<PAGE>
As filed with the Securities and Exchange Commission on March 14, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Genomica Corporation
(Name of Issuer in its charter)
Delaware 7371 23-2821818
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification
incorporation Classification Code Number)
or organization) Number)
4001 Discovery Drive
Suite 130
Boulder, CO 80303
(303) 544-4000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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Teresa W. Ayers
Chief Executive Officer
Genomica Corporation
4001 Discovery Drive
Suite 130
Boulder, CO 80303
(303) 544-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies To:
James C. T. Linfield, Esq. Mark Mihanovic, Esq.
Steven E. Segal, Esq. McDermott, Will & Emery
Cooley Godward llp 2049 Century Park East
2595 Canyon Boulevard, Suite 250 Suite 3400
Boulder, CO 80302-6737 Los Angeles, CA 90067
(303) 546-4000 (310) 277-4110
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
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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) of the Securities Act, please check the following box
and list the Securities Act registration serial number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
maximum
Proposed aggregate
Title of securities to Amount to be maximum offering offering price Amount of
be registered registered price per unit (1)(2) registration fee
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<S> <C> <C> <C> <C>
Common Stock, $.001 par
value................. 6,900,000 $17.00 $117,300,000 $30,967
</TABLE>
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(1) Includes shares that the Underwriters have the option to purchase solely
to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(o).
Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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<PAGE>
Subject to Completion, Dated March 14, 2000
The information contained in this prospectus is not complete and may be
changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities, and it is not soliciting an offer to
buy these securities, in any state where the offer or sale is not permitted.
6,000,000 Shares
Common Stock
$ per share
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This is an initial public offering of common stock of Genomica Corporation.
We expect that the price to the public in the offering will be between $15.00
and $17.00 per share. The market price of the shares after the offering may be
higher or lower than the offering price.
We have applied to include the common stock on the Nasdaq National Market under
the symbol "GNOM."
Investing in the common stock involves risks. See "Risk Factors" beginning on
page 5.
<TABLE>
<CAPTION>
Per Share Total
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<S> <C> <C>
Price to the public........................... $ $
Underwriting discount.........................
Proceeds to Genomica..........................
</TABLE>
We have granted an over-allotment option to the underwriters. Under this
option, the underwriters may elect to purchase a maximum of 900,000 additional
shares from us within 30 days following the date of this prospectus to cover
over-allotments.
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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.
CIBC World Markets
Dain Rauscher Wessels
Prudential Vector Healthcare
a unit of Prudential Securities
The date of this Prospectus is , 2000.
<PAGE>
[INSIDE COVER]
The inside cover art includes a gatefold entitled "The Discovery Manager
Software Product Supports a Broad Range of Disciplines." There are descriptions
of six scientific disciplines including Clinical Genetics, Epidemiology and
Statistical Genetics (on the left page) and Human Genetics, Molecular Biology
and Pharmacogenomics (on the right page). Each description consists of a white-
filled box with a brown border inside of which is the name of the discipline in
capital letters and a one-line description of the discipline. Overlaying the
right side of each text box is a "print screen" of a picture of a computer
screen from Discovery Manager that is useful to a researcher in the discipline.
The inside front cover is a block diagram that describes the various components
of our Discovery Manager product. At the top of the diagram are six rectangles,
one for each type of Discovery Manager user: Clinical Geneticist,
Epidemiologist, Statistical Geneticist, Human Geneticist, Molecular Biologist,
and Pharmacogenomics Researcher. Below these rectangles is a rectangle labeled
"User Interface." Below the User Interface rectangle are three rectangles that
correspond to the key modules of Discovery Manager: Sequence Analysis Module,
Genetic Analysis Module and Mapping Analysis Module. Below the rectangles that
represent our modules there are two cylinders labeled Genomic Database and
Reference Database.
<PAGE>
TABLE OF CONTENTS
Page
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<TABLE>
<S> <C>
Prospectus Summary......................................................... 1
Risk Factors............................................................... 5
Forward-Looking Statements................................................. 13
Use of Proceeds............................................................ 14
Dividend Policy............................................................ 14
Capitalization............................................................. 15
Dilution................................................................... 12
Selected Financial Data.................................................... 16
Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................ 17
Overview of Genomics....................................................... 22
Business................................................................... 24
Management................................................................. 32
Principal Stockholders..................................................... 38
Related-Party Transactions................................................. 40
Description of Capital Stock............................................... 41
Shares Eligible for Future Sale............................................ 44
Underwriting............................................................... 45
Legal Matters.............................................................. 46
Experts.................................................................... 46
Where You Can Find More Information........................................ 47
Index to Financial Statements.............................................. F-1
</TABLE>
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The underwriters are offering the shares subject to various conditions and may
reject all or part of any order.
<PAGE>
Prospectus Summary
This summary highlights information contained in other parts of this
prospectus. Because it is a summary, it does not contain all of the information
that you should consider before investing in the shares. You should read the
entire prospectus carefully.
Our Business
We are a leading provider of software products and services that enable
pharmaceutical and biotechnology researchers to accelerate the drug discovery
and development process. We believe our first product, Discovery Manager,
offers the broadest set of software tools for genomics researchers of any
commercially available product. Our current customers include leading genomics-
based research organizations such as AstraZeneca, GlaxoWellcome, Parke-Davis
and the National Cancer Institute. We are also collaborating with PE Biosystems
to develop software products to be used with its industry-leading hardware for
drug discovery.
Genomics is the study of genes and their relationship to disease. Drug
companies are increasingly focusing major research efforts on genomics to
develop new therapeutic drugs and diagnostic tests. Researchers are nearly
finished mapping the human genome, meaning that much of the preliminary work of
identifying human genes is completed. Researchers' next challenge is to
understand the functions of these genes. To do this, researchers must analyze
unprecedented volumes of genetic data, which has created the need for powerful
new software tools to manage and analyze the data. Discovery Manager merges
information technology and genomics by offering researchers software tools to
solve their data management and analysis challenges.
Our Opportunity
Bioinformatics is the application of computer technologies for the collection,
management and analysis of biological data. According to industry surveys,
pharmaceutical and biotechnology organizations will spend $1-2 billion on
bioinformatics in the year 2001. This amount includes spending for both
internal bioinformatics departments and external products and services.
Challenges of Using Genomic Data
The key challenges of using genomic data in the drug discovery and development
process are:
.Unprecedented volumes of data. Public and private genomic databases now
contain tens of
billions of genetic sequence data points. New experiments or analyses
involving these data will rapidly expand the total data volume.
.Diversity of data sources. Many different types of scientists are performing
genomic research and data generation in thousands of different locations
throughout the world. These groups usually represent, classify and store
their data in different ways.
.Current tools unsuited to the task. Many genomic researchers currently rely
on a patchwork of non-standard, non-integrated, non-scientific and
unsupported software tools.
.Short supply of bioinformaticists. There is a limited supply of individuals
with training or experience in both the science of genomics and the
application of computer-based information technology.
.Difficulty of data visualization/presentation. Visualization of large
quantities of highly interrelated genomic data presents significant
challenges.
.Data security concerns. Research organizations are concerned about access to
and the security of the data they produce and use.
Discovery ManagerTM
Discovery Manager is our first bioinformatics product. It has been developed
over the past 15 years by our Chief Scientist in collaboration with some of the
leading researchers working in the field of genomics. The product is an
integrated suite of software tools and a database template for genomics
research. The database can be filled with genomic data from the user's own
research as well as publicly available and other sources. Our tools include
sophisticated scientific algorithms designed for easy use by genomic
researchers without the assistance of bioinformaticists. Discovery Manager
enables individual or collaborating researchers to access, store, manipulate,
analyze, annotate and integrate genomic data from a variety of sources. We
believe that Discovery Manager is the only commercially available product that
integrates human sequence, genetic map, genotype, phenotype and clinical
information.
1
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Discovery Manager addresses the challenges of using genomic data in the drug
discovery and development process. It offers:
. Data standardization. We provide a standard representation of diverse types
and formats of genomic information.
. Data integration. Our product brings together in one database many
different types of information contained in both publicly available and
proprietary genomic databases.
. High scalability. We believe our product will be able to meet the
scalability needs of the largest pharmaceutical and biotechnology companies
in the world.
. Broad suite of data analysis tools. Our product's proprietary software
tools enable researchers to easily sort, manage and analyze genomic
information.
. Practical visualization tools. Our product provides a practical way to show
complex genomic information in simple-to-understand formats.
. Security. Our product provides security and access features to help ensure
the privacy of sensitive project data.
Our Strategy
Our objective is to provide pharmaceutical and biotechnology researchers with
the most scientifically adept bioinformatics tools and services for genetic
research and drug discovery and development. The key elements of our strategy
to achieve our objective include:
. Expanding our product offerings through internal development and
acquisitions
. Establishing product development and distribution alliances with companies
in the drug discovery and development market that have strong market
positions and technologies complementary to ours
. Offering our customers the option to access our products via the Internet
without the need to install and maintain the software on their own
equipment; this approach is commonly called being an application service
provider, or ASP
. Continuing our scientific leadership by deepening and expanding our
relationships with scientific leaders in the field of genomics
. Increasing our sales and marketing capacity
Other Information
We were incorporated in Delaware in September 1995. Our principal executive
offices are located at 4001 Discovery Drive, Suite 130, Boulder, Colorado
80303. Our telephone number is (303) 544-4000. Our website is located at
"www.genomica.com." Our website is not part of this prospectus.
GENOMICATM and Discovery ManagerTM are trademarks of Genomica Corporation. All
other product names, trade names and trademarks included in this prospectus are
the property of their respective owners.
2
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The Offering
<TABLE>
<S> <C>
Common stock offered............... 6,000,000 shares
Common stock to be outstanding
after the offering................ 21,134,668 shares
Use of proceeds.................... We intend to use the net proceeds from the
offering to continue development of
Discovery Manager and new products; expand
our sales and marketing activities; acquire
complementary technologies, products or
companies; repay capital lease obligations;
and for general corporate purposes.
Proposed Nasdaq National Market
symbol............................ GNOM
</TABLE>
In the table above, the number of shares of common stock to be outstanding
after the offering is based on the number of shares outstanding as of December
31, 1999 and includes 3,340,877 shares of common stock issuable upon conversion
of our Series C preferred stock sold in March 2000.
The number of shares of common stock outstanding excludes:
. 1,073,724 shares of common stock issuable upon the exercise of options
outstanding as of December 31, 1999, at a weighted average exercise price
of $0.18 per share
. 79,443 shares of common stock issuable upon exercise of warrants
outstanding as of March 13, 2000, at a weighted average exercise price of
$2.12 per share
. 1,621,980 shares of common stock issuable upon the exercise of options
granted thus far in 2000 with a weighted average exercise price of $1.03
Unless otherwise stated, all information contained in this prospectus assumes:
. no exercise of the over-allotment option granted to the underwriters
. a one-for-three reverse stock split of our common stock
. the conversion of all outstanding shares of our preferred stock into shares
of common stock
.the issuance of 260,943 shares of common stock upon the exercise of warrants
that would otherwise expire upon the closing of the offering.
3
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Summary Financial Data
(in thousands, except per share data)
The pro forma balance sheet data reflect the sale of Series C preferred stock
in March 2000 for net proceeds of $15.0 million. The pro forma as adjusted
balance sheet data reflects the receipt of the net proceeds from the sale of
6,000,000 shares of our common stock at an assumed price to the public of
$16.00 per share, after deducting the underwriting discounts and estimated
offering expenses, and the repayment of capital lease obligations.
<TABLE>
<CAPTION>
Year Ended December 31,
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1997 1998 1999
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<S> <C> <C> <C>
Statements of Operations Data:
Revenue:
Software licenses and services................ $ -- $ 197 $ 622
Research grants............................... -- -- 159
------- ------- --------
Total revenue............................... -- 197 781
------- ------- --------
Operating expenses:
Costs of revenue.............................. -- 141 447
Research and development...................... 1,682 2,328 4,869
Selling and marketing......................... 495 634 1,722
General and administrative.................... 579 884 1,723
------- ------- --------
Total operating expenses.................... 2,756 3,987 8,761
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Operating loss.................................. (2,756) (3,790) (7,980)
Interest income................................. 37 90 419
Interest expense................................ (19) (55) (18)
------- ------- --------
Net loss........................................ $(2,738) $(3,755) $ (7,579)
======= ======= ========
Net loss per share, basic and diluted........... $ (2.80) $ (3.81) $ (7.13)
======= ======= ========
Weighted average common shares outstanding,
basic and diluted.............................. 977 986 1,062
Pro forma (unaudited):
Net loss per share, basic and diluted......... $ (0.68)
========
Weighted average common shares outstanding,
basic and diluted............................ 11,121
<CAPTION>
December 31, 1999
------------------------------
Pro Forma
Actual Pro Forma As Adjusted
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<S> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and short-term
investments.................................... $ 6,343 $21,343 $109,125
Working capital................................. 5,246 20,246 108,158
Total assets.................................... 7,554 22,554 110,336
Capital lease obligations, long-term portion.... 268 268 --
Total stockholders' equity...................... 5,681 20,681 108,861
</TABLE>
4
<PAGE>
Risk Factors
You should carefully consider the following factors and other information in
this prospectus before deciding to invest in the shares.
We have a history of operating losses and an accumulated deficit, and we may
not succeed or become profitable.
We will need to generate significant revenue to achieve profitability and we
may be unable to do so. Even if we do achieve profitability, we may not be
able to sustain or increase profitability in the future. If we do not achieve
or sustain profitability, then we may be unable to continue our operations. We
have incurred operating losses every quarter since we began operations and we
have not generated enough revenue to cover the substantial amounts that we
have spent to develop and market our products and services. We had an
accumulated deficit of $16.2 million at December 31, 1999.
We expect to invest substantial financial and other resources to develop and
introduce new products and services and expand our sales and marketing
departments, strategic relationships and operating infrastructure. We expect
that our expenses will continue to increase. In addition, as a result of
recent stock option grants, we anticipate that there will be significant
charges to earnings in future periods, which will further hamper our ability
to achieve profitability. In the first quarter of 2000, we will incur a one-
time noncash charge to earnings of approximately $15 million as a result of
the sale of our Series C preferred stock.
We are likely to continue experiencing operating losses and negative cash flow
from operations for the foreseeable future.
Our limited operating history makes evaluating our business difficult. This
also makes it difficult to forecast our future operating results.
We commenced operations in September 1995 and we did not begin generating
revenue from our product and services until June 1998. Also, we have only sold
our product to a limited number of customers to date. Our limited operating
history makes it difficult to evaluate our business and to forecast our future
operating results. As a result, you must consider the risks and uncertainties
inherent in the development of a new business enterprise.
The market for our products and services is evolving and uncertain, and if our
products and services do not achieve market acceptance, our business will be
harmed. Our future results of operations depend on whether the market accepts
Discovery Manager and new products and services that we intend to develop. As
is typical in new and evolving markets, demand and market acceptance for our
products and services are subject to a high level of uncertainty. Only a few
commercially available software products designed specifically for genomics-
based drug development and discovery exist and these are unproven.
Our software is designed to incorporate features that respond to the needs of
pharmaceutical and biotechnology researchers. To the extent we experience
delays or difficulties implementing features that these researchers request,
our ability to serve our customers may be adversely affected.
Market acceptance of our products and services will depend on a number of
factors, some of which are not in our control. Our business will suffer if the
market for our products fails to develop or develops more slowly than we
expect.
If we fail to successfully redevelop our product to use a different computer
programming language and database, our customer base will likely decline.
To maintain and increase our customer base, we are currently redeveloping our
product with a different programming language and database platform. We are
not sure if the redeveloped product will have the same performance level as
our current product. If we do not successfully redevelop this product, our
customer base may decline. Any delays in this redevelopment may result in
postponement of future sales and erosion of our competitive position. In
addition, until our customers transition to our redeveloped product, we will
be required to devote resources to maintain and support both our current
product and redeveloped product, which could consume both our personnel and
other resources. If in the future our customers demand a different programming
language or database platform than the ones we have chosen for the current
redevelopment, we will incur substantial additional costs in redeveloping our
product and our business will be harmed.
We expect to rely heavily on strategic relationships with larger companies to
help us achieve market acceptance for our products. If we are unable to
successfully develop these relationships, or if these companies do not perform
as expected, our ability to achieve profitability would be materially harmed.
5
<PAGE>
foreseeable future. The loss of customers could cause a material decrease in
our revenues.
Our customer contracts are cancellable with little notice and if we lose any
of these contracts, our revenues and marketing efforts with other customers
will be materially adversely affected.
The contracts with our customers are cancellable by them with little notice.
Our customers do not have any obligation to continue to use our current
product or to purchase additional services from us. Our strategy has been to
focus on potential customers who are considered market leaders in the drug
discovery and development industries. Consequently, we depend on our customers
not only for generating revenue but also for enhancing our marketing efforts
with other customers. The loss of any of these contracts would adversely
impact our revenues and operating results, and may affect our marketing
efforts with other customers.
If we are unable to expand our sales and marketing capabilities, we will be
unable to significantly increase our revenue.
We have limited experience in sales and marketing. We currently have only 11
people in our sales and marketing departments. If we are unable to increase
our sales and marketing personnel and efforts, both in the United States and
in Western Europe, or arrange with a third party to perform these services, we
will be unable to significantly increase our revenue. We are currently
attempting to hire and train additional personnel, but we cannot assure you
that our sales force will be sufficiently large or knowledgeable to
meaningfully increase our sales and customer base. Even if we are able to hire
additional sales personnel in the near future, their effectiveness will be
limited until they gain sufficient experience.
If we cannot attract, retain and motivate skilled personnel, our ability to
compete will be impaired.
Our success depends on our ability to attract, retain and motivate highly
qualified management and scientific personnel. We face intense competition for
qualified personnel. If we are unable to continue to employ our key personnel
or to attract and retain qualified personnel in the future, our business will
suffer.
Several members of our senior management team have joined us very recently. If
we are unable to effectively integrate them into our business or work together
as a management team, then our business will suffer. In addition, our
employees, including members of our senior management team, may terminate
their Part of our business strategy is to work with larger, more established
companies that are suppliers to the drug discovery and development industry to
help create market awareness and acceptance of our products. If we are
unsuccessful in developing strategic relationships, or if parties with which
we develop relationships do not perform as expected, our products may not
achieve broad market acceptance and our ability to achieve profitability will
be significantly harmed.
We are highly dependent on Dr. Thomas Marr, and the loss of his services could
affect our ability to be successful.
We are highly dependent on Dr. Thomas Marr, our founder, President and Chief
Scientist. Dr. Marr is important to developing information, tools and services
required for implementation of our business plan. Moreover, we believe Dr.
Marr's reputation and prominence in the genomics field provides us with a
competitive advantage. A significant component of our marketing strategy is to
capitalize on the reputation and contacts of Dr. Marr. If we lost Dr. Marr's
expertise, we would have difficulty replacing him and our product development
efforts and business opportunities could be adversely affected. We do not have
life insurance on Dr. Marr.
If we do not increase our brand and name recognition, our ability to sell our
products will be reduced and our business and operating results will suffer.
We believe that establishing and maintaining brand and name recognition is
critical for attracting and expanding our targeted customer base. We also
believe that the importance of name recognition and reputation will increase
as competition in our market increases. Promotion and enhancement of our brand
and name will depend on the effectiveness of our marketing and advertising
efforts and on our ability to continue providing high-quality products and
services. We may not be successful in either regard.
We currently have a small number of customers. If we do not increase the num-
ber of our customers and increase sales to our existing customers, we will be
unable to increase our revenue significantly.
If we do not increase the number of product licenses sold to existing and new
customers, we will be unable to significantly increase our revenue. We
currently have nine customers. Our primary target market is biotechnology and
pharmaceutical organizations. A relatively small number of customers will
represent a significant percentage of our total revenue for the
6
<PAGE>
employment with us at any time. If any of our key employees left or was
seriously injured and unable to work and we were unable to find a qualified
replacement, our business could be harmed. In addition, the industry in which
we compete has a high level of employee mobility and aggressive recruiting of
skilled personnel.
We face intense competition, including from internal bioinformatics
departments, and we may not have the resources required to successfully
compete.
We face significant competition from the internal bioinformatics departments
of our customers and other companies that are potential customers. Some of our
customers and potential customers have internally developed software to
organize and analyze genomic data. These companies may believe that their
software is adequate for their needs and that our product is unnecessary. In
addition, certain internal departments of a corporation may be resistant to
outsourcing software because it could reduce the departments' budgets.
We face competition from other organizations, as well, including:
.other bioinformatics companies
.specialized drug discovery software companies
.academic and scientific institutions
.public and private research organizations
Many of our customers and potential customers and other competitors have much
greater resources and name recognition than we do. Some of our third-party
competitors may offer discounts as a competitive tactic. Moreover, our
competitors may in the future offer broader product lines or technologies or
products that are more commercially attractive than our current or future
products or that may render our technologies or products obsolete.
If our customers and potential customers elect to continue to develop their
own bioinformatics software, or we are unable to compete successfully with our
third-party competitors, then our business, operating results and financial
condition would suffer.
Our failure to manage growth could adversely affect our business.
We need to rapidly and significantly expand our operations. Our growth has
strained and will continue to strain
our management, financial controls, operations systems, personnel and other
resources. If we do not manage our future growth effectively, our efforts to
increase our customer base and product and service offerings will suffer. In
addition, our rapid growth could adversely affect our ability to provide
services and technical support in a timely manner and in accordance with
customer expectations. To manage growth of our operations, we must:
. improve existing and implement new operational, financial and management
information controls, reporting systems and procedures
. hire, train and manage additional qualifiedpersonnel
. effectively manage multiple relationships with our customers, suppliers and
other third parties, including our collaborators
We may not be able to install management information and control systems in an
efficient and timely manner, and our current or planned personnel, systems,
procedures and controls may not be adequate to support our future operations.
If we do not successfully address these issues, our business could be harmed.
If we are unable to obtain additional capital to fund our operations when
needed, our sales and marketing and product development efforts would be
adversely affected. This could cause our business, prospects and operating
results to be materially harmed.
The continued development of the Discovery Manager product and the expansion
of our sales, marketing and customer support personnel will require
significant additional capital. In addition, our continued product development
efforts, including the possible acquisition of technologies, products or
companies, will require substantial additional capital. If we are unable to
obtain additional capital or are required to obtain it on terms less
satisfactory than what we desire, we may need to delay the development and
marketing of our products or take other actions that could adversely affect
our business, prospects, operating results and financial condition.
To date, our cash flow from operations has been insufficient to cover our
expenses and capital needs. Our estimated funding requirements do not reflect
any contingency amounts and may increase, perhaps substantially, if we are
unable to generate revenues in the amount and within the time frame we expect
or if we have unexpected cost increases.
7
<PAGE>
We experience rapid technological change in our markets. If we do not modify
our products to incorporate new technologies, they may become obsolete and our
sales will suffer.
We compete in a market that is subject to rapid technological change, frequent
new product introductions and enhancements, changes in customer demands and
evolving industry standards. To remain competitive, we must continue to expand
our databases, improve our software, and invest in new technologies in
anticipation of the needs of our customers. Our products could become obsolete
due to the introduction of products containing new technologies, changing
customer requirements or changing industry standards. This would have a
significant negative impact on our revenue generation.
The technological life cycles of our products are difficult to estimate. Our
future success will depend upon our ability to continue to enhance our current
products and to continue to develop and introduce new products that keep pace
with competitive and technological developments and customer demands. If we
fail to develop, market and deliver new products on a timely basis, we may
lose market share, perhaps significantly, and our business could be seriously
harmed.
Our business will suffer if our product contains defects or does not function
as intended, which would cause our revenues to decline.
Our business would suffer if our product malfunctions or our customers' access
to their information stored on our product is interrupted. In addition, our
product is complex and sophisticated and holds vast amounts of data. As a
result, our product and third-party software incorporated into our product
could contain erroneous data, design defects or software errors that could be
difficult to detect and correct. Software defects could be found in current or
future products. If we fail to maintain the quality and integrity of our
product, we would fail to achieve market acceptance.
If we are unable to maintain a product with adequate security safeguards, our
product would not achieve market acceptance and our business would suffer.
Researchers use our product to analyze proprietary data, sometimes in
disparate locations. Our product must have effective, reliable and secure
operations. If we fail to maintain an effective, reliable and secure product,
our customers' data may be compromised and our customers would lose confidence
in our product. Our revenues and ability to maintain or increase market share
would then suffer.
Our product currently depends on components licensed from third parties, and
the failure to maintain these licenses could result in the loss of access to
these components and could delay or suspend our commercialization efforts.
The Genome Topographer technology license from Cold Spring Harbor Laboratory
provides the intellectual property foundation for our Discovery Manager
product. A breach by us of any of the terms of, or other failure to maintain,
this license agreement could preclude future sales of Discovery Manager or
delay or prevent the introduction of new products. Our ability to identify and
license or develop other equivalent technology is highly uncertain and, even
if we were successful in doing so, the cost and delays of such a changeover in
our base technology would likely cause material harm to our business. Further,
we cannot assure you that the Chang-Marr algorithm patent included in the
Genome Topographer technology will not be challenged, invalidated or
circumvented. This could limit or prevent our ability to make, use or sell
this algorithm in our product.
Discovery Manager incorporates other technologies which are the subject of
proprietary rights of others. We have obtained licenses for some of these
technologies and may be required to obtain licenses for others. We may not be
able to obtain any necessary licenses for the proprietary technology of other
parties on commercially reasonable terms, or at all. In addition, one or more
third parties whose software or technologies are used in our product might
cease to make its software or other technologies available to us or to update
such software or technologies as appropriate. We may not be able to develop
alternative approaches if we are unable to obtain necessary licenses, or if
third-party software or technologies become unavailable to us or obsolete. We
cannot assure you that our current or future licenses will be adequate for the
operation of our business. The failure to obtain necessary licenses or
identify and implement alternative approaches could have a material adverse
effect on our business, financial condition and results of operations.
Our intellectual property protection may be inadequate, allowing others to use
our technology or similar technologies, reducing our ability to compete.
The steps taken by us to protect our proprietary technology may be inadequate
to prevent misappropriation of our technology by third parties or third
parties may develop similar technology independently. We rely on a combination
of trademark, copyright and trade secret laws, employee and third-party non-
disclosure agreements and other contracts to establish and protect our
technology and other
8
<PAGE>
intellectual property rights. However, these agreements may be breached or
terminated, and we may not have adequate remedies for any breach. In addition,
we currently have no patents or patent applications pending, although we do
have an exclusive license to one patent. A third party could copy or otherwise
obtain and use our products or technology without authorization.
Our products could infringe on the intellectual property of others, which may
cause us to engage in costly litigation and, if we are not successful, could
cause us to pay substantial damages and prohibit us from selling our products.
Third parties may assert infringement or other intellectual property claims
against us based on their patents or other intellectual property claims. We
may have to pay substantial damages, possibly including treble damages, for
past infringement if it is ultimately determined that our products infringe a
third-party's patents. We would have to obtain a license to sell our product
if our product infringed another person's intellectual property. We might be
prohibited from selling our product before we obtain a license, which, if
available at all, may require us to pay substantial royalties. Even if
infringement claims against us are without merit, defending a lawsuit takes
significant time, may be expensive and may divert management attention from
other business concerns.
Our employees may be bound by confidentiality and other nondisclosure
agreements regarding the trade secrets of their former employers. As a result,
our employees or we could be subject to allegations of trade secret violations
and other similar violations if claims are made that they breached these
agreements.
Our current and potential customers primarily consist of biotechnology and
pharmaceutical organizations, which face risks that could affect our ability
to license our products.
We currently derive a substantial portion of our revenue from product licenses
to biotechnology and pharmaceutical organizations. We expect that these
organizations will continue to be our primary source of revenue for the
foreseeable future. If the drug discovery, development and related industries
experience a downturn, our business will be harmed. Thus, our ability to
generate revenue is indirectly subject to risks and uncertainties that could
cause reductions and delays in research and development expenditures within
the drug discovery, development and related industries. These reductions and
delays may result from factors such as:
. market-driven pressures on companies to consolidate and reduce costs
. the uncertainty of healthcare reform, including the continuing efforts of
governmental and third-party payors to contain or reduce the cost of health
care
. changes in regulations of the U.S. Food and Drug Administration or other
regulatory agencies
These factors are not within our control. In addition, consolidation in the
drug discovery and development industries will reduce the number of our
potential customers and, therefore, may adversely affect our future revenues.
We will not be able to sell our products if the use of genomic information to
develop drugs is not commercially successful.
The development of new drugs based on genomic information is unproven. Few
therapeutic products based on genomic discoveries have been developed and
commercialized. If our customers and potential customers are unable to develop
drugs based on genomic information in general and using our products or
services in particular, then our business will suffer.
If ethical and other concerns surrounding the use of genetic information
become widespread, the demand for our products could decrease.
Genetic testing and research has raised ethical issues regarding
confidentiality and the appropriate uses of the resulting information. For
these reasons, governmental authorities may limit or regulate the use of
genetic testing or prohibit testing for genetic predisposition to certain
conditions, particularly for those that have no known cure. Any such action by
governmental authorities could reduce the potential markets for our products,
which could seriously harm our business.
Doing business outside of the United States involves significant risks that
could harm our business.
International operations involve a number of risks not typically present in
domestic operations. Our exposure to any of these risks could materially and
adversely affect our business, operating results and financial condition.
These risks include:
. costs of operations in countries outside the United States
. licenses, tariffs and other trade barriers
. difficulties in staffing and managing remote operations
. potentially adverse tax consequences
. the burden of complying with multiple and complex laws, regulations and
treaties
. currency fluctuations
9
<PAGE>
. political and economic instability
Our operating results may fluctuate, making it likely that, in some future
quarter or quarters, we will fail to meet analysts' estimates of operating
results or financial performance, causing our stock price to fall.
If revenue declines in a quarter, our earnings will decline because many of
our expenses are relatively fixed. In particular, research and development,
sales and marketing and general and administrative expenses are not affected
directly by variations in revenue. In some future quarter or quarters, our
operating results likely will be below the expectations of securities analysts
or investors. In this event, the market price of our common stock may fall
abruptly and significantly.
We face risks related to the Year 2000.
Our product, the third-party software incorporated in our product or our
internal information technology systems may contain undetected errors or
defects associated with Year 2000. If any such errors or defects do exist, we
may incur material costs, which would adversely affect our business.
Our management has broad discretion over the use of the net proceeds from the
offering.
Our management has broad discretion to allocate the net proceeds of the
offering. The timing and amount of our actual expenditures are subject to
change and will be based on many factors, including:
. success of our sales and marketing efforts
. progress in and scope of our product development activities
. progress in and scope of our strategic alliances
. competitive market developments
We will determine, in our sole discretion without the need for stockholder
approval, how to allocate these proceeds. If our management does not wisely
allocate the proceeds, our business will suffer.
Concentration of ownership among our existing executive officers, directors
and principal stockholders may prevent new investors from influencing
significant corporate decisions.
Following the offering, our executive officers, directors and principal
stockholders will beneficially own, in the aggregate, approximately 27.5% of
our outstanding common stock. These stockholders as a group will be able to
substantially influence our management and affairs. If acting together, they
would be able to influence most matters requiring the approval by our
stockholders, including the election of directors, any merger, consolidation
or sale of all or substantially all of our assets and any other significant
corporate transaction. The concentration of ownership may also delay or
prevent a change in control if opposed by these stockholders irrespective of
whether the proposed transaction is at a premium price or otherwise beneficial
to our stockholders as a whole.
No public market has existed for our shares and an active trading market may
not develop or be sustained.
Before the offering, there has been no public market for our common stock. An
active public market for our common stock may not develop or be sustained
after the offering. The initial public offering price will be determined by
negotiation between the representatives of the underwriters and us and may not
be indicative of future market prices.
Our stock price may be volatile and your investment in our stock could decline
in value.
The market prices for securities of early stage technology companies in
general have been highly volatile and may continue to be highly volatile in
the future. Often this volatility is unrelated to operating performance of a
company.
If our stock price is volatile, we may become subject to securities litiga-
tion, which is expensive and could divert our resources.
Many companies with a volatile stock price have been subject to class-action
litigation brought by security holders. If the market value of our common
stock experiences adverse fluctuations, and we become involved in this type of
litigation, we could incur substantial legal costs and our management's
attention could be diverted, causing our business to suffer, regardless of the
outcome of the litigation.
The future sale of shares of our common stock may cause the market price of
our common stock to fall.
At March 13, 2000 approximately 15,663,557 shares of common stock,
representing 72% of our common stock outstanding after the offering, were
unregistered and eligible for sale, subject to compliance with Rule 144 or
Rule 701 under the Securities Act.
While the holders of substantially all of these shares are subject to lock-up
agreements with the underwriters in the offering for 180 days after the
offering, CIBC World Markets Corp., in its sole discretion, may release any
portion or all of these shares from the lock-up restrictions. In addition,
sales of a substantial number of shares could occur at any time after the
expiration of the 180-day period.
10
<PAGE>
If our stockholders sell substantial amounts of our common stock, including
shares issued upon the exercise of outstanding options and warrants, the
market price of our common stock may fall. These sales also might make it more
difficult for us to sell equity or equity-related securities in the future at
a time and price that we deem appropriate.
New investors in our common stock will experience immediate and substantial
dilution.
The initial public offering price is substantially higher than the book value
per share of our common stock. Investors purchasing common stock in the
offering will incur immediate dilution of $10.78 in net tangible book value
per share of common stock, based on the initial public offering price of
$16.00 per share. Investors will incur additional dilution upon the exercise
of outstanding stock options and warrants.
Provisions of our charter documents and Delaware law may inhibit a takeover,
which could limit the price investors might be willing to pay in the future
for our common stock.
Provisions in our certificate of incorporation and bylaws may have the effect
of delaying or preventing an acquisition, or merger in which we are not the
surviving company, or changes in our management. In addition, the provisions
of Section 203 of the Delaware General Corporation Law, to which we are
subject, could discourage acquisition or other changes in our control
(including those in which our stockholders might otherwise receive a premium
for their shares over then-current market prices) and otherwise limit the
price that investors might be willing to pay in the future for our common
stock.
11
<PAGE>
Dilution
Our pro forma net tangible book value as of December 31, 1999 was $20.7
million, or approximately $1.39 per share. "Pro forma net tangible book value"
is total assets minus the sum of liabilities and intangible assets, after
giving effect to $15.0 million received from the sale of Series C Preferred
Stock in March 2000. "Pro forma net tangible book value per share" is pro forma
net tangible book value divided by the total number of shares outstanding and
assuming conversion of all outstanding shares of preferred stock (including
Series C) into common stock. Without taking into account any other changes in
the pro forma net tangible book value after December 31, 1999, other than the
sale of the shares offered hereby at an assumed offering price of $16.00 per
share, our pro forma net tangible book value as of December 31, 1999 would have
been $108.9 million, or $5.22 per share. This pro forma net tangible book value
amount assumes that the proceeds to us, net of offering expenses and
underwriting discount, will be approximately $88.2 million.
The following table illustrates the pro forma increase in net tangible book
value of $3.83 per share and the dilution (the difference between the offering
price per share and pro forma net tangible book value per share) to new
investors:
<TABLE>
<S> <C> <C>
Assumed public offering price per share....................... $16.00
Pro forma net tangible book value per share as of December
31, 1999................................................... $ 1.39
Increase in pro forma net tangible book value per share
attributable to the offering............................... 3.83
---------
Pro forma net tangible book value per share as of December 31,
1999 after giving effect to the offering..................... 5.22
------
Dilution per share to new investors in the offering........... $10.78
======
</TABLE>
The following table shows the difference between existing stockholders and new
investors with respect to the number of shares purchased from us, the total
consideration paid and the average price paid per share. The table assumes that
the public offering price will be $16.00 per share.
<TABLE>
<CAPTION>
Average
Shares Purchased Total Consideration Price
------------------ -------------------- Per
Number Percent Amount Percent Share
---------- ------- ------------ ------- -------
<S> <C> <C> <C> <C> <C>
Existing stockholders........... 14,934,490 71.3% $ 36,153,804 27.4% $ 2.42
New investors................... 6,000,000 28.7 96,000,000 72.6 $16.00
---------- ----- ------------ -----
Total......................... 20,934,490 100.0% $132,153,804 100.0%
========== ===== ============ =====
</TABLE>
In the discussion and tables above, we assume no exercise of any stock options
or warrants to purchase our common stock. As of December 31, 1999, there were
outstanding options to purchase a total of 1,073,724 shares of common stock at
a weighted average exercise price of $0.18 per share. In addition there were
outstanding warrants to purchase a total of 340,387 shares of common stock, of
which 260,943 shares will expire if not exercised prior to the closing of the
offering. To the extent that holders of these options and warrants exercise
their outstanding options and warrants, new investors will be further diluted.
12
<PAGE>
Forward-Looking Statements
Some of the information in this prospectus contains forward-looking statements
within the meaning of the federal securities laws. These forward-looking
statements include statements about our plans, objectives, expectations and
intentions and other statements contained in this prospectus that are not
historical facts. You can find these statements under "Prospectus Summary,"
"Risk Factors," "Use of Proceeds," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business" and elsewhere in
this prospectus.
We typically identify forward-looking statements by using terms such as "may,"
"will," "should," "could," "would," "expect," "intend," "plan," "anticipate,"
"believe," "seek," "estimate," "predict," "potential," "continue" and similar
words, although we express some forward-looking statements differently. You
should be aware that our actual results could differ materially from those
contained in the forward-looking statements due to a number of factors,
including:
. failure to successfully market and sell our products
. failure to develop new products
. competition
. technological change
. general economic conditions
. variability of license and other revenue
. failure to satisfy performance obligations
. failure to successfully transition our Discovery Manager product to a new
technology base
. failure to enter into collaborative agreements
. changes in industry practice
You should also consider carefully the statements under "Risk Factors" and
other sections of this prospectus, which address additional factors that could
cause our actual results to differ from those set forth in the forward-looking
statements. These forward-looking statements speak only as of the date of this
prospectus and we caution potential investors not to place undue reliance on
these statements. We have no plans to update these forward-looking statements.
We use market data and industry forecasts throughout this prospectus, which we
have obtained from internal surveys, market research, publicly available
information and industry publications. Industry publications generally state
that the information they provide has been obtained from sources believed to be
reliable, but that the accuracy and completeness of such information is not
guaranteed. Similarly, we believe that the surveys and market research we or
others have performed are reliable, but we have not independently verified this
information. Neither we nor any of the underwriters represents that any such
information is accurate.
13
<PAGE>
Use of Proceeds
We estimate that the net proceeds from the sale of the shares of common stock
we are offering will be approximately $88.2 million. If the underwriters
exercise in full their option to purchase an additional 900,000 shares, the net
proceeds of the shares sold by us will be $101.6 million. "Net proceeds" are
what we expect to receive after paying the underwriting discount and other
expenses of the offering. For the purpose of estimating net proceeds we are
assuming an initial public offering price of $16.00 per share.
We expect to use our net proceeds from the offering to:
. continue development of Discovery Manager and new products
. expand our sales and marketing activities
. acquire complementary technologies, products or companies
. repayment of $398,000 of capital lease obligations
. fund general corporate purposes
Our management has broad discretion as to the allocation of the net proceeds of
the offering. Although we intend to evaluate acquisition opportunities, we have
no current agreements or commitments with respect to any acquisition. The
timing and amount of our actual expenditures are subject to change and are
based on many factors, including:
. success of our sales and marketing efforts
. success of our acquisition efforts
. progress and scope of our product development activities
. progress and scope of our strategic alliances
Until we use the net proceeds of the offering, we will invest the funds in
short term, interest bearing, investment grade securities.
Dividend Policy
We have never paid any cash dividends on our capital stock. We anticipate that
we will retain any earnings to support operations and to finance the growth and
development of our business. Therefore, we do not anticipate paying any cash
dividends in the foreseeable future. Any future determination to pay cash
dividends will be at the discretion of our board of directors and will depend
upon our financial condition, operating results, capital requirements,
covenants in our debt instruments, and such other factors as the board of
directors deems relevant.
14
<PAGE>
Capitalization
The following table shows:
. our capitalization on December 31, 1999
. our pro forma capitalization on December 31, 1999 reflecting the issuance
of $15.0 million of our Series C preferred stock in March 2000
. our pro forma as adjusted capitalization on December 31, 1999, assuming the
conversion of all outstanding preferred stock and the completion of the
offering at an assumed public offering price of $16.00 per share and the
repayment of capital lease obligations
<TABLE>
<CAPTION>
December 31, 1999
------------------------------
Pro Pro Forma
Actual Forma As Adjusted
------- -------- -----------
(dollars in thousands)
<S> <C> <C> <C>
Capital lease obligations....................... $ 398 $ 398 $ --
------- -------- --------
Stockholders' equity:
Common stock, $0.001 par value, 44,000,000
shares authorized; 1,079,399 shares issued
and outstanding;............................. 1 1 21
Preferred stock, $0.001 par value, 37,688,178
shares authorized:
Series A, 12,533,676 shares issued and
outstanding................................ 7,504 7,504 --
Series B, 18,826,959 shares issued and
outstanding................................ 12,369 12,369 --
Series C, 10,022,634 shares issued and
outstanding................................ -- 15,000 --
Additional paid-in capital.................... 31 15,031 138,064
Options and warrants.......................... 7,765 7,765 7,765
Deferred compensation......................... (5,772) (5,772) (5,772)
Accumulated deficit........................... (16,217) (31,217) (31,217)
------- -------- --------
Total stockholders' equity.................. 5,681 20,681 $108,861
------- -------- --------
Total capitalization...................... $ 6,079 $ 21,079 $108,861
======= ======== ========
</TABLE>
The number of shares of common stock in this table excludes:
. 1,073,724 shares of common stock issuable upon exercise of options
outstanding as of December 31, 1999
. 340,386 shares of common stock issuable upon exercise of warrants
outstanding as of December 31, 1999, 260,943 of which will expire if not
exercised prior to the closing of the offering
15
<PAGE>
Selected Financial Data
This section presents our selected historical financial data. You should read
carefully the financial statements included in this prospectus, including the
notes to the financial statements. The selected data in this section is not
intended to replace the financial statements.
We derived the statement of operations data for the years ended December 31,
1997, 1998 and 1999 and the balance sheet data as of December 31, 1998 and 1999
from the audited financial statements in this prospectus. Those financial
statements were audited by Arthur Andersen llp, independent public accountants.
We derived the statement of operations data for the period from our inception
to December 31, 1995 and for the year ended December 31, 1996 and the balance
sheet data as of December 31, 1995, 1996 and 1997 from audited financial
statements that are not included in this prospectus. Historical results are not
necessarily indicative of the results to be expected for any interim period or
for the year as a whole.
<TABLE>
<CAPTION>
Period from
Inception
(September 5,
1995) to Year Ended December 31,
December 31, ----------------------------------
1995 1996 1997 1998 1999
------------- ------- ------- ------- -------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenue:
Software licenses and
services.............. $-- $ -- $ -- $ 197 $ 622
Research grants........ -- -- -- -- 159
---- ------- ------- ------- -------
Total revenue........ -- -- -- 197 781
---- ------- ------- ------- -------
Operating expenses:
Costs of revenue....... -- -- -- 141 447
Research and
development........... -- 1,533 1,682 2,328 4,869
Selling and marketing.. -- 383 495 634 1,722
General and
administrative........ 70 183 579 884 1,723
---- ------- ------- ------- -------
Total operating
expenses............ 70 2,099 2,756 3,987 8,761
---- ------- ------- ------- -------
Operating loss........... (70) (2,099) (2,756) (3,790) (7,980)
Interest income.......... -- 28 37 90 419
Interest expense......... -- (5) (19) (55) (18)
---- ------- ------- ------- -------
Net loss................. $(70) $(2,076) $(2,738) $(3,755) $(7,579)
==== ======= ======= ======= =======
Net loss per share, basic
and diluted............. $-- $ (2.67) $ (2.80) $ (3.81) $ (7.13)
==== ======= ======= ======= =======
Weighted average common
shares outstanding,
basic and diluted....... -- 779 977 986 1,062
Pro forma (unaudited):
Net loss per share,
basic and diluted..... $0.68
=======
</TABLE>
<TABLE>
<S> <C>
Weighted average common shares outstanding, basic and diluted.......... 11,121
</TABLE>
<TABLE>
<CAPTION>
December 31,
---------------------------------
1995 1996 1997 1998 1999
---- ---- ------- ------ ------
<S> <C> <C> <C> <C> <C>
(in thousands)
Balance Sheet Data:
Cash, cash equivalents and short-term
investments.................................. $ 6 $355 $ 3,094 $5,223 $6,343
Working capital............................... (82) (264) 2,515 4,569 5,246
Total assets.................................. 18 515 3,426 5,649 7,554
Notes Payable and capital lease obligations,
long-term portion............................ -- -- 184 71 268
Total stockholders' equity.................... (70) (143) 2,623 4,872 5,681
</TABLE>
16
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
You should read this discussion together with the financial statements and
other financial information included in this prospectus.
Overview
We are a leading provider of software products and services that enable
pharmaceutical and biotechnology researchers to accelerate the drug discovery
and development process. We believe our first product, Discovery Manager,
offers the broadest set of software tools for genomics researchers of any
commercially available product. Our current customers include leading genomics-
based research organizations such as AstraZeneca, GlaxoWellcome, Parke-Davis
and the National Cancer Institute. We are also collaborating with PE Biosystems
to develop software products to be used with their industry-leading hardware
for drug discovery.
We have sold our product to customers directly since June 1998. We derive
revenue primarily from granting licenses to our Discovery Manager product to
pharmaceutical and biotechnology research organizations. Our software license
agreements are typically one to three years in length, and include support and
maintenance. The price for each agreement depends upon the number of users
licensed by our customers, the duration of the agreement and which of our
product components and services the customer purchases. We typically invoice
our customers on an annual basis at the commencement of the software license
agreement and on each anniversary date. We record deferred revenue at the time
of our invoice and we recognize the associated revenue ratably over the related
period.
We have incurred losses since our inception. As of December 31, 1999, we had an
accumulated deficit of $16.2 million. These losses and this accumulated deficit
resulted from the significant costs incurred in the development of our
technology platform and the establishment of relationships with our customers.
We intend to invest heavily in research and development, selling and marketing
and our computer and administrative infrastructure. In addition, as a result of
recent stock option grants, we will incur approximately $30.1 million of
charges to earnings in future periods. We also will record a one-time noncash
charge of approximately $15.0 million in the quarter ending March 31, 2000 for
the difference between the deemed fair value of our common stock for financial
reporting purposes and the price at which our Series C preferred stock was
sold.
Results of Operations
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
Total revenue. Total revenue increased to $781,000 in 1999 from $197,000 in
1998, an increase of $584,000. Of this increase, $425,000 was from licensing
our software to an increased number of pharmaceutical and biotechnology
organizations. We also recognized revenue from research grants of $159,000 in
1999; no such revenue was recognized in 1998.
Costs of revenue. Costs of revenue increased to $447,000 in 1999 from $141,000
in 1998, an increase of $306,000. This increase was due to additional customer
service and support costs, software royalty payments for third-party software
licenses and costs associated with research grants. Our research grants pay us
for our direct costs of performing specified research projects and a portion of
our other operating expenses. We expect costs of revenue to increase in
absolute dollars but decrease as a percent of revenue as we spread customer
service and support and maintenance costs over a larger customer and revenue
base. Because we recognize revenue ratably over the life of our license
agreements, our revenue may grow more slowly than our costs for a time, as we
must build infrastructure to support our customers.
Research and development. Research and development expenses increased to $4.9
million in 1999 from $2.3 million in 1998, an increase of $2.5 million. The
increase was primarily related to an increase in salaries and other personnel
costs in 1999 related to engaging additional software developers. We also
incurred non-cash compensation expense
17
<PAGE>
of $846,000 in 1999 from options for common stock issued with exercise prices
below the deemed market value of the common stock for financial reporting
purposes, as discussed below. We expect research and development expenses will
continue to increase for the foreseeable future as we expand our product
offerings.
Selling and marketing. Selling and marketing expenses increased to $1.7 million
in 1999 from $634,000 in 1998, an increase of $1.1 million. The increase was
due primarily to an increase in salaries, travel and other personnel costs
related to expanding our selling and marketing team. We also increased our
product marketing expenses to enhance the visibility of our product. We
incurred non-cash compensation expense of $85,000 in 1999 for options for
common stock issued with exercise prices below the deemed market value of the
common stock for financial reporting purposes, as discussed below. We expect
selling and marketing expenses will continue to increase for the foreseeable
future.
General and administrative. General and administrative expenses increased to
$1.7 million in 1999 from $884,000 in 1998, an increase of $839,000. The
increase was due primarily to additions to our management team. We incurred
non-cash compensation expense of $738,000 in 1999 from options for common stock
issued with exercise prices below the deemed market value of the common stock
for financial reporting purposes, as discussed below. We expect general and
administrative expenses to increase for the foreseeable future.
Stock-based compensation. Deferred compensation for options granted is the
difference between the exercise price and the deemed fair value for financial
reporting purposes of our common stock on the date the options were granted. In
connection with the grant of stock options to employees, we recorded deferred
stock compensation of $7.4 million during the year ended December 31, 1999, of
which $1.7 million was expensed in 1999.
So far in 2000, we have granted employees additional stock options to purchase
1,621,980 shares of common stock at exercise prices ranging from $0.75 to $4.50
per share. We will record additional deferred stock compensation of
approximately $24.3 million in the quarter ending March 31, 2000 to account for
the difference between the exercise price of these option grants and the deemed
fair value for financial reporting purposes of our common stock on the date of
grant.
Deferred compensation is included as a component of stockholders' equity and is
being amortized in accordance with FASB Interpretation No. 28 over the vesting
periods of the related options, which is generally four or five years. We
recognized $1.7 million of compensation expense in 1999. We will recognize
additional compensation expense of $14.6 million in 2000, $7.9 million in 2001,
$4.5 million in 2002, $2.3 million in 2003, $753,000 in 2004 and $49,000 in
2005.
On March 13, 2000, we issued 3,340,877 shares of our Series C preferred stock
for $15.0 million, which will convert into shares of common stock upon the
closing of this offering. We will record a one-time charge to earnings
applicable to common stockholders of $15.0 million on March 13, 2000 for the
beneficial conversion feature associated with the sale of our Series C
preferred stock at a price below the deemed fair value of our common stock for
financial reporting purposes.
Interest income. Interest income increased to $419,000 in 1999 from $90,000 in
1998, an increase of $329,000. The increase was primarily due to our higher
average cash and investment balances during 1999 as a result of a private
placement of equity securities in February 1999 and December 1998.
Interest expense. Interest expense decreased to $18,000 in 1999 from $55,000 in
1998, a decrease of $37,000. The decrease was due primarily to lower average
debt outstanding during 1999 following the conversion of a note payable to
equity in 1998.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Total revenue. Total revenue was $197,000 in 1998. We added our first two
customers in 1998 and had no customers in 1997.
Costs of revenue. Costs of revenue were $141,000 in 1998. These costs were
associated with customer service and support expenses.
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Research and development. Research and development expenses increased to $2.3
million in 1998 from $1.7 million in 1997, an increase of $646,000. The
increase was due primarily to an increase in salaries and other personnel
costs in 1998 related to hiring additional software developers.
Selling and marketing. Selling and marketing expenses increased to $634,000 in
1998 from $495,000 in 1997, an increase of $138,000. The increase was due
primarily to an increase in salaries, travel and other personnel costs related
to expanding our selling and marketing team. We also increased our product
marketing expenses to enhance the visibility of our product.
General and administrative. General and administrative expenses increased to
$884,000 in 1998 from $579,000 in 1997, an increase of $305,000. The increase
was due primarily to additions to our management team.
Interest income. Interest income increased to $90,000 in 1998 from $37,000 in
1997, an increase of $53,000. The increase was primarily due to our higher
cash and investment balances during 1998 as a result of a private placement of
equity securities in 1998.
Interest expense. Interest expense increased to $55,000 in 1998 from $20,000
in 1997, an increase of $35,000. The increase was due primarily to higher
average debt outstanding during 1998.
Liquidity and Capital Resources
We have financed our operations primarily from the net proceeds generated from
the issuance of preferred stock. We have received total net proceeds of
approximately $35.2 million from sales of:
. 12,533,676 shares of our Series A convertible preferred stock in March 1996
and February, June and October 1997, including conversions of convertible
notes payable, raising net proceeds of $7.5 million
.18,826,959 shares of our Series B convertible preferred stock in December
1998 and February 1999, including conversions of convertible notes
payable, raising net proceeds of $12.7 million
.10,022,634 shares of our Series C convertible preferred stock in March 2000,
raising net proceeds of $15.0 million
As of December 31, 1999, we had cash, cash equivalents and short-term
investments of approximately $6.3 million, up from $5.2 million of cash and
cash equivalents at December 31, 1998. On a pro forma basis, accounting for
Series C preferred stock proceeds received in March 2000, we had cash and cash
equivalents and short-term investments of $21.3 million as of December 31,
1999.
In 1999, we used cash of approximately $5.1 million in operating activities to
fund our net losses of $7.6 million, offset by non-cash charges for
depreciation and deferred compensation amortization totalling $1.9 million and
increases in deferred revenue of $706,000. We used approximately $3.5 million
of cash for operations in 1998 and $2.4 million in 1997.
Our investing activities used cash of approximately $3.1 million in 1999,
compared to a provision of cash of $2.3 million in 1998 and cash used of $2.7
million in 1997. Our investing activities consisted primarily of purchases and
sales of short-term investments depending on our cash balances, and purchases
of property and equipment to be used in our business. We expect to continue to
make investments in our infrastructure, including the purchase of property and
equipment to support our operations. As discussed below, we have also acquired
property through the use of capital leases.
Our financing activities in 1999 generated $6.5 million of cash, primarily
from the net proceeds of sales of preferred stock. Our financing activities in
1998 generated $5.8 million in cash, primarily from the net proceeds of sales
of preferred stock and the issuance of convertible notes payable, which were
subsequently converted into preferred stock. Our financing activities in 1997
generated $5.4 million of cash, primarily from the net proceeds of sales of
preferred stock and $400,000 of borrowings under a bank loan. This loan was
repaid in monthly installments through September 1999. In December 1998, we
entered into a master lease agreement under which we could borrow $1.0 million
through December 1999. This facility is treated as a capital lease. We
borrowed $97,000 under this lease in 1998 and $354,000 in 1999. Our borrowings
under this lease have stated interest rates ranging from 8.4% to 15.3%
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and were used to acquire computer equipment and office furniture. We repaid
$70,000 of these borrowings during 1999, and $398,000 remains outstanding at
December 31, 1999 under this lease. We intend to repay outstanding borrowings
under this lease out of proceeds of the offering.
We expect our cash requirements to increase significantly in 2000 as we
continue our research and development efforts, hire additional personnel, grow
our administrative support activities and expand our facilities. The amount and
timing of cash requirements will depend on market acceptance of our products
and the resources we devote to researching and developing, marketing, selling
and supporting our products. We may also acquire complementary businesses or
products, although we have no commitment to do so.
We believe that our cash, cash equivalents and short-term investments,
including the proceeds of the March 2000 sale of Series C preferred stock and
the net proceeds from this offering are sufficient to fund our operations for
at least 24 months. Without the net proceeds of this offering, we believe our
capital resources will be sufficient to fund our operations through at least
December 31, 2000.
Our future capital requirements will depend on many factors, including the
following:
. success of our selling and marketing efforts
. success of our acquisition efforts
. progress and scope of our product development activities
. progress and scope of our strategic alliances
Future capital requirements will also depend on the extent to which we acquire
or invest in businesses, products and technologies. If we should require
additional financing due to unanticipated developments, additional financing
may not be available when needed or, if available, we may not be able to obtain
this financing on terms favorable to us or to our stockholders. Insufficient
funds may require us to delay, scale back or eliminate some or all of our
research and development programs, or may adversely affect our ability to
operate as a going concern. If additional funds are raised by issuing equity
securities, substantial dilution to existing stockholders may result.
Income Taxes
As of December 31, 1999 we had a net operating loss carryforward of
approximately $11.3 million for federal income tax reporting purposes, which
begins to expire in 2010. We have established a valuation allowance against the
entire amount of our deferred tax asset because our management has not been
able to conclude that it is more likely than not that we will be able to
realize the deferred tax asset, due primarily to our history of operating
losses.
Quantitative and Qualitative Disclosures about Market Risk
The primary objective of our investment activities is to preserve principal
while at the same time maximize the income we receive from our investments
without significantly increasing risk. Some of the securities that we invest in
may have market risk. This means that a change in prevailing interest rates may
cause the principal amount of the investment to fluctuate. For example, if we
hold a security that was issued with a fixed interest rate at the then-
prevailing rate and the prevailing interest rate later rises, the principal
amount of our investment will probably decline. To minimize this risk in the
future, we intend to maintain our portfolio of cash equivalents and short-term
investments in a variety of securities, including commercial paper, money
market funds, government and non-government debt securities. The average
duration of all of our investments in 1999 was less than one year. Due to the
short-term nature of these investments, we believe we have no material exposure
to interest rates arising from our investments. Therefore, no quantitative
tabular disclosure is included in the prospectus.
The Year 2000
Computer systems and software must accept four digit entries to distinguish
21st century dates from 20th century dates. As a result, many software and
computer systems that accepted only two digit entries needed to be upgraded in
order to accept dates beginning January 1, 2000. We did not experience any
date-related problems with our software.
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In addition, we have not been made aware of, nor have we experienced, date-
related problems with any third-party software. We do not believe that we will
incur material costs in the future because of date-related problems.
Recently Issued Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes
accounting and reporting standards for derivative financial instruments and
hedging activities related to those instruments as well as other hedging
activities. It requires an entity to recognize all derivatives as either assets
or liabilities in the statement of financial position and measures those
instruments at fair value. In June 1999, the FASB issued Statement of Financial
Accounting Standards No. 137, "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133--an
amendment of FASB Statement No. 133" ("SFAS No. 137"). SFAS No. 137 delays the
effective date of SFAS No. 133 to fiscal quarters and fiscal years beginning
after June 15, 2000. The Company does not typically enter into arrangements
that would fall under the scope of SFAS No. 133 and thus, management believes
that SFAS No. 133 will not significantly affect its financial condition and
results of operations.
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101, "Revenue Recognition" ("SAB 101"). SAB 101
provides the SEC Staff's views in applying generally accepted accounting
principles to selected revenue recognition issues. We must implement the
guidance in SAB 101 during the first quarter of 2000. We believe we are in
compliance with the guidelines provided in SAB 101, and thus, our management
believes that the adoption of SAB 101 will not significantly affect our results
of operations.
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Overview of Genomics
Introduction
The number of currently known disease targets limits the development of new
drugs. Disease targets are molecules in the body that can be affected by a drug
to cause a desired biological reaction. Pharmaceutical and biotechnology
organizations are increasingly turning to genomics to improve the productivity
of the drug discovery and development process. The study of the human genome is
revealing new disease targets and providing pharmaceutical and biotechnology
organizations with better information regarding these targets. Industry
analysts expect genomics to lead to a medical revolution in identifying and
treating disease based on growing evidence that genes play a significant role
in most major diseases.
Genomics
The complete set of instructions for making an organism is called its genome.
The human genome governs all cellular functions, which, in turn, determine all
human physiology, such as metabolism, susceptibility to disease and reactions
to drugs. Genomics is broadly defined as the study of an organism's genes,
including their location, structure, sequence, regulation, function and
relationship to disease.
The human genome is organized into 23 pairs of chromosomes, which include the X
and Y chromosomes that determine sex. These chromosomes are comprised of
strands of DNA molecules that consist of long chains of chemical sub-units,
called nucleotides. There are four types of nucleotides--adenine, cytosine,
guanine, and thymine, often abbreviated with their first letters A, C, G, and
T. DNA molecules consist of two long chains of nucleotides bound together by
the pairing of the nucleotides. Each nucleotide is also referred to as a base,
and pairs of bases bound to each other are called base pairs. Approximately 3.2
billion nucleotide base pairs, or 6.4 billion total bases, make up the entire
human genome.
Some sequences of nucleotides, called genes, carry the specific information
necessary to construct proteins that regulate most aspects of human life. Genes
may contain from several dozen to millions of nucleotides. Scientific evidence
to date indicates that there are approximately 100,000 genes in the human
genome, although some researchers estimate the number to be as high as 150,000.
Genetic Study Methods
The methods of analysis in the field of genomics generally fall into one of
four major categories:
. DNA Sequencing. DNA sequencing is the process of determining the linear
order of nucleotide bases in a strand of DNA and is performed with a
laboratory instrument called a DNA sequencer.
. Genotyping. Genotyping is the process of analyzing locations within a
genome where variations in the sequence of nucleotides within a gene, or
genetic polymorphisms, are known to exist. Differences in a genotype, or
the sequence of nucleotides in a gene, can determine specific physical
characteristics, such as eye color, or functions, such as ability to
produce insulin. Genetic polymorphisms play a role in an individual's
susceptibility to disease and response to drugs. One type of polymorphism
is a variation in a single nucleotide base, commonly referred to as a
single nucleotide polymorphism, or SNP. SNPs are the most common type of
genetic variation. There are an estimated three to ten million SNPs in the
human genome. While only a small fraction of human SNPs have been
identified to date, we expect this number to increase dramatically during
the next few years. The SNP Consortium is a group of drug companies and
public entities who are working together to discover 300,000 SNPs and
contribute their findings to public databases. Numerous other individual
companies have initiated programs to identify large numbers of human SNPs.
As more and more SNPs are identified, a new market is emerging for looking
at SNPs of individuals for diagnostic and therapeutic purposes, called SNP
genotyping. Merely identifying a SNP does not indicate whether or how it
may relate to human health. To relate SNPs to disease or drug response,
SNPs must be measured in hundreds or thousands of people and correlated
with clinical data describing the physical or mental health of those
individuals.
. Gene Expression Analysis. Gene expression analysis involves measuring the
extent to which specific genes are expressed within a cell. Gene
expression is the process by which a gene's coded information is
translated into
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the production of proteins within a cell. While all cells contain the full
set of DNA, different cells express different sets of genes depending on
cell type and environmental conditions. Certain diseases also arise from
the over or under expression of genes. Researchers use differential gene
expression analysis, the comparison of genes expressed in healthy versus
diseased samples, to identify specific genes involved in a particular
disease process. Researchers can also measure changes in expression of
certain genes when they add drug candidates to cells. As researchers
identify more genes, we expect the market for expression analysis
technologies to grow significantly.
.Phenotyping. Phenotyping is the determination of the traits of an individu-
al. A phenotype is the physical and measurable trait related to an under-
lying gene. For example, a gene is responsible for determining eye color,
but the actual eye color is a phenotype.
Proteomics
Proteins are large complex molecules that control and mediate most cellular
activities. Proteins are created based upon the information provided by genes.
Each set of three nucleotides in a gene codes for a specific amino acid. Amino
acids are the basic building blocks that make up proteins. Success in drug
discovery is often a function of the amount known about the structure and
function of a particular protein.
A very important goal for biology and pharmaceutical research and development
is to establish a direct correlation between the sequence information of the
human genome and the sequence information in proteins. This field is generally
referred to as proteomics. Proteomics seeks to determine what proteins are
being made where, in what amount and under what conditions. By integrating
gene and protein information, researchers are able to trace amino acid
sequences back to corresponding gene sequences. That, in turn, enables them to
take data on proteins present in samples and link it to the gene expression
data, providing a new level of detail on how genes actually regulate proteins
in cells.
Proteomics research involves the large-scale separation, identification and
characterization of proteins. While gene expression data provides important
information regarding the underlying proteins, it cannot predict all changes
that occur to a protein. Although the proteomics market is relatively new, it
is expected to be one of the fastest growing life science disciplines.
Pharmacogenomics
Pharmacogenomics is a rapidly evolving field of identifying genetic variations
that may affect an individual's response to a specific drug. We expect that
this research will lead to a more personalized approach to medicine that will
allow drugs and dosages to be tailored for individual patients based upon
their genetic information. In addition, pharmacogenomics may enable more
successful clinical trials by improving the process of patient selection and
"rescuing" drugs that have failed previous drug trials by identifying more
appropriate populations for using the drug. Candidates for rescued drugs
include those where particular sub-populations have reacted adversely to these
drugs or where a drug has worked in a particular subpopulation but not in the
broader group initially studied.
We expect that genomic information will be used to develop genetic
characterization tests to identify the genetic make-up of individuals. These
tests will contribute to a more personalized approach to medicine. For
example, many types of cancer have similar symptoms. The ability to deliver an
effective treatment for a particular patient depends on understanding what
kind of cancer the patient has. Genetic characterization tests may help the
physician select the most effective drug with the fewest side effects. We
believe that this approach should benefit patients with more customized care,
reduced illness length, and better treatment results.
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Business
Overview
We are a leading provider of software products and services that enable
pharmaceutical and biotechnology researchers to accelerate the drug discovery
and development process. Discovery Manager, our first product, is used for
genomics research, including genetic research, gene discovery and
pharmacogenomics. This product allows researchers to turn the vast volumes of
gene, SNP, protein and patient data from diverse sources into information
useful for drug discovery. We license Discovery Manager to leading genomics-
based research organizations, including AstraZeneca, GlaxoWellcome, Parke-Davis
and the National Cancer Institute. We are also collaborating with companies
such as PE Biosystems to develop software products to be used with their
industry-leading hardware for drug discovery.
The Bioinformatics Market Opportunity
The market for software products to facilitate the drug discovery process is
large and rapidly growing. Genetic Engineering News projects the bioinformatics
market to be in the range of $1-2 billion in the year 2001. We believe that
this number includes spending by research organizations for both internal and
external bioinformatics services. Additional industry sources expect that
research and development spending for bioinformatics technology will grow to
over $2 billion by 2004.
Challenges of Using Genomic Data
Pharmaceutical and biotechnology researchers are increasingly turning to
genomics to improve the efficiency of the drug discovery process. These
researchers need bioinformatics tools to effectively manage the large
quantities and complexities of data being generated by genomics research.
Bioinformatics is the application of computer technologies to collect, manage,
analyze and link biological data. The key challenges of using genomic data in
the drug discovery and development process are:
. Unprecedented volumes of data. Improvements in genetic research
methodologies and related tools are producing unprecedented quantities of
genetic data, creating massive data management problems for organizations
conducting genomics research. These problems are accelerating as leading
research organizations near completion of sequencing the human genome.
Public sequence databases are growing exponentially. Some of these
databases are expected to reach over 10 billion bases of sequence data and
more than 6 million records by the end of 2000. Experiments or analyses
involving these data can rapidly expand the total data volume. The use of
SNPs in drug research illustrates the effect of experiments on data
volume. The SNP Consortium has announced its intention to identify a set
of approximately 300,000 SNPs by April 2001. Identifying all of these SNPs
in a group of 1,000 patients would generate over 300,000,000 individual
SNP scores. Similarly, a single pharmacogenomics experiment could entail
analysis of approximately 100,000 different sites in a patient's DNA, so
that a 1,000 patient study would generate approximately 100,000,000 data
points.
. Diversity of data sources. Genomic research and data generation is being
performed in thousands of different locations throughout the world.
Genomic projects generally involve a diverse group of scientists, such as
clinicians, geneticists and biologists, each working on their own type of
data. Furthermore, these projects often involve multiple organizations
working together. These groups often represent, classify and store their
data in different ways.
. Current tools unsuited to the task. Many organizations currently collect,
store, and analyze their genomic data using a patchwork of public domain,
free or low-fee software, off-the-shelf, non-scientific desktop
applications such as spreadsheets and internally developed bioinformatics
tools. This can result in researchers using a variety of non-standard,
non-integrated, non-scientific and unsupported software tools. Many
genomic researchers also rely on time-consuming and error-prone manual
approaches to handle their bioinformatics needs.
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. Short supply of bioinformaticists. Genomic-based research is heavily
dependent on sophisticated computer applications that are typically
created and maintained by bioinformaticists. The supply of individuals
with training or experience in both genomics and the development of
computer-based information technology is limited. As a result, many
organizations have been unable to internally develop adequate
bioinformatics tools.
. Difficulty of data visualization/presentation. Researchers need to
visualize the large quantities of complex genomic data and their
relationships to perform analyses and derive meaningful results.
Visualization of large quantities of highly interrelated data is a
challenging software problem.
. Data security concerns. Research organizations are concerned about access
to and the security of the data they produce and use. Security issues are
compounded when multiple organizations are collaborating on a project. A
security breach could compromise or even ruin an entire drug discovery
effort, potentially resulting in the loss of substantial profits.
Bioinformatics tools must provide security features that reliably ensure
the desired type and level of security required by each research
organization.
Our Solution
We offer proprietary bioinformatics solutions designed to address the
challenges of using genomic data in the drug discovery and development process.
Our solutions offer:
. Data standardization. We provide a standard representation of diverse
types and formats of genomic information, including both publicly
available and proprietary genomic data. Our process of standardization
allows our customers to compare and cross-analyze information from varied
sets of genomic data. This can result in significant savings in time and
fewer user errors.
. Data integration. Our product brings together in one database information
contained in many publicly available and proprietary genomic data sets.
Our products also integrate different types of genomic data from research
sources such as pharmacogenomic, high-throughput genotyping, SNP and
sequence data.
. High scalability. Our product has been designed to handle massive data
sets and large numbers of users. We believe our product will be able to
meet the needs of the largest pharmaceutical and biotechnology companies
in the world.
. Broad suite of data analysis tools. Our product's proprietary software
tools enable researchers such as clinicians, epidemiologists, geneticists
and molecular biologists to easily sort and analyze genomic information.
. Practical visualization tools. Our product provides a practical way to
show complex genomic information in simple-to-understand formats such as
tables, graphs, charts and reports.
. Security. Our product includes state-of-the-art redundancy, back-up and
encryption systems to ensure minimal exposure to systems failure or
unauthorized access. We employ rigorous electronic security measures to
protect our customers' data and to restrict unauthorized access to such
data from non-approved users both within and outside client organizations.
. Professional services. We support our product by offering our customers
product integration services, scientific consulting services and technical
consulting services.
Our Strategy
Our objective is to provide pharmaceutical and biotechnology researchers with
the most scientifically adept bioinformatics tools and services for drug
discovery and development. The key elements of our strategy to achieve our
objective include:
. Expand our product offerings. We intend to significantly extend our
product offerings to include modules in other areas of drug discovery and
development such as gene and protein expression analysis and protein
function prediction. In addition to developing products internally and in
collaboration with our strategic partners, we plan to selectively acquire
complementary businesses and products.
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. Establish significant industry collaborations. We intend to establish
product development and distribution alliances with companies in the drug
discovery and development market that have strong market positions and
technologies complementary to ours. We believe that these collaborations
will provide us with access to broader markets and accelerated market
penetration. We plan to add, in collaboration with some of these
companies, new modules or features to our products that work with their
technology and hardware. As part of this strategy, we also intend to
offer reduced functionality versions of most of our products. We expect
that these entry-level products will sell for a lower price, but in
greater quantities, than the enterprise-level versions of our products.
These entry-level products should provide the opportunity for future
upgrade sales to enterprise-level products.
. Implement application service provider strategy. We intend to offer our
customers the option to access our products via the Internet without the
need to install and maintain the software on their own equipment. This
approach, commonly called being an application service provider, or ASP,
should broaden and accelerate the adoption of our products by lowering
initial capital investment, minimizing implementation time and effort,
providing convenient scalability, offering affordable payment options and
reducing the information technology burden for our customers.
. Continue scientific leadership. We believe our close interaction with
commercial and academic scientific leaders has been a major factor in
establishing Discovery Manager as one of the most comprehensive and
scientifically advanced bioinformatics products available to the genomics
industry. We intend to advance our scientific leadership by deepening and
expanding our relationships with scientific leaders in the field of
genomics. We rely on these relationships to stay abreast of cutting edge
developments in the field and to identify and address new customer needs.
. Increase sales and marketing capacity. We intend to expand our direct
sales force to sell our enterprise-level product in the United States and
major international markets. We also intend to pursue a multifaceted
marketing strategy to increase Genomica brand awareness and to
substantially increase our number of qualified customer leads. One of the
key goals of our sales personnel is to increase the number of users of
our product at existing customers.
Discovery Manager(TM)
Discovery Manager is our core bioinformatics product. It is an integrated
suite of software tools and a database template for genomics research. The
database can be filled with genomic data from the user's own research as well
as publicly available and other sources. Our tools include sophisticated
scientific algorithms designed for easy use by genomic researchers without the
assistance of bioinformaticists. Discovery Manager enables individual or
collaborating researchers to access, store, manipulate, analyze, annotate and
integrate genomic data from a variety of sources. We believe that Discovery
Manager is the only commercially available product that integrates human
sequence, genetic map, genotype, phenotype and clinical information.
Supported disciplines. We developed Discovery Manager to be used by
researchers in a broad range of disciplines including:
. Clinical genetics. Clinical geneticists identify patients and collect
their medical data. Discovery Manager allows these researchers to store
and view patient information in a simple graphical format, which can show
the medical and genetic data of each patient as well as parent and
sibling genetic relationships among family members, called pedigrees.
. Epidemiology. Epidemiologists study the genetic and environmental causes
for disease. Discovery Manager helps these researchers analyze and
determine how a genetic trait or environmental factor is distributed
among people in a population.
. Statistical genetics. Statistical geneticists identify the regions of DNA
that determine a particular trait. Discovery Manager helps these
researchers group individuals together and test various hypotheses
regarding the portion of DNA to which a trait is linked.
. Human genetics. Human geneticists identify the location of genes using a
variety of sophisticated analytical approaches. Discovery Manager helps
these researchers study the specific genes of each family member.
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. Molecular biology. Molecular biologists determine the function of genes.
Discovery Manager helps these researchers organize and analyze genetic map
and sequence data to isolate genes and determine their function.
. Pharmacogenomics. Pharmacogenomics researchers determine the genetic basis
for why a drug works for some people but not others. Discovery Manager
helps these researchers examine the genetic variations of a group of
patients with similar drug responses.
Key tools. Discovery Manager provides three key tool sets that are used by
different types of researchers to facilitate the interpretation of data
relevant to the drug discovery and development process:
. Sequence analysis tools. Sequence analysis is the examination of a specific
DNA sequence to understand the structure and function of the sequence.
Discovery Manager provides tools for finding genes in human DNA sequences
and comparing two or more sequences for similarity.
. Genetic analysis tools. Genetic analysis is the isolation and analysis of
DNA variations in families and unrelated populations. Discovery Manager
provides tools to integrate, manipulate, edit and analyze genetic data.
. Map analysis tools. Map analysis is the construction and comparison of maps
containing different representations of genetic information. Discovery
Manager provides tools that support the graphical viewing, manipulation and
comparison of maps that are created using well-known algorithms.
Discovery Manager database. A key component of Discovery Manager is a central
repository of genomic data compiled from many sources:
. Legacy data. Data that researchers previously have accumulated on various
systems and in various formats.
. New data. Results from experiments performed using Discovery Manager.
. Reference Database. Our proprietary Reference Database, described below, is
comprised of 12 publicly available genomic databases from major
international genome research centers. Each of these public databases has
completed the peer review, quality control process of the National
Institutes of Health. In addition, we standardize and quality check this
data before including it in the Reference Database.
. Other public data. If a customer wishes to incorporate data from sources
other than those in the Reference Database, the customer can convert it
into a common format and import it into Discovery Manager. Customers can
also access the National Center for Biotechnology Information and other
websites of interest directly from Discovery Manager. Researchers use
information from these websites to annotate their database.
Reference Database. We offer our proprietary database, the Reference Database,
as an option to licensees of Discovery Manager. Our Reference Database
compiles into one database and in one common format all of the information
from 12 publicly available databases. Researchers no longer need to access the
individual remote databases. As a result, they are able to easily and
uniformly query these distinct databases, resulting in significant time
savings and reduced risk of user errors.
Common user interface. Discovery Manager addresses many important aspects of
genomics research from a common user interface. This interface permits
researchers to access, use and compare data from a single database. With
simple point-and-click operations, researchers can map, compare, query and
graphically display data in formats commonly used in the industry. Using
annotation tools, researchers may enrich data with additional information,
such as experiment details, literature references and direct links to websites
of interest. The common user interface also enables many different types of
researchers to use the same data and system to do their part of the analysis.
Security. Because of the potential value of proprietary genomic information,
security is important to our customers. Discovery Manager provides security
and access features that enable system administrators to assign user accounts
and passwords, provide users with access to authorized projects and allow
management to review the work progress within the genomic project while
insuring the privacy of sensitive project data.
We regularly upgrade Discovery Manager to keep pace with the latest advances
in algorithms, tools and technology. Customer input plays a key role in the
definition of these upgrades. We also regularly upgrade the contents of the
Reference Database to include newly available information. We intend to expand
the Reference Database to include
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other public databases and additional databases of non-human data. We also
intend to develop new products to expand into other areas of drug discovery
and development and new technologies.
Technology
We designed Discovery Manager to support the unique needs of drug discovery
and development researchers. We selected technologies to handle very large and
complex data sets and provide users with simple-to-use data visualization
technology. Because researchers most often work in teams, our products
securely operate in a network environment designed to allow collaboration
among hundreds of researchers. We believe that Discovery Manager offers the
broadest set of software tools for genomics research of any commercially
available product.
Our software uses "object-oriented" technology as a simple way of modeling
biological data and their relationships, such as patients and their associated
DNA sequences. An object is a combination of related data, such as patient
name, age and height. We invested 40 person-years to create a collection of
over 400 objects to represent the core biological entities that are part of
drug discovery and development. A key benefit of our use of object-oriented
technology is that once the core biological objects have been defined, it
becomes easier to add new features to keep pace with advances in genomic
science.
Current architecture. The current software structure, or architecture, of
Discovery Manager is divided into two key operating components, referred to as
a client and a server. The client is the easy-to-use graphical interface that
operates on a standard desktop computer used by the researcher. The server
consists of the scientific applications and databases that operate on a
powerful computer that provides processing services to all the clients.
The Discovery Manager client component was developed using a commercially
available programming language known as VisualWorks for Smalltalk. The server
component was developed using a commercially available database management
system known as GemStone/S.
Next-generation architecture. We are currently developing the next generation
of Discovery Manager to be Internet compatible. The new architecture will have
three key operating components, referred to as a client, an application server
and a database server. We expect the new client component to continue to
provide a set of visualization tools to simplify organizing, querying and
analyzing complex genomic information. The client will allow users to interact
with Discovery Manager through a standard Java-based web browser, such as
Netscape Navigator or Microsoft Explorer. The application server component
will consist of scientific applications developed using Java technology. The
database server component will consist of Oracle Corporation's Oracle 8i
relational database management system.
We are transitioning to this new technology architecture primarily because we
believe drug discovery and development companies have selected the Oracle
database technology as a standard operating environment for their genomic
research and because many customers have expressed an interest in moving to
Internet-compatible applications. We believe that our new technology choices
of Java for application and advanced user interface programming, Hypertext
Markup Language (HTML) for programming web browser interfaces, and Oracle as
the database for storing all of the genomic data, will meet customer
requirements and provide a stable foundation for the foreseeable future. We
are scheduled to deliver our first product on the new architecture in 2000. We
will transition all existing customers to the redeveloped product at no
additional cost to them.
Research and Development
As of March 13, 2000, we had 39 employees working in research and development,
of which 16 were working on the development of the current Discovery Manager
product and 23 were working on the redeveloped product. We intend to transfer
all development resources to developing the redeveloped product once all
customers have transitioned to the new Discovery Manager product. Our research
and development expenses were $2.3 million in 1998 and $4.9 million in 1999.
We expect that research and development expenses will continue to increase.
Consulting and Scientific Services
We currently offer limited consulting services that are included in the price
of Discovery Manager. We anticipate offering a full range of consulting
services on a fee-for-service basis in conjunction with Discovery Manager,
including the following:
28
<PAGE>
. Product integration. Helping customers integrate the Discovery Manager
product suite into their bioinformatics departments and scientific
workflow.
. Technical consulting. Providing custom programming, technical guidance and
tools development for bioinformatics needs.
. Scientific consulting. Helping customers with their genomics research.
Examples of this service include designing scientific experiments,
formulas and algorithms.
Customers
We license our products and provide services to pharmaceutical and
biotechnology companies and academic institutions in the United States and
Western Europe. The following is a list of our current customers:
AstraZeneca PLC
Biognosis U.S. Inc.
Clingenix
GlaxoWellcome Inc.
National Cancer Institute
Oxagen Limited
Orchid Biosciences, Inc.
University of Oxford Wellcome Trust Centre for Human Genetics
Warner-Lambert Company
As pharmacogenomics expands, we believe our products will play a key role in
both genetic analysis and clinical trial data gathering and processing. We also
expect to increase sales to contract research organizations and healthcare
providers. We intend to target agricultural biotechnology companies involved in
genomic research.
In the year ended December 31, 1999, the clients listed above accounted for all
of our software license revenue. We expect that a small number of clients will
continue to account for a high percentage of our total revenue for the
foreseeable future.
Sales and Marketing
Direct Sales
We sell our enterprise-level product and services in North America and Western
Europe through a direct sales force to pharmaceutical and biotechnology
companies and academic institutions. Our direct sales force is divided into
three regions: U.S. East Coast, U.S. West Coast and Western Europe (based in
the United Kingdom). We combine an account manager with a field scientist, who
together demonstrate the business and scientific value of our product to our
potential customers. As of March 13, 2000, we had six individuals in our sales
department, including two sales managers, two account managers and two field
scientists. We are currently recruiting additional sales people.
Indirect Sales
We intend to augment our direct sales effort with indirect sales channels
established through collaborations. Indirect sales channels are expected to
give us access to sales forces that are much larger than our own. Through these
sales forces, we believe we can increase and accelerate our market penetration.
We believe the following types of indirect sales channels are viable for our
products:
. Distributors outside core territories. In markets where there are
insufficient sales opportunities to justify a direct presence, or barriers
to entry in the markets are high, we may establish distributor
relationships.
. Strategic industry collaborations. We intend to establish product
development and distribution alliances with companies in the drug
discovery and development market that have strong market positions and
technologies complementary to ours. We also plan to add, in collaboration
with some of these companies, new modules or features to our products that
work with their technology and hardware.
. Consultants and systems integrators. We intend to establish a services
partnership program with consultants and systems integrators who provide
professional services to our targeted customer base. We believe
consultants and systems integrators are in a strong position to recommend
our solutions to their services customers.
29
<PAGE>
Marketing
To support our sales force, our marketing team is focused on creating a
consistent, targeted message that increases awareness of our brand name and
solutions. We intend to expand our use of marketing programs such as print and
online advertising, direct mail and conference exhibits.
As a part of our marketing efforts, we provide our product and other support to
leading genomics research institutions. These institutions are the thought
leaders in the genomics research industry and set the trends of how genomics
research will be conducted in the future. In addition, we believe that our
relationship with these institutions will result in graduates being trained
users of Discovery Manager and, therefore, potential customers. The following
institutions currently use Discovery Manager:
. Johns Hopkins University
. Princeton University
. University of Colorado
. University of Oxford Wellcome Trust Centre for Human Genetics
Strategic Relationships
We have entered into an agreement with PE Biosystems, a leading supplier of
gene sequencing and other equipment to the drug discovery industry. Under this
agreement, we are jointly developing software for users of certain PE
Biosystems genotyping equipment. Customers will use our software to manage,
sort and manipulate genotypic, phenotypic, clinical and other data produced
using PE Biosystems' genotyping hardware and other sources. We and PE
Biosystems are currently discussing terms under which this product may be
jointly commercialized.
We have entered into an agreement with PE Biosystems and Oxagen Limited to
create a comprehensive drug discovery system for use by Oxagen, incorporating
system hardware and software from PE Biosystems, bioinformatics software from
Genomica and drug discovery technologies from Oxagen. The agreement
contemplates that we will consider marketing the jointly developed product if
we are successful in creating this drug discovery system.
Competition
We face competition from other bioinformatics companies and specialized drug
discovery software companies. We believe that additional specialized software
companies will be formed to pursue this market opportunity. Competition could
also result from non-commercial software developed by academic institutions and
software developed by companies who sell access to proprietary genomic data.
Some of our competitors, including academic institutions and large genomics or
pharmaceutical companies, have substantially greater financial, marketing,
sales and support resources than we do. We also face competition from
pharmaceutical companies' own bioinformatics departments.
There are many companies describing bioinformatics as part of their strategy,
but a much smaller number who currently offer bioinformatics products or
databases commercially. Most of our commercial competitors offer sequence
analysis software products, which represents only a portion of the
functionality of our product. We believe that no other company has a
bioinformatics product for genomics that matches the functionality of Discovery
Manager.
The market for software products and services to support the drug discovery
process is new and rapidly changing, and we believe it will become highly
competitive. We believe that the principal competitive factors affecting the
markets for our software and services include:
. breadth of functionality
. technological and scientific excellence
. timeliness of product introductions
. responsiveness to customer requirements
. customer relationships
. ease of use
We believe we compete favorably with respect to each of these factors.
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<PAGE>
Intellectual Property
We are the exclusive, worldwide licensee of the Genome Topographer technology
owned by Cold Spring Harbor Laboratory. Genome Topographer was co-developed by
our founder, President and Chief Scientist, Dr. Thomas G. Marr at Cold Spring
Harbor Laboratory under work supported, in part, by grants from the Department
of Energy and the National Institutes of Health. Genome Topographer is a
general purpose computer system useful for studying complex, genetic diseases
and serves as the intellectual property foundation of Discovery Manager. The
Genome Topographer technology includes the patented Chang/Marr algorithm, which
incorporates, either in hardware or software form, an algorithm for analyzing
genetic data. Our license with Cold Spring Harbor Laboratory grants us
exclusive, worldwide rights to the Chang/Marr Patent, as well as the exclusive
right to commercialize the complete set of Genome Topographer technology. Our
Discovery Manager product incorporates this licensed technology.
Failure to maintain the license agreement with Cold Spring Harbor Laboratory
could preclude future sales of Discovery Manager or delay or prevent the
introduction of new products. Even if we could identify and license or develop
non-infringing equivalent technology, which is far from certain, the cost and
delays of such a changeover in our base technology would likely cause material
harm to our business.
We cannot assure you that the Chang/Marr algorithm patent owned by Cold Spring
Harbor Laboratory will not be challenged, invalidated or circumvented or that
the rights created thereunder will provide a competitive advantage. In
addition, our competitors may apply for and obtain patents covering
technologies that are more effective than our technologies. This could render
our technologies or products obsolete or uncompetitive or prevent, limit or
interfere with our ability to make, use or sell our product either in the
United States or in international markets.
Our current product incorporates additional technologies that are the subject
of proprietary rights of others. We have obtained licenses for certain of these
technologies and may be required to obtain licenses for others. If needed, we
may not be able to obtain licenses for technology patented by others on
commercially reasonable terms, or at all. We also may not be able to develop
alternative approaches if we are unable to obtain necessary licenses. We cannot
assure you that our current and future licenses will be adequate for the
operation of our business. The failure to obtain necessary licenses or identify
and implement alternative approaches could have a material adverse effect on
our business, financial condition and results of operations.
We believe the source code for our proprietary software is protected both as a
trade secret and copyright work in the United States. However, effective
copyright and trade secret protection may not be available in every other
country in which our products are distributed.
Our policy is to enter into confidentiality agreements with our employees,
consultants and vendors, and we generally control access to and distribution of
our software, documentation and other proprietary information. Despite these
precautions, a third party might be able to copy or otherwise obtain and use
our products or technology without authorization. The steps taken by us to
protect our proprietary technology might be inadequate to prevent
misappropriation of our technology by third parties. In addition, third parties
might be able to develop similar technology independently. Either of these
events could significantly harm our business, operating results and financial
condition.
Employees
As of March 13, 2000, we had 61 full-time employees, including 39 employees
primarily engaged in research and development, 11 in sales and marketing, five
in customer support and six in administration. None of our employees is
currently represented under collective bargaining agreements and we consider
our relations with our employees to be good.
Facilities
We are located in Boulder, Colorado. We lease approximately 9,500 square feet
under an agreement that expires April 2000. We recently entered into a lease
agreement for 24,000 square feet in a different location in Boulder, Colorado.
We have entered into a non-binding letter of intent to lease an additional
14,000 square feet beginning in June 2000. We believe that our current
facilities, plus the additional facilities available under our lease
agreements, will be adequate to support our operations through 2000. In the
event that additional space is needed, we believe that additional or substitute
space will be available on commercially reasonable terms.
Legal Proceedings
We are not currently involved in any legal proceedings.
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<PAGE>
Management
Executive Officers and Directors
The following table sets forth, as of March 13, 2000, certain information
concerning our executive officers and directors:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Teresa W. Ayers ........ 46 Chief Executive Officer and Director
Thomas G. Marr, Ph.D.... 47 President, Chief Scientist and Director
Kenneth S. Rubin........ 35 Executive Vice President of Commercial Development
Daniel R. Hudspeth...... 37 Chief Financial Officer, Vice President of Finance, Treasurer
and Secretary
James E. Clemens........ 52 Vice President of Engineering
James L. Rathmann(1).... 48 Chairman of the Board
Marvin H. Caruthers,
Ph.D.(1)(2)............ 59 Director
Ralph E. Christoffersen,
Ph.D.(2)............... 62 Director
Arnold J. Levine, Ph.D.. 60 Director
Robert T. Nelsen(1)(2).. 36 Director
</TABLE>
- ------------------
(1) Member of the compensation committee.
(2) Member of the audit committee.
Teresa W. Ayers has served as our Chief Executive Officer since 1999 and as a
member of our board of directors since 1999. From 1997 to 1999, Ms. Ayers
served as the President, Chief Executive Officer and director of BioStar, Inc.,
a point-of-care diagnostics company. From 1995 until 1997, Ms. Ayers served as
BioStar's President and Chief Operating Officer and, from 1992 until 1995, as
BioStar's Vice President of Finance. Ms. Ayers received a B.B.A. from the
University of Georgia.
Thomas G. Marr, Ph.D. has served as our President and Chief Scientist and a
member of our board of directors since our inception. From 1997 to 1998, Dr.
Marr served as our Chief Executive Officer. From 1989 to 1997, Dr. Marr held
various positions at Cold Spring Harbor Laboratory. From 1989 to 1994, Dr. Marr
was a Senior Staff Investigator. From 1994 to 1997, Dr. Marr was a Senior
Scientist, head of the Structural Biology and Computational Section at the Cold
Spring Harbor Laboratory/National Cancer Institute-Cancer Center and head of
the Computational Molecular Biology and Genetics Department. Prior to 1989, Dr.
Marr was a Staff Scientist at Los Alamos National Laboratory. Dr. Marr has been
involved in the development of bioinformatics technology used in the Human
Genome Project since 1985, and has served on many peer review, policy and
standards committees related to the project. Dr. Marr received a Ph.D. in
Biology from New Mexico State University.
Kenneth S. Rubin has served as our Executive Vice President of Commercial
Development since January 2000. In addition, Mr. Rubin has served as a
consultant to us since 1997. From 1997 until 2000, Mr. Rubin served as the
Chief Operating Officer of Secant Technologies, Inc., a software products
company. From 1995 until 1997, Mr. Rubin served as the Director of Business
Development for IBM Corporation's North America Object Technology Practice. Mr.
Rubin received an M.S. in Computer Science from Stanford University.
Daniel R. Hudspeth has served as our Chief Financial Officer, Vice President of
Finance, Treasurer and Secretary since April 1999. From 1997 to 1999, Mr.
Hudspeth served as the Chief Financial Officer, Vice President of Finance,
Treasurer and Secretary of Communications Systems International, Inc., a
publicly-traded telecommunications company. From 1995 to 1997, Mr. Hudspeth
served as the Chief Financial Officer, Vice President of Finance, Treasurer and
Secretary of Wireless Telecom, Inc., a software developer and distributor of
wireless data telecommunications products. During 1995, Mr. Hudspeth served as
Vice President and Corporate Controller of CWE, Inc., a publicly-traded
computer retail company. Mr. Hudspeth has a BS/BA in Accounting from Colorado
State University. Mr. Hudspeth is a certified public accountant.
James E. Clemens has served as our Vice President of Engineering since 1997.
From 1996 to 1997, Mr. Clemens served as the Vice President of Engineering for
Objectshare, Inc., a software development company. From 1994 to 1996, Mr.
Clemens served as the Senior Director of Engineering at Volt Delta Resources, a
telecommunications software and hardware company. Mr. Clemens received a B.A.
in Mathematics and Computer Science from the University of California at Los
Angeles.
James L. Rathmann has served as the Chairman of our board of directors since
our inception and served as our Chief Executive Officer from inception to 1997.
Mr. Rathmann founded Falcon Technology Partners, L.P. in 1993, and is the
president of Falcon Technology Management Corporation and the general partner
of Falcon Technology
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<PAGE>
Partners, L.P. Mr. Rathmann also serves on the board of directors of Ciphergen
Biosystems, Inc., a biological research systems company. Mr. Rathmann received
an M.S. in Computer Science from the University of Wisconsin.
Marvin H. Caruthers, Ph.D. has served as a member of our board of directors
since 1997. From 1992 to 1995, Dr. Caruthers was the chairman of the Department
of Chemistry and Biochemistry at the University of Colorado. He has been a
professor at the University of Colorado since 1979. Dr. Caruthers is a director
of OXiGENE, Inc. and Array Biopharma, both of which are biotechnology
companies. Dr. Caruthers received a Ph.D. from Northwestern University.
Ralph E. Christoffersen, Ph.D. has served as a member of our board of directors
since 1997. Dr. Christoffersen has served as Chief Executive Officer, President
and a director of Ribozyme Pharmaceuticals, Inc. since 1992. From 1989 to 1992,
Dr. Christoffersen was Senior Vice President and Director of U.S. Research at
SmithKline Beecham Pharmaceuticals, a pharmaceutical company. From 1983 to
1989, he held senior management positions in research at The Upjohn Company, a
pharmaceutical company. Prior to joining The Upjohn Company, Dr. Christoffersen
served as a Professor of Chemistry and Vice Chancellor for Academic Affairs at
the University of Kansas and as President of Colorado State University. He
received his Ph.D. in Physical Chemistry from Indiana University.
Arnold J. Levine, Ph.D. has served as a member of our board of directors since
1997. Dr. Levine is a cancer biologist and is President of Rockefeller
University. Previously, Dr. Levine was the Harry C. Wiess Professor of the Life
Sciences at Princeton University, where he founded Princeton's molecular
biology department during a 12-year tenure that saw the department grow to
include two research laboratories and 35 faculty members. Prior to his work at
Princeton, Dr. Levine was chairman at SUNY/Stony Brook School of Medicine. Dr.
Levine is also a director of PE Corporation and Baxter International, Inc.
Robert T. Nelsen has served as a member of our board of directors since 1997.
Since 1994, Mr. Nelsen has served as a senior principal of various venture
capital funds associated with ARCH Venture Partners, including ARCH Venture
Fund II, L.P., ARCH Venture Fund III, L.P. and ARCH Venture Fund IV, L.P. From
1987 to 1994, Mr. Nelsen was Senior Manager at ARCH Development Corporation, a
company affiliated with the University of Chicago, where he was responsible for
new company formation. He holds an M.B.A. from the University of Chicago.
Scientific Advisory Board
We benefit from consultation with prominent scientists active in fields related
to our technology. Each of the individuals serving on our scientific advisory
board has significant expertise in both the computational and biological
aspects of genomics and each has been involved in the Human Genome Project
since its inception.
Aravinda Chakravarti, Ph.D. is Professor of Genetics in the School of Medicine
at Case Western Reserve University. Dr. Chakravarti is a leading quantitative
geneticist, well known for his contributions in determining the multigenic
cause of congenital human birth defects.
Uta Francke, M.D. is an Investigator at the Howard Hughes Medical Institute and
Professor of Genetics and Pediatrics at the Stanford University School of
Medicine. Dr. Francke is the current president of the American Society of Human
Genetics.
William R. Pearson, Ph.D. is Professor of Biochemistry at the University of
Virginia. Dr. Pearson created the FASTA package of sequence comparison
programs. FASTA is a worldwide standard for performing sequence comparison
searches.
Gary D. Stormo, Ph.D. is Professor of Molecular Biology at Washington
University Human Genome Center. Dr. Stormo's research has been in pattern
recognition algorithms for the identification of regulatory sequences in DNA
and for pathway analysis.
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<PAGE>
Board Composition
Upon the closing of the offering, in accordance with the terms of our restated
certificate of incorporation, the terms of office of the board of directors
will be divided into three classes:
. Class I directors, whose term will expire at the annual meeting of
stockholders to be held in 2001
. Class II directors, whose term will expire at the annual meeting of
stockholders to be held in 2002
. Class III directors, whose term will expire at the annual meeting of
stockholders to be held in 2003
Each class of directors will be determined by resolution of our board of
directors prior to the closing of the offering. At each annual meeting of
stockholders beginning with the 2001 annual meeting, the successors to
directors whose terms expire will be elected to serve from the time of election
and qualification until the third annual meeting following election and until
their successors have been elected.
Committees of the Board of Directors
The audit committee reviews the selection of independent auditors, the results
and scope of the audit and other services provided by our independent auditors
and evaluates our internal accounting procedures.
The compensation committee reviews and approves compensation and benefits for
our executive officers. The compensation committee also administers our
compensation and stock plans and makes recommendations to the board of
directors regarding such matters.
Director Compensation
Ralph Christoffersen, an outside director, receives $1,000 for each board
meeting attended. Other than Dr. Christoffersen, no other directors receive
compensation for their services as directors. We reimburse our outside
directors, upon request, for reasonable out-of-pocket expenses incurred in
attending board and committee meetings. In addition, all directors are eligible
to participate in our 2000 Equity Incentive Plan.
Compensation Committee Interlocks and Insider Participation
During 1999, Messrs. Caruthers, Nelsen and Rathmann served as members of our
compensation committee. None of our executive officers serves as a member of
the board of directors or compensation committee of any other entity that has
one or more executive officers serving as a member of our board of directors or
compensation committee.
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<PAGE>
Executive Compensation
Summary Compensation Table (1)(2)
The following table sets forth all compensation awarded to, earned by or paid
to our chief executive officer and our four highest paid executive officers
for services rendered in all capacities to us during 1999. We refer to these
executive officers as our "named executive officers" in other parts of this
prospectus.
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
---------------- ---------------------
Securities Underlying All Other
Name and Principal Position Salary Bonus Options Compensation
- --------------------------- -------- ------- --------------------- ------------
<S> <C> <C> <C> <C>
Teresa W. Ayers(1),
Chief Executive Officer... $102,015 -- 366,699 --
Thomas G. Marr,
President and Chief
Scientist................. 225,000 -- 66,699 $4,050(3)
Daniel R. Hudspeth(1),
Vice President of Finance
and Chief Financial
Officer................... 94,673 -- 33,366 19,423(3)
James E. Clemens,
Vice President of
Engineering............... 162,415 $60,000 33 --
Susan E. Strong,
Former Vice President of
Sales and Marketing....... 164,968 -- 8,366 --
</TABLE>
- -----------------
(1) We hired Ms. Ayers in July 1999 and Mr. Hudspeth in April 1999.
(2) We hired Mr. Rubin in January 2000. Had he been employed by us for the
entire year of 1999, his compensation would have required disclosure in
this table. Mr. Rubin's base salary is $200,000.
(3) Reimbursement of moving expenses.
1999 Option Grants
The following table sets forth information regarding options granted to each
of our named executive officers during 1999.
The options in this table were granted under our 2000 Equity Incentive Plan,
have 10-year terms, will terminate before their expiration dates if the
optionee leaves his or her employment with us, and unless otherwise noted,
vest over a period of four years. We have not granted any stock appreciation
rights.
The percentages shown below of options granted is based on an aggregate of
697,397 options we granted in 1999.
<TABLE>
<CAPTION>
Potential Realizable Value at
Number of Percent of Assumed Annual Rates of
Securities Total Options Exercise Stock Price Appreciation for
Underlying Granted to Price Option Term
Options Employees in (Per ------------------------------
Name Granted 1999 Share) Expiration Date 5% 10%
- ---- ---------- ------------- -------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Teresa W. Ayers......... 366,666(1) 52.6% $0.18 6/21/09 $ 3,689,508 $ 9,349,939
33(2) * 0.18 12/1/09 332 841
Thomas G. Marr.......... 66,666(2) 9.6% 0.18 6/21/09 670,814 1,699,975
33(2) * 0.18 12/1/09 332 841
Daniel R. Hudspeth...... 33,333(1) 4.8% 0.18 4/5/09 355,407 849,987
33(2) * 0.18 12/1/09 332 841
James E. Clemens........ 33(2) * 0.18 12/1/09 332 841
Susan E. Strong......... 8,333(3) 1.2% 0.18 4/15/09 83,849 212,490
33(2) * 0.18 12/7/09 332 841
</TABLE>
- -----------------
* Less than 1%.
(1) 25% of the options vest on the first anniversary of the vesting
commencement date. The remaining 75% vest in 36 equal monthly installments
thereafter.
(2) 100% vested on the vesting commencement date.
(3) 25% of the options vest on December 8, 1999. The remaining 75% vest in 36
equal monthly installments thereafter.
35
<PAGE>
The potential realizable value represents amounts, net of exercise price before
taxes, that may be realized upon exercise of the options immediately prior to
the expiration of their terms assuming appreciation of 5% and 10% over the
option term. Assuming 5% and 10% annual appreciation, these values are
calculated based on rules promulgated by the Securities and Exchange Commission
and an assumed initial public offering price of $16.00 per share and do not
reflect our estimate of future stock price growth. The actual value realized
may be greater or less than the potential realizable value set forth in the
table.
1999 Option Values
The following table sets forth information concerning the number and value of
exercisable and unexercisable options held by each of the named executive
officers as of December 31, 1999. The value of unexercised, in-the-money
options at December 31, 1999 represents an amount equal to the difference
between the assumed initial public offering price of $16.00 per share and the
option exercise price, multiplied by the number of unexercised, in-the-money
options. An option is in-the-money if the fair market value of the underlying
shares exceeds the exercise price of the options.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options at
Shares Options at December 31, 1999 December 31, 1999
Acquired on Value -------------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Teresa W. Ayers......... -- -- 33 366,666 $ 522 $5,800,656
Thomas G. Marr.......... -- -- 122,254 27,778 1,934,058 439,448
Daniel R. Hudspeth...... -- -- 33 33,333 522 527,328
James E. Clemens........ -- -- 16,351 25,348 258,673 401,005
Susan E. Strong......... -- -- 4,116 4,167 66,428 65,922
</TABLE>
Employee Benefit Plans
401(k) Plan
Our employees are eligible to participate in our 401(k) Plan. Pursuant to the
401(k) Plan, employees may elect to reduce their current compensation by up to
the lesser of 15% of eligible compensation or the statutorily prescribed annual
limit ($10,000 in 1999). Employees may contribute this amount on a pre-tax
basis to the 401(k) Plan. Employees direct the investment of the assets of the
401(k) Plan in up to seven different investment funds. The 401(k) Plan is
intended to qualify under Section 401 of the Internal Revenue Code so that
contributions by employees to the 401(k) Plan, and income earned on plan
contributions are not taxable to employees until withdrawn. An employee becomes
eligible for the matching contribution only if he or she makes a pretax
contribution. We may make discretionary matching contributions to the 401(k)
Plan. Additionally, we may make annual discretionary profit sharing
contributions in amounts to be determined annually by the board of directors.
Since the 401(k) Plan's inception, we have made no matching or profit sharing
contributions.
2000 Equity Incentive Plan
Our 2000 Equity Incentive Plan was originally adopted as the 1996 Stock Option
Plan and its amendment and restatement was adopted by our board of directors on
March 13, 2000. We expect to submit the plan for approval to our stockholders
prior to the closing of the offering. There is currently an aggregate of
5,000,000 shares of common stock authorized for issuance under the plan. The
plan will terminate on March 13, 2010 unless sooner terminated by the board of
directors (or committee). As of March 13, 2000, we have not issued shares
pursuant to stock awards under our plan, no shares have been repurchased or
lapsed and there are no shares which remain subject to repurchase. In addition,
options to purchase 1,889,678 shares at a weighted average price of $0.87 per
share were outstanding, and 2,183,884 shares remained available for future
stock awards under our plan. Awards issued under our plan prior to its
amendment and restatement as the 2000 Equity Incentive Plan will be governed by
the terms of the plan and applicable option agreements in effect prior to such
amendment and restatement. Prior to the amendment and restatement, the plan
provided only for grants of stock options and not for other types of awards.
36
<PAGE>
The plan provides for the grant of incentive stock options, as defined under
the Code, and nonstatutory stock options, restricted stock purchase awards and
stock bonuses. Our employees are eligible to receive incentive stock options
under our plan and our employees, directors and consultants are eligible to
receive nonstatutory stock options, restricted stock purchase awards and stock
bonuses. Our board or a committee appointed by the board administers the plan,
which determines recipients and types of awards to be granted, including the
exercise price, number of shares and the exercisability thereof. The plan also
permits our board of directors to allow the early exercise of option grants.
Shares issued under such option grants carry restrictions which lapse over the
vesting period of the original option grant.
The terms of options granted under the plan may not exceed ten years. The
board, or committee, determines the exercise price of options granted under the
plan. The exercise price for incentive stock options cannot be less than 100%
of the fair market value of the common stock on the date of the option grant.
The exercise price for nonstatutory stock options cannot be less than 85% of
the fair market value of the common stock on the date of the option grant.
Options granted under the plan typically vest over four years. Generally, the
optionee may not transfer a stock option other than by will or the laws of
descent or distribution unless the optionee holds a nonstatutory stock option
that provides for transfer in the stock option agreement. However, an optionee
may designate a beneficiary who may exercise the option following the
optionee's death. An optionee whose service relationship with us ceases for any
reason may exercise vested options for the term provided in the option
agreement, which is generally one month.
No incentive stock option may be granted to any person who, at the time of the
grant, owns or is deemed to own stock possessing more than 10% of our total
combined voting power unless the option exercise price is at least 110% of the
fair market value of the stock subject to the option on the date of grant and
the term of the option does not exceed five years from the date of grant. In
addition, the aggregate fair market value, determined at the time of grant, of
the shares of common stock with respect to which incentive stock options are
exercisable for the first time by an optionee during any calendar year may not
exceed $100,000.
Shares subject to stock awards that have expired or otherwise terminated
without having been exercised revert and become available for the grant of
awards under the stock plan. The board or committee may reprice outstanding
options or offer optionees the opportunity to replace outstanding options with
new options for the same or a different number of shares.
The board or committee determines the terms of restricted stock purchase awards
granted under the plan. Under restricted stock purchase awards, we have an
option to repurchase unvested shares upon termination of service. The price of
a restricted stock purchase award cannot be less than 85% of the fair market
value of the stock subject to the award on the date of grant. Our board or
committee may award stock bonuses in consideration of past services without a
purchase payment. Restricted stock purchase awards under the plan are generally
non-transferable, although the applicable award agreement may permit some
transfers. Transfers other than by will or the laws of descent and distribution
are restricted so long as the stock remains subject to the agreement.
Upon a merger, consolidation, reorganization, stock dividend, stock split or
other change in corporate structure affecting the number of issued shares of
our common stock, our board or committee may make proportionate adjustments to
the outstanding stock awards, including the class, number of shares and price
per share of options granted under the plan.
Our plan provides that if we dissolve, liquidate or sell substantially all of
our assets, outstanding stock awards will terminate immediately prior to that
event. In addition, upon our merger with or into another corporation or a sale
of substantially all of our assets, each option or right shall be assumed or an
equivalent option or right will be substituted by the successor corporation. If
the outstanding options or awards are not assumed or substituted, the vesting
of options or awards will be accelerated.
37
<PAGE>
Principal Stockholders
The following table sets forth information with respect to beneficial ownership
of our common stock as of March 13, 2000 for:
. each person or group of affiliated persons known to us to beneficially own
more than five percent of our common stock
. each of our directors
. each of our named executive officers and
. all of our directors and executive officers as a group
Beneficial ownership is determined according to the rules of the Securities and
Exchange Commission and generally means that a person has beneficial ownership
of a security if he or she possesses sole or shared voting or investment power
over that security, and includes options and warrants that are currently
exercisable or exercisable within 60 days. Each director, officer or 5% or more
stockholder, as the case may be, has furnished us with information with respect
to beneficial ownership. Except as otherwise indicated, we believe that the
beneficial owners of the common stock listed below, based on the information
each of them has given to us, have sole investment and voting power with
respect to their shares, except where community property laws may apply.
This table lists applicable percentage ownership based on 15,663,557 shares of
common stock outstanding as of March 13, 2000 (including shares of preferred
stock on an as-converted basis, and excluding shares issuable under warrants
which expire upon the closing of the offering), and also lists applicable
percentage ownership based on 21,663,557 shares of common stock outstanding
after completion of the offering. Options and warrants to purchase shares of
our common stock that are exercisable within 60 days of March 13, 2000, are
deemed to be beneficially owned by the persons holding these options and
warrants for the purpose of computing percentage ownership of that person, but
are not treated as outstanding for the purpose of computing any other person's
ownership percentage. Shares underlying options and warrants that are deemed
beneficially owned are listed in this table separately in the column labeled
"Shares Subject to Options and Warrants." These shares are included in the
number of shares listed in the column labeled "Total Number."
Unless otherwise indicated, the address of each person or entity named below is
c/o Genomica Corporation, 4001 Discovery Drive, Suite 130, Boulder, CO 80303.
<TABLE>
<CAPTION>
Shares Beneficially Owned
---------------------------------------------
Shares Subject to Percent Percent
Total Options and Before After
Name of Beneficial Owner Number Warrants Offering Offering
- ------------------------ --------- ----------------- -------- --------
<S> <C> <C> <C> <C>
The Kaufmann Fund, Inc. (1)...... 3,989,272 -- 25.5% 18.4%
Falcon Technology Partners,
L.P. (2)........................ 3,035,987 66,673 19.3% 14.0%
INVESCO Global Health Sciences
Fund (3)........................ 2,599,597 25,173 16.6% 12.0%
ARCH Venture Fund III, L.P. (4).. 1,727,180 16,493 11.0% 8.0%
Boulder Ventures Limited (5)..... 1,025,805 1,736 6.5% 4.7%
Teresa W. Ayers.................. 366,699 33 2.3% 1.7%
Thomas G. Marr................... 560,031 50,032 3.6% 2.6%
James E. Clemens................. 105,031 33 * *
Susan E. Strong.................. 31,977 -- * *
Daniel R. Hudspeth............... 166,699 33 1.1% *
Marvin H. Caruthers (6).......... 117,348 868 * *
Ralph E. Christoffersen.......... 12,500 12,500 * *
Arnold J. Levine................. 12,500 12,500 * *
Robert T. Nelsen (7)............. 1,727,180 16,493 11.0% 8.0%
James L. Rathmann (8)............ 3,075,987 66,673 19.6% 14.2%
All current directors and
executive officers as a group
(10 persons) (9)................ 6,165,641 159,167 39.0% 28.3%
</TABLE>
- ------------------
* Represents beneficial ownership of less than 1%.
(1) The address of The Kaufmann Fund, Inc. is 140 East 45th Street, 43rd
Floor, New York, New York 10017.
38
<PAGE>
(2) The address of Falcon Technology Partners, L.P. is 600 Dorset Road, Devon,
Pennsylvania 19333.
(3) The address of INVESCO Global Health Sciences Fund is 7800 East Union
Avenue, Mail Stop 1100, Denver, Colorado 80237.
(4) The address of ARCH Venture Fund III, L.P. is 8725 West Higgins Road,
Suite 290, Chicago, Illinois 60631.
(5) Consists of 301,731 shares held by Boulder Ventures, L.P., 629,944 shares
held by Boulder Ventures II, L.P. and 94,130 shares held by Boulder
Ventures II (Annex), L.P. The address of each entity is 1634 Walnut
Street, Suite 301, Boulder, Colorado 80303.
(6) Consists solely of shares held by The Caruthers Family, L.L.C., of which
Dr. Caruthers is the Manager.
(7) Consists solely of shares held by ARCH Venture Fund III, L.P. (see Note 4
above), of whose General Partner, Mr. Nelsen is the Managing Director. Mr.
Nelsen disclaims beneficial ownership of such shares except to the extent
of his pecuniary interest herein.
(8) Includes shares held by Falcon Technology Partners, L.P. (see Note 2
above), of which Mr. Rathmann is the General Partner.
(9) Includes 75,133 shares of common stock issuable upon exercise of stock
options and 84,034 shares of common stock issuable upon exercise of
preferred stock warrants. Also, see Notes 6 through 11 above.
39
<PAGE>
Related-Party Transactions
Financings
The following persons or entities purchased securities in the amounts set
forth, on an as-converted to common stock basis, in the chart below. We sold
shares of our common stock between March 1996 and April 2000. We sold shares of
our Series A preferred stock between March 1996 and October 1997. We sold
shares of our Series B preferred stock between December 1998 and February 1999.
We sold shares of our Series C preferred stock in March 2000. The warrants were
issued in .
<TABLE>
<CAPTION>
Series A Series B Series C
Purchaser Common Stock Financing Financing Financing Warrants
- --------- ------------ --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Principal Stockholders
The Kaufmann Fund, Inc.. -- -- 3,240,740 748,532 --
Falcon Technology
Partners, L.P.......... -- 1,660,099 864,770 444,444 66,673
INVESCO Global Health
Sciences Fund.......... -- 830,025 633,288 1,111,111 25,173
ARCH Venture Fund III,
L.P.................... -- 691,687 574,556 444,444 16,493
Boulder Ventures Limited
....................... -- 276,675 486,283 261,111 1,736
Caruthers Family L.L.C.. -- 69,169 36,200 11,111 868
Executive Officers
Teresa W. Ayers......... 366,666 -- -- -- --
Thomas G. Marr.......... 509,999 -- -- -- --
James E. Clemens........ 108,332 -- -- -- --
Susan E. Strong......... 31,977 -- -- -- --
Daniel R. Hudspeth...... 166,666 -- -- -- --
James L. Rathmann....... 40,000 -- -- -- --
Kenneth S. Rubin........ 21,664 -- -- -- --
Other Transaction
Information
Price per share......... $0.003-$0.75 $ 1.80 $ 2.16 $ 4.50 $1.81-$2.16
</TABLE>
Investor Rights Agreement
We have entered into an Amended and Restated Investors Rights' Agreement with
the purchasers of our common and preferred stock pursuant to which these and
other stockholders will have registration rights with respect to their shares
of common stock following this offering. For a description of these
registration rights, see "Description of Capital Stock--Registration Rights."
Indemnification
We have entered into, or prior to the offering will enter into, indemnity
agreements with our directors and executive officers for the indemnification
and advance payment of expenses to these persons to the fullest extent
permitted by law. See "Description of Capital Stock--Limitation of Liability
and Indemnification."
We believe that each of the transactions described above was carried out on
terms that were no less favorable to us than those that would have been
obtained from unaffiliated third parties. Any future transactions between us
and any of our directors, officers or principal stockholders will be on terms
no less favorable to us than could be obtained from unaffiliated third parties
and will be approved by a majority of the independent and disinterested members
of the board of directors.
40
<PAGE>
Description of Capital Stock
In accordance with our restated certificate of incorporation, which will become
effective upon the closing of the offering, we may issue up to 50,000,000
shares of common stock, par value $0.001 per share, and 5,000,000 shares of
preferred stock, par value $0.001 per share. As of March 13, 2000, there were
1,869,141 shares of common stock outstanding held by 35 stockholders of record,
and 13,794,416 shares of preferred stock outstanding held by 19 stockholders of
record.
We do not intend the following summary description of our capital stock to be
complete and we qualify the description by referring to the provision of
applicable law and to our restated certificate of incorporation and our amended
and restated bylaws, which will become effective upon the closing the offering,
filed as exhibits to the registration statement of which this prospectus is a
part.
Common Stock
As of March 13, 2000, and assuming conversion of all outstanding preferred
stock into common stock upon the closing of the offering, there were
outstanding 15,663,556 shares of common stock held of record by 53
stockholders. Each share of common stock entitles the holder to one vote on all
matters submitted to a vote of stockholders. Subject to preferences that may be
applicable to any outstanding shares of preferred stock, holders of common
stock are entitled to receive ratably the dividends, if any, declared from time
to time by the board of directors out of legally available funds. In the event
of our liquidation, dissolution or winding up, holders of common stock are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preferences of any outstanding shares of preferred stock.
Holders of common stock have no preemptive, conversion, subscription or other
rights. There are no redemption or sinking fund provisions applicable to the
common stock. All outstanding shares of common stock are, and all shares of
common stock to be outstanding upon completion of the offering will be, fully
paid and nonassessable.
Preferred Stock
As of March 13, 2000, assuming the closing of the offering, all outstanding
shares of preferred stock would have been converted into 13,794,416 shares of
common stock. See Note 5 to financial statements for a description of the
currently outstanding preferred stock. Following the conversion, our restated
certificate of incorporation will be amended and restated to delete all
references to such shares of preferred stock. The restated certificate of
incorporation gives the board of directors the authority, without further
action by stockholders, to issue up to five million shares of preferred stock
in one or more series and to fix the rights, preferences, privileges,
qualifications and restrictions granted to or imposed upon such preferred
stock, including dividend rights, conversion rights, voting rights, rights and
terms of redemption, liquidation preference and sinking fund terms, any or all
of which may be greater than the rights of the common stock. The issuance of
preferred stock could:
. adversely affect the voting power of holders of common stock and reduce the
likelihood that such holders will receive dividend payments and payments
upon liquidation
. decrease the market price of our common stock
. delay, deter or prevent a change in our control
We have no present plans to issue any shares of preferred stock.
Warrants
In connection with the private placement of our Series A preferred stock, we
issued a warrant to purchase 124,502 shares of Series A preferred stock at an
exercise price of $0.60 per share (which will convert into 41,500 shares of
common stock, if exercised prior to the closing of the offering) to Falcon
Technology Partners, L.P. which expires upon the closing of this initial public
offering, and a warrant to purchase 30,000 shares of Series A preferred stock
at an exercise price of $0.60 per share (which will become exercisable for
10,000 shares of common stock upon the closing of the offering) issued to
Silicon Valley Bank, which expires on September 9, 2004.
We have outstanding warrants to purchase an aggregate of 208,331 shares of
Series B preferred stock at an exercise price of $0.72 per share (which will
become exercisable for 69,443 shares of common stock upon the closing of the
offering) issued to certain principal stockholders, which expire on December
16, 2003.
We have outstanding warrants to purchase an aggregate of 219,443 shares of
common stock at an exercise price of $2.16 per share issued to Punk, Ziegel &
Company L.P., which expire on the closing of this initial public offering.
41
<PAGE>
The exercise price of each of our outstanding warrants is subject to customary
adjustments for stock splits, stock dividends or subdivisions. Additionally,
the warrants are subject to customary adjustments upon a sale of all or
substantially all of our assets or upon our reorganization, reclassification,
consolidation or merger. The exercise prices of the warrants are also subject
to adjustment in the event of our subsequent issuance of common stock at a
price per share less than their respective exercise prices. None of our
warrants confer upon the holder any voting or any other rights of our
stockholders, and the shares issuable upon exercise of the warrants carry
registration rights. See "Description of Capital Stock--Registration Rights."
Registration Rights
Under agreements between us and some of our investors, investors holding
14,134,803 shares of our common stock issued or issuable upon conversion of our
outstanding preferred stock and upon exercise of outstanding warrants to
purchase preferred and common stock have registration rights pertaining to the
securities they hold. After December 11, 2000, we may be required to prepare
and file a registration statement under the Securities Act if requested to do
so by the holders of at least a majority of the registrable securities, so long
as the aggregate offering price is at least $15,000,000 and the shares to be
registered constitute at least 20% of the outstanding shares of the Company's
common stock. We are required to use our best efforts to effect such
registration. We are not obligated to effect more than one such registration.
If we propose to register any of our securities under the Securities Act for
our own account or the account of any of our stockholders other than these
holders of registrable securities, the holders of registrable securities are
entitled to include registrable securities in the registration, subject to the
underwriters' right to limit the number of shares included. The holders of
registrable securities also may require us to file additional registration
statements on Form S-3 if requested to do so by the holders of at least 25% of
the registrable securities. We are not obligated to effect more than three of
such registrations on Form S-3.
We are required to bear all costs incurred in connection with any such
registrations. The foregoing registration rights could result in substantial
future expenses for us and adversely affect any future public offerings of our
equity securities.
Anti-Takeover Provisions
Delaware Law
We are governed by the provisions of Section 203 of the Delaware General
Corporation Law. In general, Section 203 prohibits a public 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 business
combination is approved in a prescribed manner. A "business combination"
includes mergers, asset sales or other transactions resulting in a financial
benefit to the stockholder. 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. The statute could have the
effect of delaying, deferring or preventing a change in our control.
Certificate of Incorporation and Bylaw Provisions
Our certificate of incorporation, which will become effective shortly following
the closing of the offering, provides that our board of directors will be
divided into three classes of directors, with each class serving a staggered
three-year term. The classification system of electing directors may tend to
discourage a third-party from making a tender offer or otherwise attempting to
obtain control of us and may maintain the composition of our current board of
directors, as the classification of the board of directors generally increases
the difficulty of replacing a majority of directors. Our certificate of
incorporation provides that any action required or permitted to be taken by our
stockholders must be effected at a duly called annual or special meeting of
stockholders and may not be effected by any consent in writing. In addition,
our bylaws provide that special meetings of our stockholders may be called only
by the chairman of the board, our chief executive officer, or by the board of
directors pursuant to a resolution adopted by a majority of the total number of
authorized directors.
42
<PAGE>
Our certificate of incorporation also specifies that the authorized number of
directors may be changed only by resolution of the board of directors and does
not include a provision for cumulative voting for directors. Under cumulative
voting, a minority stockholder holding a sufficient percentage of a class of
shares may be able to ensure the election of one or more directors. These and
other provisions contained in our certificate of incorporation and bylaws could
delay or discourage certain types of transactions involving an actual or
potential change in our control or change in our management (including
transactions in which stockholders might otherwise receive a premium for their
shares over then current prices) and may limit the ability of stockholders to
remove current management or approve transactions that stockholders may deem to
be in their best interests and, therefore, could adversely affect the price of
our common stock.
Limitation of Liability and Indemnification
Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. In addition, our bylaws require us to
indemnify our directors and officers, and allow us to indemnify our other
employees and agents, the fullest extent permitted by law.
We have entered into, or prior to the offering will enter into, indemnity
agreements with our directors and executive officers for the indemnification
and advancement of expenses to these persons. We also intend to enter into
these agreements with our future directors and executive officers. We believe
that these provisions and agreements are necessary to attract and retain
qualified directors and executive officers.
At present, there is no pending litigation or proceeding involving any
director, executive officer, employee or agent where indemnification will be
required or permitted. We are not aware of any threatened litigation or
proceeding that might result in a claim for such indemnification. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, executive officers or persons controlling our company
pursuant to the foregoing provisions, we have been informed that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
Transfer Agent and Registrar
We have appointed American Securities Transfer & Trust, Inc. to serve as the
transfer agent and registrar for the common stock.
Listing
We have applied for listing of the common stock on the Nasdaq National Market
under the trading symbol "GNOM".
43
<PAGE>
Shares Eligible for Future Sale
When the offering is completed, we will have a total of 21,663,557 shares of
common stock outstanding. The 6,000,000 shares offered by this prospectus will
be freely tradeable unless they are purchased by our "affiliates," as defined
in Rule 144 under the Securities Act of 1933. Shares purchased by affiliates
may generally only be sold pursuant to an effective registration statement
under the Securities Act or in compliance with Rule 144. The remaining
15,663,557 shares are "restricted," which means they were originally sold in
offerings that were not subject to a registration statement filed with the
Securities and Exchange Commission. These restricted shares may be resold only
through registration under the Securities Act or under an available exemption
from registration, such as provided through Rule 144.
Rule 144
Generally, Rule 144 as currently in effect provides that, beginning 90 days
after the first date of this prospectus, a person who has beneficially owned
shares of our common stock for at least one year would be entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of:
. one percent of the number of shares of common stock then outstanding, which
based on the shares outstanding as of March 13, 2000, will equal
approximately 216,635 shares or
. the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of the
notice on Form 144 with respect to the sale
Rule 144 provides limitation as the manner of sales and imposes requirements
as to notice and the availability of current public information about us.
Under Rule 144(k), a person who has not been one of our affiliates 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, may sell his or her shares without
complying with the manner of sale, public information, volume limitation or
notice provisions of Rule 144. Therefore, unless otherwise restricted,
including by a lock-up agreement, a person who has been a non-affiliate for at
least two years may sell his or her shares in the open market.
One hundred eighty days after the date of this prospectus, 11,421,247 shares
of our common stock will be eligible for sale under Rule 144, including
1,053,121 shares under Rule 144(k), and 901,433 will be eligible for sale
under Rule 701. The remaining shares will be eligible for sale within 180 days
thereafter.
Rule 701
Rule 701 permits any of our employees, officers, directors or consultants who
purchased their shares under a compensatory stock or option plan or other
written agreement prior to the effective date of this offering to sell such
shares under Rule 144 without complying with the holding period, public
information, volume limitation or notice requirement of Rule 144. Holders of
Rule 701 shares may not sell their Rule 701 shares until 90 days after the
date of this prospectus. However, substantially all shares of our common stock
issued under Rule 701 are subject to the lock-up agreements described below.
Registration Rights
The holders of 14,710,185 shares of common stock and of warrants exercisable
into 340,386 shares of the common stock will be entitled to certain rights
with respect to the registration of these shares under the Securities Act.
After these shares are registered, they will be freely tradable.
Lock-Up Agreements
All of our stockholders have entered into lock-up agreements with us
prohibiting them from offering, selling, pledging or otherwise disposing of
their shares for a period of 180 days after the date of this prospectus. In
addition, our directors, officers and other stockholders who together own
shares of common stock have agreed to similar lock-up agreements with the
underwriters prohibiting them from offering, selling, pledging or otherwise
disposing of these shares for the same 180-day period. This generally means
that the stockholders cannot sell these shares during the 180 days following
the date of this prospectus.
44
<PAGE>
Underwriting
We have entered into an underwriting agreement with the underwriters named
below. CIBC World Markets Corp., Dain Rauscher Incorporated and Prudential
Securities Incorporated are acting as representatives of the underwriters.
The underwriting agreement provides for the purchase of a specific number of
shares of common stock by each of the underwriters. The underwriters'
obligations are several, which means that each underwriter is required to
purchase a specified number of shares, but is not responsible for the
commitment of any other underwriter to purchase shares. Subject to the terms
and conditions of the underwriting agreement, each underwriter has severally
agreed to purchase the number of shares of common stock set forth opposite its
name below:
<TABLE>
<CAPTION>
Underwriter Number of Shares
----------- ----------------
<S> <C>
CIBC World Markets Corp..................................
Dain Rauscher Incorporated...............................
Prudential Securities Incorporated.......................
-------------
Total................................................ 6,000,000
=============
</TABLE>
The underwriters have agreed to purchase all of the shares offered by this
prospectus (other than those covered by the over-allotment option described
below) if any are purchased. Under the underwriting agreement, if an
underwriter defaults in its commitment to purchase shares, the commitments of
non-defaulting underwriters may be increased or the underwriting agreement may
be terminated, depending on the circumstances.
The shares should be ready for delivery on or about , 2000 against payment in
immediately available funds. The representatives have advised us that the
underwriters propose to offer the shares directly to the public at the public
offering price that appears on the cover page of this prospectus. In addition,
the representatives may offer some of the shares to other securities dealers at
such price less a concession of $ per share. The underwriters may also allow,
and such dealers may reallow, a concession not in excess of $ per share to
other dealers. After the shares are released for sale to the public, the
representatives may change the offering price and other selling terms at
various times.
We have granted the underwriters an over-allotment option. This option, which
is exercisable for up to 30 days after the date of this prospectus, permits the
underwriters to purchase a maximum of 900,000 additional shares from us to
cover over-allotments. If the underwriters exercise all or part of this option,
they will purchase shares covered by the option at the initial public offering
price that appears on the cover page of this prospectus, less the underwriting
discount. If this option is exercised in full, the total price to public will
be $110.4 million and the total proceeds to us will be $ . The underwriters
have severally agreed that, to the extent the over-allotment option is
exercised, they will each purchase a number of additional shares proportionate
to the underwriter's initial amount reflected in the foregoing table.
The following table provides information regarding the amount of the discount
to be paid to the underwriters by us.
<TABLE>
<CAPTION>
Total without Total with Full
Exercise of Over- Exercise of Over-
Per Share Allotment Option Allotment Option
--------- ----------------- -----------------
<S> <C> <C> <C>
Genomica.................... $ $ $
</TABLE>
We estimate that our total expenses of the offering, excluding the underwriting
discount, will be approximately $1,100,000.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
We, our officers and directors and some other stockholders have agreed to a
180-day "lock-up" with respect to shares of common stock and other
Genomica securities that they beneficially own, including securities that are
convertible into shares of common stock and securities that are exchangeable or
exercisable for shares of common stock. This means that, subject to certain
exceptions, for a period of 180 days following the date of this prospectus, we
and such persons may not offer, sell, pledge or otherwise dispose of these
Genomica securities without the prior written consent of CIBC World Markets
Corp.
The representatives have informed us that they do not expect discretionary
sales by the underwriters to exceed five percent of the shares offered by this
prospectus.
45
<PAGE>
The underwriters have reserved for sale up to shares for employees,
directors and other persons associated with us. These reserved shares will be
sold at the initial public offering price that appears on the cover page of
this prospectus. The number of shares available for sale to the general public
in the offering will be reduced to the extent reserved shares are purchased by
such persons. The underwriters will offer to the general public, on the same
terms as other shares offered by this prospectus, any reserved shares that are
not purchased by such persons.
There is no established trading market for the shares. The offering price for
the shares has been determined by us and the representatives, based on the
following factors:
. estimates of our business potential and earnings prospects
. an assessment of our management
. consideration of the above factors in relation to market valuations of
companies in related businesses
Rules of the Securities and Exchange Commission may limit the ability of the
underwriters to bid for or purchase shares before the distribution of the
shares is completed. The underwriters may, however, engage in the following
activities in accordance with the rules:
. Stabilizing transactions--The representatives may make bids or purchases
for the purpose of pegging, fixing or maintaining the price of the
shares, so long as stabilizing bids do not exceed a specified maximum.
. Over-allotments and syndicate covering transactions--The underwriters may
create a short position in the shares by selling more shares than are set
forth on the cover page of this prospectus. If a short position is
created in connection with the offering, the representatives may engage
in syndicate covering transactions by purchasing shares in the open
market. The representatives may also elect to reduce any short position
by exercising all or part of the over-allotment option.
. Penalty bids--If the representatives purchase shares in the open market
in a stabilizing transaction or syndicate covering transaction, they may
reclaim a selling concession from the underwriters and selling group
members who sold those shares as part of this offering.
Stabilization and syndicate covering transactions may cause the price of the
shares to be higher than it would be in the absence of such transactions. The
imposition of a penalty bid might also have an effect on the price of the
shares if it discourages resales of the shares.
Neither we nor the underwriters makes any representation or prediction as to
the effect that the transactions described above may have on the price of the
shares. These transactions may occur on the Nasdaq National Market or
otherwise. If such transactions are commenced, they may be discontinued
without notice at any time.
One of the representatives, Prudential Securities Incorporated, facilitates
the making of new issues online through its PrudentialSecurities.com division.
Clients of Prudential AdvisorSM may view offering terms and a prospectus
online and place orders through their financial advisors. Other than the
prospectus in electronic format, the information on the Prudential Securities
Incorporated website is not part of this prospectus or the registration
statement of which this prospectus forms a part and has not been approved or
endorsed by us or any underwriter in such capacity and should not be relied on
by prospective investors.
Legal Matters
Certain legal matters with respect to the legality of the issuance of the
shares of common stock offered by this prospectus will be passed upon for us
by Cooley Godward llp, Boulder, Colorado. An investment partnership affiliated
with Cooley Godward llp owns 69,444 shares of our preferred stock, which will
convert into 23,148 shares of our common stock upon the completion of this
offering. Certain legal matters will be passed upon for the underwriters by
McDermott, Will & Emery.
Experts
The financial statements included in this prospectus and elsewhere in this
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and
are included herein in reliance upon the authority of said firm as experts in
giving said reports.
46
<PAGE>
Where You Can Find More Information
We have filed a registration statement on Form S-1 with the Securities and
Exchange Commission in connection with the offering. In addition, upon
completion of the offering, we will be required to file annual, quarterly and
current reports, proxy statements and other information with the Securities and
Exchange Commission. You may read and copy the registration statement or any
other documents filed by us at the Securities and Exchange Commission's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the Public Reference Room. Our Securities and Exchange
Commission filings are also available to the public at the Securities and
Exchange Commission's Internet site at "http://www.sec.gov."
This prospectus is part of the registration statement and does not contain all
of the information included in the registration statement. Whenever a reference
is made in this prospectus to any contract or other document of Genomica, the
reference may not be complete and you should refer to the exhibits that are a
part of the registration statement for a copy of the contract or document.
After the offering, we expect to provide annual reports to our stockholders
that include financial information examined and reported on by our independent
auditors.
47
<PAGE>
Index to Financial Statements
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Arthur Andersen LLP, Independent Public Accountants.............. F-1
Balance Sheets............................................................. F-2
Statements of Operations................................................... F-3
Statements of Stockholders' Equity......................................... F-4
Statements of Cash Flows................................................... F-5
Notes to Financial Statements.............................................. F-7
</TABLE>
<PAGE>
After the reverse stock split discussed in Note 2 to the Company's financial
statements is effected, we expect to be in a position to render the following
audit report.
Arthur Andersen LLP
Denver, Colorado,
March 13, 2000.
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Genomica Corporation:
We have audited the accompanying balance sheets of Genomica Corporation (a
Delaware corporation) as of December 31, 1998 and 1999, and the related
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the 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 provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Genomica Corporation as of
December 31, 1998 and 1999, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
Denver, Colorado,
March 13, 2000 (except
with respect to the
reverse stock split
discussed in Note 2, as
to which the date is
, 2000).
F-1
<PAGE>
GENOMICA CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------
1998 1999
----------- ------------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 5,222,549 $ 3,518,570
Short-term investments................................. -- 2,824,763
Accounts receivable-trade.............................. -- 360,000
Prepaid expenses and other............................. 53,151 148,037
----------- ------------
Total current assets............................... 5,275,700 6,851,370
----------- ------------
PROPERTY AND EQUIPMENT, net.............................. 349,394 673,479
OTHER ASSETS............................................. 24,309 28,786
----------- ------------
Total assets....................................... $ 5,649,403 $ 7,553,635
=========== ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable....................................... $ 229,615 $ 318,206
Accrued compensation and employee benefits............. 93,593 289,538
Current portion of note payable........................ 166,667 --
Current portion of capital lease obligations........... 44,435 130,142
Deferred revenue....................................... 123,333 829,601
Other accrued expenses................................. 49,046 37,429
----------- ------------
Total current liabilities.......................... 706,689 1,604,916
----------- ------------
LONG-TERM DEBT:
Capital lease obligations, net of current portion...... 70,556 268,157
----------- ------------
Total liabilities.................................. 777,245 1,873,073
----------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Convertible preferred stock, $.001 par value,
26,785,400 and 37,688,178 shares authorized,
respectively:
Series A, 12,533,676 shares issued and outstanding
(liquidation value--$7,550,209)..................... 7,504,266 7,504,266
Series B, 8,757,516 and 18,826,959 shares issued and
outstanding, respectively (liquidation value--
$6,305,411 and $13,555,410, respectively)........... 5,898,515 12,369,208
Common stock, $.001 par value, 34,000,000 and
44,000,000 shares authorized, 1,105,859 and 1,140,073
shares issued and outstanding, respectively........... 1,106 1,140
Treasury stock, at cost................................ (182) (182)
Additional paid-in capital............................. 25,103 31,228
Options and warrants................................... 82,298 7,764,767
Deferred compensation.................................. -- (5,772,446)
Accumulated deficit.................................... (8,638,948) (16,217,419)
----------- ------------
Total stockholders' equity......................... 4,872,158 5,680,562
----------- ------------
Total liabilities and stockholders' equity......... $ 5,649,403 $ 7,553,635
=========== ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-2
<PAGE>
GENOMICA CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For The Years Ended December 31,
-------------------------------------
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE:
Software licenses and services......... $ -- $ 196,892 $ 622,230
Research grants........................ -- -- 159,100
----------- ----------- -----------
Total revenue........................ -- 196,892 781,330
----------- ----------- -----------
OPERATING EXPENSES:
Costs of revenue....................... -- 141,490 447,057
Research and development............... 1,681,868 2,327,569 4,868,577
Selling and marketing.................. 495,068 633,551 1,722,141
General and administrative............. 578,952 884,267 1,723,364
----------- ----------- -----------
Total operating expenses............. 2,755,888 3,986,877 8,761,139
----------- ----------- -----------
Operating loss...................... (2,755,888) (3,789,985) (7,979,809)
INTEREST INCOME......................... 37,219 90,325 419,279
INTEREST EXPENSE........................ (19,581) (55,214) (17,941)
----------- ----------- -----------
NET LOSS................................ $(2,738,250) $(3,754,874) $(7,578,471)
=========== =========== ===========
NET LOSS PER SHARE, basic and diluted... $ (2.80) $ (3.81) $ (7.13)
=========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING, basic and diluted......... 976,532 986,015 1,062,392
=========== =========== ===========
PRO FORMA NET LOSS PER SHARE
(UNAUDITED--NOTE 2):
Net loss per share, basic and diluted. $ (0.68)
===========
Weighted average common shares
outstanding, basic and diluted....... 11,120,510
===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
GENOMICA CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Convertible Preferred Stock
--------------------------------------------
Series A Series B Common Stock Treasury Stock Additional Options
--------------------- ---------------------- ---------------- --------------- Paid-In and
Shares Amount Shares Amount Shares Amount Shares Amount Capital Warrants
---------- ---------- ---------- ----------- --------- ------ ------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances,
December 31,
1996........... 3,320,400 $2,000,209 -- $ -- 976,532 $ 977 (60,764) $ (182) $ 1,953 $ --
Sale of Series A
preferred stock
in February,
June and
October 1997
for cash of
$0.6024 per
share, net of
offering costs
of $45,943..... 8,383,256 5,004,057 -- -- -- -- -- -- -- --
Conversion of
notes payable
in March 1997
at $0.6024 per
share.......... 830,020 500,000 -- -- -- -- -- -- -- --
Net loss........ -- -- -- -- -- -- -- -- -- --
---------- ---------- ---------- ----------- --------- ------ ------- ------ ------- ----------
Balances,
December 31,
1997........... 12,533,676 7,504,266 -- -- 976,532 977 (60,764) (182) 1,953 --
Sale of Series B
preferred stock
in December
1998 for cash
of $0.72 per
share, net of
offering costs
of $332,264.... -- -- 7,347,927 4,958,243 -- -- -- -- -- --
Issuance of
warrants to
purchase common
stock.......... -- -- -- -- -- -- -- -- -- 82,298
Conversion of
notes payable
in December
1998 at $0.72
per share...... -- -- 1,409,589 940,272 -- -- -- -- -- --
Issuance of
common stock
upon exercise
of options..... -- -- -- -- 129,327 129 -- -- 23,150 --
Net loss........ -- -- -- -- -- -- -- -- -- --
---------- ---------- ---------- ----------- --------- ------ ------- ------ ------- ----------
Balances,
December 31,
1998........... 12,533,676 7,504,266 8,757,516 5,898,515 1,105,859 1,106 (60,764) (182) 25,103 82,298
Sale of Series B
preferred stock
in February
1999 for cash
of $0.72 per
share, net of
offering costs
of $538,180.... -- -- 10,069,443 6,711,819 -- -- -- -- -- --
Issuance of
warrants to
purchase common
stock.......... -- -- -- (241,126) -- -- -- -- -- 241,126
Issuance of
common stock
upon exercise
of options..... -- -- -- -- 34,214 34 -- -- 6,125 --
Deferred
compensation... -- -- -- -- -- -- -- -- -- 7,441,343
Amortization of
deferred
compensation... -- -- -- -- -- -- -- -- -- --
Net loss........ -- -- -- -- -- -- -- -- -- --
---------- ---------- ---------- ----------- --------- ------ ------- ------ ------- ----------
Balances,
December 31,
1999........... 12,533,676 $7,504,266 18,826,959 $12,369,208 1,140,073 $1,140 (60,764) $ (182) $31,228 $7,764,767
========== ========== ========== =========== ========= ====== ======= ====== ======= ==========
<CAPTION>
Deferred Accumulated
Compensation Deficit Total
------------- ------------- ------------
<S> <C> <C> <C>
Balances,
December 31,
1996........... $ -- $ (2,145,824) $ (142,867)
Sale of Series A
preferred stock
in February,
June and
October 1997
for cash of
$0.6024 per
share, net of
offering costs
of $45,943..... -- -- 5,004,057
Conversion of
notes payable
in March 1997
at $0.6024 per
share.......... -- -- 500,000
Net loss........ -- (2,738,250) (2,738,250)
------------- ------------- ------------
Balances,
December 31,
1997........... -- (4,884,074) 2,622,940
Sale of Series B
preferred stock
in December
1998 for cash
of $0.72 per
share, net of
offering costs
of $332,264.... -- -- 4,958,243
Issuance of
warrants to
purchase common
stock.......... -- -- 82,298
Conversion of
notes payable
in December
1998 at $0.72
per share...... -- -- 940,272
Issuance of
common stock
upon exercise
of options..... -- -- 23,279
Net loss........ -- (3,754,874) (3,754,874)
------------- ------------- ------------
Balances,
December 31,
1998........... -- (8,638,948) 4,872,158
Sale of Series B
preferred stock
in February
1999 for cash
of $0.72 per
share, net of
offering costs
of $538,180.... -- -- 6,711,819
Issuance of
warrants to
purchase common
stock.......... -- -- --
Issuance of
common stock
upon exercise
of options..... -- -- 6,159
Deferred
compensation... (7,441,343) -- --
Amortization of
deferred
compensation... 1,668,897 -- 1,668,897
Net loss........ -- (7,578,471) (7,578,471)
------------- ------------- ------------
Balances,
December 31,
1999........... $(5,772,446) $(16,217,419) $ 5,680,562
============= ============= ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
GENOMICA CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For The Years Ended December 31,
--------------------------------------
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.............................. $(2,738,250) $(3,754,874) $ (7,578,471)
Adjustments to reconcile net loss to
net cash used in operating
activities--
Depreciation......................... 69,422 176,926 253,016
Amortization of discount on
convertible debt.................... -- 7,666 --
Amortization of discount on short-
term investments.................... -- -- 38,053
Preferred stock issued for accrued
interest on convertible debt........ -- 14,904 --
Amortization of deferred
compensation........................ -- -- 1,668,897
Changes in operating assets and
liabilities--
Accounts receivable................. -- -- (360,000)
Other assets........................ 2,168 (18,127) (99,363)
Accounts payable.................... 47,682 83,848 88,591
Accrued compensation and employee
benefits........................... 93,825 (8,841) 195,945
Deferred revenue.................... -- 123,333 706,268
Other accrued expenses.............. 107,379 (109,652) (11,617)
----------- ----------- ------------
Net cash used in operating
activities........................ (2,417,774) (3,484,817) (5,098,681)
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Redemptions of held-to-maturity
securities........................... -- 2,462,412 16,480,000
Purchases of held-to-maturity
securities........................... (2,462,412) -- (19,342,816)
Purchases of property and equipment... (209,071) (157,095) (223,480)
----------- ----------- ------------
Net cash provided by (used in)
investing activities.............. (2,671,483) 2,305,317 (3,086,296)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital leases............ (4,683) (11,239) (70,313)
Proceeds from issuance of loan........ 400,000 -- --
Principal payments on loan............ (33,333) (200,000) (166,667)
Proceeds from issuance of convertible
debt and warrants.................... -- 1,000,000 --
Proceeds from issuance of preferred
stock................................ 5,050,000 5,290,507 7,249,999
Costs related to issuance of preferred
stock................................ (45,943) (332,264) (538,180)
Proceeds from exercise of common stock
options.............................. -- 23,279 6,159
----------- ----------- ------------
Net cash provided by financing
activities........................ 5,366,041 5,770,283 6,480,998
----------- ----------- ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS...................... 276,784 4,590,783 (1,703,979)
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR.................................. 354,982 631,766 5,222,549
----------- ----------- ------------
CASH AND CASH EQUIVALENTS, END OF YEAR. $ 631,766 $ 5,222,549 $ 3,518,570
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
GENOMICA CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For The Years Ended
December 31,
------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.............................. $19,581 $32,644 $ 17,941
======= ======= ========
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING
ACTIVITIES:
Capital lease obligations incurred to acquire
equipment.......................................... $33,716 $97,197 $353,621
======= ======= ========
Warrants issued for offering costs.................. $ -- $ -- $241,126
======= ======= ========
</TABLE>
- --------
As discussed in Note 4, in 1997, the Company converted a $500,000 note payable
to a stockholder into shares of Series A Preferred Stock.
As discussed in Note 4, in 1998, the Company converted $925,368 of debt, net of
unamortized discount of $74,632, plus accrued interest of $14,904 into
1,409,589 shares of Series B Preferred Stock.
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. Organization and Business:
Genomica Corporation (the "Company"), a Delaware corporation, is a provider
of software products and services that enable pharmaceutical and biotechnology
researchers to accelerate the drug discovery and development process. The
Company's first product, Discovery Manager, offers a broad set of software
tools for genomic researchers.
The Company was incorporated in September 1995 and began operations shortly
thereafter. Since its inception, the Company has incurred significant losses.
Although the Company anticipates that funds from product licenses, working
capital at December 31, 1999 and the proceeds of its March 2000 private
placement (Note 11) will be sufficient to fund its operations through at least
December 31, 2000, additional financing may be needed after that date by the
Company to fund its operations, continue the commercial development of its
products and develop its sales and marketing infrastructure. The Company may
also seek additional capital in 2000 to accelerate these efforts. There is no
guarantee that such financing will be available when needed upon terms
acceptable to the Company. Operations of the Company are subject to certain
risks and uncertainties including, among others, uncertainty of product
development, inexperience in marketing or selling its product, technological
uncertainty, competition and dependence on key personnel.
2. Summary of Significant Accounting Policies:
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates may 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 revenue and expenses
during the reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk are primarily cash and cash equivalents, accounts
receivable and investments in high-grade corporate bonds and commercial paper.
The Company maintains its cash balances in the form of bank demand deposits and
money market accounts with financial institutions that management believes are
creditworthy. Accounts receivable are typically unsecured and are concentrated
in the pharmaceutical industry. Accordingly, the Company may be exposed to
credit risk generally associated with pharmaceutical and biotechnology
companies. Two customers (Note 8) accounted for all of the Company's trade
accounts receivable as of December 31, 1999. The Company has no significant
financial instruments with off-balance sheet risk of accounting loss, such as
foreign exchange contracts, option contracts or other foreign currency hedging
arrangements.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
F-7
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
Fair Value of Financial Instruments
The Company's financial instruments consist of cash and cash equivalents,
short-term investments, trade receivables and payables and capital leases. The
carrying values of the cash equivalents, short-term investments, trade
receivables and payables approximate their fair values.
Investments in Marketable Securities
The Company's investments in corporate debt securities are classified as
held-to-maturity and are stated at amortized cost. The investments had the
following values at December 31, 1999:
<TABLE>
<CAPTION>
Gross Gross
Amortized/ Accrued Unrealized Unrealized
Accreted Cost Interest Holding Gains Holding Losses Fair Value
------------- -------- ------------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Corporate debt
securities, maturing
within one year....... $2,824,763 $51,599 $(51,599) $-- $2,824,763
========== ======= ======== ==== ==========
</TABLE>
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Impairment is indicated when the carrying amount of the asset
is greater than amounts recoverable from future undiscounted cash flows.
Revenue Recognition
The Company generates revenue from the license and related maintenance of
its proprietary software products. The Company recognizes revenue when there is
persuasive evidence of an arrangement, delivery has occurred, collection is
probable, and the fee is fixed or determinable. If an acceptance period exists,
license revenues are recognized upon the earlier of customer acceptance or the
expiration of the acceptance period. The Company generally bundles its license
fees and subsequent maintenance, consisting of software updates, content
updates and support. The Company has concluded that there is no basis to
allocate the total license and maintenance fees charged in its software
arrangements to these various elements of the arrangement as the Company
currently does not offer the license fee and maintenance for sale separately.
Accordingly, revenue is generally deferred and recognized ratably over the term
of the arrangement. Certain software arrangements include other elements, such
as services and training. If present, such elements are unbundled based on
vendor-specific objective evidence of their fair value and the related revenue
is recognized when those elements are delivered.
The Company believes its current revenue recognition policies and practices
are consistent with the provisions of Statement of Position 97-2, "Software
Revenue Recognition" ("SOP 97-2"), as amended by SOP 98-4 and SOP 98-9, which
were issued by the American Institute of Certified Public Accountants.
Implementation guidelines for these standards, as well as potential new
standards, could lead to unanticipated changes in the Company's current revenue
recognition policies. Such changes could affect the timing of the Company's
future revenue and results of operations.
F-8
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
Research and Development and Software Development Costs
Research and development costs are charged to expense as incurred and
consist of salaries and other direct costs. Statement of Financial Accounting
Standards No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed," requires the capitalization of certain software
development costs subsequent to the establishment of technological feasibility.
The Company's software is deemed to be technologically feasible at the point a
working model of the software product is developed. Through December 31, 1999,
for products developed by the Company, the period since attainment of
technological feasibility has been brief and qualifying costs were not
significant, and, accordingly, the Company has not capitalized any qualifying
software development costs in the accompanying financial statements.
Income Taxes
The current provision for income taxes represents actual or estimated
amounts payable on tax return filings each year. Deferred tax assets and
liabilities are recorded for the estimated future tax effects of temporary
differences between the tax bases of assets and liabilities and amounts
reported in the accompanying balance sheets, and for operating loss and tax
credit carryforwards. The change in deferred tax assets and liabilities for the
period measures the deferred tax provision or benefit for the period. Effects
of changes in enacted tax laws on deferred tax assets and liabilities are
reflected as adjustments to the tax provision or benefit in the period of
enactment. The Company's deferred tax assets have been reduced by a valuation
allowance to the extent it is more likely than not that some or all of the
deferred tax assets will not be realized.
Stock-Based Compensation
The Company accounts for its employee stock option plans in accordance with
the provisions of Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," ("APB No. 25"), and related interpretations. The
Company adopted the disclosure-only requirements of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS
No. 123"), which allows entities to continue to apply the provision of APB No.
25 for transactions with employees and provide pro forma disclosures for
employee stock grants made as if the fair value-based method of accounting in
SFAS No. 123 had been applied to these transactions. Any deferred stock
compensation calculated according to APB No. 25 is amortized over the vesting
period of the individual options, generally four or five years, in accordance
with Financial Accounting Standards Board ("FASB") Interpretation No. 28,
"Accounting for Stock Appreciation Rights and Other Variable Stock Option and
Awards Plans."
The Company applies the provisions of SFAS No. 123 and related
interpretations to stock-based compensation to non-employees.
Reverse Stock Split
On March 13, 2000, the Company's Board of Directors authorized a one for
three reverse stock split of its common stock to be effective upon the
effective date of a Registration Statement on Form S-1 filed by the Company
with the Securities and Exchange Commission (the "SEC"). All common share
amounts, equivalent common share amounts and per share amounts have been
adjusted retroactively to reflect the reverse stock split.
Net Earning or Loss Per Share
The Company presents basic and diluted earnings or loss per share in
accordance with Statement of Financial Accounting Standards No. 128 "Earnings
per Share" ("SFAS No. 128"), which establishes standards for computing and
presenting basic and diluted earnings per share. Under this statement, basic
earnings or loss per share is computed by dividing the net earnings or loss by
the weighted average number of shares of common stock outstanding. Diluted
earnings or loss per share is determined by dividing the net earnings or loss
by the sum of (1) the weighted average number of common shares outstanding, (2)
if not anti-dilutive, the number of shares of convertible preferred stock as if
converted upon issuance, and (3) if not anti-dilutive, the effect of
outstanding stock options and warrants determined utilizing the treasury stock
method.
F-9
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
For all periods presented, the effects of the convertible preferred stock
and stock options were excluded from the calculation of diluted loss per share
since the result would have been anti-dilutive. The dilutive effect of common
stock options and warrants, without regard to the treasury stock method, that
are excluded from the calculation of diluted loss per share because their
effect is anti-dilutive totaled 413,410 in 1997, 655,027 in 1998 and 1,414,111
in 1999.
Pro Forma Net Loss Per Share (Unaudited)
Pro forma net loss per share for the year ended December 31, 1999 is
computed using the net loss and weighted average number of common shares
outstanding, including the pro forma effects of the assumed conversion of the
Company's Series A and B convertible preferred stock into shares of the
Company's common stock as if such conversion occurred on January 1, 1999, or at
date of original issuance, if later. The resulting pro forma adjustment
includes an increase in the weighted average shares used to compute basic and
diluted net loss per share of 10,058,118 shares for the year ended December 31,
1999. The pro forma effects of these transactions are unaudited.
Comprehensive Income
Effective January 1, 1998, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130
establishes standards for reporting comprehensive income and its components in
financial statements. Comprehensive income includes all changes in equity
during a period from non-owner sources. During each of the three years ended
December 31, 1999 and for the cumulative period from inception, the Company has
not had any transactions that are required to be reported as adjustments to
determine comprehensive income (loss).
Reportable Segments
Statement of Financial Accounting Standards No. 131, "Disclosure About
Segments of and Enterprise and Related Information," establishes standards for
the reporting of information about operating segments. Since its inception, the
Company has conducted its operations in one operating segment.
Recent Accounting Pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
No. 133"). The Statement establishes accounting and reporting standards for
derivative financial instruments and hedging activities related to those
instruments as well as other hedging activities. It requires an entity to
recognize all derivatives as either assets or liabilities in the statement of
financial position and measures those instruments at fair value. In June 1999,
the FASB issued Statement of Financial Accounting Standards No. 137,
"Accounting for Derivative Instruments and Hedging Activities--Deferral of the
Effective Date of SFAS Statement No. 133--an amendment of FASB Statement No.
133" ("SFAS No. 137"). SFAS No. 137 delays the effective date of SFAS No. 133
to fiscal quarters and fiscal years beginning after June 15, 2000. Since
inception, the Company has not entered into arrangements that would fall under
the scope of SFAS No. 133 and thus, management believes that SFAS No. 133 will
not significantly affect its financial condition and results of operations.
F-10
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
In December 1999, the SEC issued Staff Accounting Bulletin No. 101, "Revenue
Recognition" ("SAB 101"). SAB 101 provides the SEC Staff's views in applying
generally accepted accounting principles to selected revenue recognition
issues. The guidance in SAB 101 must be implemented by the Company during its
first fiscal quarter of fiscal 2000. The Company believes it is in compliance
with the guidelines provided in SAB 101, and thus, management believes that the
adoption of SAB 101 will not significantly affect its results of operations.
3. Property and Equipment:
Property and equipment consists of the following at December 31:
<TABLE>
<CAPTION>
1998 1999
--------- ----------
<S> <C> <C>
Computer and office equipment...................... $ 540,201 $ 953,361
Furniture and fixtures............................. 18,379 123,218
Software........................................... 4,792 63,894
Leasehold improvements............................. 47,657 47,657
--------- ----------
611,029 1,188,130
Less--Accumulated depreciation..................... (261,635) (514,651)
--------- ----------
$ 349,394 $ 673,479
========= ==========
</TABLE>
Property and equipment are recorded at cost. Depreciation is computed using the
straight-line method based on estimated useful lives ranging from three to five
years. Maintenance and repairs are expensed as incurred. Depreciation expense
was $69,422, $176,926 and $253,016 for the years ended December 31, 1997, 1998
and 1999, respectively.
4. Debt:
Convertible Notes Payable
In December 1996, the Company issued a $500,000 convertible promissory note
with an interest rate of 5.8% to Falcon Technology Partners. In conjunction
with the sale of the Series A Preferred Stock on February 28, 1997, the note
was converted in March 1997 into 830,020 shares of Series A Preferred Stock and
accrued interest of $6,753 was paid in full.
In October 1998, the Company issued $1,000,000 of debt securities with an
interest rate of 8% to various investors. The notes included warrants to
purchase 208,333 shares of Series B Preferred Stock at $0.72 per share. These
warrants were valued at $82,298 using the Black-Scholes option pricing model.
The warrants are considered to be an issuance of equity and the Company has
attributed a portion of the proceeds from the debt offering to the fair value
of the warrants and recorded an initial discount to the carrying value of the
related debt in the amount of $82,298. The discount was amortized using the
effective interest-rate method over the two-year term of the note.
In conjunction with the sale of the Series B Preferred Stock on December 16,
1998, the net amount of the notes of $925,368 and accrued interest of $14,904
were converted into 1,409,589 shares of Series B Preferred Stock.
Loan Agreement
On September 17, 1997, the Company entered into a Bridge Loan and Security
Agreement ("Loan Agreement") with a bank. Under the terms of the Loan
Agreement, the outstanding advances of $400,000 were converted into a term loan
("Term Loan") on October 9, 1997. The principal and interest on the Term Loan
was due in monthly installments through October 9, 1999. Interest accrued at a
rate equal to the bank's prime rate plus 1.5% (9.25% at December 31, 1998), and
the Loan Agreement was collateralized by assets of the Company. On October 9,
1999, the Term Loan and all interest was paid in full.
F-11
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
Capital Lease Obligations
The Company has entered into four capital lease obligations with imputed
interest rates ranging from 8.4% to 15.3%. These leases are collateralized by
the leased assets which have a net book value of $111,930 and $378,753 at
December 31, 1999 and 1998, respectively.
At December 31, 1999, future payments under capital lease obligations are as
follows:
<TABLE>
<S> <C>
2000........................................................... $ 178,735
2001........................................................... 168,120
2002........................................................... 142,181
---------
489,036
Less--amount related to interest............................... (90,737)
---------
398,299
Less--current portion.......................................... (130,142)
---------
$ 268,157
=========
</TABLE>
5. Stockholders' Equity:
Authorized Shares
In December 1998, the Company increased the number of authorized shares of
common and preferred stock to 34,000,000 and 26,785,400, respectively. In
February 1999, the Company increased the number of authorized shares of common
stock and preferred stock to 44,000,000 and 37,688,178, respectively. On March
13, 2000, the Company increased the number of authorized shares of common stock
and preferred stock to 65,000,000 and 47,938,179 shares, respectively.
Series A and Series B Convertible Preferred Stock
The Company is authorized to issue preferred stock in various series with
rights and privileges as determined by the Board of Directors.
Liquidation Preference
In the event of liquidation, holders of Series A and Series B Preferred
Stock would be entitled to receive in preference to any holders of the
Company's common stock an amount equal to the greater of (i) $0.6024 per share
and $0.72 per share, respectively, plus all accrued or other declared but
unpaid dividends or (ii) such an amount per share as would have been payable
had all shares of Series A and Series B Preferred Stock been converted to the
Company's common stock immediately prior to such liquidation, provided that a
license agreement with a related party of the Company may not be distributed to
the Series A Preferred Stock (Note 7). Remaining assets, if any, would be
distributed to common stockholders.
Conversion Rights
Each share of Series A and Series B Preferred Stock is initially convertible
into one share of common stock. The conversion rate will adjust to 0.3333
shares of common stock per share of preferred held to reflect the common stock
split to be completed upon the effective date of a Registration Statement on
Form S-1 filed by the Company with the SEC. Each share of Series A and Series B
Preferred Stock will be automatically converted into common stock upon the
closing of a $5,000,000 and $15,000,000, respectively, firmly underwritten
public offering of at least $8.00 per share.
Voting Rights
Each holder of Series A and Series B Preferred Stock is entitled to the
number of votes equal to the number of shares of the Company's common stock
into which such shares of Series A and Series B Preferred Stock could be
converted. The holders of Series A Preferred Stock are entitled to elect four
out of the six members of the Board of Directors.
F-12
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
Dividend Rights
The holders of the Series A and B Preferred Stock are not entitled to
receive dividends, except as declared, and at such amounts per share as may be
specified by the Board of Directors. No dividends are to be paid on any common
stock unless a dividend is paid with respect to all outstanding shares of
Series A and B Preferred Stock in an amount equal to or greater than the
aggregate amount of such dividends for all shares of common stock into which
the Series A and B Preferred Stock could then be converted into. As of December
31, 1999, the Company had not declared or paid any dividends.
Stock Option Plan
In May 1996, the Company established the 1996 Stock-Based Incentive
Compensation Plan (the "Plan") under which incentive and nonqualified stock
options may be granted to employees, directors and independent contractors. As
amended, an aggregate of 1,666,667 shares of common stock are reserved for
issuance under the Plan. The exercise price per share of each option granted
will not be less than 110% of the fair market value of the stock in the case of
incentive stock options granted to persons owning 10% or more of the voting
power of the Company, as defined, and otherwise shall not be less than 100% of
the fair market value of the stock. Options generally vest over a four or five-
year term. The exercise period is not more than five years from the date of
grant in the case of incentive stock options granted to persons owning 10% or
more of the voting power of the Company and otherwise not more than ten years.
During the year ended December 31, 1999, in connection with the grant of
certain stock options to employees, the Company recorded deferred stock-based
compensation of $7,441,343, representing the difference between the exercise
price and the deemed fair value (for financial reporting purposes) of the
Company's common stock on the date these stock options were granted. Deferred
compensation is included as a component of stockholders' equity and is being
amortized in accordance with FASB Interpretation No. 28 over the vesting
periods of the related options, which is generally four or five years. Stock
compensation expense recognized for the year ended December 31, 1999, and
remaining compensation expense to be recognized is as follows:
<TABLE>
<CAPTION>
Deferred Stock Expense Unamortized Deferred Stock Expense To Be Recognized
Recognized During During the Years Ending December 31,
The Year Ended ----------------------------------------------------
December 31, 1999 2000 2001 2002 2003
---------------------- ------------- ------------- ------------------------
<S> <C> <C> <C> <C> <C>
Research and
development............ $ 846,131
Selling and marketing... 85,114
General and
administrative......... 737,652
----------
$1,668,897 $ 3,569,612 $ 1,354,324 $ 662,280 $ 186,230
========== ============= ============= =========== ===========
</TABLE>
Restricted Stock
In 1998, the Company issued 112,067 shares of restricted common stock under
the Plan. The holders of such shares of restricted common stock, generally
executives of the Company, have entered into Restricted Stock Purchase
Agreements under which the Company has the right to repurchase unvested common
shares at the original issuance price upon termination of these individuals'
business relationships with the Company. Restrictions on these common shares
lapse over periods ranging from nineteen months to four years, and such lapsing
is subject to acceleration under certain conditions. At December 31, 1998 and
1999, restrictions had lapsed with regard to 39,951 and 105,707 of these
shares, respectively.
Pro Forma Disclosures
SFAS No. 123 defines a fair value-based method of accounting for stock-based
compensation plans. An entity may continue to measure compensation cost for
options granted to employees using the intrinsic value-based method prescribed
by APB No. 25, provided that pro forma disclosures are made of net income or
loss, assuming the fair value-based method of SFAS No. 123 had been applied.
F-13
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
The Company has elected to account for its stock-based employee compensation
plans under APB No. 25; accordingly, for purposes of the pro forma disclosures
presented below, the Company has computed the fair values of all options
granted during 1997, 1998 and 1999 using the Black-Scholes pricing model and
the following weighted average assumptions:
<TABLE>
<CAPTION>
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
Risk-free interest rate........................ 5.55% 5.23% 5.61%
Expected lives................................. 5 years 5 years 4 years
Expected volatility............................ 0.001% 0.001% 0.001%
Expected dividend yield........................ 0% 0% 0%
</TABLE>
Cumulative compensation cost recognized in pro forma net income or loss with
respect to options that are forfeited prior to vesting is adjusted as a
reduction of pro forma compensation expense in the period of forfeiture.
The total fair value of options granted to employees was computed to be
$19,366, $15,885 and $7,541,587 for the years ended December 31, 1997, 1998 and
1999, respectively. Pro forma stock-based compensation, net of the amounts
recorded for amortization of deferred compensation and the effect of
forfeitures, was $6,718, $12,192 and $26,068 for the years ended December 31,
1997, 1998 and 1999, respectively.
If the Company had accounted for its stock-based compensation plans in
accordance with SFAS No. 123, the Company's net loss would have been reported
as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Net loss:
As reported...................... $(2,738,250) $(3,754,874) $(7,578,471)
=========== =========== ===========
Pro forma........................ $(2,744,968) $(3,767,066) $(7,604,539)
=========== =========== ===========
Net loss per share:
As reported...................... $ (2.80) $ (3.81) $ (7.13)
=========== =========== ===========
Pro forma........................ $ (2.81) $ (3.82) $ (7.16)
=========== =========== ===========
</TABLE>
A summary of all employee options activity under the Plan for the years
ended December 31, 1997, 1998 and 1999 is as follows:
<TABLE>
<CAPTION>
Weighted
Number of Average
Options Exercise Price
--------- --------------
<S> <C> <C>
Outstanding at December 31, 1996................ 55,000 $0.18
Granted....................................... 307,575 $0.18
Forfeited..................................... (73,998) $0.18
---------
Outstanding at December 31, 1997................ 288,577 $0.18
Granted....................................... 283,099 $0.18
Forfeited..................................... (13,248) $0.18
Exercised..................................... (112,400) $0.18
---------
Outstanding at December 31, 1998................ 446,028 $0.18
Granted....................................... 697,397 $0.18
Forfeited..................................... (105,487) $0.18
Exercised..................................... (34,214) $0.18
---------
Outstanding at December 31, 1999................ 1,003,724 $0.18
=========
</TABLE>
F-14
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
As of December 31, 1997, 1998 and 1999, 50,459, 106,465 and 261,991 of the
above options were exercisable, respectively, with weighted average exercise
prices of $0.18, $0.18 and $0.18, respectively.
The following table summarizes the weighted average exercise prices of
options granted during the years ended December 31, 1997, 1998 and 1999.
The table includes options for common stock whose exercise price was less
than the fair market value, for financial reporting purposes, of the underlying
common stock at the date of grant and equal to the fair market value at the
date of grant:
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
EXERCISE PRICE:
Less than fair market value--
Number of options......................... -- -- 697,397
======== ======== ========
Weighted average exercise price........... $ -- $ -- $ 0.18
======== ======== ========
Weighted average fair value............... $ -- $ -- $ 10.73
======== ======== ========
Equal to fair market value--
Number of options......................... 307,575 283,099 --
======== ======== ========
Weighted average exercise price........... $ 0.18 $ 0.18 $ --
======== ======== ========
Weighted average fair value............... $ 0.06 $ 0.06 $ --
======== ======== ========
</TABLE>
The following table summarizes information about employee stock options
outstanding and exercisable under the Plan at December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------- ---------------------
Number of Weighted Number
Options Average Weighted Exercisable Weighted
Outstanding at Remaining Average At Average
Exercise December 31, Contractual Exercise December 31, Exercise
Price 1999 Life in Years Price 1999 Price
-------- -------------- ------------- -------- ------------ --------
<S> <C> <C> <C> <C> <C>
$0.18 1,003,724 8.84 $0.18 261,991 $0.18
</TABLE>
Options Issued to Non-Employees
SFAS No. 123 and related interpretations require that all transactions with
non-employees in which goods or services are the consideration received for the
issuance of equity instruments be accounted for based on the fair value of the
consideration received or the equity instruments issued, whichever is more
reliably measurable. The Company has computed the fair value of all options
granted to non-employees during 1997 and 1998, using the Black-Scholes pricing
model. No expense has been recognized related to these options as their fair
value was determined to be nominal. No options were issued to non-employees in
1999.
F-15
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
A summary of all non-employee option activity for the years ended December
31, 1997, 1998 and 1999 is as follows:
<TABLE>
<CAPTION>
Weighted
Number of Average
Options Exercise Price
--------- --------------
<S> <C> <C>
Outstanding at December 31, 1996................. 40,000 $0.18
Granted........................................ 34,999 $0.18
Forfeited...................................... (1,666) $0.18
-------
Outstanding at December 31, 1997................. 73,333 $0.18
Granted........................................ 32,000 $0.18
Forfeited...................................... (18,406) $0.18
Exercised...................................... (16,927) $0.18
-------
Outstanding at December 31, 1998................. 70,000 $0.18
Granted........................................ --
Forfeited...................................... --
------- -----
Outstanding at December 31, 1999................. 70,000 $0.18
======= =====
</TABLE>
The following table summarizes information about non-employee stock options
outstanding and exercisable under the Plan at December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------------- ---------------------
Number of Weighted Number
Options Average Weighted Exercisable Weighted
Outstanding Remaining Average At Average
Exercise at December 31, Contractual Exercise December 31, Exercise
Price 1999 Life in Years Price 1999 Price
-------- --------------- ------------- -------- ------------ --------
<S> <C> <C> <C> <C> <C>
$0.18 70,000 7.06 $0.18 70,000 $0.18
</TABLE>
Stock Warrants
In December 1996, the Company entered into a warrant agreement with a
related party to purchase the Company's Series A Preferred Stock. On May 31,
1997, under the terms of the warrant agreement, the Company issued a warrant to
that related party to purchase 124,502 shares of the Company's Series A
Preferred Stock for an exercise price of $0.6024 per share. The warrant expires
on the earlier of the closing of an initial public offering of the Company's
common stock or November 30, 2001. No value has been attributed to this warrant
as its value was determined to be nominal.
In September 1997, the Company entered into a warrant agreement with a bank
to purchase the Company's Series A Preferred Stock. On October 9, 1997, under
the terms of the warrant agreement, the Company issued a warrant to the bank to
purchase 30,000 shares of the Company's Series A Preferred Stock for an
exercise price of $0.6024 per share. The warrant expires on September 9, 2004.
No value has been attributed to this warrant as its value was determined to be
nominal.
In October 1998, in connection with the issuance of convertible debt (see
Note 4), the Company entered into warrant agreements to purchase a total to
208,331 shares of the Company's Series B Preferred Stock for an exercise price
of $0.72 per share. The warrants expire on December 16, 2003. The Company
determined the fair value of the warrants to be $82,298 using the Black-Scholes
option pricing model using the following assumptions:
<TABLE>
<S> <C>
Exercise price.................................................... $0.72
Fair market value of Series B Preferred Stock on grant date....... $0.72
Option life....................................................... 5 years
Volatility rate................................................... 60%
Risk free rate of return.......................................... 4.18%
Dividend rate..................................................... 0%
</TABLE>
The fair value of these warrants have been included as a discount to the
related debt.
F-16
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
In December 1998, the Company entered into a warrant agreement with the
Series B placement agent to purchase 18,055 shares of the Company's common
stock for an exercise price of $2.16 per share. The warrants expire on the
earlier of the closing of an initial public offering of the Company's common
stock or December 16, 2003. No deduction from the Series B proceeds was
recorded related to these warrants as their value was determined to be nominal.
In February 1999, the Company entered into a warrant agreement with the
Series B placement agent to purchase 201,388 shares of the Company's common
stock for an exercise price of $2.16 per share. The warrants expire on the
earlier of the closing of an initial public offering of the Company's common
stock or February 11, 2004. The Company has determined the fair value of the
warrants to be $241,125 using the Black-Scholes option pricing model using the
following assumptions:
<TABLE>
<S> <C>
Exercise price.................................................... $2.16
Fair market value of common stock on grant date................... $0.72
Option life....................................................... 5 years
Volatility rate................................................... 60%
Risk free rate of return.......................................... 4.66%
Dividend rate..................................................... 0%
</TABLE>
The fair value of these warrants have been included as additional offering
costs of the Series B Preferred Stock.
6. Income Taxes:
The provision for income taxes includes the following:
<TABLE>
<CAPTION>
1997 1998 1999
---------- ----------- -----------
<S> <C> <C> <C>
Current--
Federal.......................... $ -- $ -- $ --
State............................ -- -- --
---------- ----------- -----------
Total current provision........ -- -- --
---------- ----------- -----------
Deferred--
Federal.......................... (984,000) (1,313,000) (2,025,000)
State............................ (95,000) (127,000) (197,000)
Valuation allowance.............. 1,079,000 1,440,000 2,222,000
---------- ----------- -----------
Total deferred provision
(benefit)..................... -- -- --
---------- ----------- -----------
Total provision................ $ -- $ -- $ --
========== =========== ===========
</TABLE>
The statutory federal income tax rate was 34% for the years ended December
31, 1997, 1998 and 1999.
Differences between the income tax expense reported in the statements of
operations and the amount computed by applying the statutory federal income tax
rate to earnings before income taxes are as follows:
<TABLE>
<CAPTION>
1997 1998 1999
---------- ----------- -----------
<S> <C> <C> <C>
Benefit at statutory rate.......... $ (931,000) $(1,276,000) $(2,577,000)
Increase (decrease) due to--
State income taxes............... (90,000) (124,000) (250,000)
Nondeductible expenses........... 2,000 4,000 7,000
Nondeductible stock-based
compensation.................... -- -- 623,000
Research and development tax
credit and other................ (60,000) (44,000) (25,000)
Valuation allowance.............. 1,079,000 1,440,000 2,222,000
---------- ----------- -----------
Income tax provision............... $ -- $ -- $ --
========== =========== ===========
</TABLE>
F-17
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
Components of net deferred tax assets (liabilities) as of December 31, 1998
and 1999 are as follows:
<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
Current--
Accounts receivable............................ $ -- $ (134,000)
Prepaid expenses............................... (7,000) (45,000)
Accounts payable and accrued liabilities....... 139,000 241,000
Deferred revenue............................... 46,000 309,000
Non-current--
Depreciation................................... 16,000 30,000
Capitalized research and development costs for
tax purposes.................................. 916,000 797,000
Net operating losses........................... 2,108,000 4,217,000
Tax credits.................................... 105,000 130,000
---------- ----------
Total net deferred tax assets.................... 3,323,000 5,545,000
Valuation allowance.............................. (3,323,000) (5,545,000)
---------- ----------
Net deferred tax assets........................ $ -- $ --
========== ==========
</TABLE>
For income tax reporting purposes, the Company has approximately $11,306,000
of net operating loss carryforwards that expire at various dates through 2019.
The Tax Reform Act of 1986 contains provisions that may limit the net operating
loss carryforwards available to be used in any given year in the event of a
significant change in ownership interests. The Company also has available
income tax credits of approximately $130,000, expiring at various dates through
2019. Realization of net operating loss and tax credit carryforwards is
dependent on generating sufficient taxable income prior to their expiration
dates.
During 1997, 1998 and 1999, the Company increased its valuation allowance by
$1,079,000, $1,440,000 and $2,222,000, respectively, due mainly to uncertainty
relating to the realizability of the Company's net operating loss carryforwards
and income tax credits. The amount of the deferred tax assets considered
realizable could be adjusted in the near term if future taxable income
materializes.
7. Commitment and Contingencies:
Operating Leases
The Company leases administrative offices, research facilities and certain
equipment under noncancelable operating lease agreements. Rent expense under
these leases was $227,982 and $247,368 for the years ended December 31, 1998
and 1999, respectively. The following is a schedule of future minimum lease
payments for the years ending December 31:
<TABLE>
<S> <C>
2000........................................................... $ 389,159
2001........................................................... 392,221
2002........................................................... 403,449
2003........................................................... 415,013
2004........................................................... 423,077
Thereafter..................................................... 102,984
----------
$2,125,903
==========
</TABLE>
Cold Springs Harbor License Agreement
The Company is the exclusive licensee of a technology owned by Cold Springs
Harbor Laboratory with regard to a specific patent. This license gives the
Company the exclusive right to commercialize the related technology. This
technology is incorporated into the Company's Discovery Manager product.
Accordingly, the Company's business could be materially harmed if the Company
loses or is unable to maintain this license agreement. Cold Springs Harbor
Laboratory is a related party through its ownership of shares of the Company's
common stock.
F-18
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Concluded)
Licensing Agreement
In April 1996, the Company entered into a licensing and remarketing
agreement with a third-party software company ("licensor"). The Company is
fully licensed to use the licensor's software and documentation. The Company
can sublicense the use of the licensor's software to its worldwide customers.
Under the terms of the two-year sublicense agreement, the Company is required
to pay royalties to the licensor based on product sales. During the years ended
December 31, 1998 and 1999, the Company paid approximately $1,800 and $57,130,
respectively, under the licensing agreement. No royalties were paid during 1997
under this agreement.
8. Major Customers:
The Company did not generate any revenue for the year ended December 31,
1997. The Company's revenue from customers in excess of 10% of net revenue for
the years ended December 31, 1998 and 1999 are as follows:
<TABLE>
<CAPTION>
1998 1999
------ -----
<S> <C> <C>
Customer A................................................... 55.0% 41.0%
Customer B................................................... 45.0% 26.0%
------ -----
100.0% 67.0%
====== =====
</TABLE>
The Company's net accounts receivable-trade as of December 31, 1998 and 1999
are concentrated with the following major customers as follows:
<TABLE>
<CAPTION>
1998 1999
---- ------
<S> <C> <C>
Customer B.................................................... --% 11.0%
Customer C.................................................... --% 89.0%
--- ------
--% 100.0%
=== ======
</TABLE>
9. Geographic Information:
The Company's operations and all assets are based in the United States. The
Company sells its products to both domestic and foreign customers. The Company
did not generate any revenue for the year ended December 31, 1997. The
Company's revenue by geographic area for the years ended December 31, 1998 and
1999 is as follows:
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
United States........................................... $108,005 $530,310
Europe.................................................. 88,887 251,020
-------- --------
$196,892 $781,330
======== ========
</TABLE>
10. Employee Benefit Plan:
401(k) and Profit Sharing Plan
Effective January 1, 1998, the Company implemented a defined contribution
plan under Section 401(k) of the Internal Revenue Code ("IRC"). Under the plan,
eligible employees may contribute up to 15% of their compensation, subject to
limitations under the IRC. The Company may make discretionary matching
contributions to the plan upon Board approval. No contributions to the plan
have been made by the Company to date.
11. Subsequent Events:
Subsequent to December 31, 1999 and through March 13, 2000, the Company
granted options to purchase 1,621,980 shares of common stock to employees and
directors at exercise prices ranging from $0.75 to $4.50 per share. In
connection with the stock option grants, the Company will recognize
compensation expense over the related vesting periods of approximately
$24,284,000 relating to these grants for the difference between the exercise
price and the deemed fair market value for financial reporting purposes.
F-19
<PAGE>
GENOMICA CORPORATION
NOTES TO FINANCIAL STATEMENTS--(Continued)
On March 13, 2000, the Company issued 10,022,634 shares of Series C
convertible preferred stock ($0.001 par value) at $1.50 per share in a private
placement offering to accredited investors, resulting in proceeds of
approximately $15,000,000. As part of this transaction, the Articles of
Incorporation were amended to increase the authorized shares to 112,938,178, of
which 47,938,178 are designated as preferred stock and 65,000,000 are
designated as common stock. The Series C preferred stock is initially
convertible into one share of common stock. However, the conversion rate will
adjust to 0.3333 shares of common stock for each share of preferred stock held
upon the effective date of a Registration Statement on Form S-1 filed by the
Company with the SEC. The issuance of the Series C preferred stock resulted in
a beneficial conversion feature of approximately $15,000,000, calculated in
accordance with Emerging Issues Task Force No. 98-5, "Accounting for
Convertible Securities with Beneficial Conversion Features." The beneficial
conversion feature will be reflected as a preferred dividend in the Statement
of Operations during the first quarter of 2000.
F-20
<PAGE>
- -----------------------------------------------------------------
Genomica Corporation
6,000,000 Shares
Common Stock
--------------
PROSPECTUS
--------------
, 2000
CIBC World Markets
Dain Rauscher Wessels
Prudential Vector Healthcare
a unit of Prudential Securities
- -----------------------------------------------------------------
You should rely only on the information contained in this
prospectus. No dealer, salesperson or other person is
authorized to give information that is not contained in
this prospectus. This prospectus is not an offer to sell
nor is it seeking an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted. The
information contained in this prospectus is correct only as
of the date of this prospectus, regardless of the time of
the delivery of this prospectus or any sale of these
securities.
Until , 2000 (25 days after the commencement of
the offering), all dealers that effect transactions in
these securities, whether or not participating in the
offering, may be required to deliver a prospectus. This is
in addition to the dealer's obligation to deliver a
prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
<PAGE>
Part II
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses, other than the
underwriting discount and commissions, payable by the registrant in connection
with the sale of the common stock being registered hereby. All amounts shown
are estimates, except the Securities and Exchange Commission registration fee,
the NASD filing fee and the Nasdaq National Market listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee........ $ 30,967.00
NASD filing fee............................................ $ 12,230.00
Nasdaq National Market listing application fee............. $ 5,000.00
Blue Sky fees and expenses................................. $ 10,000.00
Printing and engraving expenses............................ $ 250,000.00
Legal fees and expenses.................................... $ 500,000.00
Accounting fees and expenses............................... $ 200,000.00
Transfer agent and registrar fees.......................... $ 10,000.00
Miscellaneous expenses..................................... $ 81,803.00
-------------
Total.................................................. $1,100,000.00
=============
</TABLE>
Item 14. Indemnification of Directors and Officers.
Under Section 145 of the General Corporation Law of Delaware (the "Delaware
Law"), we have broad powers to indemnify our directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
Our certificate of incorporation and bylaws include provisions to (i) eliminate
the personal liability of our directors for monetary damages resulting from
breaches of their fiduciary duty to the extent permitted by Section 102(b)(7)
of the Delaware Law and (ii) require us to indemnify our directors and officers
to the fullest extent permitted by Section 145 of the Delaware Law, including
circumstances in which indemnification is otherwise discretionary. Pursuant to
Section 145 of the Delaware Law, a corporation generally has the power to
indemnify its present and former directors, officers, employees and agents
against expenses incurred by them in connection with any suit to which they
are, or are threatened to be made, a party by reason of their serving in such
positions so long as they acted in good faith and in a manner they reasonably
believed to be in or not opposed to, the best interests of the corporation and,
with respect to any criminal action, had no reasonable cause to believe their
conduct was unlawful. We believe that these provisions are necessary to attract
and retain qualified persons as directors and officers. These provisions do not
eliminate the directors' duty of care, and, in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief
will remain available under Delaware Law. In addition, each director will
continue to be subject to liability for breach of the director's duty of
loyalty to us, for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for acts or omissions that the
director believes to be contrary to our best interests or the best interests of
our stockholders, for any transaction from which the director derived an
improper personal benefit, for acts or omissions involving a reckless disregard
for the director's duty to us or our stockholders when the director was aware
or should have been aware of a risk of serious injury to us or our
stockholders, for acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to us or our
stockholders, for improper transactions between the director and us and for
improper distributions to stockholders and loans to directors and officers. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities law or state or federal environmental laws.
We have entered into, or prior to the offering we will enter into, indemnity
agreements with our directors and executive officers that require us to
indemnify such persons against expenses, judgments, fines, settlements and
other amounts incurred (including expenses of a derivative action) in
connection with any proceeding, whether actual or threatened, to which any such
person may be made a party by reason of the fact that such person is or was one
of our directors or executive officers or any of our affiliated enterprises,
provided that such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to our best interests and, with
respect to any criminal
II-1
<PAGE>
proceeding, had no reasonable cause to believe his conduct was unlawful. The
indemnification agreements also set forth certain procedures that will apply in
the event of a claim for indemnification thereunder.
At present, there is no pending litigation or proceeding involving any of our
directors or officers as to which indemnification is being sought nor are we
aware of any threatened litigation that may result in claims for
indemnification by any officer or director.
We have an insurance policy covering our officers and directors with respect to
certain liabilities, including liabilities arising under the Securities Act or
otherwise.
Item 15. Recent Sales of Unregistered Securities.
Described below is information regarding all securities that have been issued
by the Company during the past three years.
On various dates between April 10, 1997 and March 13, 2000, we authorized the
grant of stock options to employees, consultants, directors and officers to
purchase 2,977,070 shares of our common stock at exercise prices ranging from
$0.18 to $4.50 per share. We relied on the exemption provided by Rule 701 of
the Securities Act.
On June 14, 1997 and October 6, 1997, we issued 9,213,276 shares of our Series
A Preferred Stock (which will convert into 3,071,089 shares of common stock
upon the closing of this offering) to certain accredited investors for cash
proceeds in the amount of $5,550,000. We relied on the exemptions provided by
Section 4(2) of the Securities Act.
On December 16, 1998 and February 12, 1999, we issued 18,826,959 shares of our
Series B Preferred Stock (which will convert into 6,275,650 shares of common
stock upon the closing of this offering) to certain accredited investors for
cash proceeds in the amount of $13,540,506. We relied on the exemption provided
by Section 4(2) of the Securities Act.
On March 13, 2000, we issued 10,022,634 shares of our Series C Preferred Stock
(which will convert into 3,340,877 of common stock upon the closing of this
offering) to certain accredited investors for cash proceeds in the amount of
$15,033,951. We relied on the exemptions provided by Rule 506 of Regulation D
of the Securities Act.
On May 31, 1997, we issued a warrant to purchase 124,502 shares of our Series A
Preferred Stock (which will be exercisable for 41,500 shares of common stock
upon the closing of this offering) at an exercise price of $0.60 per share to
one investor. We relied on the exemption provided by Section 4(2) of the
Securities Act.
On September 10, 1997, we issued a warrant to purchase 30,000 shares of our
Series A Preferred Stock (which will be exercisable for 10,000 shares of common
stock upon the closing of this offering) at an exercise price of $0.60 per
share to one lender. We relied on the exemption provided by Section 4(2) of the
Securities Act.
On October 9, 1998, we issued warrants to accredited investors to purchase
208,331 shares of our Series B Preferred Stock (which will be exercisable for
69,443 shares of common stock upon the closing of this offering) at an exercise
price of $0.72 per share in connection with our Series B Preferred Stock
financing. We relied on the exemption provided by Section 4(2) of the
Securities Act.
On December 16, 1998 and February 12, 1999, we issued warrants to a placement
agent to purchase 219,443 shares of our common stock at an exercise price of
$2.16 per share in connection with our Series B Preferred Stock financing. We
relied upon the exemption provided by section 4(2) of the Securities Act.
The recipients of the above-described securities represented their intention to
acquire the securities for investment only and not with a view for distribution
thereof. Appropriate legends were affixed to the stock certificates issued in
such transactions. All recipients had adequate access, through employment or
other relationships, to information about the Company.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation, currently in effect.
3.2 Bylaws, currently in effect.
3.3 Form of Restated Certificate of Incorporation, to be filed and become
effective upon the closing of this offering.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
3.4 Amended and Restated Bylaws, to become effective upon the closing of
this offering.
4.1 Reference is made to Exhibits 3.1 through 3.4.
4.2* Specimen Stock Certificate.
5.1* Form of Opinion of Cooley Godward LLP regarding legality of
securities being issued.
10.1 Form of Common Stock Acquisition Agreement by and between the Company
and certain investors, and supplemental schedule.
10.2 Stockholder Agreements by and between the Company and certain
stockholders of the Company, dated March 22, 1996.
10.3 Founders Agreements by and between the Company and certain
stockholders of the Company, dated March 22, 1996.
10.4 Voting Agreement, dated March 22, 1996; Supplemental Voting Agreement
dated February 28, 1997; Amendment to Supplemental Voting Agreement,
dated June 14, 1997; Second Amendment to Supplemental Voting
Agreement, dated October 6, 1997; Third Amendment to Supplemental
Voting Agreement, dated October 20, 1997.
10.5 Series A Convertible Preferred Stock Purchase Agreement, dated March
22, 1996.
10.6 Series A Convertible Preferred Stock Purchase Agreement, dated
February 28, 1997; Amendment to Series A Convertible Stock Purchase
Agreement, dated June 14, 1997; Second Amendment to Series A
Convertible Preferred Stock Purchase Agreement, dated October 6,
1997.
10.7 Note and Warrant Purchase Agreement, dated October 9, 1998.
10.8 Series B Preferred Stock Purchase Agreement, dated December 16, 1998.
10.9 Series B Preferred Stock Purchase Agreement, dated February 12, 1999.
10.10 Series C Preferred Stock Purchase Agreement, dated March 13, 2000.
10.11 Amended and Restated Investors' Rights Agreement by and among the
Company and certain stockholders of the Company dated March 13, 2000.
10.12 Warrant Agreement to purchase shares of Series A Preferred Stock with
Falcon Technology Partners, L.P., dated May 31, 1997.
10.13 Warrant Agreement to purchase shares of Series A Preferred Stock with
Silicon Valley Bank, dated September 10, 1997.
10.14 Form of Warrant Agreement to purchase Series B Preferred Stock.
10.15 Form of Warrant Agreement to purchase shares of Common Stock.
10.16 Form of Indemnity Agreement to be entered into between the Company
and its directors and executive officers.
10.17 License Agreement by and between Cold Spring Harbor Laboratory and
Genomica Corporation, dated January 6, 1996.
10.18 Gemstone Systems, Inc. Domestic Software License Agreement, dated
March 28, 1996.
10.19 Amended and Restated 1996 Stock Option Plan.
10.20 2000 Equity Incentive Plan.
10.21 Form of Grant Notice and Stock Option Agreement under the Amended and
Restated 1996 Stock Option Plan.
10.22 Form of Grant Notice and Stock Option Agreement under the 2000 Equity
Incentive Plan.
10.23 Lease by and between Boulder 38th LLC and Genomica Corporation, dated
December 30, 1999.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
10.24 Master Lease Agreement between Genomica Corporation and Transamerica
Business Credit Corporation, dated November 3, 1998.
23.1 Consent of Arthur Andersen LLP.
23.2* Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Powers of Attorney. Reference is made to Page II-5.
27.0* Financial Data Schedule.
</TABLE>
- --------
*To be filed by amendment.
(b) Financial Statement Schedules.
No financial statement schedules are provided, because the information called
for is not required or is shown either in the financial statements or the notes
thereto.
Item 17. Undertakings.
The undersigned registrant hereby undertakes to provide to the underwriters at
the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriters 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 provisions described in Item 14 or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than 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 its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Act, 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 Act 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 Act, 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-4
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boulder,
County of Boulder, State of Colorado, on March 14, 2000.
/s/ Teresa W. Ayers
By: ____________________________________
Teresa W. Ayers
Chief Executive Officer
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Teresa W. Ayers and Daniel R. Hudspeth and each
of them, as his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place, and stead,
in any and all capacities, to sign any and all amendments (including post-
effective amendments, exhibits thereto and other documents in connection
therewith) to this Registration Statement and any subsequent registration
statement filed by the registrant pursuant to Rule 462(b) of the Securities Act
of 1933, as amended, which relates to this Registration Statement, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James L. Rathmann Chairman of the Board of March 14, 2000
____________________________________ Directors
James L. Rathmann
/s/ Teresa W. Ayers Chief Executive Officer and March 14, 2000
____________________________________ Director (Principal
Teresa W. Ayers Executive Officer)
/s/ Thomas G. Marr President, Chief Scientist March 14, 2000
____________________________________ and Director
Thomas G. Marr
/s/ Daniel R. Hudspeth Vice President of Finance, March 14, 2000
____________________________________ Chief Financial Officer,
Daniel R. Hudspeth Secretary and Treasurer
(Principal Financial and
Accounting Officer)
/s/ Marvin H. Caruthers Director March 14, 2000
____________________________________
Marvin H. Caruthers
/s/ Ralph E. Christoffersen Director March 14, 2000
____________________________________
Ralph E. Christoffersen
/s/ Arnold J. Levine Director March 14, 2000
____________________________________
Arnold J. Levine
/s/ Robert T. Nelsen Director March 14, 2000
____________________________________
Robert T. Nelsen
</TABLE>
II-5
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
----------- ----------- ---
<C> <S> <C>
1.1 Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation, currently in effect.
3.2 Bylaws, currently in effect.
3.3 Form of Restated Certificate of Incorporation, to be filed
and become effective upon the closing of this offering.
3.4 Amended and Restated Bylaws, to become effective upon the
closing of this offering.
4.1 Reference is made to Exhibits 3.1 through 3.4.
4.2* Specimen Stock Certificate.
5.1* Form of Opinion of Cooley Godward LLP regarding legality of
securities being issued.
10.1 Form of Common Stock Acquisition Agreement by and between
the Company and certain investors, and supplemental
schedule.
10.2 Stockholder Agreements by and between the Company and
certain stockholders of the Company, dated March 22, 1996.
10.3 Founders Agreements by and between the Company and certain
stockholders of the Company, dated March 22, 1996.
10.4 Voting Agreement, dated March 22, 1996; Supplemental Voting
Agreement dated February 28, 1997; Amendment to Supplemental
Voting Agreement, dated June 14, 1997; Second Amendment to
Supplemental Voting Agreement, dated October 6, 1997; Third
Amendment to Supplemental Voting Agreement, dated October
20, 1997.
10.5 Series A Convertible Preferred Stock Purchase Agreement,
dated March 22, 1996.
10.6 Series A Convertible Preferred Stock Purchase Agreement,
dated February 28, 1997; Amendment to Series A Convertible
Stock Purchase Agreement, dated June 14, 1997; Second
Amendment to Series A Convertible Preferred Stock Purchase
Agreement, dated October 6, 1997.
10.7 Note and Warrant Purchase Agreement, dated October 9, 1998.
10.8 Series B Preferred Stock Purchase Agreement, dated December
16, 1998.
10.9 Series B Preferred Stock Purchase Agreement, dated February
12, 1999.
10.10 Series C Preferred Stock Purchase Agreement, dated March 13,
2000.
10.11 Amended and Restated Investors' Rights Agreement by and
among the Company and certain stockholders of the Company
dated March 13, 2000.
10.12 Warrant Agreement to purchase shares of Series A Preferred
Stock with Falcon Technology Partners, L.P., dated May 31,
1997.
10.13 Warrant Agreement to purchase shares of Series A Preferred
Stock with Silicon Valley Bank, dated September 10, 1997.
10.14 Form of Warrant Agreement to purchase Series B Preferred
Stock.
10.15 Form of Warrant Agreement to purchase shares of Common
Stock.
10.16 Form of Indemnity Agreement to be entered into between the
Company and its directors and executive officers.
10.17 License Agreement by and between Cold Spring Harbor
Laboratory and Genomica Corporation, dated January 6, 1996.
10.18 Gemstone Systems, Inc. Domestic Software License Agreement,
dated March 28, 1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
----------- ----------- ---
<C> <S> <C>
10.19 Amended and Restated 1996 Stock Option Plan.
10.20 2000 Equity Incentive Plan.
10.21 Form of Grant Notice and Stock Option Agreement under the
Amended and Restated 1996 Stock Option Plan.
10.22 Form of Grant Notice and Stock Option Agreement under the
2000 Equity Incentive Plan.
10.23 Lease by and between Boulder 38th LLC and Genomica
Corporation, dated December 30, 1999.
10.24 Master Loan and Security Agreement between Genomica
Corporation and Transamerica Business Credit Corporation,
dated September 10, 1998.
23.1 Consent of Arthur Andersen LLP.
23.2* Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1.
24.1 Powers of Attorney, Reference is made to Page II-5.
27.0* Financial Data Schedule.
</TABLE>
- ------------------
* To be filed by amendment.
<PAGE>
EXHIBIT 1.1
MW&E Draft
----------
March 13, 2000
______________ Shares
GENOMICA CORPORATION
Common Stock
UNDERWRITING AGREEMENT
_________ __, 2000
CIBC WORLD MARKETS CORP.
PRUDENTIAL SECURITIES INCORPORATED
DAIN RAUSCHER INCORPORATED
on behalf of the Several
Underwriters named on
Schedule I attached hereto
c/o CIBC World Markets Corp.
One World Financial Center
New York, New York 10281
Ladies and Gentlemen:
Genomica Corporation, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions contained herein, to sell to you
and the other underwriters named on Schedule I to this Agreement (the
"Underwriters"), for whom you are acting as Representatives (the
"Representatives"), an aggregate of _____________ shares (the "Firm Shares") of
the Company's Common Stock, $0.001 par value (the "Common Stock"). The
respective amounts of the Firm Shares to be purchased by each of the several
Underwriters are set forth opposite their names on Schedule I attached hereto.
In addition, the Company proposes to grant to the Underwriters an option to
purchase up to an additional ___________ shares (the "Option Shares") of Common
Stock from the Company for the purpose of covering over-allotments in connection
with the sale of the Firm Shares. The Firm Shares and the Option Shares are
together called the "Shares."
As part of the offering contemplated by this Agreement, the
Representatives have agreed to reserve out of the Firm Shares purchased by them
up to ________ shares (the "Directed Shares") for sale to the Company's
directors, officers, employees and other parties associated with the Company
(each, individually a "Participant" and collectively, the "Participants") under
the terms of the friends and family directed sales program (the "Friends and
Family Program"). Shares to be sold pursuant to the Friends and Family Program
shall be sold pursuant to this
<PAGE>
Agreement at the public offering price. Any Directed Shares not [orally]
confirmed for purchase by a Participant by [5:00 p.m. New York time] on the date
of this Agreement will be offered to the public by the Representatives as set
forth in the Prospectus (as such term is hereinafter defined).
1. Sale and Purchase of the Shares.
-------------------------------
On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement:
(a) The Company agrees to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from
the Company, at a price of $_____ per share (the "Initial Price"), the
number of Firm Shares set forth opposite the name of such Underwriter
under the column "Number of Firm Shares to be Purchased from the Company"
on Schedule I to this Agreement, subject to adjustment in accordance with
Section 10 hereof.
(b) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option Shares
at the Initial Price. The number of Option Shares to be purchased by
each Underwriter shall be the same percentage (adjusted by the
Representatives to eliminate fractions) of the total number of Option
Shares to be purchased by the Underwriters as such Underwriter is
purchasing of the Firm Shares. Such option may be exercised only to
cover over-allotments in the sales of the Firm Shares by the Underwriters
and may be exercised in whole or in part at any time on or before 12:00
noon, New York City time, on the business day before the Firm Shares
Closing Date (as defined below), and from time to time thereafter within
30 days after the date of this Agreement, in each case upon written,
facsimile or telegraphic notice, or verbal or telephonic notice confirmed
by written, facsimile or telegraphic notice, by the Representatives to
the Company no later than 12:00 noon, New York City time, on the business
day before the Firm Shares Closing Date or at least two business days
before the Option Shares Closing Date (as defined below), as the case may
be, setting forth the number of Option Shares to be purchased and the
time and date (if other than the Firm Shares Closing Date) of such
purchase.
2. Delivery and Payment. Delivery by the Company of the Firm
Shares to the Representatives for the respective accounts of the Underwriters,
and payment of the purchase price by certified or official bank check or checks
payable in New York Clearing House (same day) funds drawn to the order of the
Company for the shares purchased from the Company, against delivery of the
respective certificates therefor to the Representatives, shall take place at the
offices of CIBC World Markets Corp., One World Financial Center, New York, New
York 10281, at 10:00 a.m., New York City time, on the third business day
following the date of this Agreement, or at such time on such other date, not
later than 10 business days after the date of this Agreement, as shall be agreed
upon by the Company and the Representatives (such time and date of delivery and
payment are called the "Firm Shares Closing Date").
-2-
<PAGE>
In the event the option with respect to the Option Shares is exercised
in whole or in part on one or more occasions, delivery by the Company of the
Option Shares to the Representatives for the respective accounts of the
Underwriters and payment of the purchase price thereof in immediately available
funds by wire transfer or by certified or official bank check or checks payable
in New York Clearing House (same day) funds to the Company shall take place at
the offices of CIBC World Markets Corp. specified above at the time and on the
date (which may be the same date as, but in no event shall be earlier than, the
Firm Shares Closing Date) specified in the notice referred to in Section 1(b)
hereof (such time and date of delivery and payment are called the "Option Shares
Closing Date"). The Firm Shares Closing Date and the Option Shares Closing Date
are called, individually, a "Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names
and shall be in such denominations as the Representatives shall request at least
two full business days before the Firm Shares Closing Date or, in the case of
Option Shares, on the day of notice of exercise of the option as described in
Section l(b) hereof and shall be made available to the Representatives for
checking and packaging, at such place as is designated by the Representatives,
on the full business day before the Firm Shares Closing Date (or the Option
Shares Closing Date in the case of the Option Shares).
3. Registration Statement and Prospectus; Public Offering. The
Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations thereunder (the "Rules") adopted by the Securities and
Exchange Commission (the "Commission") a Registration Statement (as hereinafter
defined) on Form S-1 (No. 333-_____), including a preliminary prospectus
relating to the Shares, and such amendments thereof as may have been required to
the date of this Agreement. Copies of such Registration Statement (including
all amendments thereof) and of the related Preliminary Prospectus (as
hereinafter defined) have heretofore been delivered by the Company to you. The
term "Preliminary Prospectus" means any preliminary prospectus (as described in
Rule 430 of the Rules) included at any time as a part of the Registration
Statement or filed with the Commission by the Company with the consent of the
Representatives pursuant to Rule 424(a) of the Rules. The term "Registration
Statement" as used in this Agreement means the initial registration statement
(including all exhibits, financial schedules and information deemed to be a part
of the Registration Statement through incorporation by reference or otherwise),
as amended at the time and on the date it becomes effective (the "Effective
Date") including the information (if any) deemed to be part thereof at the time
of effectiveness pursuant to Rule 430A of the Rules. If the Company has filed
an abbreviated registration statement to register additional Shares pursuant to
Rule 462(b) under the Rules (the "462(b) Registration Statement") then any
reference herein to the Registration Statement shall also be deemed to include
such 462(b) Registration Statement. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement at the time of effectiveness or, if Rule 430A of the Rules is relied
on, the term Prospectus shall also include the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules.
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The Company understands that the Underwriters propose to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as the Representatives
deem advisable. The Company hereby confirms that the Underwriters and dealers
have been authorized to distribute or cause to be distributed each Preliminary
Prospectus and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement complied, and
on the date of the Prospectus, the date any post-effective amendment to
the Registration Statement becomes effective, the date any supplement or
amendment to the Prospectus is filed with the Commission and each Closing
Date, the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material respects,
with the applicable provisions of the Securities Act and the Rules and
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations of the Commission thereunder. The Registration
Statement did not, as of the Effective Date, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and on the Effective Date and the other dates referred to
above neither the Registration Statement nor the Prospectus, nor any
amendment thereof or supplement thereto, will contain any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. When any related preliminary
prospectus was first filed with the Commission (whether filed as part of
the Registration Statement or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement thereto
was first filed with the Commission, such preliminary prospectus as
amended or supplemented complied in all material respects with the
applicable provisions of the Securities Act and the Rules and did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading. Notwithstanding the foregoing,
none of the representations and warranties in this Section 4(a) shall
apply to statements in, or omissions from, the Registration Statement or
the Prospectus made in reliance upon, and in conformity with, information
herein or otherwise furnished in writing by the Representatives on behalf
of the several Underwriters for use in the Registration Statement or the
Prospectus. With respect to the preceding sentence, the Company
acknowledges that the only information furnished in writing by the
Representatives on behalf of the several Underwriters for use in the
Registration Statement or the Prospectus is the paragraph with respect to
stabilization on the inside front cover page of the Prospectus and the
statements contained under the caption "Underwriting" in the Prospectus.
(b) The Registration Statement is effective under the Securities Act
and no
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stop order preventing or suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the Prospectus has been
issued and no proceedings for that purpose have been instituted or are
threatened under the Securities Act. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) of the
Rules has been or will be made in the manner and within the time period
required by such Rule 424(b).
(c) The documents incorporated by reference in the Registration
Statement and the Prospectus, at the time they were filed with the
Commission, complied in all material respects with the requirements of
the Exchange Act and, when read together and with the other information
in the Registration Statement and the Prospectus, do not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(d) The financial statements of the Company (including all notes and
schedules thereto) included or incorporated by reference in the
Registration Statement and Prospectus present fairly the financial
position, the results of operations, the statements of cash flows and the
statements of stockholders' equity and the other information purported
to be shown therein of the Company at the respective dates and for the
respective periods to which they apply; and such financial statements and
related schedules and notes have been prepared in conformity with
generally accepted accounting principles, consistently applied throughout
the periods involved, and all adjustments necessary for a fair
presentation of the results for such periods have been made. The summary
and selected financial data included in the Prospectus present fairly the
information shown therein as at the respective dates and for the
respective periods specified and the summary and selected financial data
have been presented on a basis consistent with the consolidated financial
statements so set forth in the Prospectus and other financial
information.
(e) Arthur Andersen LLP, whose reports are filed with the Commission
as a part of the Registration Statement, are and, during the periods
covered by their reports, were independent public accountants as required
by the Securities Act and the Rules.
(f) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The
Company has no subsidiary or subsidiaries and does not control, directly
or indirectly, any corporation, partnership, joint venture, association
or other business organization. The Company is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted by it or
location of the assets or properties owned, leased or licensed by it
requires such qualification, except for such jurisdictions where the
failure to so qualify would not have a material adverse effect on the
assets or properties, business, results of operations or financial
condition of the Company (a "Material Adverse Effect"). The Company does
not own, lease or license any asset or
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<PAGE>
property or conduct any business outside the United States of America.
The Company has all requisite corporate power and authority, and all
necessary authorizations, approvals, consents, orders, licenses,
certificates and permits of and from all governmental or regulatory
bodies or any other person or entity (collectively, the "Permits"), to
own, lease and license its assets and properties and conduct its
business, all of which are valid and in full force and effect, as
described in the Registration Statement and the Prospectus, except where
the lack of such Permits, individually or in the aggregate, would not
have a Material Adverse Effect. The Company has fulfilled and performed
all of its obligations with respect to such Permits and no event has
occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other impairment of
the rights of the Company thereunder. Except as may be required under the
Securities Act and state and foreign Blue Sky laws, no other Permits are
required to enter into, deliver and perform this Agreement and to issue
and sell the Shares.
(g) The Company owns or possesses adequate and enforceable rights to
use all patent, patent applications, trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications, licenses,
know-how and other similar rights and proprietary knowledge
(collectively, "Intangibles") described in the Prospectus as being owned
by it necessary for the conduct of its business. The Company has not
received any notice of, or is not aware of, any infringement of or
conflict with asserted rights of others with respect to any Intangibles.
No departed employee of the Company has a right of reverter, or any other
interest, with respect to any Intangible.
(h) The Company has good and marketable title in fee simple to all
items of real property and good and marketable title to all personal
property described in the Prospectuses as being owned by it. Any real
property and buildings described in the Prospectuses as being held under
lease by the Company is held by it under valid, existing and enforceable
leases, free and clear of all liens, encumbrances, claims, security
interests and defects, except such as are described in the Registration
Statement and the Prospectus or that would not have a Material Adverse
Effect.
(i) There are no litigation or governmental proceedings to which the
Company is subject or which is pending or, to the knowledge of the
Company, threatened, against the Company , which, individually or in the
aggregate, might have a Material Adverse Effect, affect the consummation
of this Agreement or which is required to be disclosed in the
Registration Statement and the Prospectus that is not so disclosed.
(j) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
described therein, (a) there has not been any material adverse change
with regard to the assets or properties, business, results of operations
or financial condition of the Company; (b) the Company has not sustained
any loss or interference with its assets, businesses or properties
(whether owned or leased) from fire, explosion, earthquake, flood or
other calamity, whether or
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<PAGE>
not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree which would
have a Material Adverse Effect; and (c) since the date of the latest
balance sheet included in the Registration Statement and the Prospectus,
except as reflected therein, the Company has not (i) issued any
securities or incurred any liability or obligation, direct or contingent,
for borrowed money, except such liabilities or obligations incurred in
the ordinary course of business, (ii) entered into any transaction not in
the ordinary course of business or (iii) declared or paid any dividend or
made any distribution on any shares of its stock or redeemed, purchased
or otherwise acquired or agreed to redeem, purchase or otherwise acquire
any shares of its stock.
(k) There is no document, contract or other agreement of a character
required to be described in the Registration Statement or Prospectus or
to be filed as an exhibit to the Registration Statement which is not
described or filed as required by the Securities Act or Rules. Each
description of a contract, document or other agreement in the
Registration Statement and the Prospectus accurately reflects in all
respects the terms of the underlying document, contract or agreement.
Each agreement described in the Registration Statement and Prospectus or
listed in the Exhibits to the Registration Statement or incorporated by
reference is in full force and effect and is valid and enforceable by and
against the Company in accordance with its terms. Neither the Company,
nor to the Company's knowledge, any other party is in default in the
observance or performance of any term or obligation to be performed by it
under any such agreement, and no event has occurred which with notice or
lapse of time or both would constitute such a default, in any such case
which default or event, individually or in the aggregate, would have a
Material Adverse Effect. No default exists, and no event has occurred
which with notice or lapse of time or both would constitute a default, in
the due performance and observance of any term, covenant or condition, by
the Company of any other agreement or instrument to which the Company is
a party or by which it or its properties or business may be bound or
affected which default or event, individually or in the aggregate, would
have a Material Adverse Effect.
(l) The Company is not in violation of any term or provision of its
charter or by-laws or of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, where the consequences of
such violation, individually or in the aggregate, would have a Material
Adverse Effect.
(m) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale
by the Company of the Shares) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or
result in the breach of any term or provision of, or constitute a default
(or an event which with notice or lapse of time or both would constitute
a default) under, or require any consent or waiver under, or result in
the execution or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company pursuant to the terms of, any
indenture, mortgage, deed of trust or other
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<PAGE>
agreement or instrument to which the Company is a party or by which it or
any of its properties or businesses is bound, or any franchise, license,
permit, judgment, decree, order, statute, rule or regulation applicable
to the Company or violate any provision of the charter or by-laws of the
Company, except for such consents or waivers which have already been
obtained and are in full force and effect.
(n) The Company has authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus. The
certificates evidencing the Shares are in due and proper legal form and
have been duly authorized for issuance by the Company. All of the issued
and outstanding shares of Common Stock have been duly and validly issued
and are fully paid and nonassessable. There are no statutory preemptive
or other similar rights to subscribe for or to purchase or acquire any
shares of Common Stock of the Company or any such rights pursuant to its
Certificate of Incorporation or by-laws or any agreement or instrument to
or by which the Company is a party or bound. The Shares, when issued and
sold pursuant to this Agreement, will be duly and validly issued, fully
paid and nonassessable and none of them will be issued in violation of
any preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and there is
no commitment, plan or arrangement to issue, any share of stock of the
Company or any security convertible into, or exercisable or exchangeable
for, such stock. The Common Stock and the Shares conform in all material
respects to all statements in relation thereto contained in the
Registration Statement and the Prospectus.
(o) No holder of any security of the Company has the right to have
any security owned by such holder included in the Registration Statement
or to demand registration of any security owned by such holder during the
period ending 180 days after the date of this Agreement, except for such
rights as have been waived. Each stockholder, director and executive
officer of the Company has delivered to the Representatives such person's
enforceable written lock-up agreement in the form attached to this
Agreement ("Lock-Up Agreement").
(p) All necessary corporate action has been duly and validly taken
by the Company to authorize the execution, delivery and performance of
this Agreement and the issuance and sale of the Shares by the Company.
This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes and will constitute the legal,
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles.
(q) The Company is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened, which dispute
would have a Material Adverse Effect. The Company is not aware of any
existing or imminent labor
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<PAGE>
disturbance by the employees of any of its principal suppliers or
contractors which would have a Material Adverse Effect. The Company is
not aware of any threatened or pending litigation between the Company and
any of its executive officers which, if adversely determined, could have
a Material Adverse Effect and has no reason to believe that such officers
will not remain in the employment of the Company.
(r) No transaction has occurred between or among the Company and any
of its officers or directors or five percent stockholders or any
affiliate or affiliates of any such officer or director or five percent
stockholder that is required to be described in and is not described in
the Registration Statement and the Prospectus.
(s) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in, or which has constituted or which might reasonably
be expected to constitute, the stabilization or manipulation of the price
of the Common Stock to facilitate the sale or resale of any of the
Shares.
(t) The Company has filed all Federal, state, local and foreign tax
returns which are required to be filed through the date hereof, or has
received extensions thereof, and has paid all taxes shown on such returns
and all assessments received by it to the extent that the same are
material and have become due. There are no tax audits or investigations
pending, which if adversely determined would have a Material Adverse
Effect; nor are there any material proposed additional tax assessments
against the Company.
(u) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market System, subject to official Notice of Issuance. A
registration statement has been filed on Form 8-A pursuant to Section 12
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which registration statement complies in all material respects with the
Exchange Act.
(v) The Company has complied with all of the requirements and filed
the required forms as specified in Florida Statutes Section 517.075.
(w) The books, records and accounts of the Company accurately and
fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the
Company. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken
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<PAGE>
with respect to any differences.
(x) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses in which it is engaged or propose to engage
after giving effect to the transactions described in the Prospectus; all
policies of insurance and fidelity or surety bonds insuring the Company
or any of its subsidiaries or the Company's or its subsidiaries'
respective businesses, assets, employees, officers and directors are in
full force and effect; the Company and each of its subsidiaries are in
compliance with the terms of such policies and instruments in all
material respects; and the Company has no reason to believe that it will
not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would not have
a Material Adverse Effect. The Company has not been denied any insurance
coverage which it has sought or for which it has applied.
(y) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by
the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or Blue Sky laws) has been obtained or made
and is in full force and effect.
(z) There are no affiliations with the NASD among the Company's
officers, directors or, to the knowledge of the Company, any five percent
or greater stockholder of the Company, except as set forth in the
Registration Statement or otherwise disclosed in writing to the
Representatives.
(aa) (i) The Company is in compliance in all material respects with
all rules, laws and regulation relating to the use, treatment, storage
and disposal of toxic substances and protection of health or the
environment ("Environmental Law") which are applicable to its business;
(ii) the Company has not received any notice from any governmental
authority or third party of an asserted claim under Environmental Laws;
(iii) the Company has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business and is in compliance with all terms and conditions of any such
permit, license or approval; (iv) to the Company's knowledge, no facts
currently exist that will require the Company to make future material
capital expenditures to comply with Environmental Laws; and (v) no
property which is or has been owned, leased or occupied by the Company
has been designated as a Superfund site pursuant to the Comprehensive
Environmental Response, Compensation of Liability Act of 1980, as amended
(42 U.S.C. Section 9601, et. seq.)
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<PAGE>
or otherwise designated as a contaminated site under applicable state or
local law. The Company has not been named as a "potentially responsible
party" under the CER, CLA 1980.
(bb) The Company has conducted a reasonable due diligence
investigation of the effect of Environmental Laws on the business,
operations and properties of the Company to identify and evaluate
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws, or any permit, license
or approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such
investigation, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a
Material Adverse Effect.
(cc) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of proceeds thereof as described
in the Prospectus, will not be an "investment company" within the meaning
of the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(dd) The Company or any other person associated with or acting on
behalf of the Company including, without limitation, any director,
officer, agent or employee of the Company has not, directly or
indirectly, while acting on behalf of the Company (i) used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any other unlawful payment.
(ee) (i) The Company has no reason to believe, and does not believe,
that (A) there are any issues related to the Year 2000 Problem that are
of a character required to be described or referred to in the
Registration Statement or Prospectus which have not been accurately
described in the Registration Statement or Prospectus and (B) the Year
2000 Problem has had or will have a Material Adverse Effect, or result in
any material loss or interference with the business or operations of the
Company and (ii) the Company reasonably believes, after due inquiry, that
the suppliers, vendors, customers or other material third parties used or
served by the Company and such subsidiaries addressed the Year 2000
Problem in a timely manner, except to the extent that a failure to
address the Year 2000 by a supplier, vendor, customer or material third
party would not have a Material Adverse Effect.
(ff) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (1) transactions are
executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit
preparation of financial statements in conformity with
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generally accepted accounting principles and to maintain asset
accountability; (3) access to assets is permitted only in accordance with
management's general or specific authorization; and (4) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(gg) Neither the Company nor any other person associated with or
acting on behalf of the Company including, without limitation, any
director, officer, agent or employee of the Company has offered or caused
the Underwriters to offer any of the Shares to any person pursuant to the
Friends and Family Program with the specific intent to unlawfully
influence (i) a customer or supplier of the Company to alter the
customer's or supplier's level or type of business with the Company or
(ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
5. Conditions of the Underwriters' Obligations. The obligations of
the Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in accordance
with Section 6(a) of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with
to the satisfaction of the Commission and the Representatives.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to Section 5(d)
shall be true and correct when made and on and as of each Closing Date as
if made on such date. The Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by it at or before such Closing
Date.
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<PAGE>
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing
Date, of the chief executive or chief operating officer and the chief
financial officer or chief accounting officer of the Company to the
effect that (i) the signers of such certificate have carefully examined
the Registration Statement, the Prospectus and this Agreement and that
the representations and warranties of the Company in this Agreement are
true and correct on and as of such Closing Date with the same effect as
if made on such Closing Date and the Company has performed all covenants
and agreements and satisfied all conditions contained in this Agreement
required to be performed or satisfied by it at or prior to such Closing
Date, and (ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and to the best of their
knowledge, no proceedings for that purpose have been instituted or are
pending under the Securities Act.
(e) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from
Arthur Andersen LLP addressed to the Representatives and dated,
respectively, the date of this Agreement and each such Closing Date, in
form and substance reasonably satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of
the Securities Act and the Rules, that the response to Item 10 of the
Registration Statement is correct insofar as it relates to them and
stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference
in the Registration Statement and the Prospectus and reported on by
them comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules;
(ii) on the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings
"Summary Financial Information" and "Selected Financial Data,"
carrying out certain procedures (but not an examination in
accordance with generally accepted auditing standards) which would
not necessarily reveal matters of significance with respect to the
comments set forth in such letter, a reading of the minutes of the
meetings of the stockholders and directors of the Company, and
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company
as to transactions and events subsequent to the date of the latest
audited financial statements, except as disclosed in the
Registration Statement and the Prospectus, nothing came to their
attention which caused them to believe that:
(A) the amounts in "Summary Financial Information," and
"Selected Financial Data" included in the Registration
Statement and the Prospectus do not agree with the
corresponding amounts in the audited financial statements from
which such amounts were derived; or
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(B) with respect to the Company, there were, at a
specified date not more than three business days prior to the
date of the letter, any increases in the current liabilities
and long-term liabilities of the Company or any decreases in
net income or in working capital or the stockholders' equity in
the Company, as compared with the amounts shown on the
Company's audited balance sheet for the fiscal year ended
December 31, 1999 included in the Registration Statement;
(iii) they have performed certain other procedures as may be
permitted under Generally Acceptable Auditing Standards as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company) set forth in the Registration
Statement and the Prospectus and reasonably specified by the
Representatives agrees with the accounting records of the Company;
and
(iv) based upon the procedures set forth in clauses (ii) and
(iii) above and a reading of the amounts included in the
Registration Statement under the headings "Summary Financial and
Other Data" and "Selected Financial Data" included in the
Registration Statement and Prospectus and a reading of the financial
statements from which certain of such data were derived, nothing has
come to their attention that gives them reason to believe that the
"Summary Financial and Other Data" and "Selected Financial Data"
included in the Registration Statement and Prospectus do not comply
as to the form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules or that
the information set forth therein is not fairly stated in relation
to the financial statements included in the Registration Statement
or Prospectus from which certain of such data were derived are not
in conformity with generally accepted accounting principles applied
on a basis substantially consistent with that of the audited
financial statements included in the Registration Statement and
Prospectus.
References to the Registration Statement and the Prospectus in
this paragraph (e) are to such documents as amended and supplemented
at the date of the letter.
(f) The Representatives shall have received on each Closing Date
from Cooley Godward LLP, counsel for the Company, an opinion, addressed
to the Representatives and dated such Closing Date, and stating in effect
that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware. To the best of such counsel's knowledge, the
Company has no subsidiary and does not control, directly or
indirectly, any corporation, partnership, joint venture,
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association or other business organization. The Company is duly
qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets or
properties (owned, leased or licensed) or the nature of its
businesses makes such qualification necessary, except for such
jurisdictions where the failure to so qualify, individually or in
the aggregate, would not have a Material Adverse Effect.
(ii) The Company has all requisite corporate power and
authority to own, lease and license its assets and properties and
conduct its business as now being conducted and as described in the
Registration Statement and the Prospectus and to enter into, deliver
and perform this Agreement and to issue and sell the Shares, other
than those required under the state and foreign Blue Sky laws.
(iii) The Company has authorized and issued capital stock as
set forth in the Registration Statement and the Prospectus under the
caption "Capitalization"; the certificates evidencing the Shares are
in due and proper legal form and have been duly authorized for
issuance by the Company; all of the outstanding shares of Common
Stock of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable and none of them was
issued in violation of any preemptive or other similar right. The
Shares when issued and sold pursuant to this Agreement will be duly
and validly issued, outstanding, fully paid and nonassessable and
none of them will have been issued in violation of any preemptive or
other similar right. To the best of such counsel's knowledge,
except as disclosed in the Registration Statement and the
Prospectus, there are no preemptive or other rights to subscribe for
or to purchase or any restriction upon the voting or transfer of any
securities of the Company pursuant to the Company's Certificate of
Incorporation or by-laws or other governing documents or any
agreements or other instruments to which the Company is a party or
by which it is bound. To the best of such counsel's knowledge,
except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right
calling for the issuance of, and no commitment, plan or arrangement
to issue, any share of stock of the Company or any security
convertible into, exercisable for, or exchangeable for stock of the
Company. The capital stock of the Company conforms in all material
respects to the descriptions thereof contained in the Registration
Statement and the Prospectus.
(iv) Each of the Lock-Up Agreements executed by the Company's
stockholders, directors and officers has been duly and validly
delivered by such persons and constitutes the legal, valid and
binding obligation of each such person enforceable against each such
person in accordance with its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
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(v) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the
Shares. This Agreement has been duly and validly authorized,
executed and delivered by the Company and this Agreement constitutes
the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
(vi) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with
notice or lapse of time, or both, would constitute a default) under,
or require consent or waiver under, or result in the execution or
imposition of any lien, charge, claim, security interest or
encumbrance upon any properties or assets of the Company pursuant to
the terms of any indenture, mortgage, deed trust, note or other
agreement or instrument of which such counsel is aware and to which
the Company is a party or by which it or any of its properties or
businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation of which such counsel is
aware or violate any provision of the charter or by-laws of the
Company.
(vii) To the best of such counsel's knowledge, no default
exists, and no event has occurred which with notice or lapse of
time, or both, would constitute a default, in the due performance
and observance of any term, covenant or condition by the Company of
any indenture, mortgage, deed of trust, note or any other agreement
or instrument to which the Company is a party or by which it or any
of its assets or properties or businesses may be bound or affected,
where the consequences of such default, individually or in the
aggregate, would have a Material Adverse Effect.
(viii) To the best of such counsel's knowledge, the Company
is not in violation of any term or provision of its charter or by-
laws or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation, where the consequences of such
violation, individually or in the aggregate, would have a Material
Adverse Effect.
(ix) No consent, approval, authorization or order of any
court or governmental agency or regulatory body is required for the
execution, delivery or performance of this Agreement by the Company
or the consummation of the
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transactions contemplated hereby or thereby, except such as have
been obtained under the Securities Act and such as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the several Underwriters.
(x) To the best of such counsel's knowledge, there is no
litigation or governmental or other proceeding or investigation,
before any court or before or by any public body or board pending or
threatened against, or involving the assets, properties or
businesses of, the Company which would have a Material Adverse
Effect.
(xi) The statements in the Prospectus under the captions
"Description of Capital Stock," "Liquidity and Capital Resources,"
"[_____________________]," "Shares Eligible for Future Sale,"
"Management-Employment Agreements," "Management-Employee Benefit
Plans," and "Certain Transactions," insofar as such statements
constitute a summary of documents referred to therein or matters of
law, are fair summaries in all material respects and accurately
present the information called for with respect to such documents
and matters. Accurate copies of all contracts and other documents
required to be filed as exhibits to, or described in, the
Registration Statement have been so filed with the Commission or are
fairly described in the Registration Statement, as the case may be.
(xii) The Registration Statement, all preliminary prospectuses
and the Prospectus and each amendment or supplement thereto (except
for the financial statements and schedules and other financial and
statistical data included therein, as to which such counsel
expresses no opinion) comply as to form in all material respects
with the requirements of the Securities Act and the Rules.
(xiii) The Registration Statement is effective under the
Securities Act, and no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for
that purpose have been instituted or are threatened, pending or
contemplated. Any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the Securities Act
has been made in the manner and within the time period required by
such Rule 424(b).
(xiv) The Shares have been approved for listing on the
Nasdaq National Market.
(xv) The capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock."
(xvi) The Company is not an "investment company" or an entity
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controlled by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the laws of
the State of New York, the General Corporation Law of the State of Delaware and
the Federal laws of the United States; provided that such counsel shall state
that in their opinion the Underwriters and they are justified in relying on such
other opinions. Copies of such certificates and other opinions shall be
furnished to the Representatives and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except as
specified in the foregoing opinion), on the basis of the foregoing, no facts
have come to the attention of such counsel which lead such counsel to believe
that the Registration Statement at the time it became effective (except with
respect to the financial statements and notes and schedules thereto and other
financial data, as to which such counsel need express no belief) contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus as amended or supplemented (except with respect to the
financial statements, notes and schedules thereto and other financial data, as
to which such counsel need make no statement) on the date thereof contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(g) The Representatives shall have received on each Closing Date
from _______________, special regulatory counsel to the Company, an
opinion, addressed to the Representatives and dated such Closing Date, in
form and substance satisfactory to the Representatives.
(h) The Representatives shall have received on each Closing Date
from ___________________, special patent counsel to the Company, an
opinion, addressed to the Representatives and dated such Closing Date, in
substantially the form attached hereto as Exhibit 5(h).
(i) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives, and their
counsel and the Underwriters shall have received from McDermott, Will &
Emery a favorable opinion, addressed to the
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Representatives and dated such Closing Date, with respect to the Shares,
the Registration Statement and the Prospectus, and such other related
matters, as the Representatives may reasonably request, and the Company
shall have furnished to McDermott, Will & Emery such documents as they
may reasonably request for the purpose of enabling them to pass upon such
matters.
(j) If the Shares have been qualified for sale in Florida, the
Representatives shall have received on each Closing Date certificates,
addressed to the Representatives, and dated such Closing Date, of an
executive officer of the Company, to the effect that the signer of such
certificate has reviewed and understands the provisions of Section
517.075 of the Florida Statutes, and represents that the Company has
complied, and at all times will comply, with all provisions of Section
517.075 and further, that as of such Closing Date, neither the Company
nor any of its affiliates does business with the government of Cuba or
with any person or affiliate located in Cuba.
(k) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person described in Section 4(o).
(l) The Company shall have furnished or caused to be furnished to
the Representatives such further certificates or documents as the
Representatives shall have reasonably requested.
6. Covenants of the Company.
------------------------
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of
this Agreement, and any amendments thereto, to become effective as
promptly as possible. The Company shall prepare the Prospectus in a
form approved by the Representatives and file such Prospectus
pursuant to Rule 424(b) under the Securities Act not later than the
Commission's close of business on the second business day following
the execution and delivery of this Agreement, or, if applicable,
such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act.
(ii) The Company shall promptly advise the Representatives in
writing (i) when any amendment to the Registration Statement shall
have become effective, (ii) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus or for any
additional information, (iii) of the prevention or suspension of the
use of any preliminary prospectus or the Prospectus or of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (iv) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares
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for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the
Prospectus unless the Company has furnished the Representatives a
copy for its review prior to filing and shall not file any such
proposed amendment or supplement to which the Representatives
reasonably object. The Company shall use its best efforts to prevent
the issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.
(iii) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Securities Act and the Rules,
any event occurs as a result of which the Prospectus as then amended
or supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which
they were made not misleading, or if it shall be necessary to amend
or supplement the Prospectus to comply with the Securities Act or
the Rules, the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (ii) of this
Section 6(a), an amendment or supplement which shall correct such
statement or omission or an amendment which shall effect such
compliance.
(iv) The Company shall make generally available to its
security holders and to the Representatives as soon as practicable,
but not later than 45 days after the end of the 12-month period
beginning at the end of the fiscal quarter of the Company during
which the Effective Date occurs (or 90 days if such 12-month period
coincides with the Company's fiscal year), an earning statement
(which need not be audited) of the Company, covering such 12-month
period, which shall satisfy the provisions of Section 11(a) of the
Securities Act or Rule 158 of the Rules.
(v) The Company shall furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits thereto and
amendments thereof) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and all amendments
thereof and, so long as delivery of a prospectus by an Underwriter
or dealer may be required by the Securities Act or the Rules, as
many copies of any preliminary prospectus and the Prospectus and any
amendments thereof and supplements thereto as the Representatives
may reasonably request.
(vi) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and
sale in connection with the offering under the laws of such
jurisdictions as the Representatives may designate and shall
maintain such qualifications in effect so long as required for the
distribution of the Shares; provided, however, that the Company
shall not
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<PAGE>
be required in connection therewith, as a condition thereof, to
qualify as a foreign corporation or to execute a general consent to
service of process in any jurisdiction or subject itself to taxation
as doing business in any jurisdiction.
(vii) Without the prior written consent of CIBC World Markets
Corp., for a period of 180 days after the date of this Agreement,
the Company and each of its individual directors and executive
officers and stockholders shall not issue, sell or register with the
Commission (other than on Form S-8 or on any successor form), or
otherwise dispose of, directly or indirectly, any equity securities
of the Company (or any securities convertible into, exercisable for
or exchangeable for equity securities of the Company), except for
the issuance of the Shares pursuant to the Registration Statement
and the issuance of shares pursuant to the Company's existing stock
option plan or bonus plan as described in the Registration Statement
and the Prospectus. In the event that during this period, (i) any
shares are issued pursuant to the Company's existing stock option
plan or bonus plan that are exercisable during such 180 day period
or (ii) any registration is effected on Form S-8 or on any successor
form relating to shares that are exercisable during such 180 period,
the Company shall obtain the written agreement of such grantee or
purchaser or holder of such registered securities that, for a period
of 180 days after the date of this Agreement, such person will not,
without the prior written consent of CIBC World Markets Corp., offer
for sale, sell, distribute, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, or exercise any
registration rights with respect to, any shares of Common Stock (or
any securities convertible into, exercisable for, or exchangeable
for any shares of Common Stock) owned by such person.
(viii) On or before completion of the offering of the Shares,
the Company shall make all filings required under applicable
securities laws and by the Nasdaq National Market (including any
required registration under the Exchange Act).
(ix) The Company shall file timely and accurate reports in
accordance with the provisions of Florida Statutes Section 517.075,
or any successor provision, and any regulation promulgated
thereunder, if at any time after the Effective Date, the Company or
any of its affiliates commences engaging in business with the
government of Cuba or any person or affiliate located in Cuba.
(x) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of
Proceeds" in the Prospectus.
(xi) The Company will comply with all applicable securities
laws and other applicable laws, rules and regulations in each
foreign jurisdiction in which the Directed Shares are offered in
connection with the Friends and Family Program.
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(xii) The Company will ensure that the Directed Shares will be
restricted, to the extent required by the NASD or the NASD rules,
from sale, transfer, assignment, pledge or hypothecation for a
period of three months following the date of the effectiveness of
the Registration Statement. The Representatives will notify the
Company as to which Participants will need to be so restricted. The
Company shall direct the transfer agent to place stop transfer
restrictions upon such securities for such period of time.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration or
qualification of the Shares for offer and sale under the securities or Blue
Sky laws of the various jurisdictions referred to in Section 6(a)(vi),
including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda, if any; (iv) the furnishing (including
costs of shipping and mailing) to the Representatives and to the
Underwriters of copies of each preliminary prospectus, the Prospectus and
all amendments or supplements to the Prospectus, and of the several
documents required by this Section to be so furnished, as may be reasonably
requested for use in connection with the offering and sale of the Shares by
the Underwriters or by dealers to whom Shares may be sold; (v) the filing
fees of the NASD in connection with its review of the terms of the public
offering and reasonable fees and disbursements of counsel for the
Underwriters in connection with such review; (vi) inclusion of the Shares
for quotation on the Nasdaq National Market; and (vii) all transfer taxes,
if any, with respect to the sale and delivery of the Shares by the Company
to the Underwriters (viii) payments to counsel for costs incurred by the
Underwriters in connection with the Friends and Family Program and payment
of any stamp duties, similar taxes or duties or other taxes, if any,
incurred by the Underwriters in connection with the Friends and Family
Program. Subject to the provisions of Section 9 hereof, the Underwriters
agree to pay, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the performance of the obligations of the Underwriters under
this Agreement not payable by the Company pursuant to the preceding
sentence, including, without limitation, the fees and disbursements of
counsel for the Underwriters.
(c) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Shares
Closing Date, any rumor,
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publication or event relating to or affecting the Company shall occur as
a result of which in the Representatives' opinion the market price of the
Common Stock has been or is likely to be materially affected (regardless
of whether such rumor, publication or event necessitates a supplement to
or amendment of the Prospectus and any integrated prospectus), the
Company will, after notice from the Representatives advising the Company
to the effect set forth above, forthwith prepare, consult with the
Representatives concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to the
Representatives, responding to or commenting on such rumor, publication
or event.
7. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all losses, claims, damages and liabilities,
joint or several (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they,
or any of them, may become subject under the Securities Act, the Exchange
Act or other Federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities arise
out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment thereof or
supplement thereto, or in any Blue Sky application or other information
or other documents executed by the Company filed in any state or other
jurisdiction to qualify any or all of the Shares under the securities
laws thereof (any such application, document or information being
hereinafter referred to as a "Blue Sky Application") or arise out of or
are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) in whole or in part upon any
breach of the representations and warranties set forth in Section 4
hereof, (iii) in whole or in part upon any failure of the Company to
perform any of its obligations hereunder or under law or (iv) any untrue
statement or alleged untrue statement of any material fact contained in
any audio or visual materials prepared by the Company or based upon
written information furnished by or on behalf of the Company, including
(without limitation) slides, videos, films, tape recordings used in
connection with the marketing of the Shares, including (without
limitation) statements communicated to securities analysts employed by
the Underwriters; provided, however, that such indemnity shall not inure
to the benefit of any Underwriter (or any person controlling such
Underwriter) on account of any losses, claims, damages or liabilities
arising from the sale of the Shares to any person by such Underwriter if
such untrue statement or omission or alleged untrue statement or omission
was made in such preliminary prospectus, the Registration Statement or
the Prospectus, or such amendment or supplement thereto, or in any Blue
Sky Application in reliance upon and in conformity with information
furnished in writing to the Company by the Representatives on behalf of
any Underwriter specifically for
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use therein. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
The Company agrees to indemnify and hold harmless the Representatives
and each person, if any, who controls any Representative within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all losses, claims, damages, expenses and liabilities
(including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claim asserted) (i) arising out of or
based upon any untrue statement or alleged untrue statement of a material
fact contained in any material prepared by or with the consent of the
Company for distribution to Participants in connection with the Friends
and Family Program or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
arising out of or based upon the failure of any Participant to pay for
and accept delivery of Directed Shares otherwise reserved for such
Participant pursuant to the Friends and Family Program, and (iii) related
to, arising out of, or in connection with the Friends and Family Program,
other than losses, claims, damages or liabilities (or expenses relating
thereto) that are finally judicially determined to have resulted from the
bad faith or gross negligence of the Representatives.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, each director of the Company, and each officer of
the Company who signs the Registration Statement, to the same extent as
the foregoing indemnity from the Company to each Underwriter, but only
insofar as such losses, claims, damages or liabilities arise out of or
are based upon any untrue statement or omission or alleged untrue
statement or omission which was made in any preliminary prospectus, the
Registration Statement or the Prospectus, or any amendment thereof or
supplement thereto, contained in the (i) concession and reallowance
figures appearing under the caption "Underwriting" and (ii) the
stabilization information contained under the caption "Underwriting" in
the Prospectus; provided, however, that the obligation of each
Underwriter to indemnify the Company (including any controlling person,
director or officer thereof) shall be limited to the net proceeds
received by the Company from such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which
a claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 7(a) or 7(b) shall be available
to any party who shall fail to give notice as provided in this Section
7(c) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by
the failure to give such notice but the omission so
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to notify such indemnifying party of any such action, suit or proceeding
shall not relieve it from any liability that it may have to any
indemnified party for contribution or otherwise than under this Section.
In case any such action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
employment of counsel by such indemnified party has been authorized in
writing by the indemnifying parties, (ii) the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it which are different from or in addition to those
available to the indemnifying party (in which case the indemnifying
parties shall not have the right to direct the defense of such action on
behalf of the indemnified party) or (iii) the indemnifying parties shall
not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of
which cases the fees and expenses of counsel shall be at the expense of
the indemnifying parties. An indemnifying party shall not be liable for
any settlement of any action, suit, proceeding or claim effected without
its written consent, which consent shall not be unreasonably withheld or
delayed.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for
in Section 7(a) or 7(b) is due in accordance with its terms but for any
reason is held to be unavailable to or insufficient to hold harmless an
indemnified party under Section 7(a) or 7(b), then each indemnifying
party shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claims asserted, but after
deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) to which
the indemnified party may be subject in such proportion as is appropriate
to reflect the relative benefits received by the Company and the
Underwriters from the offering of the Shares or, if such allocation is
not permitted by applicable law or indemnification is not available as a
result of the indemnifying party not having received notice as provided
in Section 7 hereof, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault
of the Company and the Underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the
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Underwriters shall be deemed to be in the same proportion as (x) the
total proceeds from the offering (net of underwriting discounts but
before deducting expenses) received by the Company, as set forth in the
table on the cover page of the Prospectus, bear to (y) the underwriting
discounts received by the Underwriters, as set forth in the table on the
cover page of the Prospectus. The relative fault of the Company or the
Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact related
to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) in no case shall any Underwriter
(except as may be provided in the Agreement Among Underwriters) be liable
or responsible for any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter hereunder and (ii)
the Company shall be liable and responsible for any amount in excess of
such underwriting discount; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls the Company within the
meaning of the Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the
same rights to contribution as the Company, subject in each case to
clauses (i) and (ii) in the immediately preceding sentence of this
Section 8. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be
made against another party or parties under this Section 8, notify such
party or parties from whom contribution may be sought, but the omission
so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or
otherwise than under this Section. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim
settled without its written consent. The Underwriter's obligations to
contribute pursuant to this Section 8 are several in proportion to their
respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with respect to the
Shares to be purchased on a Closing Date by the Representatives by notifying the
Company at any time:
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<PAGE>
(a) in the absolute discretion of the Representatives at or before
any Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the future materially disrupt,
the securities markets; (ii) if there has occurred any new outbreak or
material escalation of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as to make
it, in the judgment of the Representatives, inadvisable to proceed with
the offering; (iii) if there shall be such a material adverse change in
general financial, political or economic conditions or the effect of
international conditions on the financial markets in the United States is
such as to make it, in the judgment of the Representatives, inadvisable
or impracticable to market the Shares; (iv) if trading in the Shares has
been suspended by the Commission or trading generally on the New York
Stock Exchange, Inc., on the American Stock Exchange, Inc. or the Nasdaq
National Market has been suspended or limited, or minimum or maximum
ranges for prices for securities shall have been fixed, or maximum ranges
for prices for securities have been required, by said exchanges or by
order of the Commission, the National Association of Securities Dealers,
Inc., or any other governmental or regulatory authority; or (v) if a
banking moratorium has been declared by any state or Federal authority;
or (vi) if, in the judgment of the Representatives, there has occurred a
Material Adverse Effect, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 5 hereof shall not have been fulfilled when and as
required by this Agreement.
If this Agreement is terminated pursuant to any of its provisions,
the Company shall be under no liability to any Underwriter, and no Underwriter
shall be under any liability to the Company, except that (y) if this Agreement
is terminated by the Representatives or the Underwriters because of any failure,
refusal or inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the proposed
purchase and sale of the Shares or in contemplation of performing their
obligations hereunder and (z) no Underwriter who shall have failed or refused to
purchase the Shares agreed to be purchased by it under this Agreement, without
some reason sufficient hereunder to justify cancellation or termination of its
obligations under this Agreement, shall be relieved of liability to the Company
or to the other Underwriters for damages occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of the
Underwriters shall fail (other than for a reason sufficient to justify the
cancellation or termination of this Agreement under Section 9) to purchase on
any Closing Date the Shares agreed to be purchased on such Closing Date by such
Underwriter or Underwriters, the Representatives may find one or more substitute
underwriters to purchase such Shares or make such other arrangements as the
Representatives may deem advisable or one or more of the remaining Underwriters
may agree to purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
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<PAGE>
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of the nondefaulting Underwriters shall be obligated to purchase
such Shares on the terms herein set forth in proportion to their
respective obligations hereunder; provided, that in no event shall the
maximum number of Shares that any Underwriter has agreed to purchase
pursuant to Section 1 hereof be increased pursuant to this Section 10 by
more than one-ninth of such number of Shares without the written consent
of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to one additional business day within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such Shares
upon the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall
have the right to postpone the applicable Closing Date for a period of not more
than five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration Statement
or Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 6(b),
7, 8 and 9. The provisions of this Section 10 shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
11. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company, or its officers,
and of the Underwriters set forth in or made pursuant to this Agreement shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 6(b), 7, 8
and 9 hereof shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Company and their respective successors and assigns, and, to
the extent expressed herein, for the benefit of persons controlling any of the
Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire
-28-
<PAGE>
or have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o CIBC World Markets Corp., One World
Financial Center, New York, New York 10281 Attention: Michael Fekete, with a
copy to McDermott, Will & Emery, 2049 Century Park East, Suite 3400, Los
Angeles, California 90067, Attention: Mark J. Mihanovic, Esq. and (b) if to the
Company, to its agent for service as such agent's address appears on the cover
page of the Registration Statement with a copy Cooley Godward LLP, 2595 Canyon
Boulevard, Suite 250, Boulder, Colorado 80302-6737, Attention: James C.T.
Linfield, Esq.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
-29-
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
GENOMICA CORPORATION
By: ____________________________________
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
PRUDENTIAL SECURITIES INCORPORATED
DAIN RAUSCHER INCORPORATED
Acting severally on behalf of itself
and as representative of the several
Underwriters named on Schedule I
attached hereto
By: CIBC WORLD MARKETS CORP.
By: ____________________________________
Title:
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<PAGE>
SCHEDULE I
----------
Number of
Firm Shares to
Name Be Purchased
---- --------------
CIBC World Markets Corp.
Prudential Securities Incorporated
Dain Rauscher Incorporated
______________
TOTAL
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<PAGE>
EXHIBIT 5(h) TO UNDERWRITING AGREEMENT
LEGAL OPINION OF COOPER & DUNHAM LLP
------------------------------------
STATEMENTS:
We have acted as patent counsel to the Company with respect to the
patent matters reflected on Schedule A attached hereto (the "Relevant
Patent Matters").
We have read the Registration Statement and the Prospectus, including
in particular the portions of the Registration Statement and the
Prospectus under the captions "Risk Factors - __________________" and
"Business - Background, ________________" (such portions being
referred to herein, collectively, as the "Technology Portions").
OPINIONS:
1. The statements in the Technology Portions are accurate and fairly
present the matters of law and legal conclusions stated therein.
2. Nothing has come to our attention which has caused us to believe that
the Technology Portions contain any untrue statement of a material
fact with respect to the patent position of the Company, or omit to
state any material fact relating to the patent position of the
Company.
3. Nothing has come to our attention which has caused us to believe that
(a) any patent application referred to in the Relevant Patent Matters
was not properly prepared and filed, in accordance with all applicable
legal and procedural requirements, or is not in good standing, (b) the
issued patent (the "Issued Patent") referred to in the Relevant Patent
Matters was not properly obtained, in accordance with all applicable
legal and procedural requirements, or is not in good standing, (c)
that any invention described in any patent application or the issued
patent is not held by the Company, or (d) any relevant prior art has
not been disclosed promptly to the appropriate governmental agency.
4. To our knowledge, the Company has not received any notice asserting
any ownership rights contrary to those of the Company in any of the
Relevant Patent Matters.
5. To our knowledge, the Company has not received any notice challenging
the validity or enforceability of any Relevant Patent Matter.
6. To our knowledge, the Company has not received any notice of
infringement of,
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<PAGE>
or conflict with, rights or claims of others with respect to any
patent, trademark, service mark, trade name, copyright or know-how.
7. To our knowledge, other than proceedings (except re-examination,
reissue or interference proceedings) of the various patent and
trademark offices, there are no legal or governmental proceedings
pending relating to any patent, patent application, trade secret,
trademark, service mark or other proprietary information or materials
of the Company and, to our knowledge, no such proceedings are
threatened or contemplated by governmental authorities or others.
-33-
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
GENOMICA CORPORATION
Pursuant to Sections 242 & 245
Genomica Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, Does Hereby
Certify:
1. The name of the corporation is Genomica Corporation. The corporation
was originally incorporated under the name Genomica Inc. The date of filing of
its original Certificate of Incorporation with the Secretary of State of the
State of Delaware was September 6, 1995.
2. This Restated Certificate of Incorporation restates and further amends
the Restated Certificate of Incorporation, as amended, of this corporation by
restating the text of the original Restated Certificate of Incorporation in full
to read as follows:
I.
The name of this Corporation is Genomica Corporation (the "Corporation" or
the "Company").
II.
The address, including street, number, city and county, of the registered
office of the Corporation in the State of Delaware is 1209 Orange Street, City
of Wilmington, County of New Castle, and the name of the registered agent of the
Corporation in the State of Delaware at such address is The Corporation Trust
Company.
III.
The purpose of this Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
IV.
A. This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the Corporation is authorized to issue is one-hundred
twelve million nine-hundred thirty-eight thousand one-hundred seventy-eight
(112,938,178) shares. Sixty-five million (65,000,000) shares shall be Common
Stock, each having a par value of $.001. Forty-seven million nine hundred
thirty-eight thousand one hundred seventy-eight (47,938,178) shares shall be
Preferred Stock, each having a par value of $.001.
B. The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares of Common Stock then outstanding)
by the affirmative vote of
<PAGE>
the holders of a majority of the stock of the Corporation (voting together on an
as-if-converted basis).
C. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, within the limitations and
restrictions stated in this Certificate of Incorporation, to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), the redemption price or
prices, the liquidation preferences of any wholly unissued series of Preferred
Stock, and 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 issue 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 so decreased, the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
D. Twelve million six hundred eighty-eight thousand one hundred seventy-
eight (12,688,178) of the authorized shares of Preferred Stock are hereby
designated "Series A Preferred Stock" (the "Series A Stock"). Twenty five
million (25,000,000) of the authorized shares of Preferred Stock are hereby
designated "Series B Preferred Stock" (the "Series B Stock"). Ten million two-
hundred fifty thousand (10,250,000) of the authorized shares of Preferred Stock
are hereby designated "Series C Preferred Stock" (the "Series C Stock").
E. The rights, preferences, privileges, restrictions and other matters
relating to the Series A Stock, Series B Stock and Series C Stock are as
follows:
1. Dividend Rights. The holders of Preferred Stock shall not be
entitled to receive dividends, except as declared, and at such rates per share,
as may be specified by the Board of Directors of the corporation. No dividends
shall be paid on any share of Common Stock unless a dividend is paid with
respect to all outstanding shares of Series A Stock, Series B Stock and Series C
Stock in an amount for each such share of Series A Stock, Series B Stock and
Series C Stock equal to or greater than the aggregate amount of such dividends
for all shares of Common Stock into which each such share of Series A Stock,
Series B Stock and Series C Stock could then be converted. No dividend shall be
paid on or declared and set apart for the shares of any series of Preferred
Stock unless at the same time a like proportionate dividend (ratably and
proportional to the respective liquidation preference for each such series of
Preferred Stock as set forth in Section 3(a) below) shall be paid on or declared
or set apart for the shares of all other series of Preferred Stock.
2. Voting Rights.
a. General Rights. Except as otherwise provided herein or as
required by law, the Series A Stock, Series B Stock and Series C Stock shall be
voted equally with the shares of the Common Stock of the Company and not as a
separate class, at any annual or special meeting of stockholders of the Company,
and may act by written consent in the same manner as the Common Stock, in either
case upon the following basis: each holder of shares of Series A Stock, Series B
Stock and Series C Stock shall be entitled to such number of votes as shall be
equal to the whole number of shares of Common Stock into which such holder's
2.
<PAGE>
aggregate number of shares of Series A Stock, Series B Stock or Series C Stock,
respectively, are convertible (pursuant to Section 4 hereof) immediately after
the close of business on the record date fixed for such meeting or the effective
date of such written consent.
b. Separate Vote of Series A Stock. For so long as at least
eight hundred thousand (800,000) shares of Series A Stock (subject to adjustment
for any stock split, reverse stock split or other similar event affecting the
Series A Stock) remain outstanding, in addition to any other vote or consent
required herein or by law, the vote or written consent of the holders of a
majority of the outstanding Series A Stock shall be necessary for effecting or
validating the following actions:
(i) Any increase or decrease (other than by redemption or
conversion) in the authorized number of shares of Series A Stock;
(ii) Any authorization or any designation, whether by
reclassification or otherwise, of any new class or series of stock or any other
securities convertible into equity securities of the Company ranking senior to
the Series A Stock in right of redemption, liquidation preference, voting or
dividends or any increase in the authorized or designated number of any such new
class or series;
(iii) Any agreement by the Company or its stockholders
regarding an Asset Transfer or Acquisition (each as defined in Section 3(c)
below);
(iv) Any voluntary dissolution or liquidation of the
Company;
(v) Any action that results in the payment or declaration
of a dividend on any shares of Common Stock; and
(vi) Any redemption, repurchase, payment of dividends or
other distributions with respect to any other stock of the Company except the
Series A Stock ("Junior Stock") (except for acquisitions of Common Stock by the
Company pursuant to agreements which permit the Company to repurchase such
shares upon termination of services to the Company or in exercise of the
Company's right of first refusal upon a proposed transfer).
c. Separate Vote of Series B Stock. For so long as at least
one million three hundred thousand (1,300,000) shares of Series B Stock (subject
to adjustment for any stock split, reverse stock split or other similar event
affecting the Series B Stock) remain outstanding, in addition to any other vote
or consent required herein or by law, the vote or written consent of the holders
of a majority of the outstanding Series B Stock shall be necessary for effecting
or validating the following actions:
(i) Any increase or decrease in the authorized number of
shares of Series B Stock, other than (a) a decrease in connection with a
redemption or conversion; or (b) a decrease which does not reduce the authorized
number to shares of Series B Stock below a number equal to the sum of the
outstanding Series B Stock plus all reservations for future issuances upon the
exercise of warrants, options or other rights;
3.
<PAGE>
(ii) Any authorization or any designation, whether by
reclassification or otherwise, of any new class or series of stock or any other
securities convertible into equity securities of the Company ranking senior to
the Series B Stock in right of redemption, liquidation preference, voting or
dividends or any increase in the authorized or designated number of any such new
class or series;
(iii) Any agreement by the Company or its stockholders
regarding an Asset Transfer or Acquisition (each as defined in Section 3(c)
below);
(iv) Any voluntary dissolution or liquidation of the
Company;
(v) Any action that results in the payment or declaration
of a dividend on any shares of Common Stock; and
(vi) Any redemption, repurchase, payment of dividends or
other distributions with respect to Junior Stock (except for acquisitions of
Common Stock by the Company pursuant to agreements which permit the Company to
repurchase such shares upon termination of services to the Company or in
exercise of the Company's right of first refusal upon a proposed transfer).
c. Separate Vote of Series C Stock. For so long as at least
five-hundred thirty-three thousand (533,000) shares of Series C Stock (subject
to adjustment for any stock split, reverse stock split or other similar event
affecting the Series C Stock) remain outstanding, in addition to any other vote
or consent required herein or by law, the vote or written consent of the holders
of a majority of the outstanding Series C Stock shall be necessary for effecting
or validating the following actions:
(i) Any increase or decrease in the authorized number of
shares of Series C Stock, other than (a) a decrease in connection with a
redemption or conversion; or (b) a decrease which does not reduce the authorized
number to shares of Series C Stock below a number equal to the sum of the
outstanding Series C Stock plus all reservations for future issuances upon the
exercise of warrants, options or other rights;
(ii) Any authorization or any designation, whether by
reclassification or otherwise, of any new class or series of stock or any other
securities convertible into equity securities of the Company ranking senior to
the Series C Stock in right of redemption, liquidation preference, voting or
dividends or any increase in the authorized or designated number of any such new
class or series;
(iii) Any agreement by the Company or its stockholders
regarding an Asset Transfer or Acquisition (each as defined in Section 3(c)
below);
(iv) Any voluntary dissolution or liquidation of the
Company;
(v) Any action that results in the payment or declaration
of a dividend on any shares of Common Stock; and
4.
<PAGE>
(vi) Any redemption, repurchase, payment of dividends or
other distributions with respect to Junior Stock (except for acquisitions of
Common Stock by the Company pursuant to agreements which permit the Company to
repurchase such shares upon termination of services to the Company or in
exercise of the Company's right of first refusal upon a proposed transfer).
d. Election of Board of Directors. The holders of Series A
Stock, voting together as a series shall be entitled to elect four (4) members
of the Board of Directors. The holders of the Common Stock shall be entitled to
elect two (2) members of the Board of Directors. The holders of Series C Stock,
voting together as a series shall be entitled to elect one (1) member of the
Board of Directors.
3. Liquidation Rights.
a. Upon any liquidation, dissolution, or winding up of the
Company, whether voluntary or involuntary, before any distribution or payment
shall be made to the holders of any Junior Stock, (i) the holders of Series A
Stock shall be entitled to be paid out of the assets of the Company an amount
per share of Series A Stock equal to the Series A Original Issue Price (as
defined in Section 4(b)) (as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like with respect to such shares) plus all
declared and unpaid dividends on the Series A Stock; (ii) the holders of Series
B Stock shall be entitled to be paid out of the assets of the Company an amount
per share of Series B Stock equal to the Series B Original Issue Price (as
defined in Section 4(b)) (as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like with respect to such shares) plus all
declared and unpaid dividends; and (iii) the holders of Series C Stock shall be
entitled to be paid out of the assets of the Company an amount per share of
Series C Stock equal to the Series C Original Issue Price (as defined in Section
4(b)) (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares) plus all declared
and unpaid dividends.
b. After the payment of the full liquidation preference of the
Series A Stock, the Series B Stock and the Series C Stock as set forth in
Section 3(a) above, the remaining assets of the Company legally available for
distribution, if any, shall be distributed ratably to the holders of the Common
Stock.
c. The following events shall be considered a liquidation under
this Section 3 (unless determined otherwise by the holders of a majority of the
outstanding Series A Stock, Series B Stock and Series C Stock, voting together
as a separate class):
(i) (A) a consolidation or merger of the Company with or
into any other corporation or other entity or person, or any other corporate
reorganization, in which the stockholders of the Company immediately prior to
such consolidation, merger or reorganization, own less than 50% of the
outstanding voting power of the surviving entity (or its parent) following the
consolidation, merger or reorganization or (B) any transaction (or series of
related transactions involving a person or entity, or a group of affiliated
persons or entities) in which in excess of fifty percent (50%) of the Company's
outstanding voting power is transferred; or
5.
<PAGE>
(ii) a sale, lease or other disposition of all or
substantially all of the assets of the Company (an "Asset Transfer").
d. If, upon any liquidation, distribution, or winding up, the
assets of the Company shall be insufficient to make payment in full to all
holders of Series A Stock, Series B Stock and Series C Stock of the liquidation
preference set forth in Section 3(a), then such assets shall be distributed
among the holders of Series A Stock, Series B Stock and Series C Stock at the
time outstanding, ratably in proportion to the full amounts to which they would
otherwise be respectively entitled.
4. Conversion Rights.
The holders of the Series A Stock, Series B Stock and Series C
Stock shall have the following rights with respect to the conversion of the
Series A Stock, Series B Stock and Series C Stock into shares of Common Stock
(the "Conversion Rights"):
a. Optional Conversion. Subject to and in compliance with the
provisions of this Section 4, any shares of Series A Stock, Series B Stock and
Series C Stock may, at the option of the holder, be converted at any time into
fully-paid and nonassessable shares of Common Stock. The number of shares of
Common Stock to which a holder of Series A Stock, Series B Stock or Series C
Stock shall be entitled upon conversion shall be the product obtained by
multiplying the applicable "Conversion Rate" then in effect (determined as
provided in Section 4(b)) by the number of shares of Series A Stock, Series B
Stock or Series C Stock being converted.
b. Conversion Rate. The conversion rate in effect at any time
for conversion of the Series A Stock (the "Series A Conversion Rate") shall be
the quotient obtained by dividing the Series A Original Issue Price by the
"Series A Conversion Price," calculated as provided in Section 4(c). The
"Original Issue Price" of the Series A Stock shall be $.6024 (the "Series A
Original Issue Price"). The conversion rate in effect at any time for
conversion of the Series B Stock (the "Series B Conversion Rate") shall be the
quotient obtained by dividing the Series B Original Issue Price by the "Series B
Conversion Price," calculated as provided in Section 4(c). The "Original Issue
Price" of the Series B Stock shall be $0.72 (the "Series B Original Issue
Price"). The conversion rate in effect at any time for conversion of the Series
C Stock (the "Series C Conversion Rate") shall be the quotient obtained by
dividing the Series C Original Issue Price by the "Series C Conversion Price,"
calculated as provided in Section 4(c). The "Original Issue Price" of the
Series C Stock shall be $1.50 (the "Series C Original Issue Price").
c. Conversion Price. The conversion price for the Series A
Stock shall initially be the Series A Original Issue Price (the "Series A
Conversion Price"). Such initial Series A Conversion Price shall be adjusted
from time to time in accordance with this Section 4. All references to the
Series A Conversion Price herein shall mean the Series A Conversion Price as so
adjusted. The conversion price for the Series B Stock shall initially be the
Series B Original Issue Price (the "Series B Conversion Price"). Such initial
Series B Conversion Price shall be adjusted from time to time in accordance with
this Section 4. All references to the Series B Conversion Price herein shall
mean the Series B Conversion Price as
6.
<PAGE>
so adjusted. The conversion price for the Series C Stock shall initially be the
Series C Original Issue Price (the "Series C Conversion Price"). Such initial
Series C Conversion Price shall be adjusted from time to time in accordance with
this Section 4. All references to the Series C Conversion Price herein shall
mean the Series C Conversion Price as so adjusted. The Series A Conversion
Price, the Series B Conversion Price and the Series C Conversion Price shall
collectively be referred to as the "Conversion Prices," and each a "Conversion
Price."
d. Sale of Shares Below Conversion Price.
(i) If at any time or from time to time after the date that
the first share of Series C Stock is issued (the "Original Issue Date"), the
Company issues or sells, or is deemed by the express provisions of this Section
4(d) to have issued or sold, Additional Shares of Common Stock (as hereinafter
defined), other than as a dividend or other distribution on any class of stock
as provided in Section 4(f), and other than a subdivision or combination of
shares of Common Stock as provided in Section 4(e) above, for an Effective Price
(as hereinafter defined) less than the applicable effective Conversion Price,
then and in each such case such then-existing Conversion Price shall be reduced,
as of the opening of business on the date of such issue or sale, to a price
determined by multiplying such Conversion Price by a fraction (i) the numerator
of which shall be (A) the number of shares of Common Stock deemed outstanding
(as defined below) immediately prior to such issue or sale, plus (B) the number
of shares of Common Stock which the aggregate consideration received (as defined
in subsection d(ii)) by the Company for the total number of Additional Shares of
Common Stock so issued would purchase at such Conversion Price, and (ii) the
denominator of which shall be the number of shares of Common Stock deemed
outstanding (as defined below) immediately prior to such issue or sale plus the
total number of Additional Shares of Common Stock so issued. For the purposes of
the preceding sentence, the number of shares of Common Stock deemed to be
outstanding as of a given date shall be the sum of (A) the number of shares of
Common Stock actually outstanding, (B) the number of shares of Common Stock into
which the then-outstanding shares of Series A Stock, Series B Stock and Series C
Stock could be converted if fully converted on the day immediately preceding the
given date, and (C) the number of shares of Common Stock which could be obtained
through the exercise or conversion of all other rights, options and convertible
securities on the day immediately preceding the given date.
(ii) For the purpose of making any adjustment required under
this Section 4(d), the consideration received by the Company for any issue or
sale of securities shall (A) to the extent it consists of cash, be computed at
the net amount of cash received by the Company after deduction of any
underwriting or similar commissions, compensation or concessions paid or allowed
by the Company in connection with such issue or sale but without deduction of
any expenses payable by the Company, (B) to the extent it consists of property
other than cash, be computed at the fair value of that property as determined in
good faith by the Board of Directors, and (C) if Additional Shares of Common
Stock, Convertible Securities (as hereinafter defined or rights or options to
purchase either Additional Shares of Common Stock or Convertible Securities are
issued or sold together with other stock or securities or other assets of the
Company for a consideration which covers both, be computed as the portion of the
consideration so received that may be reasonably determined in good faith by the
Board of Directors to be allocable to such Additional Shares of Common Stock,
Convertible Securities or rights or options.
7.
<PAGE>
(iii) For the purpose of the adjustment required under this
Section 4(d), if the Company issues or sells any rights or options for the
purchase of, or stock or other securities convertible into, Additional Shares of
Common Stock (such convertible stock or securities being herein referred to as
"Convertible Securities") and if the Effective Price of such Additional Shares
of Common Stock is less than the Conversion Price, in each case the Company
shall be deemed to have issued at the time of the issuance of such rights or
options or Convertible Securities the maximum number of Additional Shares of
Common Stock issuable upon exercise or conversion thereof and to have received
as consideration for the issuance of such shares an amount equal to the total
amount of the consideration, if any, received by the Company for the issuance of
such rights or options or Convertible Securities, plus, in the case of such
rights or options, the minimum amounts of consideration, if any, payable to the
Company upon the exercise of such rights or options, plus, in the case of
Convertible Securities, the minimum amounts of consideration, if any, payable to
the Company (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities) upon the conversion thereof; provided, that, if
in the case of Convertible Securities the minimum amounts of such consideration
cannot be ascertained, but are a function of antidilution or similar protective
clauses, the Company shall be deemed to have received the minimum amounts of
consideration without reference to such clauses; provided, further, that if the
minimum amount of consideration payable to the Company upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or
on the occurrence or non-occurrence of specified events other than by reason of
antidilution adjustments, the Effective Price shall be recalculated using the
figure to which such minimum amount of consideration is reduced; provided,
further, that if the minimum amount of consideration payable to the Company upon
the exercise or conversion of such rights, options or Convertible Securities is
subsequently increased, the Effective Price shall be again recalculated using
the increased minimum amount of consideration payable to the Company upon the
exercise or conversion of such rights, options or Convertible Securities. No
further adjustment of any Conversion Price, as adjusted upon the issuance of
such rights, options or Convertible Securities, shall be made as a result of the
actual issuance of Additional Shares of Common Stock on the exercise of any such
rights or options or the conversion of any such Convertible Securities. If any
such rights or options or the conversion privilege represented by any such
Convertible Securities shall expire without having been exercised, any
Conversion Price as adjusted upon the issuance of such rights, options or
Convertible Securities shall be readjusted to the Conversion Price which would
have been in effect had an adjustment been made on the basis that the only
Additional Shares of Common Stock so issued were the Additional Shares of Common
Stock, if any, actually issued or sold on the exercise of such rights or options
or rights of conversion of such Convertible Securities, and such Additional
Shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise, plus the consideration, if
any, actually received by the Company for the granting of all such rights or
options, whether or not exercised, plus the consideration received for issuing
or selling the Convertible Securities actually converted, plus the
consideration, if any, actually received by the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion of such Convertible Securities, provided that such
readjustment shall not apply to prior conversions of Series A Stock, Series B
Stock or Series C Stock.
(iv) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Company or deemed to be issued pursuant to
this Section
8.
<PAGE>
4(d), whether or not subsequently reacquired or retired by the Company other
than (A) shares of Common Stock issued upon conversion of the Series A Stock,
Series B Stock or Series C Stock; (B) shares of Common Stock and/or options,
warrants or other Common Stock purchase rights, and the Common Stock issued
pursuant to such options, warrants or other rights (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like) after the
Original Issue Date to employees, officers or directors of, or consultants or
advisors to the Company or any subsidiary pursuant to stock purchase or stock
option plans or other arrangements that are approved by the Board of Directors;
(C) shares of Common Stock issued pursuant to the exercise of options, warrants
or convertible securities outstanding as of the Original Issue Date; (D) shares
of Common Stock issued in connection with the Company's initial public offering;
and (E) shares of Common Stock or Preferred Stock issued as a dividend. The
"Effective Price" of Additional Shares of Common Stock shall mean the quotient
determined by dividing the total number of Additional Shares of Common Stock
issued or sold, or deemed to have been issued or sold by the Company under this
Section 4(d), into the aggregate consideration received, or deemed to have been
received by the Company for such issue under this Section 4(d), for such
Additional Shares of Common Stock.
e. Adjustment for Stock Splits and Combinations. If the Company
shall at any time or from time to time after the Original Issue Date effect a
subdivision of the outstanding Common Stock without a corresponding subdivision
of the Preferred Stock, each Conversion Price in effect immediately before that
subdivision shall be proportionately decreased. Conversely, if the Company
shall at any time or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock into a smaller number of shares without a
corresponding combination of the Preferred Stock, each Conversion Price in
effect immediately before the combination shall be proportionately increased.
Any adjustment under this Section 4(e) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
f. Adjustment for Common Stock Dividends and Distributions. If
the Company at any time or from time to time after the Original Issue Date
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, in each such event the Conversion Price then in effect
shall be decreased as of the time of such issuance or, in the event such record
date is fixed, as of the close of business on such record date, by multiplying
the respective Conversion Price then in effect by a fraction (i) the numerator
of which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date and (ii) the denominator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution; provided,
however, that if such record date is fixed and such dividend is not fully paid
or if such distribution is not fully made on the date fixed therefor, the
Conversion Price shall be recomputed accordingly as of the close of business on
such record date and thereafter the Conversion Price shall be adjusted pursuant
to this Section 4(f) to reflect the actual payment of such dividend or
distribution.
g. Adjustments for Other Dividends and Distributions. If the
Company at any time or from time to time after the Original Issue Date makes, or
fixes a record
9.
<PAGE>
date for the determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in securities of the Company other than
shares of Common Stock, in each such event provision shall be made so that the
holders of the Series A Stock, Series B Stock and Series C Stock shall receive
upon conversion thereof, in addition to the number of shares of Common Stock
receivable thereupon, the amount of other securities of the Company which they
would have received had their Series A Stock, Series B Stock or Series C Stock,
as applicable, 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, subject to all other adjustments called for during
such period under this Section 4 with respect to the rights of the holders of
the Series A Stock, Series B Stock or Series C Stock, as applicable, or with
respect to such other securities by their terms.
h. Adjustment for Reclassification, Exchange and Substitution.
If at any time or from time to time after the Original Issue Date, the Common
Stock issuable upon the conversion of the Series A Stock, Series B Stock and
Series C Stock is changed into the same or a different number of shares of any
class or classes of stock, whether by recapitalization, reclassification or
otherwise (other than an Acquisition or Asset Transfer as defined in Section
3(c) or a subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets provided for elsewhere
in this Section 4), in any such event each holder of Series A Stock, Series B
Stock and Series C Stock shall have the right thereafter to convert such stock
into the kind and amount of stock and other securities and property receivable
upon such recapitalization, reclassification or other change by holders of the
maximum number of shares of Common Stock into which such shares of Series A
Stock, Series B Stock or Series C Stock, as applicable, could have been
converted immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein or with respect to
such other securities or property by the terms thereof.
i. Reorganizations, Mergers, Consolidations or Sales of Assets.
If at any time or from time to time after the Original Issue Date, there is a
capital reorganization of the Common Stock (other than an Acquisition or Asset
Transfer as defined in Section 3(c) or a recapitalization, subdivision,
combination, reclassification, exchange or substitution of shares provided for
elsewhere in this Section 4, as a part of such capital reorganization, provision
shall be made so that the holders of the Series A Stock, Series B Stock or
Series C Stock shall thereafter be entitled to receive upon conversion of the
Series A Stock, Series B Stock or Series C Stock the number of shares of stock
or other securities or property of the Company to which a holder of the number
of shares of Common Stock deliverable upon conversion would have been entitled
on such capital reorganization, subject to adjustment in respect of such stock
or securities by the terms thereof. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 4 with
respect to the rights of the holders of Series A Stock, Series B Stock and
Series C Stock after the capital reorganization to the end that the provisions
of this Section 4 (including adjustment of the Conversion Price then in effect
and the number of shares issuable upon conversion of the Series A Stock, Series
B Stock or Series C Stock, as applicable) shall be applicable after that event
and be as nearly equivalent as practicable.
10.
<PAGE>
j. Certificate of Adjustment. In each case of an adjustment or
readjustment of the Conversion Price for the number of shares of Common Stock or
other securities issuable upon conversion of the Series A Stock, Series B Stock
or Series C Stock, if the Series A Stock, Series B Stock or Series C Stock is
then convertible pursuant to this Section 4, the Company, at its expense, shall
compute such adjustment or readjustment in accordance with the provisions hereof
and prepare a certificate showing such adjustment or readjustment, and shall
mail such certificate, by first class mail, postage prepaid, to each registered
holder of such stock at the holder's address as shown in the Company's books.
The certificate shall set forth such adjustment or readjustment, showing in
detail the facts upon which such adjustment or readjustment is based, including
a statement of (i) the consideration received or deemed to be received by the
Company for any Additional Shares of Common Stock issued or sold or deemed to
have been issued or sold, (ii) each Conversion Price at the time in effect,
(iii) the number of Additional Shares of Common Stock and (iv) the type and
amount, if any, of other property which at the time would be received upon
conversion of the Series A Stock, Series B Stock and Series C Stock.
k. Notices of Record Date. Upon (i) any taking by the Company
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 or
other distribution, or (ii) any Acquisition (as defined in Section 3(c)) or
other capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any merger or
consolidation of the Company with or into any other corporation, or any Asset
Transfer (as defined in Section 3(c)), or any voluntary or involuntary
dissolution, liquidation or winding up of the Company, the Company shall mail to
each holder of Series A Stock, Series B Stock and Series C Stock at least twenty
(20) days prior to the record date specified therein a notice specifying (A) the
date on which any such record is to be taken for the purpose of such dividend or
distribution and a description of such dividend or distribution, (B) the date on
which any such Acquisition, reorganization, reclassification, transfer,
consolidation, merger, Asset Transfer, dissolution, liquidation or winding up is
expected to become effective, and (C) the date, if any, that is to be fixed as
to when the holders of record of Common Stock (or other securities) shall be
entitled to exchange their shares of Common Stock (or other securities) for
securities or other property deliverable upon such Acquisition, reorganization,
reclassification, transfer, consolidation, merger, Asset Transfer, dissolution,
liquidation or winding up.
l. Automatic Conversion. Each share of Series A Stock, Series
B Stock and Series C Stock shall automatically be converted into shares of
Common Stock, based on the then-effective applicable Conversion Price, (A) at
any time upon the affirmative election of the holders of a majority of the
outstanding shares of Series A Stock, Series B Stock and Series C Stock, voting
together as a separate class on as as-converted basis, or (B) immediately upon
the closing of a firmly 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 Company in which (i)
the per share price is at least $2.50 per share (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like) and (ii) the
gross cash proceeds to the Company (before underwriting discounts, commissions
and fees) are at least $15,000,000. Upon such automatic conversion, any
declared and unpaid dividends shall be paid in accordance with the provisions of
Section 4(m).
11.
<PAGE>
m. Mechanics of Conversion.
(i) Optional Conversion. Each holder of Series A Stock,
Series B Stock or Series C Stock who desires to convert the same into shares of
Common Stock pursuant to this Section 4 shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Company or any
transfer agent for such stock, and shall give written notice to the Company at
such office that such holder elects to convert the same. Such notice shall state
the number of shares of Series A Stock, Series B Stock or Series C Stock being
converted. Thereupon, the Company shall promptly issue and deliver at such
office to such holder a certificate or certificates for the number of shares of
Common Stock to which such holder is entitled. Such conversion shall be deemed
to have been made at the close of business on the date of such surrender of the
certificates representing the shares of Series A Stock, Series B Stock or Series
C Stock, as applicable, to be converted, and the person entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder of such shares of Common Stock on such date.
(ii) Automatic Conversion. Upon the occurrence of the event
specified in paragraph 4(l) above, the outstanding shares of Series A Stock,
Series B Stock and Series C Stock shall be converted automatically without any
further action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Company or its transfer agent;
provided, however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless the
certificates evidencing such shares of Series A Stock, Series B Stock and Series
C Stock are either delivered to the Company or its transfer agent as provided
below, or the holder notifies the Company or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with such certificates. Upon the occurrence of such automatic
conversion of the Series A Stock, Series B Stock and Series C Stock, the holders
of Series A Stock, Series B Stock and Series C Stock shall surrender the
certificates representing such shares at the office of the Company or any
transfer agent for the Series A Stock, Series B Stock and Series C Stock, as
applicable. Thereupon, there shall be issued and delivered to such holder
promptly at such office and in its 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 Series A Stock, Series B Stock and Series
C Stock surrendered were convertible on the date on which such automatic
conversion occurred, and any declared and unpaid dividends shall be paid in
accordance with the provisions of Section 4(m)(i) above.
n. Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of Series A Stock, Series B Stock and Series C
Stock. All shares of Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series A Stock, Series B Stock and Series C
Stock by a holder thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of any fractional share.
If, after the aforementioned aggregation, the conversion would result in the
issuance of any fractional share, the Company shall, in lieu of issuing any
fractional share, pay cash equal to the product of such fraction multiplied by
the Common Stock's fair market value (as determined by the Board of Directors)
on the date of conversion.
12.
<PAGE>
5. General Provisions.
a. Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A Stock, Series B Stock and Series C Stock, such number
of its shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Series A Stock, Series B Stock
and Series C Stock. If at any time the number of authorized but unissued shares
of Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A Stock, Series B Stock and Series C Stock, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
b. Notices. Any notice required by the provisions of this
Section 6 shall be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified, (ii) when sent by confirmed telex
or facsimile if sent during normal business hours of the recipient; if not, then
on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (iv)
one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All notices
shall be addressed to each holder of record at the address of such holder
appearing on the books of the Company.
c. Payment of Taxes. The Company will pay all taxes (other
than taxes based upon income) and other governmental charges that may be imposed
with respect to the issue or delivery of shares of Common Stock upon conversion
of shares of Series A Stock, Series B Stock and Series C Stock, excluding any
tax or other charge imposed in connection with any transfer involved in the
issue and delivery of shares of Common Stock in a name other than that in which
the shares of Series A Stock, Series B Stock or Series C Stock, as applicable,
so converted were registered.
d. No Dilution or Impairment. Without the consent of the
holders of then outstanding Series A Stock, Series B Stock and Series C Stock as
required under Section 2(b) or 2(c), the Company shall not amend its Certificate
of Incorporation or participate in any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or take any
other voluntary action, for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but shall at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate in
order to protect the conversion rights of the holders of the Series A Stock,
Series B Stock and Series C Stock against dilution or other impairment.
e. No Reissuance of Preferred Stock. No share or shares of
Series A Stock, Series B Stock or Series C Stock acquired by the Corporation by
reason of redemption, purchase, conversion or otherwise shall be reissued.
f. No Preemptive Rights. Stockholders shall have no preemptive
rights except as granted by the Company pursuant to written agreements.
13.
<PAGE>
V.
For the management of the business and for the conduct of the affairs of
the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed by the Board
of Directors in the manner provided in the Bylaws.
B. The Board of Directors is expressly authorized to make, amend,
supplement or repeal the Bylaws; provided, however, that the stockholders may
change or repeal any Bylaw adopted by the Board of Directors by the affirmative
vote of the holders of a majority of the voting power of all of the then
outstanding shares of the capital stock of the Corporation; 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.
C. The directors of the Corporation need not be elected by written ballot
unless the Bylaws so provide.
VI.
A. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for any 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 an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.
B. Any repeal or modification of this Article VI shall be prospective and
shall not affect the rights under this Article VI in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
[SIGNATURE PAGE FOLLOWS]
14.
<PAGE>
In Witness Whereof, this Certificate has been subscribed this 13th day of
March, 2000 by the undersigned who affirms that the statements made herein are
true and correct.
/s/ Teresa W. Ayers
------------------------------
Teresa W. Ayers
Chief Executive Officer
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
GENOMICA CORPORATION
ARTICLE I
STOCKHOLDERS
------------
1.1 Meetings.
--------
1.1.1 Place. Meetings of the stockholders shall be held at such place as
-----
may be designated by the board of directors.
1.1.2 Annual Meeting. An annual meeting of the stockholders for the
--------------
election of directors and for other business shall be held on such date and at
such time as may be fixed by the board of directors.
1.1.3 Special Meetings. Special meetings of the stockholders may be
----------------
called at any time by the president, by any member of the board of directors, by
the holders of a majority of the outstanding shares of stock of the Company
entitled to vote at the meeting, or by any holder or holders of at least 25% of
the outstanding shares of the Company's Series A Preferred Stock (the "Preferred
Shares") or Common Stock.
1.1.4 Quorum. The presence, in person or by proxy, of the holders of a
-----
majority of the outstanding shares of stock of the Company entitled to vote on a
particular matter shall constitute a quorum for the purpose of considering such
matter.
1.1.5 Voting Rights. Except as otherwise provided herein, in the
-------------
certificate of incorporation or by law, every stockholder shall have the right
at every meeting of stockholders to one vote for every share standing in the
name of such stockholder on the books of the Company which is entitled to vote
at such meeting. Every stockholder may vote either in person or by proxy.
<PAGE>
ARTICLE II
DIRECTORS
---------
2.1 Number and Term. The board of directors, by the affirmative vote of at
---------------
least 80% of the whole board of directors shall have authority to (i) determine
the number of directors to constitute the board and (ii) fix the terms of office
of the directors; provided, however, that the number of directors fixed in
-------- -------
accordance with the foregoing shall in no event conflict with any of the terms
or provisions of the Company's Certificate of Incorporation.
2.2 Meetings.
2.2.1 Place. Meetings of the board of directors shall be held at such
-----
place as may be designated by the board of directors or in the notice of the
meeting.
2.2.2 Regular Meetings. Regular meetings of the board of directors shall
----------------
be held at such times as the board of directors may designate. Notice of
regular meetings need not be given.
2.2.3 Special Meetings. Special meetings of the board of directors may be
----------------
called by direction of the president, by any member of the board on three days'
notice to each director, either personally or by mail telegram or facsimile
transmission or by any holder or holders of at least 25% of the outstanding
Preferred Shares.
2.2.4 Quorum. A majority of all the directors in office shall constitute
------
a quorum for the transaction of business at any meeting.
2.2.5 Voting. Except as otherwise provided herein, in the certificate of
------
incorporation or by law, the vote of a majority of the directors present at any
meeting at which a quorum is present shall constitute the act of the board of
directors.
2.2.6 Committees. The board of directors may, by resolution adopted by a
----------
majority of the whole board, designate one or more committees, each committee to
consist of one or more directors and such alternate members (also directors) as
may be designated by the board, provided, however, that in the event Cold Spring
-------- -------
Harbor Laboratory is entitled to designate a director pursuant to a certain
Voting Agreement dated as of March 22, 1996, all committees of the board of
directors shall contain the director designated by Cold Spring Harbor
Laboratory. Unless otherwise provided herein, in the absence or
disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint
-2-
<PAGE>
another director to act at the meeting in the place of any such absent or
disqualified member. Except as otherwise provided herein, in the certificate of
incorporation or by law, any such committee shall have and may exercise the
powers of the full board of directors to the extent provided in the resolution
of the board directing the committee.
ARTICLE III
OFFICERS
--------
3.1 Election. At its first meeting after each annual meeting of the
--------
stockholders, the board of directors shall elect a president, treasurer,
secretary and such other officers as it deems advisable.
3.2 Authority, Duties and Compensation. The officers shall have such
----------------------------------
authority, perform such duties and serve for such compensation as may be
determined by resolution of the board of directors. Except as otherwise
provided by board resolution, (i) the president shall be the chief executive
officer of the Company, shall have general supervision over the business and
operations of the Company, may perform any act and execute any instrument for
the conduct of such business and operations and shall preside at all meetings of
the board and stockholders, (ii) the other officers shall have the duties
customarily related to their respective offices, and (iii) any vice president,
or vice presidents in the order determined by the board, shall in the absence of
the president have the authority and perform the duties of the president
ARTICLE IV
INDEMNIFICATION
---------------
4.1 Right to Indemnification. The Company shall indemnify any person who was
------------------------
or is 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 (a "proceeding"), by reason of the fact that such person is or was
a director or officer of the Company or a constituent corporation absorbed in a
consolidation or merger, or is or was serving at the request of the Company or a
constituent corporation absorbed in a consolidation or merger, as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or is or was a director or officer of the Company serving at its
request as an administrator, trustee or other fiduciary of one or more of the
employee benefit plans of the Company or other enterprise, against expenses
(including attorneys' fees), liability and loss actually and reasonably incurred
or suffered by such
-3-
<PAGE>
person in connection with such proceeding, whether or not the indemnified
liability arises or arose from any threatened, pending or completed proceeding
by or in the right of the Company, except to the extent that such
indemnification is prohibited by applicable law.
4.2 Advance of Expenses. Except for proceedings against a director or officer
-------------------
instigated by the Company, expenses incurred by a director or officer of the
Company in defending a proceeding shall be paid by the Company in advance of the
final disposition of such proceeding subject to the provisions of any applicable
statute.
4.3 Procedure for Determining Permissibility. To determine whether any
----------------------------------------
indemnification or advance of expenses under this Article IV is permissible, the
board of directors by a majority vote of a quorum consisting of directors not
parties to such proceeding may, and on request of any person seeking
indemnification or advance of expenses shall be required to, determine in each
case whether the applicable standards in any applicable statute have been met,
or such determination shall be made by independent legal counsel if such quorum
is not obtainable, or, even if obtainable, a majority vote of a quorum of
disinterested directors so directs, provided that, if there has been a change in
control of the Company between the time of the action or failure to act giving
rise to the claim for indemnification or advance of expenses and the time such
claim is made, at the option of the person seeking indemnification or advance of
expenses, the permissibility of indemnification or advance of expenses shall be
determined by independent legal counsel. The reasonable expenses of any
director or officer in prosecuting a successful claim for indemnification, and
the fees and expenses of any special legal counsel engaged to determine
permissibility of indemnification or advance of expenses, shall be borne by the
Company.
4.4 Contractual Obligation. The obligations of the Company to indemnify a
----------------------
director or officer under this Article IV, including the duty to advance
expenses, shall be considered a contract between the Company and such director
or officer, and no modification or repeal of any provision of this Article IV
shall affect, to the detriment of the director or officer, such obligations of
the Company in connection with a claim based on any act or failure to act
occurring before such modification or repeal.
4.5 Indemnification Not Exclusive; Inuring of Benefit. The indemnification and
-------------------------------------------------
advance of expenses provided by this Article IV shall not be deemed exclusive of
any other right to which one indemnified may be entitled under any statute,
provision of the Certificate of Incorporation, these 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
such office, and shall inure to the benefit of the heirs, executors and
administrators of any such person.
-4-
<PAGE>
4.6 Insurance and Other Indemnification. The board of directors shall have the
-----------------------------------
power to (i) authorize the Company to purchase and maintain, at the Company's
expense, insurance on behalf of the Company and on behalf of others to the
extent that power to do so has not been prohibited by statute, (ii) create any
fund of any nature, whether or not under the control of a trustee, or otherwise
secure any of its indemnification obligations, and (iii) give other
indemnification to the extent permitted by statute.
ARTICLE V
TRANSFER OF SHARE CERTIFICATES
------------------------------
Transfers of share certificates and the shares represented thereby shall be
made on the books of the Company only by the registered holder or by duly
authorized attorney. Transfers shall be made only on surrender of the share
certificate or certificates.
ARTICLE VI
AMENDMENTS
----------
These bylaws may be amended or repealed at any regular or special meeting
of the board of directors by vote of a majority of all directors in office or at
any annual or special meeting of stockholders by vote of holders of a majority
of the outstanding stock entitled to vote; provided, however, that Section 2.1
-------- -------
or Article IV and this Article VI may not be amended without the vote of 662/3%
of the outstanding Preferred Shares, voting separately as a class and Section
2.1, Section 2.2.6, Article IV and this Article VI may not be amended without
the approval of Cold Spring Harbor Laboratory, so long as it is a shareholder of
the Company entitled to designate a director as contemplated by Section 2.2.6 of
these bylaws. Notice of any such annual or special meeting of stockholders
shall set forth the proposed change or a summary thereof.
-5-
<PAGE>
EXHIBIT 3.3
RESTATED CERTIFICATE OF INCORPORATION
OF
GENOMICA CORPORATION
Genomica Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, Does Hereby
Certify:
1. The name of the corporation is Genomica Corporation. The corporation
was originally incorporated under the name Genomica Inc. The date of filing of
its original Certificate of Incorporation with the Secretary of State of the
State of Delaware was September 6, 1995.
2. This Restated Certificate of Incorporation of Jato Communications
Corp. has been duly adopted in accordance with the provisions of Sections 228,
242 and 245 of the General Corporation Law of the State of Delaware.
3. This Restated Certificate of Incorporation restates and further amends
the Restated Certificate of Incorporation of this corporation by restating the
text of the original Restated Certificate of Incorporation in full to read as
follows:
I.
The name of this Corporation is Genomica Corporation (the "Corporation" or
the "Company").
II.
The address, including street, number, city and county, of the registered
office of the Corporation in the State of Delaware is 1209 Orange Street, City
of Wilmington, County of New Castle, and the name of the registered agent of the
Corporation in the State of Delaware at such address is The Corporation Trust
Company.
III.
The purpose of this Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
IV.
A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the Corporation is authorized to issue is [forty-nine million
(49,000,000)] shares. [Forty-four million (44,000,000)] shares shall be Common
Stock, each having a par value of $.001. [Five million (5,000,000)] shares
shall be Preferred Stock, each having a par value of $.001.
1.
<PAGE>
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law
("DGCL"), to fix or alter from time to time the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions of any wholly unissued series of Preferred Stock, and to
establish from time to time the number of shares constituting any such series 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.
V.
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A.
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted by the Board of Directors.
2. Board of Directors
Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specified circumstances, the directors
shall be divided into three classes designated as Class I, Class II and Class
III, respectively. Directors shall be assigned to each class in accordance with
a resolution or resolutions adopted by the Board of Directors. At the first
annual meeting of stockholders following the adoption and filing of this
Certificate of Incorporation, the term of office of the Class I directors shall
expire and Class I directors shall be elected for a full term of three years. At
the second annual meeting of stockholders following the adoption and filing of
this Certificate of Incorporation, the term of office of the Class II directors
shall expire and Class II directors shall be elected for a full term of three
years. At the third annual meeting of stockholders following the adoption and
filing of this Certificate of Incorporation, the term of office of the Class III
directors shall expire and Class III directors shall be elected for a full term
of three years. At each succeeding annual meeting of stockholders, directors
shall be elected for a full term of three years to succeed the directors of the
class whose terms expire at such annual meeting.
Notwithstanding the foregoing provisions of this section, each director shall
serve until his successor is duly elected and qualified or until his death,
resignation or removal. No decrease in
2.
<PAGE>
the number of directors constituting the Board of Directors shall shorten the
term of any incumbent director.
3. Removal of Directors
a. Neither the Board of Directors nor any individual director
may be removed without cause.
b. Subject to any limitation imposed by law, any individual
director or directors may be removed with cause by the holders of a majority of
the voting power of the corporation entitled to vote at an election of
directors.
4. Vacancies
a. Subject to the rights of the holders of any series of
Preferred Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the stockholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the director for which the vacancy was created or occurred and until such
director's successor shall have been elected and qualified.
b. If at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Delaware Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) 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 newly
created directorships, or to replace the directors chosen by the directors then
in offices as aforesaid, which election shall be governed by Section 211 of the
DGCL.
B.
1. Bylaw Amendments
Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws
may be altered or amended or new Bylaws adopted by the affirmative vote 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 of the corporation entitled to
vote. The Board of Directors shall also have the power to adopt, amend, or
repeal Bylaws.
2. The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
3.
<PAGE>
3. 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.
4. 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.
VI.
A. The liability of the directors for monetary damages shall be
eliminated to the fullest extent under applicable law.
B. Any repeal or modification of this Article VI shall be prospective and
shall not affect the rights under this Article VI in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
VII.
A. 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, except as provided in paragraph B. of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation 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, this Certificate
of Incorporation or any Preferred Stock Designation, 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 Articles V, VI,
and VII.
4.
<PAGE>
In Witness Whereof, this Certificate has been subscribed this ____ day of
__________, 2000 by the undersigned who affirms that the statements made herein
are true and correct.
_____________________________
Teresa W. Ayers
5.
<PAGE>
EXHIBIT 3.4
AMENDED AND RESTATED BYLAWS
OF
GENOMICA CORPORATION
(A DELAWARE CORPORATION)
<PAGE>
Table Of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I Offices.................................................... 1
Section 1. Registered Office...................................... 1
Section 2. Other Offices.......................................... 1
ARTICLE II Corporate Seal............................................. 1
Section 3. Corporate Seal......................................... 1
ARTICLE III Stockholders' Meetings..................................... 1
Section 4. Place Of Meetings...................................... 1
Section 5. Annual Meetings........................................ 2
Section 6. Special Meetings....................................... 4
Section 7. Notice Of Meetings..................................... 5
Section 8. Quorum................................................. 5
Section 9. Adjournment And Notice Of Adjourned Meetings........... 6
Section 10. Voting Rights.......................................... 6
Section 11. Joint Owners Of Stock.................................. 6
Section 12. List Of Stockholders................................... 6
Section 13. Action Without Meeting................................. 7
Section 14. Organization........................................... 8
ARTICLE IV Directors.................................................. 8
Section 15. Number And Term Of Office.............................. 8
Section 16. Powers................................................. 8
Section 17. Classes of Directors................................... 8
Section 17. Classes of Directors................................... 9
Section 17. Classes of Directors................................... 10
Section 17. Board of Directors..................................... 11
Section 17. Board of Directors..................................... 11
Section 18. Vacancies.............................................. 12
Section 19. Resignation............................................ 12
Section 20. Removal................................................ 13
Section 20. Removal................................................ 14
</TABLE>
i.
<PAGE>
Table Of Contents
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
Section 21. Meetings............................................... 15
Section 22. Quorum And Voting...................................... 16
Section 23. Action Without Meeting................................. 16
Section 24. Fees And Compensation.................................. 16
Section 25. Committees............................................. 16
Section 26. Organization........................................... 18
ARTICLE V Officers................................................... 18
Section 27. Officers Designated.................................... 18
Section 28. Tenure And Duties Of Officers.......................... 18
Section 29. Delegation Of Authority................................ 19
Section 30. Resignations........................................... 19
Section 31. Removal................................................ 20
ARTICLE VI Execution Of Corporate Instruments And Voting Of Securities
Owned By The Corporation................................... 20
Section 32. Execution Of Corporate Instruments..................... 20
Section 33. Voting Of Securities Owned By The Corporation.......... 20
ARTICLE VII Shares Of Stock............................................ 21
Section 34. Form And Execution Of Certificates..................... 21
Section 35. Lost Certificates...................................... 21
Section 36. Transfers.............................................. 22
Section 37. Fixing Record Dates.................................... 22
Section 38. Registered Stockholders................................ 23
ARTICLE VIII Other Securities Of The Corporation........................ 23
Section 39. Execution Of Other Securities.......................... 23
ARTICLE IX Dividends.................................................. 24
Section 40. Declaration Of Dividends............................... 24
Section 41. Dividend Reserve....................................... 24
ARTICLE X Fiscal Year................................................ 24
Section 42. Fiscal Year............................................ 24
</TABLE>
ii.
<PAGE>
Table Of Contents
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE XI Indemnification............................................ 24
Section 43. Indemnification Of Directors, Executive Officers, Other
Officers, Employees And Other Agents................... 25
ARTICLE XII Notices.................................................... 28
Section 44. Notices................................................ 28
ARTICLE XIII Amendments................................................. 29
Section 45. Amendments............................................. 30
Section 45. Amendments............................................. 30
ARTICLE XIV Loans To Officers.......................................... 30
Section 46. Loans To Officers...................................... 30
</TABLE>
iii.
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
GENOMICA CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I
Offices
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be in the City of Wilmington, County of New Castle.
Section 2. Other Offices. The corporation shall also have and maintain an
office or principal place of business at such place as may be fixed by the Board
of Directors, and 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
Corporate Seal
Section 3. Corporate Seal. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate Seal-
Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III
Stockholders' Meetings
Section 4. Place Of Meetings. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
Section 5. Annual Meetings.
(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. Nominations of persons for election
to the Board of Directors of the corporation and the proposal of business to be
considered by the stockholders may be made at an annual meeting of stockholders:
(i) pursuant to the corporation's notice of meeting of stockholders; (ii) by or
at the
1.
<PAGE>
direction of the Board of Directors; or (iii) by any stockholder of the
corporation who was a stockholder of record at the time of giving of notice
provided for in the following paragraph, who is entitled to vote at the meeting
and who complied with the notice procedures set forth in Section 5.
(b) At an annual meeting of the stockholders, only such business shall
be conducted as shall have been properly brought before the meeting. For
nominations or other business to be properly brought before an annual meeting by
a stockholder pursuant to clause (c) of Section 5(a) of these Bylaws, (i) the
stockholder must have given timely notice thereof in writing to the Secretary of
the corporation, (ii) such other business must be a proper matter for
stockholder action under the Delaware General Corporation Law ("DGCL"), (iii) if
the stockholder, or the beneficial owner on whose behalf any such proposal or
nomination is made, has provided the corporation with a Solicitation Notice (as
defined in this Section 5(b)), such stockholder or beneficial owner must, in the
case of a proposal, have delivered a proxy statement and form of proxy to
holders of at least the percentage of the corporation's voting shares required
under applicable law to carry any such proposal, or, in the case of a nomination
or nominations, have delivered a proxy statement and form of proxy to holders of
a percentage of the corporation's voting shares reasonably believed by such
stockholder or beneficial owner to be sufficient to elect the nominee or
nominees proposed to be nominated by such stockholder, and must, in either case,
have included in such materials the Solicitation Notice, and (iv) if no
Solicitation Notice relating thereto has been timely provided pursuant to this
section, the stockholder or beneficial owner proposing such business or
nomination must not have solicited a number of proxies sufficient to have
required the delivery of such a Solicitation Notice under this Section 5. To be
timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the ninetieth (90/th/) day nor earlier than the close of business on
the one hundred twentieth (120/th/) day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced more than thirty (30) days prior to or
delayed by more than thirty (30) days after the anniversary of the preceding
year's annual meeting, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the one hundred twentieth
(120/th/) day prior to such annual meeting and not later than the close of
business on the later of the ninetieth (90/th/) day prior to such annual meeting
or the tenth (10/th/) day following the day on which public announcement of the
date of such meeting is first made. In no event shall the public announcement
of an adjournment of an annual meeting commence a new time period for the giving
of a stockholder's notice as described above. Such stockholder's notice shall
set forth: (A) as to each person whom the stockholder proposed to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "1934 Act") and Rule 14a-11 thereunder (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (B) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (C) as to
the stockholder
2.
<PAGE>
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and address of such stockholder, as
they appear on the corporation's books, and of such beneficial owner, (ii) the
class and number of shares of the corporation which are owned beneficially and
of record by such stockholder and such beneficial owner, and (iii) whether
either such stockholder or beneficial owner intends to deliver a proxy statement
and form of proxy to holders of, in the case of the proposal, at least the
percentage of the corporation's voting shares required under applicable law to
carry the proposal or, in the case of a nomination or nominations, a sufficient
number of holders of the corporation's voting shares to elect such nominee or
nominees (an affirmative statement of such intent, a "Solicitation Notice").
(c) Notwithstanding anything in the second sentence of Section 5(b) of
these Bylaws to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the Corporation is increased and there is
no public announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors made by the corporation at least one
hundred (100) days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice required by this Section 5 shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the corporation not later than the close of
business on the tenth (10/th/) day following the day on which such public
announcement is first made by the corporation.
(d) Only such persons who are nominated in accordance with the
procedures set forth in this Section 5 shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 5. Except as otherwise provided by law, the Chairman of the
meeting shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made, or proposed, as the
case may be, in accordance with the procedures set forth in these Bylaws and, if
any proposed nomination or business is not in compliance with these Bylaws, to
declare that such defective proposal or nomination shall not be presented for
stockholder action at the meeting and shall be disregarded.
(e) Notwithstanding the foregoing provisions of this Section 5, 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.
Nothing in these Bylaws shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the corporation proxy statement pursuant to
Rule 14a-8 under the 1934 Act.
(f) For purposes of this Section 5, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the 1934 Act.
3.
<PAGE>
Section 6. Special Meetings.
(a) Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption)
(b) If a special meeting is properly called by any person or persons
other than the Board of Directors, the request shall be in writing, specifying
the general nature of the business proposed to be transacted, and shall be
delivered personally or sent by registered mail or by telegraphic or other
facsimile transmission to the Chairman of the Board of Directors, the Chief
Executive Officer, or the Secretary of the corporation. No business may be
transacted at such special meeting otherwise than specified in such notice. The
Board of Directors shall determine the time and place of such special meeting,
which shall be held not less than thirty-five (35) nor more than one hundred
twenty (120) days after the date of the receipt of the request. Upon
determination of the time and place of the meeting, the officer receiving the
request shall cause notice to be given to the stockholders entitled to vote, in
accordance with the provisions of Section 7 of these Bylaws. If the notice is
not given within one hundred (100) days after the receipt of the request, the
person or persons properly requesting the meeting may set the time and place of
the meeting and give the notice. Nothing contained in this paragraph (b) shall
be construed as limiting, fixing, or affecting the time when a meeting of
stockholders called by action of the Board of Directors may be held.
(c) Nominations of persons for election to the Board of Directors
may be made at a special meeting of stockholders at which directors are to be
elected pursuant to the corporation's notice of meeting (i) by or at the
direction of the Board of Directors or (ii) by any stockholder of the
corporation who is a stockholder of record at the time of giving notice provided
for in these Bylaws who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 6(c). In the event
the corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be), for election to such
position(s) as specified in the corporation's notice of meeting, if the
stockholder's notice required by Section 5(b) of these Bylaws shall be delivered
to the Secretary at the principal executive offices of the corporation not
earlier than the close of business on the one hundred twentieth (120/th/) day
prior to such special meeting and not later than the close of business on the
later of the ninetieth (90/th/) day prior to such meeting or the tenth (10/th/)
day following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving of a
stockholder's notice as described above.
Section 7. Notice Of Meetings. Except as otherwise provided by law or the
Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not
4.
<PAGE>
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, such notice to specify the
place, date and hour and purpose or purposes of the meeting. Notice of the time,
place and purpose of any meeting of stockholders may be waived in writing,
signed by the person entitled to notice thereof, either before or after such
meeting, and will be waived by any stockholder by his attendance thereat in
person or by proxy, except when the stockholder 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. Any stockholder so waiving notice of such meeting shall be bound by
the proceedings of any such meeting in all respects as if due notice thereof had
been given.
Section 8. Quorum. At all meetings of stockholders, except where otherwise
provided by statute or by the Certificate of Incorporation, or by these Bylaws,
the presence, in person or by proxy duly authorized, of the holders of a
majority of the outstanding shares of stock entitled to vote shall constitute a
quorum for the transaction of business. In the absence of a quorum, any meeting
of stockholders may be adjourned, from time to time, either by the chairman of
the meeting or by vote of the holders of a majority of the shares represented
thereat, but no other business shall be transacted at such meeting. The
stockholders present at a duly called or convened meeting, at which a quorum is
present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by statute, the Certificate of Incorporation or these Bylaws,
in all matters other than the election of directors, the affirmative vote of the
majority of shares present in person or represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the stockholders.
Except as otherwise provided by statute, the Certificate of Incorporation or
these Bylaws, directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Where a separate vote by a class or classes
or series is required, except where otherwise provided by the statute or by the
Certificate of Incorporation or these Bylaws, a majority of the outstanding
shares of such class or classes or series, present in person or represented by
proxy, shall constitute a quorum entitled to take action with respect to that
vote on that matter and, except where otherwise provided by the statute or by
the Certificate of Incorporation or these Bylaws, the affirmative vote of the
majority (plurality, in the case of the election of directors) of the votes cast
by the holders of shares of such class or classes or series shall be the act of
such class or classes or series.
Section 9. Adjournment And Notice Of Adjourned Meetings. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes. When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the corporation may transact any business which might have been
transacted at the original meeting. 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.
5.
<PAGE>
Section 10. Voting Rights. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote shall have the right to do so either in person or by an
agent or agents authorized by a proxy granted in accordance with Delaware law.
An agent so appointed need not be a stockholder. No proxy shall be voted after
three (3) years from its date of creation unless the proxy provides for a longer
period.
Section 11. Joint Owners Of Stock. If shares or other securities having
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect: (a) if only
one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Delaware Court of Chancery for
relief as provided in the DGCL, Section 217(b). If the instrument filed with
the Secretary shows that any such tenancy is held in unequal interests, a
majority or even-split for the purpose of subsection (c) shall be a majority or
even-split in interest.
Section 12. List Of Stockholders. The Secretary shall prepare and make, at
least ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at said meeting, arranged in alphabetical order,
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 specified, at the place where
the meeting is to be held. The list shall be produced and kept at the time and
place of meeting during the whole time thereof and may be inspected by any
stockholder who is present.
Section 13. Action Without Meeting.
(a) No action shall be taken by the stockholders 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.
Section 14. Organization.
(a) At every meeting of stockholders, the Chairman of the Board of
Directors, or, if a Chairman has not been appointed or is absent, the Chief
Executive Officer or President, or, if the Chief Executive Officer or President
is absent, a chairman of the meeting chosen by a majority in interest of the
stockholders entitled to vote,
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present in person or by proxy, shall act as chairman. The Secretary, or, in his
absence, an Assistant Secretary directed to do so by the Chief Executive Officer
or President, shall act as secretary of the meeting.
(b) The Board of Directors of the corporation shall be entitled to
make such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters which are to be voted
on by ballot. Unless and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
ARTICLE IV
Directors
Section 15. Number And Term Of Office. The authorized number of directors
of the corporation shall be fixed in accordance with the Certificate of
Incorporation. Directors need not be stockholders unless so required by the
Certificate of Incorporation. If for any cause, the directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws.
Section 16. Powers. The powers of the corporation shall be exercised, its
business conducted and its property controlled by the Board of Directors, except
as may be otherwise provided by statute or by the Certificate of Incorporation.
Section 17. Classes of Directors. Subject to the rights of the holders of
any series of Preferred Stock to elect additional directors under specified
circumstances, the directors shall be divided into three classes designated as
Class I, Class II and Class III, respectively. Directors shall be assigned to
each class in accordance with a resolution or resolutions adopted by the Board
of Directors. At the first annual meeting of stockholders following the
adoption and filing of the Certificate of Incorporation providing for a
classified Board of Directors, the term of office of the Class I directors shall
expire and Class I directors shall be elected for a full term of three years.
At the second annual meeting of stockholders following the adoption and filing
of the Certificate of Incorporation providing for a classified Board of
Directors, the term of office of the Class II directors shall expire and Class
II directors shall be elected for a full term of three years. At the third
annual meeting of stockholders following the adoption and filing of the
Certificate of
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Incorporation providing for a classified Board of Directors, the term of office
of the Class III directors shall expire and Class III directors shall be elected
for a full term of three years. At each succeeding annual meeting of
stockholders, directors shall be elected for a full term of three years to
succeed the directors of the class whose terms expire at such annual meeting.
Notwithstanding the foregoing provisions of this section, each director shall
serve until his successor is duly elected and qualified or until his death,
resignation or removal. No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director.
Section 18. Vacancies.
(a) Unless otherwise provided in the Certificate of Incorporation,
any vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other causes and any newly created directorships
resulting from any increase in the number of directors shall, unless the Board
of Directors determines by resolution that any such vacancies or newly created
directorships shall be filled by stockholders, be filled only by the affirmative
vote of a majority of the directors then in office, even though less than a
quorum of the Board of Directors. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
director for which the vacancy was created or occurred and until such director's
successor shall have been elected and qualified. A vacancy in the Board of
Directors shall be deemed to exist under this Section 18 in the case of the
death, removal or resignation of any director.
(b) If at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Delaware Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) 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 newly
created directorships, or to replace the directors chosen by the directors then
in offices as aforesaid, which election shall be governed by Section 211 of the
DGCL.
Section 19. Resignation. Any director may resign at any time by delivering
his written resignation to the Secretary, such resignation to specify whether it
will be effective at a particular time, upon receipt by the Secretary or at the
pleasure of the Board of Directors. If no such specification is made, it shall
be deemed effective at the pleasure of the Board of Directors. When one or more
directors shall resign from the Board of Directors, effective at a future date,
a majority of the directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective, and
each Director so chosen shall hold office for the unexpired portion of the term
of the Director whose place shall be vacated and until his successor shall have
been duly elected and qualified.
Section 20. Removal.
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(a) Neither the Board of Directors nor any individual director may
be removed without cause.
(b) Subject to any limitation imposed by law, any individual
director or directors may be removed with cause by the affirmative vote of a
majority of the voting power of the corporation entitled to vote at an election
of directors.
SECTION 21. Meetings.
(a) Annual Meetings. The annual meeting of the Board of Directors
shall be held immediately before or after the annual meeting of stockholders and
at the place where such meeting is held. No notice of an annual meeting of the
Board of Directors shall be necessary and such meeting shall be held for the
purpose of electing officers and transacting such other business as may lawfully
come before it.
(b) Regular Meetings. Unless otherwise restricted by the
Certificate of Incorporation, regular meetings of the Board of Directors may be
held at any time or date and at any place within or without the State of
Delaware which has been designated by the Board of Directors and publicized
among all directors. No formal notice shall be required for regular meetings of
the Board of Directors.
(c) Special Meetings. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may be
held at any time and place within or without the State of Delaware whenever
called by the Chairman of the Board, the Chief Executive Officer or President or
any two of the directors
(d) Telephone Meetings. Any member of the Board of Directors, or of
any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
(e) Notice of Meetings. Notice of the time and place of all special
meetings of the Board of Directors shall be orally or in writing, by telephone,
including a voice messaging system or other system or technology designed to
record and communicate messages, facsimile, telegraph or telex, or by electronic
mail or other electronic means, during normal business hours, at least twenty-
four (24) hours before the date and time of the meeting, or sent in writing to
each director by first class mail, charges prepaid, at least three (3) days
before the date of the meeting. Notice of any meeting may be waived in writing
at any time before or after the meeting and will be waived by any director by
attendance thereat, except when the director attends the 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.
(f) Waiver of Notice. The transaction of all business at any
meeting of the Board of Directors, or any committee thereof, however called or
noticed, or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be
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present and if, either before or after the meeting, each of the directors not
present shall sign a written waiver of notice. All such waivers shall be filed
with the corporate records or made a part of the minutes of the meeting.
Section 22. Quorum And Voting.
(a) Unless the Certificate of Incorporation requires a greater
number and except with respect to indemnification questions arising under
Section 43 hereof, for which a quorum shall be one-third of the exact number of
directors fixed from time to time in accordance with the Certificate of
Incorporation, a quorum of the Board of Directors shall consist of a majority of
the exact number of directors fixed from time to time by the Board of Directors
in accordance with the Certificate of Incorporation; provided, however, at any
meeting whether a quorum be present or otherwise, a majority of the directors
present may adjourn from time to time until the time fixed for the next regular
meeting of the Board of Directors, without notice other than by announcement at
the meeting.
(b) At each meeting of the Board of Directors at which a quorum is
present, all questions and business shall be determined by the affirmative vote
of a majority of the directors present, unless a different vote be required by
law, the Certificate of Incorporation or these Bylaws.
Section 23. Action Without 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 members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 24. Fees And Compensation. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.
Section 25. Committees.
(a) Executive Committee. The Board of Directors may appoint an
Executive Committee to consist of one (1) or more members of the Board of
Directors. The Executive Committee, to the extent permitted by law and 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 (i) approving or adopting, or
recommending to the
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stockholders, any action or matter expressly required by the DGCL to be
submitted to stockholders for approval, or (ii) adopting, amending or repealing
any bylaw of the corporation.
(b) Audit Committee. The Board of Directors may appoint an Audit
Committee consisting of at least three (3) independent directors, with at least
one (1) director having a financial background. The Audit Committee shall have
such power and perform such duties as may be prescribed by a charter approved by
the Board of Directors creating the Audit Committee or as may be prescribed by a
resolution of the Board of Directors.
(c) Compensation Committee. The Board of Directors may appoint a
Compensation Committee consisting of two (2) or more members of the Board of
Directors. The Compensation Committee shall review and approve compensation and
benefits for the Company's executive officers. The Compensation Committee shall
also administer the Company's compensation and stock plans and make
recommendations to the board of directors regarding such matters. In addition,
the Compensation Committee shall have powers and perform such duties as may be
prescribed by a resolution of the Board of Directors.
(d) Other Committees. The Board of Directors may, from time to time,
appoint such other committees as may be permitted by law. Such other committees
appointed by the Board of Directors shall consist of one (1) or more members of
the Board of Directors and shall have such powers and perform such duties as may
be prescribed by the resolution or resolutions creating such committees, but in
no event shall any such committee have the powers denied to the Executive
Committee in these Bylaws.
(e) Term. Each member of a committee of the Board of Directors shall
serve a term on the committee coexistent with such member's term on the Board of
Directors. The Board of Directors, subject to any requirements of any
outstanding series of preferred Stock and the provisions of subsections (a) or
(b) of this Bylaw, may at any time increase or decrease the number of members of
a committee or terminate the existence of a committee. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation from the committee or from the Board of Directors. The Board of
Directors may at any time for any reason remove any individual committee member
and the Board of Directors may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors 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, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he 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.
(f) Meetings. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee appointed
pursuant to this Section 25 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter. Special meetings of any such
committee may be held at any place which has been determined from time to time
by such committee, and may be called by any director who is a member of such
committee, upon written notice to the members of such committee of the time and
place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of
any committee may be waived in writing at any time before or after the meeting
and will be waived by any director by attendance thereat, except when the
director attends such special 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. A majority of the authorized number
of members of any such committee shall constitute a quorum for the transaction
of business, and the act of a majority of those present at any meeting at which
a quorum is present shall be the act of such committee.
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Section 26. Organization. At every meeting of the directors, the Chairman
of the Board of Directors, or, if a Chairman has not been appointed or is
absent, the Chief Executive Officer or President (if a director), or if the
Chief Executive Officer or President is absent, the most senior Vice President
(if a director), or, in the absence of any such person, a chairman of the
meeting chosen by a majority of the directors present, shall preside over the
meeting. The Secretary, or in his absence, any Assistant Secretary directed to
do so by the Chief Executive Officer or President, shall act as secretary of the
meeting.
ARTICLE V
Officers
Section 27. Officers Designated. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer and the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Directors. The Board of Directors may also appoint one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such
other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of the
officers of the corporation shall be fixed by or in the manner designated by the
Board of Directors.
Section 28. Tenure And Duties Of Officers.
(a) General. All officers shall hold office at the pleasure of the
Board of Directors and until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the office
of any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors.
(b) Duties of Chairman of the Board of Directors. The Chairman of
the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers, as the Board of Directors
shall designate from time to time. If there is no Chief Executive Officer or
President, then the Chairman of the Board of Directors shall also serve as the
Chief Executive Officer of the corporation and shall have the powers and duties
prescribed in paragraph (c) of this Section 28.
(c) Duties of Chief Executive Officer. The Chief Executive Officer
shall preside at all meetings of the stockholders and at all meetings of the
Board of Directors, unless the Chairman of the Board of Directors has been
appointed and is present. 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 officers of the corporation. The
Chief Executive Officer shall perform other duties commonly incident to his
office and shall also perform such other duties and have such other powers as
the Board of Directors shall designate form time to time.
(d) Duties of President. The President shall perform such duties
commonly incident to his office and shall also perform such other duties and
have such other powers as the Board of Directors or the Chief Executive Officer
shall designate from time to time.
(e) Duties of President. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is present.
Unless some other officer has been elected Chief Executive Officer of the
corporation, the President shall be the chief executive officer of the
corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
corporation. The President shall perform
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other duties commonly incident to his office and shall also perform such other
duties and have such other powers, as the Board of Directors shall designate
from time to time.
(d) Duties of Vice Presidents. The Vice Presidents may assume and
perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time.
(e) Duties of Secretary. The Secretary shall attend all meetings of
the stockholders and of the Board of Directors and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the stockholders
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers, as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time.
(f) Duties of Chief Financial Officer. The Chief Financial Officer
shall keep or cause to be kept the books of account of the corporation in a
thorough and proper manner and shall render statements of the financial affairs
of the corporation in such form and as often as required by the Board of
Directors or the President. The Chief Financial Officer, subject to the order of
the Board of Directors, shall have the custody of all funds and securities of
the corporation. The Chief Financial Officer shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time. The President may direct the Treasurer or any Assistant Treasurer,
or the Controller or any Assistant Controller to assume and perform the duties
of the Chief Financial Officer in the absence or disability of the Chief
Financial Officer, and each Treasurer and Assistant Treasurer and each
Controller and Assistant Controller shall perform other duties commonly incident
to his office and shall also perform such other duties and have such other
powers as the Board of Directors or the President shall designate from time to
time.
Section 29. Delegation Of Authority. The Board of Directors may from time
to time delegate the powers or duties of any officer to any other officer or
agent, notwithstanding any provision hereof.
Section 30. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors, Chief Executive Officer, to the
President or to the Secretary. Any such resignation shall be effective when
received by the person or persons to whom such notice is given, unless a later
time is specified therein, in which event the resignation shall become effective
at such later time. Unless otherwise specified in such notice, the acceptance of
any such resignation shall not be
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necessary to make it effective. Any resignation shall be without prejudice to
the rights, if any, of the corporation under any contract with the resigning
officer.
Section 31. Removal. Any officer may be removed from office at any time,
either with or without cause, by the affirmative vote of a majority of the
directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.
ARTICLE VI
Execution Of Corporate Instruments And Voting Of Securities Owned By The
Corporation
Section 32. Execution Of Corporate Instruments. The Board of Directors may,
in its discretion, determine the method and designate the signatory officer or
officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
All checks and drafts drawn on banks or other depositaries on funds to the
credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
Section 33. Voting Of Securities Owned By The Corporation. All stock and
other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, or any Vice President.
ARTICLE VII
Shares Of Stock
Section 34. Form And Execution Of Certificates. Certificates for the shares
of stock of the corporation shall be in such form as is consistent with the
Certificate of Incorporation and applicable law. 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 of the Board of Directors, or the President or
any Vice President and by the Treasurer or Assistant Treasurer or the Secretary
or
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Assistant Secretary, certifying the number of shares owned by him in the
corporation. Any or all of the signatures on the certificate may be facsimiles.
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 with the same effect as if he were such officer, transfer agent,
or registrar at the date of issue. Each certificate shall state upon the face or
back thereof, in full or in summary, all of the powers, designations,
preferences, and rights, and the limitations or restrictions of the shares
authorized to be issued or shall, except as otherwise required by law, set forth
on the face or back 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. Within a reasonable time after the issuance or
transfer of uncertificated stock, the corporation shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to this section or otherwise required
by law or with respect to this section 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. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of certificates representing stock of the same class and series shall be
identical.
Section 35. Lost Certificates. A new certificate or certificates shall 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. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to agree to indemnify the corporation in such manner as it shall
require or to give the corporation a surety bond in such form and amount 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 36. Transfers.
(a) Transfers of record of shares of stock of the corporation shall
be made only upon its books by the holders thereof, in person or by attorney
duly authorized, and upon the surrender of a properly endorsed certificate or
certificates for a like number of shares.
(b) The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the DGCL.
Section 37. Fixing Record Dates.
(a) 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, the Board of
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Directors may fix, in advance, a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall, subject to applicable law,
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting. If no record date is fixed by the Board of Directors, 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. 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.
(b) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders 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
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty (60)
days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
Section 38. 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 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 VIII
Other Securities Of The Corporation
Section 39. Execution Of Other Securities. All bonds, debentures and other
corporate securities of the corporation, other than stock certificates (covered
in Section 34), may be signed by the Chairman of the Board of Directors, the
President or any Vice President, or such other person as may be authorized by
the Board of Directors, and the corporate seal impressed thereon or a facsimile
of such seal imprinted thereon and attested by the signature of the Secretary or
an Assistant Secretary, or the Chief Financial Officer or Treasurer or an
Assistant Treasurer; provided, however, that where any such bond, debenture or
other corporate security shall be authenticated by the manual signature, or
where permissible facsimile signature, of a trustee under an indenture pursuant
to which such bond, debenture or other corporate security shall be issued, the
signatures of the persons signing and attesting the corporate seal on such bond,
debenture or other corporate security may be the imprinted facsimile of the
signatures of such persons. Interest coupons appertaining to any such bond,
debenture or other corporate security, authenticated by a trustee as aforesaid,
shall be signed by the Treasurer or an Assistant Treasurer of the corporation or
such other person as may be authorized by the Board of Directors,
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or bear imprinted thereon the facsimile signature of such person. In case any
officer who shall have signed or attested any bond, debenture or other corporate
security, or whose facsimile signature shall appear thereon or on any such
interest coupon, shall have ceased to be such officer before the bond, debenture
or other corporate security so signed or attested shall have been delivered,
such bond, debenture or other corporate security nevertheless may be adopted by
the corporation and issued and delivered as though the person who signed the
same or whose facsimile signature shall have been used thereon had not ceased to
be such officer of the corporation.
ARTICLE IX
Dividends
Section 40. Declaration Of Dividends. Dividends upon the capital stock of
the corporation, subject to the provisions of the Certificate of Incorporation
and applicable law, if any, may be declared by the Board of Directors pursuant
to law at any regular or special meeting. Dividends may be paid in cash, in
property, or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation and applicable law.
Section 41. 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 Board of 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 Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
Fiscal Year
Section 42. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the Board of Directors.
ARTICLE XI
Indemnification
Section 43. Indemnification Of Directors, Executive Officers, Other
Officers, Employees And Other Agents.
(a) Directors And Executive Officers. The corporation shall
indemnify its directors and executive officers (for the purposes of this Article
XI, "executive officers" shall have the meaning defined in Rule 3b-7 promulgated
under the 1934 Act) to the fullest extent not prohibited by the DGCL or any
other applicable law; provided, however, that the corporation may modify the
extent of such indemnification by individual contracts with its directors and
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executive officers; and, provided, further, that the corporation shall not be
required to indemnify any director or executive officer in connection with any
proceeding (or part thereof) initiated by such person 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, (iii) such
indemnification is provided by the corporation, in its sole discretion, pursuant
to the powers vested in the corporation under the DGCL or any other applicable
law or (iv) such indemnification is required to be made under subsection (d).
(b) 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 DGCL or any other applicable law. The Board of Directors shall have
the power to delegate the determination of whether indemnification shall be
given to any such person except executive officers to such officers or other
persons as the Board of Directors shall determine.
(c) Expenses. The corporation shall advance to 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 he is or was a director or executive
officer, of the corporation, or is or was serving at the request of the
corporation as a director or executive officer of another corporation,
partnership, joint venture, trust or other enterprise, prior to the final
disposition of the 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 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 Section 43 or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Section 43, no advance shall be made by the corporation to
an executive officer of the corporation (except by reason of the fact that such
executive officer is or was a director of the corporation in which event this
paragraph shall not apply) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, 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.
(d) 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 Section 43 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
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claimant in such enforcement action, if successful in whole or in part, shall be
entitled to be paid also the expense of prosecuting his claim. In connection
with any claim for indemnification, 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 DGCL or any other applicable law for
the corporation to indemnify the claimant for the amount claimed. In connection
with any claim by an executive officer of the corporation (except in any action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such executive officer is or was a director of the
corporation) for advances, the corporation shall be entitled to raise a defense
as to any such action clear and convincing evidence 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, or with respect to any
criminal action or proceeding that such person acted without reasonable cause to
believe that his conduct was lawful. 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 has met the applicable standard of conduct set forth in the DGCL or
any other applicable law, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that claimant has not
met the applicable standard of conduct. In any suit brought by a director or
executive officer to enforce a right to indemnification or to an advancement of
expenses hereunder, the burden of proving that the director or executive officer
is not entitled to be indemnified, or to such advancement of expenses, under
this Section 43 or otherwise shall be on the corporation.
(e) 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 applicable statute, provision of the Certificate
of Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his 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, or by any
other applicable law.
(f) 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.
(g) Insurance. To the fullest extent permitted by the DGCL or any
other applicable 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 Section 43.
(h) Amendments. Any repeal or modification of this Section 43 shall
only be prospective and shall not affect the rights under this Bylaw in effect
at the time of the alleged
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occurrence of any action or omission to act that is the cause of any proceeding
against any agent of the corporation.
(i) 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 Section 43 that
shall not have been invalidated, or by any other applicable law. If this Section
43 shall be invalid due to the application of the indemnification provisions of
another jurisdiction, then the corporation shall indemnify each director and
executive officer to the full extent under any other applicable law.
(j) Certain Definitions. For the purposes of this Bylaw, the
following definitions shall apply:
(1) 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 testimony in,
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.
(2) 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.
(3) 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 Section 43 with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(4) References to a "director," "executive officer," "officer,"
"employee," or "agent" of the corporation shall include, without limitation,
situations where such person is serving at the request of the corporation as,
respectively, a director, executive officer, officer, employee, trustee or agent
of another corporation, partnership, joint venture, trust or other enterprise.
(5) 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, or
involves services by, such director, officer, employee, or agent with respect to
an employee
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benefit plan, its participants, or beneficiaries; and a person who acted in good
faith and in a manner he 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 Section 43.
ARTICLE XII
Notices
Section 44. Notices.
(a) Notice To Stockholders. Whenever, under any provisions of these
Bylaws, notice is required to be given to any stockholder, it shall be given in
writing, timely and duly deposited in the United States mail, postage prepaid,
and addressed to his last known post office address as shown by the stock record
of the corporation or its transfer agent.
(b) Notice To Directors. Any notice required to be given to any
director may be given by the method stated in subsection (a), or by overnight
delivery service, facsimile, telex or telegram, except that such notice other
than one which is delivered personally shall be sent to such address as such
director shall have filed in writing with the Secretary, or, in the absence of
such filing, to the last known post office address of such director.
(c) Affidavit Of Mailing. An affidavit of mailing, executed by a
duly authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
director or directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall in the absence of fraud, be prima
facie evidence of the facts therein contained.
(d) Time Notices Deemed Given. All notices given by mail or by
overnight delivery service, as above provided, shall be deemed to have been
given as at the time of mailing, and all notices given by facsimile, telex or
telegram shall be deemed to have been given as of the sending time recorded at
time of transmission.
(e) Methods of Notice. It shall not be necessary that the same
method of giving notice be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
(f) Failure To Receive Notice. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such director to receive such
notice.
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(g) Notice To Person With Whom Communication Is Unlawful. Whenever
notice is required to be given, under any provision of law or of the Certificate
of Incorporation or Bylaws of the corporation, to any person with whom
communication is unlawful, the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person. Any action or
meeting which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any provision of the DGCL,
the certificate shall state, if such is the fact and if notice is required, that
notice was given to all persons entitled to receive notice except such persons
with whom communication is unlawful.
(h) Notice To Person With Undeliverable Address. Whenever notice is
required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the DGCL, the certificate need not state that notice was not given
to persons to whom notice was not required to be given pursuant to this
paragraph.
ARTICLE XIII
Amendments
Section 45. Amendments. Subject to paragraph (h) of Section 43 of the
Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote 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 of the
corporation entitled to vote. The Board of Directors shall also have the power
to adopt, amend, or repeal Bylaws.
ARTICLE XIV
Loans To Officers
Section 46. 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
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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 these Bylaws shall be deemed to deny, limit or restrict the powers of
guaranty or warranty of the corporation at common law or under any statute.
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EXHIBIT 10.1
COMMON STOCK ACQUISITION
AGREEMENT
COMMON STOCK ACQUISITION AGREEMENT dated as of March 22, 1996 between
--
Genomica Corporation, a Delaware corporation (the "Company"), and [ ] (the
"Purchaser").
WHEREAS the Company wishes to sell an aggregate of [ ] shares of
the Company's Common Stock, $.001 par value per share, (the "Shares") to the
Purchaser; and
WHEREAS the Purchaser wishes to purchase the Shares on the terms and
subject to the conditions set forth in this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
covenants, and in reliance on the representations and warranties, contained or
incorporated by reference in this Agreement, the parties agree as follows:
SECTION 1. Issuance and Transfer of the Shares. The Company agrees to
-----------------------------------
issue and sell to the Purchaser, and the Purchaser hereby agrees to purchase
from the Company, the number of Shares set forth opposite the name of the
Purchaser under the heading "Number of Shares to be Purchased" on Schedule I, at
----------
the aggregate purchase price set forth opposite the name of the Purchaser under
the heading "Aggregate Purchase Price for Shares" on Schedule I.
----------
SECTION 2. Representations and Warranties of the Company.
---------------------------------------------
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and is duly
licensed or qualified to transact business as a foreign corporation in the
Commonwealth of Pennsylvania. The Company has the corporate power and authority
to execute, deliver and perform this Agreement and to issue and deliver the
Shares.
(b) The execution and delivery by the Company of this Agreement, the
performance by the Company of its obligations hereunder and the issuance and
delivery of the Shares have been duly authorized by all requisite corporate
action.
(c) The Shares have been duly authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable shares of Common Stock with no personal liability attaching to the
ownership thereof and will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through the Company.
<PAGE>
(d) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
(e) The capitalization of the Company immediately following the
issuance and delivery of the Shares will be as set forth on Exhibit A hereto.
---------
(f) The Certificate of Incorporation of the Company is as set forth
on Exhibit B hereto, is in full force and effect, and has not been restated or
---------
amended since the date thereof.
(g) The representations and warranties of the Company set forth in
Article II of the Series A Convertible Preferred Stock Purchase Agreement dated
as of March 15, 1996 (the "Preferred Stock Purchase Agreement") by and among the
Company and the several purchasers named in Schedule I attached thereto
(including the qualifications set forth in Section 2.10 thereof) are
incorporated by reference herein and made a part hereof as if fully set forth
herein (with references to "this Agreement" being deemed to refer to the
Preferred Stock Purchase Agreement).
SECTION 3. Representations and Warranties of the Purchaser. The
-----------------------------------------------
Purchaser represents and warrants to the Company that:
(a) it is an "accredited investor" within the meaning of Rule 501(a)
of Regulation D as promulgated under the Securities Act and was not organized
for the specific purpose of acquiring the Shares;
(b) it has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's stage of development,
i.e. start-up or development stage enterprises with very limited operating
history and no net income from operations to date, so as to be able to evaluate
the risks and merits of its investment in the Company and it is able financially
to bear the risks thereof;
(c) it has had an opportunity to discuss the Company's business,
management and financial affairs with the Company's management and the Company
has furnished to it all information which it considers necessary to form a
decision concerning the acquisition of the Shares and no valid request to the
Company for such information has been refused or denied by the Company or
remains unfilled as of the date hereof;
(d) it is acquiring the Shares for its own account for the purpose of
investment and not with a view to any resale or distribution thereof, in whole
or in part, in violation of the Securities Act of 1933, as amended (the "Act");
(e) it understands that (i) the Shares have not been registered under
the Act, based and in reliance upon such Purchaser's representations, warranties
and agreements
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as set forth herein and are being issued and sold pursuant hereto. in a
transaction exempt from the registration requirements of the Act pursuant to
Section 4(2) thereof, (ii) the Shares must be held indefinitely unless a
subsequent disposition thereof is registered under the Act or is exempt from
such registration, (iii) the Shares are "restricted securities" as that term is
defined in Rule 144 of the General Rules and Regulations under the Act, (iv) the
Shares will bear a legend substantially to the effect as set forth in clauses
(ii) and (iii) above, (v) the Company will make a notation on its transfer books
to such effect and (vi) the Shares represent a speculative investment involving
a very high degree of risk, are highly illiquid. have no public market and that
it is not likely that a public market for the Shares will develop;
(f) it understands that any routine sales of the Shares in reliance
upon Rule 144 under the Act, if the provisions of such Rule should then be
available as to the Shares, can be made only after the holding period specified
in the Rule, and in accordance with all the terms and conditions of that Rule
and that, in the case of securities to which that Rule is not applicable,
compliance with Regulation A under the Act or some other exemption under the Act
will be required; it further understands that Rule 144 is not now available for
the resale of the Shares and that the Company may, if it so desires, permit the
transfer of the Shares only when such Shares are the subject of an effective
registration statement under the Act or when the Company has received an opinion
of counsel, in form acceptable to the Company, that such registration is not
required under the Act, and it agrees to furnish such documentation and
undertakings as the Company and its counsel may reasonably require in connection
with any such opinion prior to such counsel's giving or approving any such
opinion;
(g) if it sells any Shares pursuant to Rule 144A promulgated under
the Act, it will take all necessary steps in order to perfect the exemption from
registration provided thereby, including (i) obtaining on behalf of the Company
information to enable the Company to establish a reasonable belief that the
purchaser is a "qualified institutional buyer" as such term is defined in Rule
144A and (ii) advising such purchaser that Rule 144A is being relied upon with
respect to such resale;
(h) it understands that the Company is the only person which may
register its securities under the Act and that the Company is currently not
contemplating registration of any of its Common Stock;
(i) the Company has not made any representations, warranties or
covenants to the Purchaser regarding the registration of the Shares or
compliance with Regulation A or any other exemption under the Act, except as set
forth in that certain Registration Rights Agreement dated as of event date
herewith by and among the Company and the stockholders of the Company named
therein (including the Purchaser);
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(j) the Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of New York; and the
Purchaser has the corporate power and authority to execute, deliver and perform
this Agreement;
(k) the execution and delivery by the Purchaser of this Agreement and
the performance by the Purchaser of its obligations hereunder have been duly
authorized by all requisite corporate action; and
(l) the foregoing representations and warranties and all other
information about it provided to the Company are true and accurate as of the
date hereof and such representations and warranties shall survive the transfer
of the Shares to the Purchaser.
SECTION 4. Covenants of the Company.
------------------------
(a) The Purchaser hereby acknowledges that the securities issued by
the Company in connection with an equity financing may bear special rights and
preferences under the Company's Certificate of Incorporation which are different
from and superior to the rights that attach to the Shares and that the Company
shall have no obligation to grant the Purchaser, as a holder of Shares, any of
such special rights and preferences.
(b) Notwithstanding the proviso in Section 4(a) above, if at any time
prior to the Company's initial public offering of its equity securities pursuant
to a registration statement declared effective pursuant to the Act (except
registrations on Forms S-4 or S-8 or any successor forms thereto) (a "Public
Offering"), the Company proposes to offer any shares of its equity securities
other than (i) shares issuable upon conversion of convertible securities of the
Company outstanding from time to time, (ii) shares issued to officers, directors
or employees of, consultants to, or members of the Scientific Advisory Board of,
the Company pursuant to stock option or stock purchase plans or agreements on
terms approved by the Board of Directors of the Company, (iii) shares excluded
from the definition of "Additional Shares of Common Stock" as described in
Article Fourth, Section C4(d)(i)(4)(A),(B) and (C) of the Company's Certificate
of Incorporation, (iv) shares issued pursuant to stock splits, stock dividends
and the like, (v) shares offered to the public pursuant to an underwritten
Public Offering and (vi) shares issued in connection with a bona-fide strategic
business arrangement or lease arrangement in which the person or entity
receiving such shares or an affiliate of such person or entity (which in either
case is not a stockholder of any of the Company's equity securities or an
affiliate of a stockholder of any of the Company's equity securities) enters
into a contractual relationship with the Company related to research and
development, manufacturing, marketing, licensing or leasing, which issuance and
transaction are approved in good faith by the Board, the Company will first
offer to each Purchaser a percentage of such shares (the "Offered Shares") equal
to such Purchaser's percentage ownership of the Common Stock of the Company
(calculated on a fully-diluted basis), in the following manner:
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(1) The Company shall promptly deliver a notice ("Notice")
to the Purchaser stating: (i) the Company's bona fide intention to sell such
equity securities, (ii) the number of shares of equity securities proposed to be
sold, (iii) the number of shares of equity which the Purchaser is entitled to
purchase, (iv) the price for which it proposes to sell such equity securities
and (v) any other material terms of the sale.
(2) Within twenty (20) days after the receipt by Purchaser
of such Notice or attempted delivery during working hours to its address shown
on the books of the Company (such date is referred to as the "Receipt Date"),
the Purchaser may, by delivering a written notice (the "Reply") to the Company
before the close of business on the twentieth (20th) day following the Receipt
Date, elect to purchase, at the price and on the terms specified in the Notice,
up to that number of shares representing a percentage of such equity securities
equal to the Purchaser's then fully-diluted percentage ownership of the Company.
The exact number of shares of equity securities desired to be purchased shall be
set forth in the Reply.
(3) During the ninety- (90-) day period following the period
required in clause (2) above, the Company may sell up to the number of shares of
equity securities not elected to be purchased as provided in clause (2) above,
at the price specified in the Notice or at a higher price and on substantially
the same terms or less favorable terms to the purchasers thereof.
SECTION 5. Covenants of the Purchaser.
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(a) Right of First Refusal. (i) If at any time the Purchaser desires
----------------------
to sell all or any part of the Shares pursuant to a bona fide offer from a third
party (the "Proposed Buyer"), the Purchaser shall submit a written offer (the
"Offer'') to sell such Shares (the "Offered Shares") to the Company on terms and
conditions, including price, not less favorable to the Company than those on
which the Purchaser proposes to sell the Offered Shares to the Proposed Buyer.
The Offer shall disclose the identity of the Proposed Buyer, the Offered Shares
proposed to be sold, the total number of Shares then owned by the Purchaser, the
terms and conditions, including price, of the proposed sale, and any other
material facts relating to the proposed sale. The Offer shall further state that
the Company may acquire, in accordance with the provisions of this Agreement,
all or any portion of the Offered Shares for the price and upon the other terms
and conditions, including deferred payment (if applicable), set forth therein.
(ii) If the Company desires to purchase all or any part of the
Offered Shares, the Company shall communicate in writing its election to
purchase to the Purchaser, which communication shall state the number of Offered
Shares the Company desires to purchase and shall be given to the Purchaser
within thirty (30) days of the date the Offer was made. Such communication
shall, when taken in conjunction with the
5
<PAGE>
Offer, be deemed to constitute a valid, legally binding and enforceable
agreement for the sale and purchase of such Offered Shares. Sales of the Offered
Shares to be sold to the Company pursuant to this Section 5(a) shall be made at
the offices of the Company on the 45th day following the date the Offer was made
(or if such 45th day is not a business day, then on the next succeeding business
day). Such sales shall be effected by the Purchaser's delivery to the Company of
a certificate or certificates evidencing the Offered Shares to be purchased by
it, duly endorsed for transfer to the Company, against payment to the Purchaser
of the purchase price therefor by the Company.
(iii) If the Company does not purchase all of the Offered Shares, the
Offered Shares not so purchased may be sold by the Purchaser at any time within
six months after the date the Offer was made, subject to the other provisions of
this Agreement. Any such sale shall be to the Proposed Buyer, at not less than
the price and upon other terms and conditions, if any, not more favorable to the
Proposed Buyer than those specified in the Offer. Any Offered Shares not sold
within such six-month period shall continue to be subject to the requirements of
this Section 5(a).
(b) The Company and the Purchaser agree that until the initial Public
Offering of any of the Company's capital stock, (i) the Shares may not be sold,
pledged or otherwise transferred by the Purchaser to any person which the
Company reasonably believes to be a competitor of the Company, and (ii) any
purchaser of the Shares shall, as a condition to the effectiveness of such
transfer, agree in writing with the Company to the restrictions on the transfer
of the Shares set forth in Section 5(a).
(c) This Section 5 shall not apply to any sale by the Purchaser as
part of an initial Public Offering of any of the Company's capital stock, and
this Section 5 shall terminate and be of no further force or effect
automatically upon consummation of such initial Public Offering.
SECTION 6. Miscellaneous.
-------------
(a) Survival of Agreements. All covenants, agreements,
----------------------
representations and warranties made herein or in any instrument delivered to
either party pursuant to or in connection with this Agreement, shall survive the
execution and delivery of this Agreement.
(b) Parties in Interest. All representations, covenants and
-------------------
agreements contained in this Agreement by or on behalf of either of the parties
hereto shall bind and inure to the benefit of the respective successors and
permitted assigns of such party whether so expressed or not.
(c) Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing and shall be delivered in person,
mailed by certified or
6
<PAGE>
registered mail, return receipt requested, or sent by telecopier or telex,
addressed as follows:
(i) if to the Company; c/o Falcon Technology Partners, L.P.,
James L. Rathmann, President, 600 Dorset Road, Devon, PA 19333 (Facsimile No.:
(610) 688-2571).
and
(ii) if to the Purchaser, the addresses set forth on Schedule I;
----------
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the other.
(d) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Delaware (without giving effect to
its conflicts of laws principles).
(e) Entire Agreement. This Agreement, together with the other
----------------
agreements referred to herein, constitute the entire agreement of the parties
with respect to the subject matter hereof and thereof.
(f) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(g) Amendments. This Agreement may not be amended or modified
----------
without the written consent of the Company and the Purchaser, and no provisions
hereof may be waived without the written consent of the party in favor of which
such provision would operate without such waiver.
(h) Severability. If any provision of this Agreement shall be
------------
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
(i) Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
7
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchaser have executed this Agreement
as of the day and year first above written.
GENOMICA CORPORATION
By:
/s/ James L. Rathmann
- ----------------------------------
James L. Rathmann
President
PURCHASER:
By:
- ----------------------------------
8
<PAGE>
SCHEDULE I
----------
Purchaser Number of Shares Aggregate Purchase
- --------- ---------------- ------------------
To Be Purchased Price for Shares
---------------- ----------------
9
<PAGE>
Exhibit A
Genomica Corporation Capitalization Table March 22, 1996
<TABLE>
<CAPTION>
Common Stock % of Common Series A Preferred % Series A Total Shares % of Total
<S> <C> <C> <C> <C> <C> <C>
Falcon Technology Partners L.P. 1,660,200 50.00% 1,660,200 26.06%
Rathmann Family 600,000 19.67% 600,000 9.42%
Harris and Harris Group, Inc. 199,800 6.55% 1,660,200 50.00% 1,860,000 29.20%
Cold Spring Harbor Laboratory 679,679 22.29% 679,697 10.67%
John Maroney 60,121 1.97% 60,121 0.94%
Thomas Marr 1,080,000 35.41% 1,080,000 16.95%
Donald Fisher 250,000 8.20% 250,000 3.92%
Jackie Salit 30,000 0.98% 30,000 0.47%
Steve Cozza 30,000 0.98% 30,000 0.47%
Pool for inventions 120,000 3.93% 120,000 1.88%
Total 3,049,600 100.00% 3,320,400 100.00% 6,370,000 100.00%
</TABLE>
<PAGE>
Common Stock Acquisition Agreements
-----------------------------------
Supplemental Schedule
---------------------
The following investors executed Common Stock Acquisition Agreements with the
Company:
Investor Number of Shares
- ------- ----------------
Thomas Marr 1,080,000
Harris and Harris Group, Inc. 199,800
James L. Rathmann 600,000
Margaret C. Rathmann
Laura Jean Rathmann
Sally A. Rathmann
Richard G. Rathmann
Cold Spring Harbor Laboratory 679,679
John Maroney 60,121
Jacqueline Salit 30,000
Steven Cozza 30,000
Donald Fisher 250,000
12
<PAGE>
EXHIBIT 10.2
GENOMICA CORPORATION
STOCKHOLDERS AGREEMENT
THIS AGREEMENT is made as of the 22th day of March, 1996, by and among
Genomica Corporation, a Delaware corporation, (the "Corporation"); Cold Spring
Harbor Laboratory ("CSH"); and the persons (the "Purchasers") named in Schedule
I to a certain Series A Convertible Preferred Stock Purchase Agreement of the
Corporation dated the date hereof (the "Purchase Agreement").
RECITALS
--------
The Corporation is engaged in the highly competitive business of
researching, developing, manufacturing and marketing computer software for the
biotechnology industry on an international basis. The CSH and the Corporation
recognize and affirm that success or failure in this highly technical and highly
competitive business is dependent on the ability of the Corporation to (1)
develop and protect proprietary technology which will give the Corporation a
competitive advantage in the marketplace; (2) incorporate this technology into
products which themselves will or may become proprietary; and (3) develop and
utilize processes which may be proprietary to accomplish (1) and (2) above.
In order to achieve the above objectives, the Corporation has expended and
will continue to expend substantial time, effort and financial resources. These
activities include research, the attraction and training of key employees, and
establishing relationships with necessary resources outside the Corporation. If
information regarding the Corporation's research, processes or products were to
fall into the hands of a competitor of the Corporation, it could be used in a
manner which would cause serious and irreparable financial and business damage
to the Corporation. For this reason, all information related to the
Corporation's technology, research, products, and business strategies is
considered to be confidential information which is proprietary to the
Corporation.
In addition the Purchasers intend to invest in the Corporation pursuant to
the Purchase Agreement based on the foregoing assumptions and such investment is
contingent upon the execution and delivery of this Agreement by the Corporation
and CSH.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above representations and
understandings, and the promises and mutual agreements set forth below, the
parties agree, effective on the date of the Agreement, to the following terms
and conditions:
<PAGE>
1. CSH's Stock. CSH has purchased from the Corporation an aggregate of
679,679 shares of Common Stock (the "Shares") at a per-share purchase price of
$.001 (the "Original Purchase Price") as more specifically set forth on Schedule
1 hereto. The Shares shall be subject to a number of restrictions as set forth
in this Agreement. Certain of the restrictions with respect to the Shares may
terminate under various conditions pursuant hereto.
2. Remedies in the Event of Breach. The Corporation, the Purchasers and
CSH understand and agree that any breach or threatened breach by the
Corporation, the Purchasers or CSH of any of the provisions hereof cannot be
remedied solely by the recovery of damages, and in the event of any such breach
or threatened breach, the Corporation, the Purchasers or CSH, as the case may
be, shall be entitled to injunctive relief, restraining CSH, the Purchasers or
the Corporation, as the case may be, and any business, firm, corporation
individual or other entity participating in such breach or attempted breach,
from engaging in any activity which would constitute a breach. The Corporation,
the Purchasers and CSH further agree that any dispute arising under the terms of
this Agreement shall be decided in accordance with the rules then in effect of
the American Arbitration Association, and any arbitration award may be entered
in a court of competent jurisdiction and enforced as a judgment thereof. Nothing
herein, however, shall be construed as (i) prohibiting the Corporation, the
Purchasers or CSH from pursuing, in conjunction with an injunction or otherwise,
any other remedies available in equity or at law for any such breach or
threatened breach, including the recovery of damages; or (ii) limiting the
Corporation's remedy against a breaching Purchaser or CSH as set forth in
Section 9 below.
3. Transferability. The Corporation and CSH agree (i) that Unvested
Shares (as defined below) may not be sold, pledged or otherwise transferred
("Transferred") without the consent of the Board of Directors in its sole
discretion (except pursuant to Section 5 below); and (ii) Vested Shares (as
defined below) may be Transferred only in accordance with the provisions set
forth herein and only if the transferee of such Vested Shares agrees in writing
to be bound by the provisions of Sections 5, 6, 7, 9 and 10 hereof. Any Shares
Transferred not in accordance with the preceding sentence shall be void, ab
initio.
4. Discontinuation Event. The Shares shall be affected as follows:
(A) In the event (i) the dissolution, liquidation or bankruptcy of CSH; or
(ii) of a breach by CSH of any of the material terms of any of the License
Agreement (which breach shall have been a material breach and shall not have
been cured prior to the expiration of any cure period) or the Common Stock
Acquisition Agreement by which CSH purchased the Shares (either such case, a
"Discontinuation Event"), certain of such Shares, defined below as "Unvested
Shares," shall be repurchased and paid for in full by the Corporation at the
Original Purchase Price within 30 days of such Discontinuation
2
<PAGE>
Event. Unvested Shares shall be those Shares which have not yet vested according
to the schedule set forth in Schedule 1 hereto. Notwithstanding the preceding
sentence, in the event the Corporation's Board of Directors approves a sale or
merger (other than a merger with or into a wholly-owned subsidiary of the
Corporation or a merger in which the Corporation is the surviving entity) of the
Corporation or an initial public offering of the Corporation's stock (any of
which events is defined herein as a "Triggering Transaction"), CSH will be
notified of such Board action. Any of such then Unvested Shares will become
Vested Shares (as defined below) simultaneously with the consummation of the
Triggering Transaction. Upon the occurrence of a Discontinuation Event, all
Unvested Shares shall forever remain Unvested Shares.
(B) Termination For Cause. Prior to the Corporation's initial public
offering, in the event of a Discontinuation Event as a result of an event set
forth in clause (ii) of Section 4(A) above, then with respect to any of its
Unvested Shares not repurchased by the Corporation pursuant to Sections 4(A)
above, CSH shall, in all matters put forth to a vote of the holders of Common
Stock (i) cause its Shares to be represented at any meeting of the stockholders
of the Corporation and (ii) vote such Shares in the same proportion and in the
same manner as all other Common Stock is voted.
5. Approved Sale of Corporation. (A) If the Corporation's Board of
Directors has adopted a resolution of the Board of Directors approving the sale
of the Corporation to any person (such person, the "Acquiring Entity"), whether
by merger, consolidation, sale of all or substantially all of the Corporation's
assets or sale of all of the outstanding capital stock (such sale, an "Approved
Sale"), CSH and each Purchaser will consent to, vote for and raise no objections
against the Approved Sale, and if the Approved Sale is structured as a sale of
stock, CSH and each Purchaser hereby agrees to sell all of their respective
Shares (and all rights thereto) on the terms and conditions approved by the
Board of Directors, provided that each holder of Common Stock receives in the
Approved Sale the same amount and type of consideration for is interest in the
Corporation as is received by the holders of the Series A Convertible Preferred
Stock, (the "Preferred Stock"), assuming such holders had converted their
respective shares of Preferred Stock into Common Stock. CSH and each Purchaser
will take all actions reasonably required to facilitate and consummate an
Approved Sale of the Corporation.
(B) The Corporation shall give written notice (a "Sale Notice") of any such
Approved Sale to CSH and Purchasers. A Sale Notice shall contain (i) the name
and address of the prospective Acquiring Entity; (ii) the purchase price and
other material terms and conditions of the Approved Sale; (iii) the date on
which the Approved Sale is intended to be consummated; (iv) the date on which
the Corporation's Board of Directors approved the Approved Sale and (v) the
Shares and Purchaser's Shares proposed to be sold. Upon receipt of a Sale
Notice, CSH and each Purchaser shall be required to consent to such Approved
Sale and to sell is Shares, to the Acquiring Entity designated therein within 30
days of receipt thereof or such later date as may be specified in the Sale
Notice.
3
<PAGE>
No Purchaser or CSH shall be required to make any representations and warranties
other than representations and warranties concerning its ownership of such
Shares, the absence of any liens or encumbrances thereon and its authority to
sell such Shares; and provided further that, if the terms of such Approved Sale
provide for the escrow of any amount of proceeds resulting from an Approved Sale
or to accept indebtedness or other securities subject to indemnification or
other rights of offset, then CSH and each Purchaser shall be required to escrow
a pro rata amount of its proceeds from such Approved Sale and/or to accept such
indebtedness or other securities.
6. Right of First Refusal. (A) Except pursuant to Section 5 above, if at
any time CSH desires to sell for cash all or any part of its Shares pursuant to
a bona fide offer from a third party (the "Proposed Transferee"), CSH shall
submit a written offer (the "Offer") to sell such Shares (the "Offered Shares")
to the Purchasers on terms and conditions, including price, not less favorable
to the Purchasers than those on which CSH proposes to sell such Offered Shares
to the Proposed Transferee. The Offer shall disclose the identity of the
Proposed Transferee, the Offered Shares proposed to be sold, the total number of
Shares owned by CSH, the terms and conditions, including price, of the proposed
sale, that the proposed buyer has been informed of the rights and obligations
provided for in this Section 6 and Section 7 below and has agreed to purchase
Offered Shares in accordance with the terms of this Agreement, and any other
material facts relating to the proposed sale. The Offer shall further state that
the Purchasers may acquire, in accordance with the provisions of this Agreement,
all but not less than all of the Offered Shares for the price and upon the other
terms and conditions, including deferred payment (if applicable), set forth
therein.
(B) Each Purchaser shall have the absolute right to purchase that number of
Offered Shares as shall be equal to the number of Offered Shares multiplied by a
fraction, the numerator of which shall be the number of Purchasers' Shares (as
defined below) then owned by such Purchaser and the denominator of which shall
be the aggregate number of Purchasers' Shares then owned by all of the
Purchasers. For purposes of this Section 6, all of the securities of the
Corporation which a Purchaser has acquired, or has the right to acquire from the
Corporation, upon the conversion, exercise or exchange of any of the securities
of the Corporation then owned by such Purchaser shall be deemed to be
Purchasers' Shares then owned by such Purchaser. (The amount of Offered Shares
that each Purchaser is entitled to purchase under this Section 6(B) shall be
referred to as its "Pro Rata Fraction").
(C) The Purchasers shall have a right of oversubscription such that if any
Purchaser fails to accept the Offer as to its Pro Rata Fraction, the other
Purchasers shall, among them, have the right to purchase up to the balance of
the Offered Shares not so purchased. Such right of oversubscription may be
exercised by a Purchaser by accepting the Offer as to more than its Pro Rata
Fraction. If, as a result thereof, such oversubscriptions exceed the total
number of Offered Shares available in respect of such
4
<PAGE>
oversubscription privilege, the oversubscribing Purchasers shall be cut back
with respect to their oversubscriptions on a pro rata basis in accordance with
their respective Pro Rata Fractions or as they may otherwise agree among
themselves. In the event that the Purchasers in the aggregate shall not have
elected in the manner set forth below to purchase all of the Offered Shares, the
Purchasers shall not have the right to purchase any of the Offered Shares and
CSH shall have the right to sell the Offered Shares in accordance with Section
6(E) below.
(D) If the Purchasers, in the aggregate, desire to purchase all of the
Offered Shares, such Purchaser(s) shall communicate in writing their election to
purchase to CSH, which communication shall state the number of Offered Shares
each Purchaser desires to purchase (which shall in the aggregate be equal to all
the Offered Shares) and shall be given to CSH within thirty days of the date the
Offer was made. Such communication shall, when taken in conjunction with the
Offer, be deemed to constitute a valid, legally binding and enforceable
agreement for the sale and purchase of such Offered Shares (subject to the
aforesaid limitations as to a Purchaser's right to purchase more than its Pro
Rata Fraction). Sales of the Offered Shares to be sold to purchasing Purchasers
pursuant to this Section 6 shall be made at the offices of the Corporation on
the 45th day following the date the Offer was made (or if such 45th day is not a
business day, then on the next succeeding business day). Such sales shall be
effected by CSH's delivery to each purchasing Purchaser of a certificate or
certificates evidencing the Offered Shares to be purchased by it, free and clear
of any liens, claims or encumbrances of any kind (other than pursuant to this
Agreement), duly endorsed for transfer to such purchasing Purchaser and with any
requisite stock transfer stamps attached, against payment to CSH of the purchase
price therefor by such purchasing Purchaser.
(E) If the Purchasers do not purchase all of the Offered Shares, the
Offered Shares may be sold by CSH at any time within six months after the date
the Offer was made, subject to Section 7 below and the other provisions of this
Agreement. Any such sale shall be to the Proposed Transferee, at not less than
the price and upon other terms and conditions, if any, not more favorable to the
Proposed Transferee than those specified in the Offer. Any Offered Shares not
sold within such six-month period shall continue to be subject to the
requirements of a prior offer pursuant to this Section 6.
7. Co-Sale Rights. (A) If at any time a Purchaser desires to sell all or
any part of its Common Stock or Preferred Stock ("Purchaser's Shares") pursuant
to a bona fide offer from a third party (for purposes of this Section 7, also a
"Proposed Transferee"), such Purchaser shall deliver a written notice (the
"Notice") of such proposed sale of such Purchaser's Shares (for purposes of this
Section 7, also "Offered Shares") to the other Purchaser. The Notice shall
disclose the identity of the Proposed Transferee, the Offered Shares proposed to
be sold, the total number of Purchaser's Shares owned by such Purchaser, the
terms and conditions, including price, of the proposed sale, that the proposed
buyer has been informed of the rights and obligations provided for in this
5
<PAGE>
Section 7 and has agreed to purchase Offered Shares in accordance with the terms
of this Agreement, and any other material facts relating to the proposed sale.
(B) (i) If a Purchaser elects not to purchase any Offered Shares pursuant
to Section 6 above; or (ii) if upon receipt of a Notice pursuant to Section 7(A)
above, such Purchaser desires to sell any of such Purchaser's Shares, then such
Purchaser shall have the right, exercisable upon written notice (the "Co-Sale
Acceptance Notice'') to the selling Purchaser or CSH, as applicable, given
within thirty (30) days after the Offer or Notice, as applicable has been
delivered pursuant to Section 6 or 7(A) above, to participate in the proposed
sale of Offered Shares pursuant to the terms and conditions specified in the
Offer or Notice, as applicable, and the selling Purchaser or CSH, as applicable,
shall require the Proposed Transferee designated in the Offer or Notice, as
applicable, to purchase from such Purchaser up to the number of whole shares of
Common Stock or Preferred Stock, as applicable, equal to the product of (i) the
total number of Offered Shares to be transferred in such proposed sale as
specified in the Offer or Notice, as applicable, and (ii) a fraction, the
numerator of which (a) in the case of Offered Shares which are Common Stock, is
the number of outstanding shares of Common Stock held by such Purchaser
(including any Common Stock issuable to such Purchaser upon the conversion or
exchange of any Purchaser's Shares convertible or exchangeable into Common
Stock) or (b) in the case of Offered Shares which are Preferred Stock, is the
number of outstanding shares of Preferred Stock held by such Purchaser, and the
denominator of which (c) in the case of Offered Shares which are Common Stock,
is the total number of shares of Common Stock (on a fully-diluted basis) then
outstanding or (d) in the case of Offered Shares which are Preferred Stock, is
the total number of shares of Preferred Stock (on a fully-diluted basis) then
outstanding. The Co-Sale Acceptance Notice shall state the number of shares such
Purchaser proposes to include in such proposed sale to the Proposed Transferee
(up to the number of shares as calculated pursuant to the immediately preceding
sentence). Any such sale by such Purchaser shall be at the same price per share
(including price and type of consideration) received by the Proposed Transferee
and otherwise on identical terms and conditions as received by the selling
Purchaser or CSH, as the case may be, in its sale to the Proposed Transferee. In
the event that the Proposed Transferee does not purchase shares of Common Stock
and/or Preferred Stock from Purchasers who have timely delivered a Co-Sale
Acceptance Notice as required by this Section 7, then the selling Purchaser or
CSH, as the case may be, shall not be permitted to, and shall not, sell any
Offered Shares to the Proposed Transferee in the proposed sale.
(C) If no Co-Sale Acceptance Notice is received by the selling Purchaser or
CSH, as the case may be, during the 30-day period referred to in Section 7(A)
above, then such selling Purchaser or CSH, as the case may be, shall have the
right to sell the Offered Shares at any time within six months after the date
the Offer or Notice, as the case may be was delivered, subject to the other
provisions of this Agreement. Any such sale shall be to the Proposed
Transferee, at not less than the price and upon other terms
6
<PAGE>
and conditions, if any, not more favorable to the Proposed Transferee than those
specified in the Offer or Notice, as applicable. Any Offered Shares not sold
within such six-month period shall continue to be subject to the requirements of
Section 6 and this Section 7.
(D) In the event a Purchaser shall desire to sell more than 50% of all of
such Purchaser's Shares purchased pursuant to the Purchase Agreement in the
aggregate in one or a series of related transactions to a Proposed Transferee,
such Purchaser shall in addition to offering the Co-Sale rights to the other
Purchaser pursuant to Sections 7(A) through (C), such Purchaser shall offer such
rights to CSH as if CSH were a Purchaser for purposes of such Sections. In the
event a Purchaser proposes to sell Preferred Stock, the number of shares of
Common Stock which CSH shall be entitled to sell shall be calculated as if all
shares of Preferred Stock were converted into Common Stock at the then
applicable conversion price and the purchase price per share of Common Stock to
be sold by CSH pursuant to this Section 11(D) shall equal the aggregate purchase
price paid for the shares of Preferred Stock sold by such Purchaser to the
Proposed Transferee divided by the number of shares of Common Stock into which
such shares of Preferred Stock were convertible at the time of such sale at the
then applicable conversion price.
(E) Notwithstanding the foregoing, this Section 7 shall not apply to any
Transfer by any Purchaser or CSH of Shares: (i) to Purchaser's or CSH's
affiliates, (ii) constituting a gift or gifts, or (iii) constituting less than
1% of the outstanding class of Shares to be Transferred.
8. Termination. The provisions of Sections 3, 4, 5, 6 and 7 hereof, shall
terminate immediately upon the closing of a firm commitment, underwritten public
offering registered under the Securities Act, (other than a registration
relating solely to a transaction referred to in Rue 145 under the Securities Act
(or any successor rule) or to an employee benefit plan of the Corporation), at a
public offering price (prior to underwriters' discounts and expenses) equal to
or exceeding $2.50 per share of Common Stock (as adjusted for any stock
dividends, combinations or splits with respect to such shares) and in which the
aggregate proceeds to the Corporation and/or selling stockholders (before
deduction for underwriters' discounts and expenses relating to the issuance,
including without limitation fees of the Corporation's counsel) exceed
$5,000,000.
9. Failure to Deliver Shares. CSH becomes obligated to sell any Shares to
a Purchaser or the Corporation under this Agreement and fails to deliver such
Shares in accordance with the terms of this Agreement, such Purchaser or the
Corporation, as the case may be, may, at its option, in addition to all other
remedies it may have, send to CSH the purchase price for such Shares as is
herein specified. Thereupon, the Corporation upon written notice to CSH, (i)
shall cancel on its books the certificate or certificates representing the
Shares to be sold and (ii) shall issue, in lieu thereof, in the name of such
Purchaser or the Corporation, as the case may be, a new certificate or
7
<PAGE>
certificates representing such Shares, and thereupon all of CSH's rights in and
to such Shares shall terminate.
10. Lock-up. If requested by the underwriters for the initial
underwritten public offering of securities of the Corporation, CSH and each
Purchaser shall agree not to sell, assign, transfer, pledge, hypothecate,
mortgage, encumber or otherwise dispose of all or any of such Shares, without
the written consent of such underwriters, for a period of not more than 180 days
following the effective date of the registration statement relating to such
offering. This Section 10 shall expressly survive the termination of this
Agreement.
11. No Waiver. Any waiver of a breach of any of the terms of this
Agreement shall not operate as a waiver of any other breach of such terms or
conditions or any other terms or conditions, nor shall any failure to enforce
any provision of this Agreement operate as a waiver of such provision or any
other provision.
12. Successors and Assigns. The rights, benefits and obligations of the
Corporation under this Agreement and all covenants and agreements hereunder
shall inure to the benefit of and be enforceable by or against its successors
and assigns. Subject to the limitations set forth herein, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of CSH.
Subject to the limitations set forth herein, neither this Agreement nor any
rights or obligations hereunder shall be assigned by CSH. The rights and
obligations of the Purchasers hereunder shall inure to the benefit of and be
binding upon the Purchasers respective successors and assigns.
13. Entire Agreement. The Agreement (with respect to the Corporation and
the Purchasers, together with the Purchase Agreement), constitutes the entire
agreement among the parties. This Agreement may not be amended or modified,
except in writing, and signed by each of the Purchasers and CSH.
14. Severability. If any provision of this Agreement or the application
thereof is held invalid or unenforceable, the invalidity or unenforceability
thereof shall not affect any other provisions or applications of this Agreement
which can be given effect without the invalid or unenforceable provision or
application. To that end, the provisions of this Agreement are to be severable.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York (without giving
effect to its conflicts of laws principles).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be signed
and each of CSH and the Purchasers have executed this Agreement as of the date
shown below.
GENOMICA CORPORATION
Dated:__________, 1996 BY:______________________________
TITLE:___________________________
Dated:__________, 1996
COLD SPRING HARBOR LABORATORY
BY:/s/ John Maroney
-------------------------------------
TITLE:__________________________________
John Maroney
Assistant Administrative Director
PURCHASERS:
FALCON TECHNOLOGY PARTNERS, L.P.,
a Delaware limited partnership
BY:/s/ James L. Rathmann
-------------------------------------
TITLE: General Partner
HARRIS & HARRIS GROUP, INC.,
a Delaware corporation
BY:/s/
-------------------------------------
TITLE: Executive Vice President
----------------------------------
9
<PAGE>
SCHEDULE 1
----------
Shares Vesting Schedule
--------- ----------------
CSH 679,679 339,840 shares are Vested Shares immediately;
(license) 5,664 shares become Vested Shares on the first day of
each calendar month commencing after the date hereof;
provided, however, that if Dr. Thomas Marr ("Marr")
leaves the employ of CSH and becomes an employee of the
Corporation, all shares become Vested Shares; provided
further, that notwithstanding the above provisions, if
CSH terminates Marr's employment not for cause and Marr
does not become an employee of the Corporation, all
shares which have not yet become Vested Shares will
always remain Unvested Shares.
10
<PAGE>
EXHIBIT 10.3
GENOMICA CORPORATION
FOUNDERS AGREEMENT
THIS AGREEMENT is made as of the 22 th day of March, 1996, by and among
Genomica Corporation, a Delaware corporation, (the "Corporation"), Steven Cozza
("Founder") and the persons (the "Purchasers") named in Schedule I to a certain
Series A Convertible Preferred Stock Purchase Agreement of the Corporation dated
the date hereof (the "Purchase Agreement").
RECITALS
--------
The Corporation is engaged in the highly competitive business of
researching, developing, manufacturing and marketing computer software for the
biotechnology industry on an international basis. Founder and the Corporation
recognize and affirm that success or failure in this highly technical and highly
competitive business is dependent on the ability of the Corporation to (1)
develop and protect proprietary technology which will give the Corporation a
competitive advantage in the marketplace; (2) incorporate this technology into
products which themselves will or may become proprietary; and (3) develop and
utilize processes which may be proprietary to accomplish (1) and (2) above.
In order to achieve the above objectives, the Corporation has expended and
will continue to expend substantial time, effort and financial resources. These
activities include research, the attraction and training of key employees, and
establishing relationships with necessary resources outside the Corporation. If
information regarding the Corporation's research, processes or products were to
fall into the hands of a competitor of the Corporation, it could be used in a
manner which would cause serious and irreparable financial and business damage
to the Corporation. For this reason, all information related to the
Corporation's technology, research, products, and business strategies is
considered to be confidential information which is proprietary to the
Corporation.
In addition, the Purchasers intend to invest in the Corporation pursuant to
the Purchase Agreement based on the foregoing assumptions and such investment is
contingent upon the execution and delivery of this Agreement by the Corporation
and Founder.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above representations and
understandings, and the promises and mutual agreements set forth below, the
parties agree, effective on the date of the Agreement, to the following terms
and conditions:
<PAGE>
1. Services. Founder agrees to serve the Corporation as reasonably
directed by its Board of Directors or its designee, consistent with the scope of
expertise and other employment obligations of Founder. Such services may
include participation in the Corporation as a director, officer, scientific
advisor, consultant, contractor and/or, with the agreement of Founder, an
employee. In all such cases, the terms and conditions of this Agreement will
continue to be binding.
2. Founder's Stock. Founder has purchased from the Corporation an
aggregate of 30,000 shares of Common Stock (the "Shares") at a per-share
purchase price of $.001 (the "Original Purchase Price") as more specifically set
forth on Schedule 1 hereto. Founder's Shares shall be subject to a number of
restrictions as set forth in this Agreement. Certain of the restrictions with
respect to Founder's Shares may terminate under various conditions pursuant
hereto in consideration for Founder's service to the Corporation as described
herein.
3. [INTENTIONALLY OMITTED]
4. Disclosure and Assignment of Technology to Corporation. Concurrently
with the execution of this Agreement, Founder is executing and delivering a
Nondisclosure Agreement substantially in the form set forth as Exhibit A hereto
(the "Nondisclosure Agreement").
5. [INTENTIONALLY OMITTED]
6. Remedies in the Event of Breach. The Corporation, the Purchasers and
Founder understand and agree that any breach or threatened breach by the
Corporation or Founder of any of the provisions hereof cannot be remedied solely
by the recovery of damages, and in the event of any such breach or threatened
breach, the Corporation or the Purchasers, as the case may be, shall be entitled
to injunctive relief, restraining Founder, and any business, firm, corporation,
individual or other entity participating in such breach or attempted breach from
engaging in any activity which would constitute a breach. The Corporation, the
Purchasers and Founder further agree that any dispute arising under the terms of
this Agreement shall be decided in accordance with the rules then in effect of
the American Arbitration Association, and any arbitration award may be entered
in a court of competent jurisdiction and enforced as a judgment thereof.
Nothing herein, however, shall be construed as (i) prohibiting the Corporation,
the Purchasers or Founder from pursuing, in conjunction with an injunction or
otherwise, any other remedies available in equity or at law for any such breach
or threatened breach, including the recovery of damages; or (ii) limiting the
Corporation's remedy against Founder as set forth in Section 13 below.
7. Transferability. The Corporation and Founder agree (i) that Unvested
Shares (as defined below) may not be sold, pledged or otherwise transferred
("Transferred") without the consent of the Board of Directors in its sole
discretion
2
<PAGE>
(except pursuant to Section 9 below); and (ii) Vested Shares (as defined below)
may be Transferred only in accordance with the provisions set forth herein and
only if the transferee of such Vested Shares agrees in writing to be bound by
the provisions of Sections 9, 10, 11, 13 and 14 hereof. Any Founder's Shares
Transferred not in accordance with the preceding sentence shall be void, ab
initio.
8. Founder's Stock. Founder's Shares shall be affected as follows:
(A) In the event (i) Founder dies; (ii) of a breach by Founder of any of
the terms of the Consulting Agreement or the Common Stock Acquisition Agreement
by which Founder purchased the Founder's Shares; or (iii) the Consulting
Agreement shall have been terminated by the Corporation for Due Cause (as such
term is defined in the Consulting Agreement) or if Dr. Marr voluntarily
terminates the Consulting Agreement (any such case, a "Discontinuation Event"),
certain of Founder's Shares, defined below as "Unvested Shares," shall be
repurchased and paid for in full by the Corporation at the Original Purchase
Price within 30 days of such Discontinuation Event. Unvested Shares shall be
those Founder's Shares which have not yet vested according to the schedule set
forth in Schedule 1 hereto. Notwithstanding the preceding sentence, in the
event the Corporation's Board of Directors approves a sale or merger (other than
a merger with or into a wholly-owned subsidiary of the Corporation or a merger
in which the Corporation is the surviving entity) of the Corporation or an
initial public offering of the Corporation's stock (any of which events is
defined herein as a "Triggering Transaction"), Founder will be notified of such
Board action. Any of Founder's then Unvested Shares will become Vested Shares
(as defined below) simultaneously with the consummation of the Triggering
Transaction. Upon the occurrence of a Discontinuation Event, all of Founder's
Unvested Shares shall forever remain Unvested Shares.
(B) Upon the occurrence of a Discontinuation Event, Founder's Shares which
are vested pursuant to Schedule 1 hereto ("Vested Shares") may be repurchased by
the Corporation, solely at the option of the Corporation (the "Corporation
Option"), at Fair Market Value (as defined below). The Corporation agrees to
give Founder (or his estate) notice of its intent to exercise the Corporation
Option within ninety (90) days of the date of such Discontinuation Event and to
pay for those shares for which it exercises such Corporation Option as follows:
3/24ths of the total price within 90 days of the date of the Discontinuation
Event, with the balance to be paid in equal monthly installments over the next
succeeding twenty-one months.
(C) Termination For Cause. Prior to the Corporation's initial public
offering, in the event of a Discontinuation Event with respect to Founder
occurring as a result of an event set forth in clauses (ii) or (iii) of Section
8(A) above, then with respect to any of Founder's Shares not repurchased by the
Corporation pursuant to Sections 8(A) or 8(B) above, Founder shall, in all
matters put forth to a vote of the holders of Common Stock (i) cause such
Founder's Shares to be represented at any meeting of the stockholders of
3
<PAGE>
the Corporation and (ii) vote such shares in the same proportion and in the same
manner as all other Common Stock is voted.
(D) Fair Market Value. For the purposes of Section 8(B), Fair Market Value
shall be that value as determined in good faith by the Board of Directors. Any
Founder (or his estate) may request an appraisal by written notice of objection
delivered not later than fifteen (15) days after receipt of such Fair Market
Value determination by the Board of Directors. If an appraisal is demanded, the
Corporation shall select an appraiser reasonably acceptable to Founder (or his
estate) to appraise Founder's Vested Shares, and the repurchase price payable
upon the Corporation's exercise of the Corporation Option shall be the higher of
such appraisal and such Fair Market Value determination by the Board of
Directors. If such appraisal results in a valuation more than 10% higher than
the Fair Market Value determination by the Board of Directors, then all expenses
of such appraisal shall be paid by the Corporation; otherwise, all expenses of
such appraisal shall be paid by Founder (or his estate).
9. Approved Sale of Corporation. (A) If the Corporation's Board of
Directors has adopted a resolution of the Board of Directors approving the sale
of the Corporation to any person (such person, the "Acquiring Entity"), whether
by merger, consolidation, sale of all or substantially all of the Corporation's
assets or sale of all of the outstanding capital stock (such sale, an "Approved
Sale"), Founder and each Purchaser will consent to, vote for and raise no
objections against the Approved Sale, and if the Approved Sale is structured as
a sale of stock, Founder and each Purchaser hereby agrees to sell all of their
respective Shares (and all rights thereto) on the terms and conditions approved
by the Board of Directors, provided that each holder of Common Stock receives in
the Approved Sale the same amount and type of consideration for its interest in
the Corporation as is received by the holders of the Series A Convertible
Preferred Stock, (the "Preferred Stock"), assuming such holders had converted
their respective shares of Preferred Stock into Common Stock. Founder and each
Purchaser will take all actions reasonably required to facilitate and consummate
an Approved Sale of the Corporation.
(B) The Corporation shall give written notice (a "Sale Notice") of any such
Approved Sale to Founder and Purchasers. A Sale Notice shall contain (i) the
name and address of the prospective Acquiring Entity; (ii) the purchase price
and other material terms and conditions of the Approved Sale; (iii) the date on
which the Approved Sale is intended to be consummated; (iv) the date on which
the Corporation's Board of Directors approved the Approved Sale and (v) the
Founder's and Purchaser's Shares proposed to be sold. Upon receipt of a Sale
Notice, Founder and each Purchaser shall be required to consent to such Approved
Sale and to sell its Founder's or Purchaser's Shares, as the case may be, to the
Acquiring Entity designated therein within 30 days of receipt thereof or such
later date as may be specified in the Sale Notice. No Purchaser or Founder
shall be required to make any representations and warranties other than
representations and warranties concerning its ownership of such Founder's or
Purchaser's Shares, the absence
4
<PAGE>
of any liens or encumbrances thereon and its authority to sell such Shares; and
provided further that, if the terms of such Approved Sale provide for the escrow
of any amount of proceeds resulting from an Approved Sale or to accept
indebtedness or other securities subject to indemnification or other rights of
offset, then Founder and Purchasers shall be required to escrow a pro rata
amount of its proceeds from such Approved Sale and/or to accept such
indebtedness or other securities.
(C) If the Corporation or Founder, in connection with any Approved Sale,
enters into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) promulgated by the Securities and Exchange Commission under
the Securities Act may be available with respect to such negotiation or
transaction (including a merger, consolidation or other reorganization), Founder
will at the request of the Corporation, appoint a purchaser representative (as
such term is defined in Rule 501(h) promulgated by the Securities and Exchange
Commission under the Securities Act) reasonably acceptable to the Corporation.
If Founder appoints the purchaser representative designated by the Corporation,
the Corporation will pay the fees of such purchaser representative, but if
Founder declines to appoint the purchaser representative designated by the
Corporation, Founder will appoint another purchaser representative (reasonably
acceptable to the Corporation), and Founder will be responsible for the fees of
the purchaser representative so appointed.
10. Right of First Refusal. (A) Except pursuant to Section 9 above, if at
any time Founder desires to sell for cash all or any part of Founder's Shares
pursuant to a bona fide offer from a third party (the "Proposed Transferee"),
Founder shall submit a written offer (the "Offer") to sell Founder's Shares (the
"Offered Shares") to the Purchasers on terms and conditions, including price,
not less favorable to the Purchasers than those on which Founder proposes to
sell such Offered Shares to the Proposed Transferee. The Offer shall disclose
the identity of the Proposed Transferee, the Offered Shares proposed to be sold,
the total number of Founder's Shares owned by Founder, the terms and conditions,
including price, of the proposed sale, that the proposed buyer has been informed
of the rights and obligations provided for in this Section 10 and Section 11
below and has agreed to purchase Offered Shares in accordance with the terms of
this Agreement, and any other material facts relating to the proposed sale. The
Offer shall further state that the Purchasers may acquire, in accordance with
the provisions of this Agreement, all but not less than all of the Offered
Shares for the price and upon the other terms and conditions, including deferred
payment (if applicable), set forth therein.
(B) Each Purchaser shall have the absolute right to purchase that number of
Offered Shares as shall be equal to the number of Offered Shares multiplied by a
fraction, the numerator of which shall be the number of Purchasers' Shares (as
defined below) then owned by such Purchaser and the denominator of which shall
be the aggregate number of Purchasers' Shares then owned by all of the
Purchasers. For purposes of this Section 10, all of the securities of the
Corporation which a Purchaser has acquired, or has
5
<PAGE>
the right to acquire from the Corporation, upon the conversion, exercise or
exchange of any of the securities of the Corporation then owned by such
Purchaser shall be deemed to be Purchasers' Shares then owned by such Purchaser.
(The amount of Offered Shares that each Purchaser is entitled to purchase under
this Section 10(B) shall be referred to as its "Pro Rata Fraction").
(C) The Purchasers shall have a right of oversubscription such that if any
Purchaser fails to accept the Offer as to its Pro Rata Fraction, the other
Purchasers shall, among them, have the right to purchase up to the balance of
the Offered Shares not so purchased. Such right of oversubscription may be
exercised by a Purchaser by accepting the Offer as to more than its Pro Rata
Fraction. If, as a result thereof, such oversubscriptions exceed the total
number of Offered Shares available in respect of such oversubscription
privilege, the oversubscribing Purchasers shall be cut back with respect to
their oversubscriptions on a pro rata basis in accordance with their respective
Pro Rata Fractions or as they may otherwise agree among themselves. In the
event that the Purchasers in the aggregate shall not have elected in the manner
set forth below to purchase all of the Offered Shares, the Purchasers shall not
have the right to purchase any of the Offered Shares and the Founder shall have
the right to sell the Offered Shares in accordance with Section 10(E) below.
(D) If the Purchasers, in the aggregate, desire to purchase all of the
Offered Shares, such Purchaser(s) shall communicate in writing their election to
purchase to Founder, which communication shall state the number of Offered
Shares each Purchaser desires to purchase (which shall in the aggregate be equal
to all the Offered Shares) and shall be given to Founder within thirty days of
the date the Offer was made. Such communication shall, when taken in
conjunction with the Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the sale and purchase of such Offered Shares (subject
to the aforesaid limitations as to a Purchaser's right to purchase more than its
Pro Rata Fraction). Sales of the Offered Shares to be sold to purchasing
Purchasers pursuant to this Section 10 shall be made at the offices of the
Corporation on the 45th day following the date the Offer was made (or if such
45th day is not a business day, then on the next succeeding business day). Such
sales shall be effected by Founder's delivery to each purchasing Purchaser of a
certificate or certificates evidencing the Offered Shares to be purchased by it,
free and clear of any liens, claims or encumbrances of any kind (other than
pursuant to this Agreement), duly endorsed for transfer to such purchasing
Purchaser and with any requisite stock transfer stamps attached, against payment
to Founder of the purchase price therefor by such purchasing Purchaser.
(E) If the Purchasers do not purchase all of the Offered Shares, the
Offered Shares may be sold by Founder at any time within six months after the
date the Offer was made, subject to Section 11 below and the other provisions of
this Agreement. Any such sale shall be to the Proposed Transferee, at not less
than the price and upon other terms
6
<PAGE>
and conditions, if any, not more favorable to the Proposed Transferee than those
specified in the Offer. Any Offered Shares not sold within such six-month period
shall continue to be subject to the requirements of a prior offer pursuant to
this Section 10.
11. Co-Sale Rights. (A) If at any time a Purchaser desires to sell all or
any part of its Common Stock or Preferred Stock ("Purchaser's Shares") pursuant
to a bona fide offer from a third party (for purposes of this Section 11, also a
"Proposed Transferee"), such Purchaser shall deliver a written notice (the
"Notice") of such proposed sale of such Purchaser's Shares (for purposes of this
Section 11, also "Offered Shares") to the other Purchaser. The Notice shall
disclose the identity of the Proposed Transferee, the Offered Shares proposed to
be sold, the total number of Purchaser's Shares owned by such Purchaser, the
terms and conditions, including price, of the proposed sale, that the proposed
buyer has been informed of the rights and obligations provided for in this
Section 11 and has agreed to purchase Offered Shares in accordance with the
terms of this Agreement, and any other material facts relating to the proposed
sale.
(B) (i) If a Purchaser elects not to purchase any Offered Shares pursuant
to Section 10 above; or (ii) if upon receipt of a Notice pursuant to Section
11(A) above, such Purchaser desires to sell any of such Purchaser's Shares, then
such Purchaser shall have the right, exercisable upon written notice (the "Co-
Sale Acceptance Notice") to the selling Founder or Purchaser, as applicable,
given within thirty (30) days after the Offer or Notice, as applicable has been
delivered pursuant to Section 10 or 11(A) above, to participate in the proposed
sale of Offered Shares pursuant to the terms and conditions specified in the
Offer or Notice, as applicable, and the selling Founder or Purchaser, as
applicable, shall require the Proposed Transferee designated in the Offer or
Notice, as applicable, to purchase from such Founder or Purchaser up to the
number of whole shares of Common Stock or Preferred Stock, as applicable, equal
to the product of (i) the total number of Offered Shares to be transferred in
such proposed sale as specified in the Offer or Notice, as applicable, and (ii)
a fraction, the numerator of which (a) in the case of Offered Shares which are
Common Stock, is the number of outstanding shares of Common Stock held by such
Purchaser (including any Common Stock issuable to such Purchaser upon the
conversion or exchange of any Purchaser's Shares convertible or exchangeable
into Common Stock) or (b) in the case of Offered Shares which are Preferred
Stock, is the number of outstanding shares of Preferred Stock held by such
Purchaser, and the denominator of which (c) in the case of Offered Shares which
are Common Stock, is the total number of shares of Common Stock (on a fully-
diluted basis) then outstanding or (d) in the case of Offered Shares which are
Preferred Stock, is the total number of shares of Preferred Stock (on a fully-
diluted basis) then outstanding . The Co-Sale Acceptance Notice shall state the
number of shares such Purchaser proposes to include in such proposed sale to the
Proposed Transferee (up to the number of shares as calculated pursuant to the
immediately preceding sentence). Any such sale by such Purchaser shall be at
the same price per share (including price and type of consideration) received by
the Proposed Transferee and otherwise on identical terms and conditions as
7
<PAGE>
received by the selling Founder or Purchaser, as the case may be, in its sale to
the Proposed Transferee. In the event that the Proposed Transferee does not
purchase shares of Common Stock and/or Preferred Stock from Purchasers who have
timely delivered a Co-Sale Acceptance Notice as required by this Section 11,
then the selling Founder or Purchaser, as the case may be, shall not be
permitted to, and shall not, sell any Offered Shares to the Proposed Transferee
in the proposed sale.
(C) If no Co-Sale Acceptance Notice is received by the selling Founder or
Purchaser, as the case may be, during the 30-day period referred to in Section
11(A) above, then such Founder or Purchaser, as the case may be, shall have the
right to sell the Offered Shares at any time within six months after the date
the Offer or Notice, as the case may be was delivered, subject to the other
provisions of this Agreement. Any such sale shall be to the Proposed
Transferee, at not less than the price and upon other terms and conditions, if
any, not more favorable to the Proposed Transferee than those specified in the
Offer or Notice, as applicable. Any Offered Shares not sold within such six-
month period shall continue to be subject to the requirements of Section 10 and
this Section 11.
(D) Notwithstanding the foregoing, this Section 11 shall not apply to any
Transfer by any Purchaser or Founder of Shares: (i) to such Purchaser's or
Founder's affiliates, members of such Purchaser's or Founder's immediate family,
family trusts or Purchasers, (ii) constituting a gift or gifts, or (iii)
constituting less than 1% of the outstanding class of Shares to be Transferred.
12. Termination. The Corporation's right to repurchase Vested Shares
pursuant to Section 8 hereof, and the provisions of Sections 7, 9, 10, 11 and 13
hereof, shall terminate immediately upon the closing of a firm commitment,
underwritten public offering registered under the Securities Act, (other than a
registration relating solely to a transaction referred to in Rule 145 under the
Securities Act (or any successor rule) or to an employee benefit plan of the
Corporation), at a public offering price (prior to underwriters' discounts and
expenses) equal to or exceeding $2.50 per share of Common Stock (as adjusted for
any stock dividends, combinations or splits with respect to such shares) and in
which the aggregate proceeds to the Corporation and/or selling stockholders
(before deduction for underwriters' discounts and expenses relating to the
issuance, including without limitation fees of the Corporation's counsel) exceed
$5,000,000.
13. Failure to Deliver Shares. If Founder becomes obligated to sell any
Founder's Shares to a Purchaser or the Corporation under this Agreement and
fails to deliver such Founder's Shares in accordance with the terms of this
Agreement, such Purchaser or the Corporation, as the case may be, may, at its
option, in addition to all other remedies it may have, send to Founder the
purchase price for such Founder's Shares as is herein specified. Thereupon, the
Corporation upon written notice to Founder, (i) shall cancel on its books the
certificate or certificates representing the Founder's Shares to be sold and
(ii) shall issue, in lieu thereof, in the name of such
8
<PAGE>
Purchaser or the corporation, as the case may be, a new certificate or
certificates representing such Founder's Shares, and thereupon all of Founder's
rights in and to such Founder's Shares shall terminate.
14. Lock-up. If requested by the underwriters for the initial
underwritten public offering of securities of the Corporation, Founder and each
Purchaser shall agree not to sell, assign, transfer, pledge, hypothecate,
mortgage, encumber or otherwise dispose of all or any of such Founder's or
Purchaser's Shares, without the written consent of such underwriters, for a
period of not more than 180 days following the effective date of the
registration statement relating to such offering. This Section 14 shall
expressly survive the termination of this Agreement.
15. No Waiver. Any waiver of a breach of any of the terms of this
Agreement shall not operate as a waiver of any other breach of such terms or
conditions or any other terms or conditions, nor shall any failure to enforce
any provision of this Agreement operate as a waiver of such provision or any
other provision.
16. Successors and Assigns. The rights, benefits and obligations of the
Corporation under this Agreement and all covenants and agreements hereunder
shall inure to the benefit of and be enforceable by or against its successors
and assigns. Subject to the limitations set forth herein, this Agreement shall
inure to the benefit of and be binding upon the Founders' heirs, successors and
assigns. Subject to the limitations set forth herein, neither this Agreement
nor any rights or obligations hereunder shall be assigned by any Founder. The
rights of the Purchasers hereunder shall inure to the benefit of and be binding
upon the Purchasers respective successors and assigns.
17. Entire Agreement. The Agreement (with respect to the Corporation and
the Purchasers, together with the Purchase Agreement), constitutes the entire
agreement among the parties. This Founders Agreement may not be amended or
modified, except in writing, and signed by each of the Purchasers and Founder.
18. Severability. If any provision of this Agreement or the application
thereof is held invalid or unenforceable, the invalidity or unenforceability
thereof shall not affect any other provisions or applications of this Agreement
which can be given effect without the invalid or unenforceable provision or
application. To that end, the provisions of this Agreement are to be severable.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York (without giving
effect to its conflicts of laws principles).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
9
<PAGE>
IN WITNESS WHEREOF. the Corporation has caused this Agreement to be signed
and each Founder has executed this Agreement as of the date shown below.
GENOMICA CORPORATION
Dated:__________, 1996 BY: /s/ James L. Rathmanns
------------------------------------
TITLE:_________________________________
Dated: March 22 , 1996 FOUNDER: /s/ Steven Cozza
--------- -------------------------------
Steven Cozza
PURCHASERS:
FALCON TECHNOLOGY PARTNERS, L.P.
A Delaware limited partnership
BY: /s/ James L. Rathmann
------------------------------------
TITLE: General Partner
HARRIS & HARRIS GROUP, INC.
A NY corporation
BY: /s/ D.C.J.
------------------------------------
TITLE: Executive Vice President
---------------------------------
10
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SCHEDULE 1
----------
Founder Founders' Vesting Schedule
- ------- --------- ----------------
Shares
------
Cozza 30,000 15,000 shares become Vested Shares on the date
($30.00) hereof and the remaining shares become Vested
Shares on the first anniversary of the date
hereof; provided however, that notwithstanding
the above provisions, if Cozza leaves the employ
of CSH for any reason except to become an
employee of the Company, all shares which have
not yet become Vested Shares will always remain
Unvested Shares.
11
<PAGE>
Exhibit A
CONFIDENTIALITY AGREEMENT
-------------------------
Name: Steven Cozza Employment Date: July 6, 1990
------------------------------ ------------------------
(Type or Print)
In consideration of (i) Genomica Corporation (the "Company") entering
into certain agreements and arrangements with my employer, Cold Spring Harbor
Laboratory ("Cold Spring Harbor"), whereby the Company will, among other things,
sponsor certain research activities in which I may be involved, and (ii) the
Company's issuance and sale to me of shares of its common stock pursuant to a
Common Stock Acquisition Agreement between the Company and me, and for other
good and valuable consideration, the receipt and sufficiency of which are by
acknowledged, I understand and agree to the following provisions for the
protection of the confidential information of the Company.
1. Confidentiality. I agree that without the written permission of the
Company, I will not knowingly use, publish or otherwise disclose any
Confidential Information. The term "Confidential Information" means any
Proprietary Information or any knowledge, information or materials about the
products, services, know-how, research and development, customers, or business
plans of the Company or any confidential information about financial matters,
marketing, pricing, compensation or any other confidential information of the
Company, its customers, or others from whom the Company has received information
under obligations of confidence which have been communicated to me in writing.
The term "Proprietary Information" means all intellectual and/or physical work
product, including without limitation, inventions, whether or not patentable and
whether or not tested or reduced to practice, discoveries, ideas, conceptions,
processes, developments, designs, business plans, trade secrets, mask works,
know-how and tangible expressions, whether or not copyrightable, computer
software, systems, programs or procedures, which (a) relates to the actual or
anticipated business activities of the Company, (b) results from work which is
performed for the Company or which is funded in whole or in part by the Company
or (c) results from any use of premises, equipment or property (tangible or
intangible) owned, leased, licensed or contracted for by the Company.
Notwithstanding the foregoing provisions of this paragraph 1 to the contrary,
"Confidential information" shall not include any information which (i) has been
made available to the general public of information which subsequently comes in
the public domain through no fault or omissions by me, (ii) is subsequently
disclosed by a third party which has the bona fide right to make such
disclosure, (iii) is required to be disclosed by law or a governmental agency
and (iv) is already generally known by personas in the computer software
industry or developed by
<PAGE>
Genomica Corporation
Confidentiality Agreement
Page 2
me independent of my work with the Company or Cold Spring Harbor without use of
any Confidential Information.
2. Confidential Information of Others. I agree not to knowingly
disclose to the Company (a) any confidential information belonging to others or
(b) any prior inventions made by me which the Company is not entitled to learn
of or use.
3. Return of Materials. Upon the written request of the Company at any
time, I will deliver promptly to the Company all documents, materials and things
(if any) in my possession which belong to the Company or have been given to me
by the Company.
4. Prior Agreements. I represent that I have attached hereto a copy of
any agreement (such as a prior employment agreement) which affects my ability to
comply with the terms of this Agreement. If there is no such agreement, I have
written my initials here: SC
----
5. Enforcement. I agree that the Company would not be fairly
compensated by money damages for any breach of this Agreement by me and
therefore, in the event of a breach or threatened breach of this Agreement, the
Company shall be entitled to specific performance, an injunction and other
equitable relief in addition to money damages and other legal remedies.
<PAGE>
Genomica Corporation
Confidentiality Agreement
Page 3
6. Miscellaneous. This Agreement shall be binding on my executors,
administrators, heirs, legal representatives or assigns, and may not be modified
except in writing with the approval of a duly authorized officer of the Company.
If any provision of this Agreement is determined to be illegal or unenforceable,
because of the duration thereof or the area or scope covered, I hereby request
any court making such determination to reduce the duration, area and/or scope so
that in its reduced form such covenant shall be enforceable and I agree that in
such event all remaining provisions shall remain in full force and effect. This
Agreement shall be governed and construed in accordance with the internal laws
of the State of New York. This document sets forth the entire agreement between
the Company and me with respect to the matters set forth herein.
WITNESS: EMPLOYEE:
/s/ Eric Hackborn /s/ Steven Cozza
- ----------------------------------- -----------------------------------
Eric Hackborn Steven Cozza
Date: 3-22-96 Date: 3/22/96
------------------------------ ------------------------------
Social Security No. ###-##-####
----------------
<PAGE>
GENOMICA CORPORATION
FOUNDERS AGREEMENT
THIS AGREEMENT is made as of the 22 th day of March, 1996, by and among
Genomica Corporation, a Delaware corporation, (the "Corporation"), Donald Fisher
("Founder") and the persons (the "Purchasers") named in Schedule I to a certain
Series A Convertible Preferred Stock Purchase Agreement of the Corporation dated
the date hereof (the "Purchase Agreement").
RECITALS
--------
The Corporation is engaged in the highly competitive business of
researching, developing, manufacturing and marketing computer software for the
biotechnology industry on an international basis. Founder and the Corporation
recognize and affirm that success or failure in this highly technical and highly
competitive business is dependent on the ability of the Corporation to (1)
develop and protect proprietary technology which will give the Corporation a
competitive advantage in the marketplace; (2) incorporate this technology into
products which themselves will or may become proprietary; and (3) develop and
utilize processes which may be proprietary to accomplish (1) and (2) above.
In order to achieve the above objectives, the Corporation has expended and
will continue to expend substantial time, effort and financial resources. These
activities include research, the attraction and training of key employees, and
establishing relationships with necessary resources outside the Corporation. If
information regarding the Corporation's research, processes or products were to
fall into the hands of a competitor of the Corporation, it could be used in a
manner which would cause serious and irreparable financial and business damage
to the Corporation. For this reason, all information related to the
Corporation's technology, research, products, and business strategies is
considered to be confidential information which is proprietary to the
Corporation.
In addition, the Purchasers intend to invest in the Corporation pursuant to
the Purchase Agreement based on the foregoing assumptions and such investment is
contingent upon the execution and delivery of this Agreement by the Corporation
and Founder.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above representations and
understandings, and the promises and mutual agreements set forth below, the
parties agree, effective on the date of the Agreement, to the following terms
and conditions:
1
<PAGE>
1. Services. Founder agrees to serve the Corporation as reasonably
directed by its Board of Directors or its designee, consistent with the scope of
expertise and other employment obligations of Founder. Such services may
include participation in the Corporation as a director, officer, scientific
advisor, consultant, contractor and/or, with the agreement of Founder, an
employee. In all such cases, the terms and conditions of this Agreement will
continue to be binding.
2. Founder's Stock. Founder has purchased from the Corporation an
aggregate of 250,000 shares of Common Stock (the "Shares") at a per-share
purchase price of $.001 (the "Original Purchase Price") as more specifically set
forth on Schedule 1 hereto. Founder's Shares shall be subject to a number of
restrictions as set forth in this Agreement. Certain of the restrictions with
respect to Founder's Shares may terminate under various conditions pursuant
hereto in consideration for Founder's service to the Corporation as described
herein.
3. [INTENTIONALLY OMITTED]
4. Disclosure and Assignment of Technology to Corporation. Concurrently
with the execution of this Agreement, Founder is executing and delivering a
Nondisclosure and Developments Agreement substantially in the form set forth as
Exhibit A hereto (the "Nondisclosure and Developments Agreement").
5. [INTENTIONALLY OMITTED]
6. Remedies in the Event of Breach. The Corporation, the Purchasers and
Founder understand and agree that any breach or threatened breach by the
Corporation or Founder of any of the provisions hereof cannot be remedied solely
by the recovery of damages, and in the event of any such breach or threatened
breach, the Corporation or the Purchasers, as the case may be, shall be entitled
to injunctive relief, restraining Founder, and any business, firm, corporation,
individual or other entity participating in such breach or attempted breach from
engaging in any activity which would constitute a breach. The Corporation, the
Purchasers and Founder further agree that any dispute arising under the terms of
this Agreement shall be decided in accordance with the rules then in effect of
the American Arbitration Association, and any arbitration award may be entered
in a court of competent jurisdiction and enforced as a judgment thereof.
Nothing herein, however, shall be construed as (i) prohibiting the Corporation,
the Purchasers or Founder from pursuing, in conjunction with an injunction or
otherwise, any other remedies available in equity or at law for any such breach
or threatened breach, including the recovery of damages; or (ii) limiting the
Corporation's remedy against Founder as set forth in Section 13 below.
7. Transferability. The Corporation and Founder agree (i) that Unvested
Shares (as defined below) may not be sold, pledged or otherwise transferred
("Transferred") without the consent of the Board of Directors in its sole
discretion
2
<PAGE>
(except pursuant to Section 9 below); and (ii) Vested Shares (as defined below)
may be Transferred only in accordance with the provisions set forth herein and
only if the transferee of such Vested Shares agrees in writing to be bound by
the provisions of Sections 9, 10, 11, 13 and 14 hereof. Any Founder's Shares
Transferred not in accordance with the preceding sentence shall be void, ab
initio.
8. Founder's Stock. Founder's Shares shall be affected as follows:
(A) In the event (i) Founder dies; (ii) of a breach by Founder of any of
the terms of the Nondisclosure and Developments Agreement or the Common Stock
Acquisition Agreement by which Founder purchased the Founder's Shares (any such
case, a "Discontinuation Event"), certain of Founder's Shares, defined below as
"Unvested Shares," shall be repurchased and paid for in full by the Corporation
at the Original Purchase Price within 30 days of such Discontinuation Event.
Unvested Shares shall be those Founder's Shares which have not yet vested
according to the schedule set forth in Schedule 1 hereto. Notwithstanding the
preceding sentence, in the event the Corporation's Board of Directors approves a
sale or merger (other than a merger with or into a wholly-owned subsidiary of
the Corporation or a merger in which the Corporation is the surviving entity) of
the Corporation or an initial public offering of the Corporation's stock (any of
which events is defined herein as a "Triggering Transaction"), Founder will be
notified of such Board action. Any of Founder's then Unvested Shares will
become Vested Shares (as defined below) simultaneously with the consummation of
the Triggering Transaction. Upon the occurrence of a Discontinuation Event, all
of Founder's Unvested Shares shall forever remain Unvested Shares.
(B) Upon the occurrence of a Discontinuation Event, Founder's Shares which
are vested pursuant to Schedule 1 hereto ("Vested Shares") may be repurchased by
the Corporation, solely at the option of the Corporation (the "Corporation
Option"), at Fair Market Value (as defined below). The Corporation agrees to
give Founder (or his estate) notice of its intent to exercise the Corporation
Option within ninety (90) days of the date of such Discontinuation Event and to
pay for those shares for which it exercises such Corporation Option as follows:
3/24ths of the total price within 90 days of the date of the Discontinuation
Event, with the balance to be paid in equal monthly installments over the next
succeeding twenty-one months.
(C) Termination For Cause. Prior to the Corporation's initial public
offering, in the event of a Discontinuation Event with respect to Founder
occurring as a result of an event set forth in clause (ii) of Section 8(A)
above, then with respect to any of Founder's Shares not repurchased by the
Corporation pursuant to Sections 8(A) or 8(B) above, Founder shall, in all
matters put forth to a vote of the holders of Common Stock (i) cause such
Founder's Shares to be represented at any meeting of the stockholders of the
Corporation and (ii) vote such shares in the same proportion and in the same
manner as all other Common Stock is voted.
3
<PAGE>
(D) Fair Market Value. For the purposes of Section 8(B), Fair Market Value
shall be that value as determined in good faith by the Board of Directors. Any
Founder (or his estate) may request an appraisal by written notice of objection
delivered not later than fifteen (15) days after receipt of such Fair Market
Value determination by the Board of Directors. If an appraisal is demanded, the
Corporation shall select an appraiser reasonably acceptable to Founder (or his
estate) to appraise Founder's Vested Shares, and the repurchase price payable
upon the Corporation's exercise of the Corporation Option shall be the higher of
such appraisal and such Fair Market Value determination by the Board of
Directors. If such appraisal results in a valuation more than 10% higher than
the Fair Market Value determination by the Board of Directors, then all expenses
of such appraisal shall be paid by the Corporation; otherwise, all expenses of
such appraisal shall be paid by Founder (or his estate).
9. Approved Sale of Corporation. (A) If the Corporation's Board of
Directors has adopted a resolution of the Board of Directors approving the sale
of the Corporation to any person (such person, the "Acquiring Entity"), whether
by merger, consolidation, sale of all or substantially all of the Corporation's
assets or sale of all of the outstanding capital stock (such sale, an "Approved
Sale"), Founder and each Purchaser will consent to, vote for and raise no
objections against the Approved Sale, and if the Approved Sale is structured as
a sale of stock, Founder and each Purchaser hereby agrees to sell all of their
respective Shares (and all rights thereto) on the terms and conditions approved
by the Board of Directors, provided that each holder of Common Stock receives in
the Approved Sale the same amount and type of consideration for its interest in
the Corporation as is received by the holders of the Series A Convertible
Preferred Stock, (the "Preferred Stock"), assuming such holders had converted
their respective shares of Preferred Stock into Common Stock. Founder and each
Purchaser will take all actions reasonably required to facilitate and consummate
an Approved Sale of the Corporation.
(B) The Corporation shall give written notice (a "Sale Notice") of any such
Approved Sale to Founder and Purchasers. A Sale Notice shall contain (i) the
name and address of the prospective Acquiring Entity; (ii) the purchase price
and other material terms and conditions of the Approved Sale; (iii) the date on
which the Approved Sale is intended to be consummated; (iv) the date on which
the Corporation's Board of Directors approved the Approved Sale and (v) the
Founder's and Purchaser's Shares proposed to be sold. Upon receipt of a Sale
Notice, Founder and each Purchaser shall be required to consent to such Approved
Sale and to sell its Founder's or Purchaser's Shares, as the case may be, to the
Acquiring Entity designated therein within 30 days of receipt thereof or such
later date as may be specified in the Sale Notice. No Purchaser or Founder
shall be required to make any representations and warranties other than
representations and warranties concerning its ownership of such Founder's or
Purchaser's Shares, the absence of any liens or encumbrances thereon and its
authority to sell such Shares; and provided further that, if the terms of such
Approved Sale provide for the escrow of any amount of proceeds resulting from an
Approved Sale or to accept indebtedness or other securities
4
<PAGE>
subject to indemnification or other rights of offset, then Founder and
Purchasers shall be required to escrow a pro rata amount of its proceeds from
such Approved Sale and/or to accept such indebtedness or other securities.
(C) If the Corporation or Founder, in connection with any Approved Sale,
enters into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) promulgated by the Securities and Exchange Commission under
the Securities Act may be available with respect to such negotiation or
transaction (including a merger, consolidation or other reorganization), Founder
will at the request of the Corporation, appoint a purchaser representative (as
such term is defined in Rule 501(h) promulgated by the Securities and Exchange
Commission under the Securities Act) reasonably acceptable to the Corporation.
If Founder appoints the purchaser representative designated by the Corporation,
the Corporation will pay the fees of such purchaser representative, but if
Founder declines to appoint the purchaser representative designated by the
Corporation, Founder will appoint another purchaser representative (reasonably
acceptable to the Corporation), and Founder will be responsible for the fees of
the purchaser representative so appointed.
10. Right of First Refusal. (A) Except pursuant to Section 9 above, if at
any time Founder desires to sell for cash all or any part of Founder's Shares
pursuant to a bona fide offer from a third party (the "Proposed Transferee"),
Founder shall submit a written offer (the "Offer") to sell Founder's Shares (the
"Offered Shares") to the Purchasers on terms and conditions, including price,
not less favorable to the Purchasers than those on which Founder proposes to
sell such Offered Shares to the Proposed Transferee. The Offer shall disclose
the identity of the Proposed Transferee, the Offered Shares proposed to be sold,
the total number of Founder's Shares owned by Founder, the terms and conditions,
including price, of the proposed sale, that the proposed buyer has been informed
of the rights and obligations provided for in this Section 10 and Section 11
below and has agreed to purchase Offered Shares in accordance with the terms of
this Agreement, and any other material facts relating to the proposed sale. The
Offer shall further state that the Purchasers may acquire, in accordance with
the provisions of this Agreement, all but not less than all of the Offered
Shares for the price and upon the other terms and conditions, including deferred
payment (if applicable), set forth therein.
(B) Each Purchaser shall have the absolute right to purchase that number of
Offered Shares as shall be equal to the number of Offered Shares multiplied by a
fraction, the numerator of which shall be the number of Purchasers' Shares (as
defined below) then owned by such Purchaser and the denominator of which shall
be the aggregate number of Purchasers' Shares then owned by all of the
Purchasers. For purposes of this Section 10, all of the securities of the
Corporation which a Purchaser has acquired, or has the right to acquire from the
Corporation, upon the conversion, exercise or exchange of any of the securities
of the Corporation then owned by such Purchaser shall be deemed to be
Purchasers' Shares then owned by such Purchaser. (The amount of Offered Shares
5
<PAGE>
that each Purchaser is entitled to purchase under this Section 10(B) shall be
referred to as its "Pro Rata Fraction").
(C) The Purchasers shall have a right of oversubscription such that if any
Purchaser fails to accept the Offer as to its Pro Rata Fraction, the other
Purchasers shall, among them, have the right to purchase up to the balance of
the Offered Shares not so purchased. Such right of oversubscription may be
exercised by a Purchaser by accepting the Offer as to more than its Pro Rata
Fraction. If, as a result thereof, such oversubscriptions exceed the total
number of Offered Shares available in respect of such oversubscription
privilege, the oversubscribing Purchasers shall be cut back with respect to
their oversubscriptions on a pro rata basis in accordance with their respective
Pro Rata Fractions or as they may otherwise agree among themselves. In the
event that the Purchasers in the aggregate shall not have elected in the manner
set forth below to purchase all of the Offered Shares, the Purchasers shall not
have the right to purchase any of the Offered Shares and the Founder shall have
the right to sell the Offered Shares in accordance with Section 10(E) below.
(D) If the Purchasers, in the aggregate, desire to purchase all of the
Offered Shares, such Purchaser(s) shall communicate in writing their election to
purchase to Founder, which communication shall state the number of Offered
Shares each Purchaser desires to purchase (which shall in the aggregate be equal
to all the Offered Shares) and shall be given to Founder within thirty days of
the date the Offer was made. Such communication shall, when taken in
conjunction with the Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the sale and purchase of such Offered Shares (subject
to the aforesaid limitations as to a Purchaser's right to purchase more than its
Pro Rata Fraction). Sales of the Offered Shares to be sold to purchasing
Purchasers pursuant to this Section 10 shall be made at the offices of the
Corporation on the 45th day following the date the Offer was made (or if such
45th day is not a business day, then on the next succeeding business day). Such
sales shall be effected by Founder's delivery to each purchasing Purchaser of a
certificate or certificates evidencing the Offered Shares to be purchased by it,
free and clear of any liens, claims or encumbrances of any kind (other than
pursuant to this Agreement), duly endorsed for transfer to such purchasing
Purchaser and with any requisite stock transfer stamps attached, against payment
to Founder of the purchase price therefor by such purchasing Purchaser.
(E) If the Purchasers do not purchase all of the Offered Shares, the
Offered Shares may be sold by Founder at any time within six months after the
date the Offer was made, subject to Section 11 below and the other provisions of
this Agreement. Any such sale shall be to the Proposed Transferee, at not less
than the price and upon other terms and conditions, if any, not more favorable
to the Proposed Transferee than those specified in the Offer. Any Offered
Shares not sold within such six-month period shall continue to be subject to the
requirements of a prior offer pursuant to this Section 10.
6
<PAGE>
11. Co-Sale Rights. (A) If at any time a Purchaser desires to sell all or
any part of its Common Stock or Preferred Stock ("Purchaser's Shares") pursuant
to a bona fide offer from a third party (for purposes of this Section 11, also a
"Proposed Transferee"), such Purchaser shall deliver a written notice (the
"Notice") of such proposed sale of such Purchaser's Shares (for purposes of this
Section 11, also "Offered Shares") to the other Purchaser. The Notice shall
disclose the identity of the Proposed Transferee, the Offered Shares proposed to
be sold, the total number of Purchaser's Shares owned by such Purchaser, the
terms and conditions, including price, of the proposed sale, that the proposed
buyer has been informed of the rights and obligations provided for in this
Section 11 and has agreed to purchase Offered Shares in accordance with the
terms of this Agreement, and any other material facts relating to the proposed
sale.
(B) (i) If a Purchaser elects not to purchase any Offered Shares pursuant
to Section 10 above; or (ii) if upon receipt of a Notice pursuant to Section
11(A) above, such Purchaser desires to sell any of such Purchaser's Shares, then
such Purchaser shall have the right, exercisable upon written notice (the "Co-
Sale Acceptance Notice") to the selling Founder or Purchaser, as applicable,
given within thirty (30) days after the Offer or Notice, as applicable has been
delivered pursuant to Section 10 or 11(A) above, to participate in the proposed
sale of Offered Shares pursuant to the terms and conditions specified in the
Offer or Notice, as applicable, and the selling Founder or Purchaser, as
applicable, shall require the Proposed Transferee designated in the Offer or
Notice, as applicable, to purchase from such Founder or Purchaser up to the
number of whole shares of Common Stock or Preferred Stock, as applicable, equal
to the product of (i) the total number of Offered Shares to be transferred in
such proposed sale as specified in the Offer or Notice, as applicable, and (ii)
a fraction, the numerator of which (a) in the case of Offered Shares which are
Common Stock, is the number of outstanding shares of Common Stock held by such
Purchaser (including any Common Stock issuable to such Purchaser upon the
conversion or exchange of any Purchaser's Shares convertible or exchangeable
into Common Stock) or (b) in the case of Offered Shares which are Preferred
Stock, is the number of outstanding shares of Preferred Stock held by such
Purchaser, and the denominator of which (c) in the case of Offered Shares which
are Common Stock, is the total number of shares of Common Stock (on a fully-
diluted basis) then outstanding or (d) in the case of Offered Shares which are
Preferred Stock, is the total number of shares of Preferred Stock (on a fully-
diluted basis) then outstanding . The Co-Sale Acceptance Notice shall state the
number of shares such Purchaser proposes to include in such proposed sale to the
Proposed Transferee (up to the number of shares as calculated pursuant to the
immediately preceding sentence). Any such sale by such Purchaser shall be at
the same price per share (including price and type of consideration) received by
the Proposed Transferee and otherwise on identical terms and conditions as
received by the selling Founder or Purchaser, as the case may be, in its sale to
the Proposed Transferee. In the event that the Proposed Transferee does not
purchase shares of Common Stock and/or Preferred Stock from Purchasers who have
timely delivered a Co-Sale Acceptance Notice as required by this Section 11,
then the selling Founder or
7
<PAGE>
Purchaser, as the case may be, shall not be permitted to, and shall not, sell
any Offered Shares to the Proposed Transferee in the proposed sale.
(C) If no Co-Sale Acceptance Notice is received by the selling Founder or
Purchaser, as the case may be, during the 30-day period referred to in Section
11(A) above, then such Founder or Purchaser, as the case may be, shall have the
right to sell the Offered Shares at any time within six months after the date
the Offer or Notice, as the case may be was delivered, subject to the other
provisions of this Agreement. Any such sale shall be to the Proposed
Transferee, at not less than the price and upon other terms and conditions, if
any, not more favorable to the Proposed Transferee than those specified in the
Offer or Notice, as applicable. Any Offered Shares not sold within such six-
month period shall continue to be subject to the requirements of Section 10 and
this Section 11.
(D) Notwithstanding the foregoing, this Section 11 shall not apply to any
Transfer by any Purchaser or Founder of Shares: (i) to such Purchaser's or
Founder's affiliates, members of such Purchaser's or Founder's immediate family,
family trusts or Purchasers, (ii) constituting a gift or gifts, or (iii)
constituting less than 1% of the outstanding class of Shares to be Transferred.
12. Termination. The Corporation's right to repurchase Vested Shares
pursuant to Section 8 hereof, and the provisions of Sections 7, 9, 10, 11 and 13
hereof, shall terminate immediately upon the closing of a firm commitment,
underwritten public offering registered under the Securities Act, (other than a
registration relating solely to a transaction referred to in Rule 145 under the
Securities Act (or any successor rule) or to an employee benefit plan of the
Corporation), at a public offering price (prior to underwriters' discounts and
expenses) equal to or exceeding $2.50 per share of Common Stock (as adjusted for
any stock dividends, combinations or splits with respect to such shares) and in
which the aggregate proceeds to the Corporation and/or selling stockholders
(before deduction for underwriters' discounts and expenses relating to the
issuance, including without limitation fees of the Corporation's counsel) exceed
$5,000,000.
13. Failure to Deliver Shares. If Founder becomes obligated to sell any
Founder's Shares to a Purchaser or the Corporation under this Agreement and
fails to deliver such Founder's Shares in accordance with the terms of this
Agreement, such Purchaser or the Corporation, as the case may be, may, at its
option, in addition to all other remedies it may have, send to Founder the
purchase price for such Founder's Shares as is herein specified. Thereupon, the
Corporation upon written notice to Founder, (i) shall cancel on its books the
certificate or certificates representing the Founder's Shares to be sold and
(ii) shall issue, in lieu thereof, in the name of such Purchaser or the
corporation, as the case may be, a new certificate or certificates representing
such Founder's Shares, and thereupon all of Founder's rights in and to such
Founder's Shares shall terminate.
8
<PAGE>
14. Lock-up. If requested by the underwriters for the initial
underwritten public offering of securities of the Corporation, Founder and each
Purchaser shall agree not to sell, assign, transfer, pledge, hypothecate,
mortgage, encumber or otherwise dispose of all or any of such Founder's or
Purchaser's Shares, without the written consent of such underwriters, for a
period of not more than 180 days following the effective date of the
registration statement relating to such offering. This Section 14 shall
expressly survive the termination of this Agreement.
15. No Waiver. Any waiver of a breach of any of the terms of this
Agreement shall not operate as a waiver of any other breach of such terms or
conditions or any other terms or conditions, nor shall any failure to enforce
any provision of this Agreement operate as a waiver of such provision or any
other provision.
16. Successors and Assigns. The rights, benefits and obligations of the
Corporation under this Agreement and all covenants and agreements hereunder
shall inure to the benefit of and be enforceable by or against its successors
and assigns. Subject to the limitations set forth herein, this Agreement shall
inure to the benefit of and be binding upon the Founders' heirs, successors and
assigns. Subject to the limitations set forth herein, neither this Agreement
nor any rights or obligations hereunder shall be assigned by any Founder. The
rights of the Purchasers hereunder shall inure to the benefit of and be binding
upon the Purchasers respective successors and assigns.
17. Entire Agreement. The Agreement (with respect to the Corporation and
the Purchasers, together with the Purchase Agreement), constitutes the entire
agreement among the parties. This Founders Agreement may not be amended or
modified, except in writing, and signed by each of the Purchasers and Founder.
18. Severability. If any provision of this Agreement or the application
thereof is held invalid or unenforceable, the invalidity or unenforceability
thereof shall not affect any other provisions or applications of this Agreement
which can be given effect without the invalid or unenforceable provision or
application. To that end, the provisions of this Agreement are to be severable.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York (without giving
effect to its conflicts of laws principles).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
9
<PAGE>
IN WITNESS WHEREOF. the Corporation has caused this Agreement to be signed
and each Founder has executed this Agreement as of the date shown below.
GENOMICA CORPORATION
Dated:__________, 1996 BY: /s/ James L Rathmann
------------------------------------
TITLE:_________________________________
Dated: 3/15 , 1996 FOUNDER: /s/ Donald Fisher
---------- -------------------------------
Donald Fisher
PURCHASERS:
FALCON TECHNOLOGY PARTNERS, L.P.
A Delaware limited partnership
BY: /s/ James L. Rathmann
------------------------------------
TITLE: General Partner
HARRIS & HARRIS GROUP, INC.
A NY corporation
BY: /s/ D.C.J.
------------------------------------
TITLE: Executive Vice President
---------------------------------
10
<PAGE>
SCHEDULE 1
----------
Founder Founders' Vesting Schedule
- ------- --------- -----------------
Shares
------
Fisher 250,000 62,500 shares become Vested Shares on
($250.00) September 25, 1996 and 1/36th of the remaining
shares become Vested Shares on the first day of
each calendar month commencing after such date;
provided however, that notwithstanding the above
provisions, if Fisher leaves the employ of the
Corporation for any reason, all shares which have
not yet become Vested Shares will always remain
Unvested Shares.
11
<PAGE>
EMPLOYEE CONFIDENTIALITY
AND
INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT
------------------------------------------
Name: Dr. Donald Fisher Employment Date: 9/25/95
----------------------------- ----------------------------
(Type or Print)
In consideration of my employment and the salary/wages paid to me by
Genomica Corporation, or any of its parent, subsidiary or affiliate companies
(all hereafter collectively called the "Company") and for other good and
valuable consideration, I understand and agree to the following provisions for
the protection of the property rights of the Company and for the protection of
the rights of others who have entrusted the Company with confidential
proprietary information:
1. Disclosure to the Company. I agree to disclose fully and promptly
to the Company all Proprietary Information which is developed, conceived,
reduced to practice or learned by me solely or jointly with others, at any time
during the term of my employment. I agree to make and maintain written records
of the aforesaid Proprietary Information and to submit promptly the same, and to
make supplemental oral disclosure, to the Company. The term "Proprietary
Information" means all intellectual property and/or physical work product,
including without limitation, inventions, whether or not patentable and whether
or not tested or reduced to practice, discoveries, ideas, conceptions,
processes, developments, designs, business plans, trade secrets, mask works,
know-how and tangible expressions, whether or not copyrightable, computer
software, systems, programs or procedures, which (a) relates in any way to the
actual or anticipated business activities of the Company, (b) results from, or
is suggested by, work which is performed for the Company or which is funded in
whole or in part by the Company or (c) results from any use of premises,
equipment or property (tangible or intangible) owned, leased, licensed or
contracted for by the Company.
2. Ownership and Assignment of Assigned Intellectual Property. I
agree to assign and hereby do assign to the Company as its exclusive property
the entire right, title and interest in and to all Proprietary Information
embraced by Paragraph 1 above, including without limitation, all patents, patent
applications and copyrights. I further agree to execute all papers, and
otherwise to provide all requested assistance, at the Company's expense, during
and subsequent to my employment, to enable the Company or its nominees to obtain
such patents, copyrights and other legal protection as it may desire in any
country. All copyrightable work ("Work") created by me in connection with my
employment is intended to be a "work made for hire" as that term is defined in
Section 101 of the Copyright Act of 1976, as amended (the "Copyright Act"), and
shall be the property of the Company, and the Company shall be the sole author
of such work within the meaning of the Copyright Act. All such Works, as well
as copies of such Works in whatever medium fixed or embodied, shall be owned
exclusively by the
12
<PAGE>
Genomica Corporation
Employee Confidentiality and Intellectual Property Agreement
Page 2
Company and I expressly disclaim any interest in them. If the copyright to any
such Works shall not be the property of the Company by operation of law, I
hereby assign and will assign to the Company, without further consideration, all
right, title and interest in such Work and will assist the Company, at its
expense, to secure, maintain and defend for the benefit of the Company all
copyrights, registrations, extensions and renewals on any and all such Work,
including translations thereof in any and all countries, such Work to be and
remain the property of the Company whether copyrighted or not.
I hereby waive all moral rights and all inalienable rights that I may
have in any Work, including without limitation, any right to identification of
authorship, any right of approval on modifications or limitation on subsequent
modifications. To the extent that this waiver is deemed unenforceable under
applicable law, I acknowledge and agree that I will not exercise any such
inalienable right without the specific prior written consent of the Company.
In the event that the Company is unable, after reasonable effort, to
secure my signature on letters patent, copyright or other documents relating to
any Proprietary Information, whether because of my physical or mental incapacity
or for any other reason whatsoever, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and
attorney-in-fact, to act for and in my behalf and stead to execute and file any
such applications(s) and to take all other lawfully permitted acts to further
the prosecution and issuance of letters patent, copyright or other documents
with the same legal force and effect as if executed by me.
The assignment provisions of this Agreement shall not apply to
Proprietary Information which is exempt from assignment under the applicable
laws of the state of employment. I agree, however, that the Company shall have
a non-exclusive, fully paid license to use for all purposes any Proprietary
Information within the scope of the actual or anticipated business of the
Company but not assigned to the Company under this Agreement unless such a
license is prohibited by statute or by a court of last resort and final
jurisdiction.
I understand and agree that the Company shall determine, in its sole
and absolute discretion, whether an application for or registration of any
patent, copyright or other intellectual property right shall be filed on any
development assigned to the Company under this Agreement, and whether such an
application shall be prosecuted or abandoned prior to issuance or registration.
3. Confidentiality. I agree that without the written permission of
the Company, I will not either during or subsequent to my employment, use,
publish or otherwise disclose any Confidential Information except in the course
of my duties with and in furtherance of the business of the Company. The term
"Confidential Information"
Employee's name: Dr. Donald Fisher
Employee Initial Here DF
------
13
<PAGE>
Genomica Corporation
Employee Confidentiality and Intellectual Property Agreement
Page 3
means any Proprietary Information or any knowledge, information or materials
about the products, services, know-how, research and development, customers, or
business plans of the Company or any confidential information about financial
matters, marketing, pricing, compensation or any other confidential information
of the Company, its customers, or others from whom the Company has received
information under obligations of confidence.
4. Confidential Information of Others. I agree not to disclose to
the Company, or to use in my work at the Company (a) any confidential
information belonging to others or (b) any prior inventions made by me which the
Company is not entitled to learn of or use. I represent that the inventions
identified in the _____ pages I attach hereto constitute all of the unpatented
inventions which I have made prior to my employment at the Company, which
inventions shall be excluded from this Agreement. (It is only necessary to list
the title of such inventions and the purpose thereof.) If there are no such
unpatented inventions, I have written my initials here: DF .
------
5. Non-Solicitation. During the term of my employment and for a
period of twelve (12) months thereafter I will not solicit or attempt to induce,
directly or indirectly, any employee or consultant of the Company to work with
me or any organization with which I may be affiliated or to accept a consulting
engagement or employment with a competitor, client or customer of the Company.
6. Return of Materials. Upon the request of the Company at any time
and in the event of the termination of my employment at the Company, whether or
not such termination is voluntary, I will deliver promptly to my superior at the
Company, or to the Board of Directors of the Company, all documents which relate
to business activities of the Company, and all materials and things which belong
to the Company or have been given to me by the Company or others during the
course of my employment.
7. Prior Agreements. I represent that I have attached hereto a copy
of any agreement (such as a prior employment agreement) which affects my ability
to comply with the terms of this Agreement. If there is no such agreement, I
have written my initials here: DF
------
8. Enforcement. I agree that the Company would not be fairly
compensated by money damages for any breach of this Agreement by me and
therefore, in the event of a breach or threatened breach of this Agreement, the
Company shall be entitled to specific performance, an injunction and other
equitable relief in addition to money damages and other legal remedies. I
hereby waive any requirement that the Company post a bond or surety in
connection with its enforcement of this Agreement.
Employee's name: Dr. Donald Fisher
Employee Initial Here DF
------
14
<PAGE>
Genomica Corporation
Consultant Confidentiality and Inventions Agreement
Page 4
9. Miscellaneous. This Agreement shall be binding on my executors,
administrators, heirs, legal representatives or assigns, and may not be modified
except in writing with the approval of a duly authorized officer of the Company.
If any provision of this Agreement is determined to be illegal or unenforceable,
because of the duration thereof or the area or scope covered, I hereby request
any court making such determination to reduce the duration, area and/or scope so
that in its reduced form such covenant shall be enforceable and I agree that in
such event all remaining provisions shall remain in full force and effect. This
Agreement shall be governed and construed in accordance with the internal laws
of the State of New York. This agreement sets forth the entire agreement
between the Company and me with respect to the matters set forth herein.
WITNESS: EMPLOYEE:
/s/ Donald Fisher
___________________________________ -----------------------------------
Date:______________________________ Date: 4/18/96
------------------------------
Social Security No. ###-##-####
----------------
15
<PAGE>
GENOMICA CORPORATION
FOUNDERS AGREEMENT
THIS AGREEMENT is made as of the 22 th day of March, 1996, by and among
Genomica Corporation, a Delaware corporation, (the "Corporation"), Dr. Thomas G.
Marr ("Founder") and the persons (the "Purchasers") named in Schedule I to a
certain Series A Convertible Preferred Stock Purchase Agreement of the
Corporation dated the date hereof (the "Purchase Agreement").
RECITALS
--------
The Corporation is engaged in the highly competitive business of
researching, developing, manufacturing and marketing computer software for the
biotechnology industry on an international basis. Founder and the Corporation
recognize and affirm that success or failure in this highly technical and highly
competitive business is dependent on the ability of the Corporation to (1)
develop and protect proprietary technology which will give the Corporation a
competitive advantage in the marketplace; (2) incorporate this technology into
products which themselves will or may become proprietary; and (3) develop and
utilize processes which may be proprietary to accomplish (1) and (2) above.
In order to achieve the above objectives, the Corporation has expended and
will continue to expend substantial time, effort and financial resources. These
activities include research, the attraction and training of key employees, and
establishing relationships with necessary resources outside the Corporation. If
information regarding the Corporation's research, processes or products were to
fall into the hands of a competitor of the Corporation, it could be used in a
manner which would cause serious and irreparable financial and business damage
to the Corporation. For this reason, all information related to the
Corporation's technology, research, products, and business strategies is
considered to be confidential information which is proprietary to the
Corporation.
In addition, the Purchasers intend to invest in the Corporation pursuant to
the Purchase Agreement based on the foregoing assumptions and such investment is
contingent upon the execution and delivery of this Agreement by the Corporation
and Founder.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above representations and
understandings, and the promises and mutual agreements set forth below, the
parties agree, effective on the date of the Agreement, to the following terms
and conditions:
<PAGE>
1. Services. Founder agrees to serve the Corporation as reasonably
directed by its Board of Directors or its designee, consistent with the scope of
expertise and other employment obligations of Founder. Such services may
include participation in the Corporation as a director, officer, scientific
advisor, consultant, contractor and/or, with the agreement of Founder, an
employee. In all such cases, the terms and conditions of this Agreement will
continue to be binding.
2. Founder's Stock. Founder has purchased from the Corporation an
aggregate of 1,080,000 shares of Common Stock (the "Shares") at a per-share
purchase price of $.001 (the "Original Purchase Price") as more specifically set
forth on Schedule 1 hereto. Founder's Shares shall be subject to a number of
restrictions as set forth in this Agreement. Certain of the restrictions with
respect to Founder's Shares may terminate under various conditions pursuant
hereto in consideration for Founder's service to the Corporation as described
herein.
3. Founder Consulting Agreement. Concurrently with the execution of this
Agreement, Founder is executing and delivering a Consulting Agreement with the
Corporation substantially in the form set forth as Exhibit A hereto (the
"Consulting Agreement").
4. [INTENTIONALLY OMITTED]
5. [INTENTIONALLY OMITTED]
6. Remedies in the Event of Breach. The Corporation, the Purchasers and
Founder understand and agree that any breach or threatened breach by the
Corporation or Founder of any of the provisions hereof cannot be remedied solely
by the recovery of damages, and in the event of any such breach or threatened
breach, the Corporation or the Purchasers, as the case may be, shall be entitled
to injunctive relief, restraining Founder, and any business, firm, corporation,
individual or other entity participating in such breach or attempted breach from
engaging in any activity which would constitute a breach. The Corporation, the
Purchasers and Founder further agree that any dispute arising under the terms of
this Agreement shall be decided in accordance with the rules then in effect of
the American Arbitration Association, and any arbitration award may be entered
in a court of competent jurisdiction and enforced as a judgment thereof.
Nothing herein, however, shall be construed as (i) prohibiting the Corporation,
the Purchasers or Founder from pursuing, in conjunction with an injunction or
otherwise, any other remedies available in equity or at law for any such breach
or threatened breach, including the recovery of damages; or (ii) limiting the
Corporation's remedy against Founder as set forth in Section 13 below.
7. Transferability. The Corporation and Founder agree (i) that Unvested
Shares (as defined below) may not be sold, pledged or otherwise transferred
("Transferred") without the consent of the Board of Directors in its sole
discretion
2
<PAGE>
(except pursuant to Section 9 below); and (ii) Vested Shares (as defined below)
may be Transferred only in accordance with the provisions set forth herein and
only if the transferee of such Vested Shares agrees in writing to be bound by
the provisions of Sections 9, 10, 11, 13 and 14 hereof. Any Founder's Shares
Transferred not in accordance with the preceding sentence shall be void, ab
initio.
8. Founder's Stock. Founder's Shares shall be affected as follows:
(A) In the event (i) Founder dies; (ii) of a breach by Founder of any of
the terms of the Consulting Agreement or the Common Stock Acquisition Agreement
by which Founder purchased the Founder's Shares; or (iii) the Consulting
Agreement shall have been terminated by the Corporation for Due Cause (as such
term is defined in the Consulting Agreement) or if Dr. Marr voluntarily
terminates the Consulting Agreement (any such case, a "Discontinuation Event"),
certain of Founder's Shares, defined below as "Unvested Shares," shall be
repurchased and paid for in full by the Corporation at the Original Purchase
Price within 30 days of such Discontinuation Event. Unvested Shares shall be
those Founder's Shares which have not yet vested according to the schedule set
forth in Schedule 1 hereto. Notwithstanding the preceding sentence, in the
event the Corporation's Board of Directors approves a sale or merger (other than
a merger with or into a wholly-owned subsidiary of the Corporation or a merger
in which the Corporation is the surviving entity) of the Corporation or an
initial public offering of the Corporation's stock (any of which events is
defined herein as a "Triggering Transaction"), Founder will be notified of such
Board action. Any of Founder's then Unvested Shares will become Vested Shares
(as defined below) simultaneously with the consummation of the Triggering
Transaction. Upon the occurrence of a Discontinuation Event, all of Founder's
Unvested Shares shall forever remain Unvested Shares.
(B) Upon the occurrence of a Discontinuation Event, Founder's Shares which
are vested pursuant to Schedule 1 hereto ("Vested Shares") may be repurchased by
the Corporation, solely at the option of the Corporation (the "Corporation
Option"), at Fair Market Value (as defined below). The Corporation agrees to
give Founder (or his estate) notice of its intent to exercise the Corporation
Option within ninety (90) days of the date of such Discontinuation Event and to
pay for those shares for which it exercises such Corporation Option as follows:
3/24ths of the total price within 90 days of the date of the Discontinuation
Event, with the balance to be paid in equal monthly installments over the next
succeeding twenty-one months.
(C) Termination For Cause. Prior to the Corporation's initial public
offering, in the event of a Discontinuation Event with respect to Founder
occurring as a result of an event set forth in clauses (ii) or (iii) of Section
8(A) above, then with respect to any of Founder's Shares not repurchased by the
Corporation pursuant to Sections 8(A) or 8(B) above, Founder shall, in all
matters put forth to a vote of the holders of Common Stock (i) cause such
Founder's Shares to be represented at any meeting of the stockholders of
3
<PAGE>
the Corporation and (ii) vote such shares in the same proportion and in the same
manner as all other Common Stock is voted.
(D) Fair Market Value. For the purposes of Section 8(B), Fair Market Value
shall be that value as determined in good faith by the Board of Directors. Any
Founder (or his estate) may request an appraisal by written notice of objection
delivered not later than fifteen (15) days after receipt of such Fair Market
Value determination by the Board of Directors. If an appraisal is demanded, the
Corporation shall select an appraiser reasonably acceptable to Founder (or his
estate) to appraise Founder's Vested Shares, and the repurchase price payable
upon the Corporation's exercise of the Corporation Option shall be the higher of
such appraisal and such Fair Market Value determination by the Board of
Directors. If such appraisal results in a valuation more than 10% higher than
the Fair Market Value determination by the Board of Directors, then all expenses
of such appraisal shall be paid by the Corporation; otherwise, all expenses of
such appraisal shall be paid by Founder (or his estate).
9. Approved Sale of Corporation. (A) If the Corporation's Board of
Directors has adopted a resolution of the Board of Directors approving the sale
of the Corporation to any person (such person, the "Acquiring Entity"), whether
by merger, consolidation, sale of all or substantially all of the Corporation's
assets or sale of all of the outstanding capital stock (such sale, an "Approved
Sale"), Founder and each Purchaser will consent to, vote for and raise no
objections against the Approved Sale, and if the Approved Sale is structured as
a sale of stock, Founder and each Purchaser hereby agrees to sell all of their
respective Shares (and all rights thereto) on the terms and conditions approved
by the Board of Directors, provided that each holder of Common Stock receives in
the Approved Sale the same amount and type of consideration for its interest in
the Corporation as is received by the holders of the Series A Convertible
Preferred Stock, (the "Preferred Stock"), assuming such holders had converted
their respective shares of Preferred Stock into Common Stock. Founder and each
Purchaser will take all actions reasonably required to facilitate and consummate
an Approved Sale of the Corporation.
(B) The Corporation shall give written notice (a "Sale Notice") of any such
Approved Sale to Founder and Purchasers. A Sale Notice shall contain (i) the
name and address of the prospective Acquiring Entity; (ii) the purchase price
and other material terms and conditions of the Approved Sale; (iii) the date on
which the Approved Sale is intended to be consummated; (iv) the date on which
the Corporation's Board of Directors approved the Approved Sale and (v) the
Founder's and Purchaser's Shares proposed to be sold. Upon receipt of a Sale
Notice, Founder and each Purchaser shall be required to consent to such Approved
Sale and to sell its Founder's or Purchaser's Shares, as the case may be, to the
Acquiring Entity designated therein within 30 days of receipt thereof or such
later date as may be specified in the Sale Notice. No Purchaser or Founder
shall be required to make any representations and warranties other than
4
<PAGE>
representations and warranties concerning its ownership of such Founder's or
Purchaser's Shares, the absence of any liens or encumbrances thereon and its
authority to sell such Shares; and provided further that, if the terms of such
Approved Sale provide for the escrow of any amount of proceeds resulting from an
Approved Sale or to accept indebtedness or other securities subject to
indemnification or other rights of offset, then Founder and Purchasers shall be
required to escrow a pro rata amount of its proceeds from such Approved Sale
and/or to accept such indebtedness or other securities.
(C) If the Corporation or Founder, in connection with any Approved Sale,
enters into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) promulgated by the Securities and Exchange Commission under
the Securities Act may be available with respect to such negotiation or
transaction (including a merger, consolidation or other reorganization), Founder
will at the request of the Corporation, appoint a purchaser representative (as
such term is defined in Rule 501(h) promulgated by the Securities and Exchange
Commission under the Securities Act) reasonably acceptable to the Corporation.
If Founder appoints the purchaser representative designated by the Corporation,
the Corporation will pay the fees of such purchaser representative, but if
Founder declines to appoint the purchaser representative designated by the
Corporation, Founder will appoint another purchaser representative (reasonably
acceptable to the Corporation), and Founder will be responsible for the fees of
the purchaser representative so appointed.
10. Right of First Refusal. (A) Except pursuant to Section 9 above, if at
any time Founder desires to sell for cash all or any part of Founder's Shares
pursuant to a bona fide offer from a third party (the "Proposed Transferee"),
Founder shall submit a written offer (the "Offer") to sell Founder's Shares (the
"Offered Shares") to the Purchasers on terms and conditions, including price,
not less favorable to the Purchasers than those on which Founder proposes to
sell such Offered Shares to the Proposed Transferee. The Offer shall disclose
the identity of the Proposed Transferee, the Offered Shares proposed to be sold,
the total number of Founder's Shares owned by Founder, the terms and conditions,
including price, of the proposed sale, that the proposed buyer has been informed
of the rights and obligations provided for in this Section 10 and Section 11
below and has agreed to purchase Offered Shares in accordance with the terms of
this Agreement, and any other material facts relating to the proposed sale. The
Offer shall further state that the Purchasers may acquire, in accordance with
the provisions of this Agreement, all but not less than all of the Offered
Shares for the price and upon the other terms and conditions, including deferred
payment (if applicable), set forth therein.
(B) Each Purchaser shall have the absolute right to purchase that number of
Offered Shares as shall be equal to the number of Offered Shares multiplied by a
fraction, the numerator of which shall be the number of Purchasers' Shares (as
defined below) then owned by such Purchaser and the denominator of which shall
be the aggregate
5
<PAGE>
number of Purchasers' Shares then owned by all of the Purchasers. For purposes
of this Section 10, all of the securities of the Corporation which a Purchaser
has acquired, or has the right to acquire from the Corporation, upon the
conversion, exercise or exchange of any of the securities of the Corporation
then owned by such Purchaser shall be deemed to be Purchasers' Shares then owned
by such Purchaser. (The amount of Offered Shares that each Purchaser is entitled
to purchase under this Section 10(B) shall be referred to as its "Pro Rata
Fraction").
(C) The Purchasers shall have a right of oversubscription such that if any
Purchaser fails to accept the Offer as to its Pro Rata Fraction, the other
Purchasers shall, among them, have the right to purchase up to the balance of
the Offered Shares not so purchased. Such right of oversubscription may be
exercised by a Purchaser by accepting the Offer as to more than its Pro Rata
Fraction. If, as a result thereof, such oversubscriptions exceed the total
number of Offered Shares available in respect of such oversubscription
privilege, the oversubscribing Purchasers shall be cut back with respect to
their oversubscriptions on a pro rata basis in accordance with their respective
Pro Rata Fractions or as they may otherwise agree among themselves. In the
event that the Purchasers in the aggregate shall not have elected in the manner
set forth below to purchase all of the Offered Shares, the Purchasers shall not
have the right to purchase any of the Offered Shares and the Founder shall have
the right to sell the Offered Shares in accordance with Section 10(E) below.
(D) If the Purchasers, in the aggregate, desire to purchase all of the
Offered Shares, such Purchaser(s) shall communicate in writing their election to
purchase to Founder, which communication shall state the number of Offered
Shares each Purchaser desires to purchase (which shall in the aggregate be equal
to all the Offered Shares) and shall be given to Founder within thirty days of
the date the Offer was made. Such communication shall, when taken in
conjunction with the Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the sale and purchase of such Offered Shares (subject
to the aforesaid limitations as to a Purchaser's right to purchase more than its
Pro Rata Fraction). Sales of the Offered Shares to be sold to purchasing
Purchasers pursuant to this Section 10 shall be made at the offices of the
Corporation on the 45th day following the date the Offer was made (or if such
45th day is not a business day, then on the next succeeding business day). Such
sales shall be effected by Founder's delivery to each purchasing Purchaser of a
certificate or certificates evidencing the Offered Shares to be purchased by it,
free and clear of any liens, claims or encumbrances of any kind (other than
pursuant to this Agreement), duly endorsed for transfer to such purchasing
Purchaser and with any requisite stock transfer stamps attached, against payment
to Founder of the purchase price therefor by such purchasing Purchaser.
(E) If the Purchasers do not purchase all of the Offered Shares, the
Offered Shares may be sold by Founder at any time within six months after the
date the Offer was
6
<PAGE>
made, subject to Section 11 below and the other provisions of this Agreement.
Any such sale shall be to the Proposed Transferee, at not less than the price
and upon other terms and conditions, if any, not more favorable to the Proposed
Transferee than those specified in the Offer. Any Offered Shares not sold within
such six-month period shall continue to be subject to the requirements of a
prior offer pursuant to this Section 10.
11. Co-Sale Rights. (A) If at any time a Purchaser desires to sell all or
any part of its Common Stock or Preferred Stock ("Purchaser's Shares") pursuant
to a bona fide offer from a third party (for purposes of this Section 11, also a
"Proposed Transferee"), such Purchaser shall deliver a written notice (the
"Notice") of such proposed sale of such Purchaser's Shares (for purposes of this
Section 11, also "Offered Shares") to the other Purchaser. The Notice shall
disclose the identity of the Proposed Transferee, the Offered Shares proposed to
be sold, the total number of Purchaser's Shares owned by such Purchaser, the
terms and conditions, including price, of the proposed sale, that the proposed
buyer has been informed of the rights and obligations provided for in this
Section 11 and has agreed to purchase Offered Shares in accordance with the
terms of this Agreement, and any other material facts relating to the proposed
sale.
(B) (i) If a Purchaser elects not to purchase any Offered Shares pursuant
to Section 10 above; or (ii) if upon receipt of a Notice pursuant to Section
11(A) above, such Purchaser desires to sell any of such Purchaser's Shares, then
such Purchaser shall have the right, exercisable upon written notice (the "Co-
Sale Acceptance Notice") to the selling Founder or Purchaser, as applicable,
given within thirty (30) days after the Offer or Notice, as applicable has been
delivered pursuant to Section 10 or 11(A) above, to participate in the proposed
sale of Offered Shares pursuant to the terms and conditions specified in the
Offer or Notice, as applicable, and the selling Founder or Purchaser, as
applicable, shall require the Proposed Transferee designated in the Offer or
Notice, as applicable, to purchase from such Founder or Purchaser up to the
number of whole shares of Common Stock or Preferred Stock, as applicable, equal
to the product of (i) the total number of Offered Shares to be transferred in
such proposed sale as specified in the Offer or Notice, as applicable, and (ii)
a fraction, the numerator of which (a) in the case of Offered Shares which are
Common Stock, is the number of outstanding shares of Common Stock held by such
Purchaser (including any Common Stock issuable to such Purchaser upon the
conversion or exchange of any Purchaser's Shares convertible or exchangeable
into Common Stock) or (b) in the case of Offered Shares which are Preferred
Stock, is the number of outstanding shares of Preferred Stock held by such
Purchaser, and the denominator of which (c) in the case of Offered Shares which
are Common Stock, is the total number of shares of Common Stock (on a fully-
diluted basis) then outstanding or (d) in the case of Offered Shares which are
Preferred Stock, is the total number of shares of Preferred Stock (on a fully-
diluted basis) then outstanding. The Co-Sale Acceptance Notice shall state the
number of shares such Purchaser proposes to include in such proposed sale to the
Proposed Transferee (up to the number of shares as calculated pursuant to the
immediately preceding sentence). Any such sale by such
7
<PAGE>
Purchaser shall be at the same price per share (including price and type of
consideration) received by the Proposed Transferee and otherwise on identical
terms and conditions as received by the selling Founder or Purchaser, as the
case may be, in its sale to the Proposed Transferee. In the event that the
Proposed Transferee does not purchase shares of Common Stock and/or Preferred
Stock from Purchasers who have timely delivered a Co-Sale Acceptance Notice as
required by this Section 11, then the selling Founder or Purchaser, as the case
may be, shall not be permitted to, and shall not, sell any Offered Shares to the
Proposed Transferee in the proposed sale.
(C) If no Co-Sale Acceptance Notice is received by the selling Founder or
Purchaser, as the case may be, during the 30-day period referred to in Section
11(A) above, then such Founder or Purchaser, as the case may be, shall have the
right to sell the Offered Shares at any time within six months after the date
the Offer or Notice, as the case may be was delivered, subject to the other
provisions of this Agreement. Any such sale shall be to the Proposed
Transferee, at not less than the price and upon other terms and conditions, if
any, not more favorable to the Proposed Transferee than those specified in the
Offer or Notice, as applicable. Any Offered Shares not sold within such six-
month period shall continue to be subject to the requirements of Section 10 and
this Section 11.
(D) Notwithstanding the foregoing, this Section 11 shall not apply to any
Transfer by any Purchaser or Founder of Shares: (i) to such Purchaser's or
Founder's affiliates, members of such Purchaser's or Founder's immediate family,
family trusts or Purchasers, (ii) constituting a gift or gifts, or (iii)
constituting less than 1% of the outstanding class of Shares to be Transferred.
12. Termination. The Corporation's right to repurchase Vested Shares
pursuant to Section 8 hereof, and the provisions of Sections 7, 9, 10, 11 and 13
hereof, shall terminate immediately upon the closing of a firm commitment,
underwritten public offering registered under the Securities Act, (other than a
registration relating solely to a transaction referred to in Rule 145 under the
Securities Act (or any successor rule) or to an employee benefit plan of the
Corporation), at a public offering price (prior to underwriters' discounts and
expenses) equal to or exceeding $2.50 per share of Common Stock (as adjusted for
any stock dividends, combinations or splits with respect to such shares) and in
which the aggregate proceeds to the Corporation and/or selling stockholders
(before deduction for underwriters' discounts and expenses relating to the
issuance, including without limitation fees of the Corporation's counsel) exceed
$5,000,000.
13. Failure to Deliver Shares. If Founder becomes obligated to sell any
Founder's Shares to a Purchaser or the Corporation under this Agreement and
fails to deliver such Founder's Shares in accordance with the terms of this
Agreement, such Purchaser or the Corporation, as the case may be, may, at its
option, in addition to all other remedies it may have, send to Founder the
purchase price for such Founder's
8
<PAGE>
Shares as is herein specified. Thereupon, the Corporation upon written notice to
Founder, (i) shall cancel on its books the certificate or certificates
representing the Founder's Shares to be sold and (ii) shall issue, in lieu
thereof, in the name of such Purchaser or the corporation, as the case may be, a
new certificate or certificates representing such Founder's Shares, and
thereupon all of Founder's rights in and to such Founder's Shares shall
terminate.
14. Lock-up. If requested by the underwriters for the initial
underwritten public offering of securities of the Corporation, Founder and each
Purchaser shall agree not to sell, assign, transfer, pledge, hypothecate,
mortgage, encumber or otherwise dispose of all or any of such Founder's or
Purchaser's Shares, without the written consent of such underwriters, for a
period of not more than 180 days following the effective date of the
registration statement relating to such offering. This Section 14 shall
expressly survive the termination of this Agreement.
15. No Waiver. Any waiver of a breach of any of the terms of this
Agreement shall not operate as a waiver of any other breach of such terms or
conditions or any other terms or conditions, nor shall any failure to enforce
any provision of this Agreement operate as a waiver of such provision or any
other provision.
16. Successors and Assigns. The rights, benefits and obligations of the
Corporation under this Agreement and all covenants and agreements hereunder
shall inure to the benefit of and be enforceable by or against its successors
and assigns. Subject to the limitations set forth herein, this Agreement shall
inure to the benefit of and be binding upon the Founders' heirs, successors and
assigns. Subject to the limitations set forth herein, neither this Agreement
nor any rights or obligations hereunder shall be assigned by any Founder. The
rights of the Purchasers hereunder shall inure to the benefit of and be binding
upon the Purchasers respective successors and assigns.
17. Entire Agreement. The Agreement (with respect to the Corporation and
the Purchasers, together with the Purchase Agreement), constitutes the entire
agreement among the parties. This Founders Agreement may not be amended or
modified, except in writing, and signed by each of the Purchasers and Founder.
18. Severability. If any provision of this Agreement or the application
thereof is held invalid or unenforceable, the invalidity or unenforceability
thereof shall not affect any other provisions or applications of this Agreement
which can be given effect without the invalid or unenforceable provision or
application. To that end, the provisions of this Agreement are to be severable.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York (without giving
effect to its conflicts of laws principles).
9
<PAGE>
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
10
<PAGE>
IN WITNESS WHEREOF. the Corporation has caused this Agreement to be signed
and each Founder has executed this Agreement as of the date shown below.
GENOMICA CORPORATION
Dated:__________, 1996 BY: /s/ James L. Rathmann
------------------------------------
TITLE:_________________________________
Dated:__________, 1996 FOUNDER: /s/ Dr. Thomas G. Marr
-------------------------------
Dr. Thomas G. Marr
PURCHASERS:
FALCON TECHNOLOGY PARTNERS, L.P.
A Delaware limited partnership
BY: /s/ James L. Rathmann
------------------------------------
TITLE: General Partner
HARRIS & HARRIS GROUP, INC.
A Delaware corporation
BY: /s/ D.C.J.
------------------------------------
TITLE: Executive Vice President
---------------------------------
11
<PAGE>
SCHEDULE 1
----------
Founder Founders' Vesting Schedule
- ------- --------- ----------------
Shares
------
Marr 1,080,000 540,000 shares are Vested Shares immediately;
($1080.00) 9,000 shares become Vested Shares on the first day
of each calendar month commencing after the date
hereof.
12
<PAGE>
Exhibit A
CONSULTING AGREEMENT
--------------------
(Dr. Thomas Marr)
AGREEMENT made as of March 22, 1996 by and between Genomica Corporation, a
Delaware corporation (the "Company''), and Dr. Thomas Marr ("Dr. Marr").
Dr. Marr is a Senior Scientist at Cold Spring Harbor Laboratory ("Cold
Spring Harbor"), a director of the Company, the key inventor of a software
system entitled "Genome Topographer" which the Company has been organized to
exploit, and a party to a Common Stock Acquisition Agreement dated the date
hereof with the Company (the "Marr Stock Acquisition Agreement") which provides
for the acquisition by Dr. Marr of shares of common stock of the Company.
Pursuant to a License Agreement dated the date hereof, Cold Spring Harbor
has granted the Company an exclusive license to intellectual property rights
pertaining to Genome Topographer.
The Company, Harris & Harris Group, Inc., a New York corporation (the
"Corporate Investor"), and Falcon Technology Partners, L.P., (the "LP Investor"
and together with the Corporate Investor, the "Investors"), are parties to a
Series A Convertible Preferred Stock Purchase Agreement (the "Stock Purchase
Agreement") which provides for the purchase by the Investors of authorized but
unissued shares of the Company's Series A Preferred Stock (the "Investors Stock
Purchase").
The Stock Purchase Agreement provides, among other things, that it is a
condition to the Investors' respective obligations to consummate the Investors
Stock Purchase that Dr. Marr enter into a Consulting Agreement with the Company
substantially in the form of this Agreement.
The parties to the Stock Purchase Agreement and Dr. Marr desire that such
condition be satisfied, and Dr. Marr is willing to provide his services to the
Company on the terms set forth herein.
NOW THEREFORE, in consideration of the premises, the mutual covenants and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1
<PAGE>
Section 1. Term; Consulting Fees; Independent Contractor.
(a) The Company hereby agrees to retain the services of Dr. Marr as
a consultant to the Company, and Dr. Marr hereby agrees to render such services
to the Company, upon the terms set forth in this Agreement, for the period
commencing on the date hereof and ending on the fifth anniversary of such date,
unless extended in accordance with the provisions of this Section 1 or earlier
terminated in accordance with the provisions of Section 6 (as so extended or
terminated, the "Term"). On each day after the third anniversary of the date
hereof, the Term shall be automatically extended for an additional day from the
then current expiration date of the Term, so that at any time the remaining Term
will consist of two years. During the, Term, the Company will pay to Dr. Marr a
base consulting fee for his services at the annual rate of $75,000, payable in
arrears in equal monthly installments.
(b) The Company and Dr. Marr hereby acknowledge and agree that Dr.
Marr shall perform the services provided for herein as an independent contractor
and not as an employee of the Company. Dr. Marr agrees that he will file his
own tax returns on the basis of his status as an independent contractor for the
reporting of all income, social security, employment and other taxes due and
owing on the consideration received by him under this Agreement and that he is
responsible for the payment of such taxes. Similarly, Dr. Marr shall not be
entitled to benefits specifically associated with employment status, such as
medical, dental and life insurance, stock (except as provided in the Marr Stock
Acquisition Agreement), and shall not be entitled to participate in any other
Company-sponsored employee benefit programs.
Section 2. Duties. During the Term, Dr. Marr shall provide such
consulting and advisory services to the Company in the areas set forth on
Schedule I hereto as the Company may reasonably request (the "Consulting
Services").
Section 3. Expenses. During the Term, Dr. Marr shall be entitled to
reimbursement for expenses incurred by him in connection with the performance of
his duties hereunder upon receipt of vouchers therefor in accordance with such
procedures as the Company has heretofore or may hereafter establish, or as may
be required by the Internal Revenue Service with respect to deduction of
business expenses by the Company.
Section 4. Termination of Service. Notwithstanding any other
provision of this Agreement, this Agreement (and thus the Term) may be
terminated as follows:
(a) Due Cause. By the Company, at any time, for Due Cause. As
used herein, the term "Due Cause" shall mean:
(i) actions or omissions of Dr. Marr constituting willful
and material misconduct intended to enrich Dr. Marr at the expense of the
Company;
2
<PAGE>
(ii) the willful and continued failure by Dr. Marr
substantially to perform his duties hereunder (other than as a result of
disability), which continues for a period of at least thirty (30) days
after a demand for substantial performance is delivered to Dr. Marr by the
Company's Board of Directors (the "Board") which specifically identifies
the manner in which the Board believes that Dr. Marr has not substantially
performed such duties; or
(iii) the conviction of Dr. Marr of a felonious crime,
but not a misdemeanor, involving moral turpitude.
(b) Illness or Disability. By the Company, at any time, if
Dr. Marr should be prevented by illness, accident or other disability (mental or
physical) from discharging his duties hereunder for a period of sixty (60)
consecutive days or a cumulative period of one hundred twenty (120) days in any
period of two hundred forty (240) consecutive days.
(c) Voluntary by Dr. Marr For Convenience. By Dr. Marr for
convenience, upon written notice to the Company given at least ninety (90) days
prior to the effective termination date.
(d) Voluntary by Dr. Marr Upon Termination of License
Agreement. By Dr. Marr, if the License Agreement dated the date hereof between
Cold Spring Harbor and the Company has been terminated in accordance with its
terms, upon written notice to the Company given at least ten (10) days prior to
the effective termination date.
(e) Material Breach by the Company. By Dr. Marr, at any time
by written notice to the Company, upon any material breach by the Company of the
terms hereof which continues uncured for a period of at least thirty (30) days
after a demand for substantial performance is delivered to the Board by Dr. Marr
which specifically identifies the manner in which Dr. Marr believes the Company
has materially breached this Agreement.
(f) Death. Automatically, in the event of Dr. Marr's death.
(g) By The Company Without Due Cause. By the Company, for
convenience upon written notice to Dr. Marr given at least ninety (90) days
prior to the effective termination date.
In the event that this Agreement (and thus the Term) is terminated
pursuant to any of Sections 4(a), 4(b), 4(c) or 4(f) above, the Company's
obligation to pay further compensation to Dr. Marr hereunder shall cease
forthwith, except that Dr. Marr (or his executor in the case of his death) shall
be entitled to receive his base consulting fee through the last day of the month
in which such termination occurs (or the effective date
3
<PAGE>
of termination in the case of termination pursuant to Section 4(a) or 4(c)). In
the event that this Agreement (and thus the Term) is terminated pursuant to
Section 4(d), 4(e) or 4(g) above, the Company shall continue to pay Dr. Marr his
base consulting fee for the remainder of the then current Term (as in effect
prior to such termination) at the same times as if such termination had not
occurred, provided that without limitation of its other rights or remedies, the
Company shall have the right to discontinue such consulting fee payments if (i)
Dr. Marr's representations and warranties contained in Section 6(a) prove to
have been untrue in any material respect or (ii) Dr. Marr breaches or has
breached in any material respect the Nondisclosure and Developments Agreement
(as defined herein) or the provisions of Section 6(b) or 7 hereof.
Section 5. Proprietary Information. Dr. Marr has executed and delivered
to the Company a Consultant Nondisclosure and Inventions Agreement in the form
of Exhibit A hereto (the "Non-Disclosure and Developments Agreement") which is
hereby incorporated into and made a part hereof.
Section 6. Other Obligations.
(a) Dr. Marr hereby represents and warrants to, and agrees with,
the Company that (i) his performance of the Consulting Services will not (A)
result in a violation by him of any material term of any employment agreement,
non-disclosure agreement, noncompete agreement or other similar agreement with
any current or previous employer of his or (B) result in a breach of any
obligation binding on him which would prohibit the use of information obtained
from him which the Company has used or may use in the future, (ii) he is
currently employed only by Cold Spring Harbor and is not a consultant or
scientific advisor to any person or entity other than Sequana Therapeutics, Inc.
("Sequana") and (iii) on or prior to the date hereof, Dr. Marr has delivered to
the Company true and correct copies of all agreements and other documents which
set forth the terms of Dr. Marr's relationship with Sequana, and such terms will
not be altered or amended in any material respect without the prior written
consent of the Company.
(b) Dr. Marr undertakes that, in the performance of the Consulting
Services, Dr. Marr will not use any materials, information, technology, know-how
or documents of a former or current employer which are not generally available
to the public, unless Dr. Marr or the Company has obtained written authorization
from the current or former employer for their possession and use.
Section 7. Non-Solicitation. During the Term (which, if this
Agreement is terminated other than pursuant to any of Sections 4(d), 4(e) or
4(g), shall, for purposes of this Section 7, mean the Term as in effect
immediately prior to such termination), Dr. Marr will not, directly or
indirectly, without the prior written consent of the Company, solicit or induce
any employee of the Company or any affiliate of the Company to leave the employ
of the Company or such affiliate or hire for any purpose any employee of the
4
<PAGE>
Company or any affiliate of the Company or any employee who has left the
employment of the Company or any such affiliate within one year of the
termination of said employee's employment with the Company.
Section 8. Agreement Not to Compete. During the term (which, if this
Agreement is terminated other than pursuant to any of Sections 4(d), 4(e) or
4(g), shall, for purposes of this Section 8, mean the Term as in effect
immediately prior to such termination), Dr. Marr will not, directly or
indirectly, engage or become interested (whether as an owner, stockholder,
partner, lender, investor, director, officer, employee, consultant or otherwise)
in any business or enterprise that is competitive with any significant part of
the business conducted by the Company or any affiliate of the Company (which for
purposes of this Section a shall be deemed to be competitive if it involves
similar research or development activities as those of the Company or any such
affiliate or similar types of products or services or proposed or anticipated
products or services as those of the Company or any such affiliate), provided
that (i) the continuation of Dr. Marr's current relationship with Sequana
(without expansion of the scope thereof or Dr. Marr's responsibilities) until
such time as the Company's business or research or development activities are
competitive with those of Sequana and (ii) ownership by Dr. Marr of not more
than 1% of the outstanding securities of any class of any corporation that are
listed on a national securities exchange or traded in the over-the-counter
market, all not be considered a breach of this Section 8.
Section 9. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given when hand delivered
(including by reputable overnight courier), five business days after being
mailed by first-class, registered or certified mail, postage prepaid, or when
transmitted by facsimile (with "answer-back" confirmation) as follows: (a) if to
Dr. Marr, to him at Cold Spring Harbor Laboratory, One Bungtown Road, Cold
Spring Harbor, New York 11724 (Facsimile No.: 516-367-8461); and (b) if to the
Company, c/o Falcon Technology Partners, L.P., 600 Dorset Road, Devon, PA 19333
Attention: President (Facsimile No.: ((215) 994 2222), with a copy to Harris &
Harris Group, Inc., One Rockefeller Plaza, 14 West 49th Street, New York, New
York, 10020, Attention: David C. Johnson, Jr. (Facsimile No.: ((212) 332-3601);
or to such other person(s) or address(ed) as either party shall have previously
furnished to the other party in accordance with this Section 9.
Section 10. Successors; Assignability; Entire Agreement. This Agreement
shall be binding upon, and shall inure to the benefit of and be enforceable by,
the respective successors and permitted assigns of the parties hereto, provided
that this Agreement shall not be assignable (in whole or in part) by Dr. Marr.
This Agreement and the agreements referred to herein constitute the entire
agreement between the Company and Dr. Marr with respect to the matters set forth
herein and therein.
5
<PAGE>
Section 11. Amendments; Waivers. This Agreement may not be amended, nor
shall any waiver, change, modification, consent or discharge be effected, except
by an instrument in writing executed by or on behalf of the party against whom
enforcement of any waiver, change, modification, consent or discharge is sought.
Any failure to enforce any provision hereof shall not operate as a waiver of
such provision or of any other provision hereof.
Section 12. Enforcement. Dr. Marr agrees that the Company would not be
fairly compensated by money damages for any breach of this Agreement by him and
therefore, in the event of a breach or threatened breach of this Agreement, the
Company shall be entitled to specific performance, an injunction and other
equitable relief in addition to money damages and other legal remedies. Dr. Marr
hereby waives any requirement that the Company post a bond or surety in
connection with its attempts to enforce this Agreement.
Section 13. Severability. In case any one or more of the provisions of
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired. Without limiting the
generality of the foregoing, if any provision of this Agreement is determined to
be illegal or unenforceable because of the duration thereof or the area or scope
covered, the parties hereby request any court making such determination to
reduce the duration, area and/or scope so that in its reduced form such covenant
shall be enforceable, and the parties agree that in such event all remaining
provisions shall remain in full force and effect.
Section 14. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
Section 15. Section Headings. The headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws (other than the laws
governing conflict of law questions) of the State of New York.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed or caused to be executed this
Agreement as of the date first above written.
GENOMICA CORPORATION
By: /s/ James L. Rathmann
--------------------------------------
Name: James L. Rathmann
Title: President
/s/ Dr. Thomas Marr
-----------------------------------------
Dr. Thomas Marr
7
<PAGE>
Schedule I
----------
Areas Covered By Exclusive Consulting Relationship
--------------------------------------------------
1. Genome Topographer product development
2. Genetic Disease Analysis tools
3. Locus interaction and gene expression
4. Gene discovery
5. Bioinformatic applications in the healthcare industry.
8
<PAGE>
CONSULTANT NONDISCLOSURE
AND
INVENTIONS AGREEMENT
--------------------
Name: /s/ Thomas Marr Engagement Date: March 22, 1996
------------------------------ -------------------------
(Type or Print)
In consideration of my engagement as a consultant to and the
consulting fees paid to me by Genomica Corporation, or any of its parent,
subsidiary or affiliate companies (all hereafter collectively called the
"Company") during the term of such engagement, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged,
having read and understood, I hereby agree to, the following provisions for the
protection of the property rights of the Company and for the protection of the
rights of others who have entrusted the Company with confidential proprietary
information:
1. Disclosure to the Company. Subject to Section 4, I agree to
disclose fully and promptly to the Company all Proprietary Information which is
developed, conceived, reduced to practice or learned by me solely or jointly
with others, at any time during the term of my engagement as a consultant to the
Company (my "Engagement"). I agree to make and maintain written records of the
aforesaid Proprietary Information and to submit promptly the same, and to make
supplemental oral disclosure, to the Company. The term "Proprietary
Information" means all intellectual property and/or physical work product,
including without limitation, inventions, whether or not patentable and whether
or not tested or reduced to practice, discoveries, ideas, conceptions,
processes, developments, designs, business plans, trade secrets, mask works,
know-how and tangible expressions, whether or not copyrightable, computer
software, systems, programs or procedures, which (a) relates in any way to the
actual or anticipated business activities of the Company, (b) results from, or
is suggested by, work which is performed for the Company or which is funded in
whole or in part by the Company or (c) results from any use of premises,
equipment or property (tangible or intangible) owned, leased, licensed or
contracted for by the Company.
2. Ownership and Assignment of Assigned Intellectual Property. I
agree to assign and hereby do assign to the Company as its exclusive property
the entire right, title and interest in and to all Proprietary Information
embraced by Paragraph 1 above which is developed, conceived, reduced to practice
or learned by me solely or jointly with others in the course of my performing
services for the Company pursuant to my Engagement, including without
limitation, all patents, patent applications and copyrights with respect thereto
(the "Assigned Intellectual Property"). I further agree to execute all papers,
and otherwise to provide all requested assistance, at the Company's expense,
during and subsequent to my Engagement, to enable the Company or its nominees to
obtain such patents, copyrights and other legal protection as it may desire in
1.
<PAGE>
Genomica Corporation
Consultant Confidentiality and Inventions Agreement
Page 2
any country. All copyrightable work ("Work") created by me in the course of my
performing services for the Company pursuant to my Engagement is intended to be
a "work made for hire" as that term is defined in Section 101 of the Copyright
Act of 1976, as amended (the "Copyright Act"), and shall be the property of the
Company, and the Company shall be the sole author of such work within the
meaning of the Copyright Act. All such Works, as well as copies of such Works
in whatever medium fixed or embodied, shall be owned exclusively by the Company
and I expressly disclaim any interest in them. If the copyright to any such
Works shall not be the property of the Company by operation of law, I hereby
assign and will assign to the Company, without further consideration, all right,
title and interest in such Work and will assist the Company, at its expense, to
secure, maintain and defend for the benefit of the Company all copyrights,
registrations, extensions and renewals on any and all such Work, including
translations thereof in any and all countries, such Work to be and remain the
property of the Company whether copyrighted or not.
I hereby waive all moral rights and all inalienable rights that I may
have in any Work, including without limitation, any right to identification of
authorship, any right of approval on modifications or limitation on subsequent
modifications. To the extent that this waiver is deemed unenforceable under
applicable law, I acknowledge and agree that I will not exercise any such
inalienable right without the specific prior written consent of the Company.
In the event that the Company is unable, after reasonable effort, to
secure my signature on letters patent, copyright or other documents relating to
any Assigned Intellectual Property, whether because of my physical or mental
incapacity or for any other reason whatsoever, I hereby irrevocably designate
and appoint the Company and its duly authorized officers and agents as my agent
and attorney-in-fact, to act for and in my behalf and stead to execute and file
any such applications(s) and to take all other lawfully permitted acts to
further the prosecution and issuance of letters patent, copyright or other
documents with the same legal force and effect as if executed by me.
The assignment provisions of this Agreement shall not apply to
Assigned Intellectual Property which is exempt from assignment under the
applicable laws of the state governing the terms of the Consulting Agreement
between me and the Company dated as of even date herewith, to which the form of
this Agreement is attached as Exhibit A. I agree, however, that the Company
shall have a non-exclusive, fully paid license to use for all purposes anywhere
in the world any Assigned Intellectual Property within the scope of the actual
or anticipated business of the Company but not assigned to
Consultant's name: Dr. Thomas Marr
Consultant Initial Here ________
<PAGE>
Genomica Corporation
Consultant Confidentiality and Inventions Agreement
Page 3
the Company under this Agreement unless such a license is prohibited by statute
or by a court of last resort and final jurisdiction.
I understand and agree that the Company shall determine, in its sole
and absolute discretion, whether an application for or registration of any
patent, copyright or other intellectual property right shall be filed on any
development assigned to the Company under this Agreement, and whether such an
application shall be prosecuted or abandoned prior to issuance or registration.
3. Confidentiality. I agree that without the written permission of
the Company, I will not either during or subsequent to my Engagement, use,
publish or otherwise disclose any Confidential Information except in the course
of my duties with and in furtherance of the business of the Company and, with
respect to Confidential Information which does not constitute Assigned
Intellectual Property, except as required by my employment relationship with
Cold Spring Harbor Laboratory. The term "Confidential Information" means any
Proprietary Information or any knowledge, information or materials about the
products, services, know-how, research and development, customers, or business
plans of the Company or any confidential information about financial matters,
marketing, pricing, compensation or any other confidential information of the
Company, its customers, or others from whom the Company has received information
under obligations of confidence. The foregoing restrictions of this Section 3
shall not apply if (a) the proprietary or confidential information becomes
available to the public through no fault of the recipient of such disclosure,
(b) the proprietary or confidential information was known to the recipient prior
to the disclosure, and such prior knowledge is ascertainable from written
records or documents of the recipient, and the recipient is under no such
obligation of confidentiality with respect to such prior knowledge or (c) the
proprietary or confidential information is subsequently received in good faith
from a third party without breaching any obligation of confidentiality of the
third party and without breaching any such obligation imposed by the third
party.
4. Confidential Information of Others. I agree not to disclose to
the Company, or to use in my work at the Company (a) any confidential
information belonging to Cold Spring Harbor Laboratory ("CSHL") or others or (b)
any prior inventions made by me which the Company is not entitled to learn of or
use. I represent that the inventions identified in the _____ pages I attach
hereto constitute all of the unpatented inventions which I have made prior to my
Engagement, which inventions shall be excluded from this Agreement. (It is only
necessary to list the title of such
Consultant's name: Dr. Thomas Marr
Consultant Initial Here ________
<PAGE>
Genomica Corporation
Consultant Confidentiality and Inventions Agreement
Page 4
inventions and the purpose thereof.) If there are no such unpatented inventions,
I have written my initials here: _____.
5. Return of Materials. Upon the request of the Company at any time
and in the event of the termination of my Engagement, whether or not such
termination is voluntary, I will deliver promptly to my supervisor at the
Company, or to the Board of Directors of the Company, all documents which relate
to business activities of the Company, and all materials and things which belong
to the Company or have been given to me by the Company or others during the
course of my engagement as a consultant thereto.
6. Prior Agreements; Consultant Obligations Subject to CSHL
Inventions Agreement. I represent that I have attached hereto a copy of the
Inventions Agreement between CSHL and me, as currently in effect (the "CSHL
Inventions Agreement"), and any other agreement (such as a prior employment
agreement) which affects my ability to comply with the terms of this Agreement.
It is expressly understood and agreed that my obligations hereunder shall be
subject to the provisions of the CSHL Inventions Agreement.
7. Enforcement. I agree that the Company would not be fairly
compensated by money damages for any breach of this Agreement by me and
therefore, in the event of a breach or threatened breach of this Agreement, the
Company shall be entitled to specific performance, an injunction and other
equitable relief in addition to money damages and other legal remedies. I
hereby waive any requirement that the Company post a bond or surety in
connection with its enforcement of this Agreement.
Consultant's name: Dr. Thomas Marr
Consultant Initial Here ________
<PAGE>
Genomica Corporation
Consultant Confidentiality and Inventions Agreement
Page 5
8. Miscellaneous. This Agreement shall be binding on my executors,
administrators, heirs, legal representatives or assigns, and may not be modified
except in writing with the approval of a duly authorized officer of the Company.
If any provision of this Agreement is determined to be illegal or unenforceable,
because of the duration thereof or the area or scope covered, I hereby request
any court making such determination to reduce the duration, area and/or scope so
that in its reduced form such covenant shall be enforceable and I agree that in
such event all remaining provisions shall remain in full force and effect. This
Agreement shall be governed and construed in accordance with the internal laws
(other than the laws governing conflict of law questions) of the State of New
York. This agreement and the Consulting Agreement referred to herein set the
entire agreement between the Company and me with respect to the matters set
forth herein and therein.
WITNESS: CONSULTANT:
/s/ Thomas Marr
___________________________________ -----------------------------------
Date:______________________________ Date: 3/19/96
------------------------------
Social Security No. ###-##-####
----------------
WITNESS: GENOMICA CORPORATION (for
purposes of section 6 only)
By: /s/ James L. Rathmann
___________________________________ --------------------------------
Name: James L. Rathmann
Date:______________________________ Title: President
Date: 3/25/96
------------------------------
<PAGE>
GENOMICA CORPORATION
FOUNDERS AGREEMENT
THIS AGREEMENT is made as of the 22 th day of March, 1996, by and among
Genomica Corporation, a Delaware corporation, (the "Corporation"), Jacqueline
Salit ("Founder") and the persons (the "Purchasers") named in Schedule I to a
certain Series A Convertible Preferred Stock Purchase Agreement of the
Corporation dated the date hereof (the "Purchase Agreement").
RECITALS
--------
The Corporation is engaged in the highly competitive business of
researching, developing, manufacturing and marketing computer software for the
biotechnology industry on an international basis. Founder and the Corporation
recognize and affirm that success or failure in this highly technical and highly
competitive business is dependent on the ability of the Corporation to (1)
develop and protect proprietary technology which will give the Corporation a
competitive advantage in the marketplace; (2) incorporate this technology into
products which themselves will or may become proprietary; and (3) develop and
utilize processes which may be proprietary to accomplish (1) and (2) above.
In order to achieve the above objectives, the Corporation has expended and
will continue to expend substantial time, effort and financial resources. These
activities include research, the attraction and training of key employees, and
establishing relationships with necessary resources outside the Corporation. If
information regarding the Corporation's research, processes or products were to
fall into the hands of a competitor of the Corporation, it could be used in a
manner which would cause serious and irreparable financial and business damage
to the Corporation. For this reason, all information related to the
Corporation's technology, research, products, and business strategies is
considered to be confidential information which is proprietary to the
Corporation.
In addition, the Purchasers intend to invest in the Corporation pursuant to
the Purchase Agreement based on the foregoing assumptions and such investment is
contingent upon the execution and delivery of this Agreement by the Corporation
and Founder.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above representations and
understandings, and the promises and mutual agreements set forth below, the
parties agree, effective on the date of the Agreement, to the following terms
and conditions:
<PAGE>
1. Services. Founder agrees to serve the Corporation as reasonably
directed by its Board of Directors or its designee, consistent with the scope of
expertise and other employment obligations of Founder. Such services may
include participation in the Corporation as a director, officer, scientific
advisor, consultant, contractor and/or, with the agreement of Founder, an
employee. In all such cases, the terms and conditions of this Agreement will
continue to be binding.
2. Founder's Stock. Founder has purchased from the Corporation an
aggregate of 30,000 shares of Common Stock (the "Shares") at a per-share
purchase price of $.001 (the "Original Purchase Price") as more specifically set
forth on Schedule 1 hereto. Founder's Shares shall be subject to a number of
restrictions as set forth in this Agreement. Certain of the restrictions with
respect to Founder's Shares may terminate under various conditions pursuant
hereto in consideration for Founder's service to the Corporation as described
herein.
3. [INTENTIONALLY OMITTED]
4. Disclosure and Assignment of Technology to Corporation. Concurrently
with the execution of this Agreement, Founder is executing and delivering a
Nondisclosure Agreement substantially in the form set forth as Exhibit A hereto
(the "Nondisclosure Agreement").
5. [INTENTIONALLY OMITTED]
6. Remedies in the Event of Breach. The Corporation, the Purchasers and
Founder understand and agree that any breach or threatened breach by the
Corporation or Founder of any of the provisions hereof cannot be remedied solely
by the recovery of damages, and in the event of any such breach or threatened
breach, the Corporation or the Purchasers, as the case may be, shall be entitled
to injunctive relief, restraining Founder, and any business, firm, corporation,
individual or other entity participating in such breach or attempted breach from
engaging in any activity which would constitute a breach. The Corporation, the
Purchasers and Founder further agree that any dispute arising under the terms of
this Agreement shall be decided in accordance with the rules then in effect of
the American Arbitration Association, and any arbitration award may be entered
in a court of competent jurisdiction and enforced as a judgment thereof.
Nothing herein, however, shall be construed as (i) prohibiting the Corporation,
the Purchasers or Founder from pursuing, in conjunction with an injunction or
otherwise, any other remedies available in equity or at law for any such breach
or threatened breach, including the recovery of damages; or (ii) limiting the
Corporation's remedy against Founder as set forth in Section 13 below.
7. Transferability. The Corporation and Founder agree (i) that Unvested
Shares (as defined below) may not be sold, pledged or otherwise transferred
("Transferred") without the consent of the Board of Directors in its sole
discretion
2
<PAGE>
(except pursuant to Section 9 below); and (ii) Vested Shares (as defined below)
may be Transferred only in accordance with the provisions set forth herein and
only if the transferee of such Vested Shares agrees in writing to be bound by
the provisions of Sections 9, 10, 11, 13 and 14 hereof. Any Founder's Shares
Transferred not in accordance with the preceding sentence shall be void, ab
initio.
8. Founder's Stock. Founder's Shares shall be affected as follows:
(A) In the event (i) Founder dies; (ii) of a breach by Founder of any of
the terms of the Consulting Agreement or the Common Stock Acquisition Agreement
by which Founder purchased the Founder's Shares (any such case, a
"Discontinuation Event"), certain of Founder's Shares, defined below as
"Unvested Shares," shall be repurchased and paid for in full by the Corporation
at the Original Purchase Price within 30 days of such Discontinuation Event.
Unvested Shares shall be those Founder's Shares which have not yet vested
according to the schedule set forth in Schedule 1 hereto. Notwithstanding the
preceding sentence, in the event the Corporation's Board of Directors approves a
sale or merger (other than a merger with or into a wholly-owned subsidiary of
the Corporation or a merger in which the Corporation is the surviving entity) of
the Corporation or an initial public offering of the Corporation's stock (any of
which events is defined herein as a "Triggering Transaction"), Founder will be
notified of such Board action. Any of Founder's then Unvested Shares will
become Vested Shares (as defined below) simultaneously with the consummation of
the Triggering Transaction. Upon the occurrence of a Discontinuation Event, all
of Founder's Unvested Shares shall forever remain Unvested Shares.
(B) Upon the occurrence of a Discontinuation Event, Founder's Shares which
are vested pursuant to Schedule 1 hereto ("Vested Shares") may be repurchased by
the Corporation, solely at the option of the Corporation (the "Corporation
Option"), at Fair Market Value (as defined below). The Corporation agrees to
give Founder (or his estate) notice of its intent to exercise the Corporation
Option within ninety (90) days of the date of such Discontinuation Event and to
pay for those shares for which it exercises such Corporation Option as follows:
3/24ths of the total price within 90 days of the date of the Discontinuation
Event, with the balance to be paid in equal monthly installments over the next
succeeding twenty-one months.
(C) Termination For Cause. Prior to the Corporation's initial public
offering, in the event of a Discontinuation Event with respect to Founder
occurring as a result of an event set forth in clause (ii) of Section 8(A)
above, then with respect to any of Founder's Shares not repurchased by the
Corporation pursuant to Sections 8(A) or 8(B) above, Founder shall, in all
matters put forth to a vote of the holders of Common Stock (i) cause such
Founder's Shares to be represented at any meeting of the stockholders of the
Corporation and (ii) vote such shares in the same proportion and in the same
manner as all other Common Stock is voted.
3
<PAGE>
(D) Fair Market Value. For the purposes of Section 8(B), Fair Market Value
shall be that value as determined in good faith by the Board of Directors. Any
Founder (or her estate) may request an appraisal by written notice of objection
delivered not later than fifteen (15) days after receipt of such Fair Market
Value determination by the Board of Directors. If an appraisal is demanded, the
Corporation shall select an appraiser reasonably acceptable to Founder (or her
estate) to appraise Founder's Vested Shares, and the repurchase price payable
upon the Corporation's exercise of the Corporation Option shall be the higher of
such appraisal and such Fair Market Value determination by the Board of
Directors. If such appraisal results in a valuation more than 10% higher than
the Fair Market Value determination by the Board of Directors, then all expenses
of such appraisal shall be paid by the Corporation; otherwise, all expenses of
such appraisal shall be paid by Founder (or her estate).
9. Approved Sale of Corporation. (A) If the Corporation's Board of
Directors has adopted a resolution of the Board of Directors approving the sale
of the Corporation to any person (such person, the "Acquiring Entity"), whether
by merger, consolidation, sale of all or substantially all of the Corporation's
assets or sale of all of the outstanding capital stock (such sale, an "Approved
Sale"), Founder and each Purchaser will consent to, vote for and raise no
objections against the Approved Sale, and if the Approved Sale is structured as
a sale of stock, Founder and each Purchaser hereby agrees to sell all of their
respective Shares (and all rights thereto) on the terms and conditions approved
by the Board of Directors, provided that each holder of Common Stock receives in
the Approved Sale the same amount and type of consideration for its interest in
the Corporation as is received by the holders of the Series A Convertible
Preferred Stock, (the "Preferred Stock"), assuming such holders had converted
their respective shares of Preferred Stock into Common Stock. Founder and each
Purchaser will take all actions reasonably required to facilitate and consummate
an Approved Sale of the Corporation.
(B) The Corporation shall give written notice (a "Sale Notice") of any such
Approved Sale to Founder and Purchasers. A Sale Notice shall contain (i) the
name and address of the prospective Acquiring Entity; (ii) the purchase price
and other material terms and conditions of the Approved Sale; (iii) the date on
which the Approved Sale is intended to be consummated; (iv) the date on which
the Corporation's Board of Directors approved the Approved Sale and (v) the
Founder's and Purchaser's Shares proposed to be sold. Upon receipt of a Sale
Notice, Founder and each Purchaser shall be required to consent to such Approved
Sale and to sell its Founder's or Purchaser's Shares, as the case may be, to the
Acquiring Entity designated therein within 30 days of receipt thereof or such
later date as may be specified in the Sale Notice. No Purchaser or Founder
shall be required to make any representations and warranties other than
representations and warranties concerning its ownership of such Founder's or
Purchaser's Shares, the absence of any liens or encumbrances thereon and its
authority to sell such Shares; and provided further that, if the terms of such
---------------------
Approved Sale provide for the escrow of any amount of proceeds resulting from an
Approved Sale or to accept indebtedness or other securities
4
<PAGE>
subject to indemnification or other rights of offset, then Founder and
Purchasers shall be required to escrow a pro rata amount of its proceeds from
such Approved Sale and/or to accept such indebtedness or other securities.
(C) If the Corporation or Founder, in connection with any Approved Sale,
enters into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) promulgated by the Securities and Exchange Commission under
the Securities Act may be available with respect to such negotiation or
transaction (including a merger, consolidation or other reorganization), Founder
will at the request of the Corporation, appoint a purchaser representative (as
such term is defined in Rule 501(h) promulgated by the Securities and Exchange
Commission under the Securities Act) reasonably acceptable to the Corporation.
If Founder appoints the purchaser representative designated by the Corporation,
the Corporation will pay the fees of such purchaser representative, but if
Founder declines to appoint the purchaser representative designated by the
Corporation, Founder will appoint another purchaser representative (reasonably
acceptable to the Corporation), and Founder will be responsible for the fees of
the purchaser representative so appointed.
10. Right of First Refusal. (A) Except pursuant to Section 9 above, if at
any time Founder desires to sell for cash all or any part of Founder's Shares
pursuant to a bona fide offer from a third party (the "Proposed Transferee"),
Founder shall submit a written offer (the "Offer") to sell Founder's Shares (the
"Offered Shares") to the Purchasers on terms and conditions, including price,
not less favorable to the Purchasers than those on which Founder proposes to
sell such Offered Shares to the Proposed Transferee. The Offer shall disclose
the identity of the Proposed Transferee, the Offered Shares proposed to be sold,
the total number of Founder's Shares owned by Founder, the terms and conditions,
including price, of the proposed sale, that the proposed buyer has been informed
of the rights and obligations provided for in this Section 10 and Section 11
below and has agreed to purchase Offered Shares in accordance with the terms of
this Agreement, and any other material facts relating to the proposed sale. The
Offer shall further state that the Purchasers may acquire, in accordance with
the provisions of this Agreement, all but not less than all of the Offered
Shares for the price and upon the other terms and conditions, including deferred
payment (if applicable), set forth therein.
(B) Each Purchaser shall have the absolute right to purchase that number of
Offered Shares as shall be equal to the number of Offered Shares multiplied by a
fraction, the numerator of which shall be the number of Purchasers' Shares (as
defined below) then owned by such Purchaser and the denominator of which shall
be the aggregate number of Purchasers' Shares then owned by all of the
Purchasers. For purposes of this Section 10, all of the securities of the
Corporation which a Purchaser has acquired, or has the right to acquire from the
Corporation, upon the conversion, exercise or exchange of any of the securities
of the Corporation then owned by such Purchaser shall be deemed to be
Purchasers' Shares then owned by such Purchaser. (The amount of Offered Shares
5
<PAGE>
that each Purchaser is entitled to purchase under this Section 10(B) shall be
referred to as its "Pro Rata Fraction").
(C) The Purchasers shall have a right of oversubscription such that if any
Purchaser fails to accept the Offer as to its Pro Rata Fraction, the other
Purchasers shall, among them, have the right to purchase up to the balance of
the Offered Shares not so purchased. Such right of oversubscription may be
exercised by a Purchaser by accepting the Offer as to more than its Pro Rata
Fraction. If, as a result thereof, such oversubscriptions exceed the total
number of Offered Shares available in respect of such oversubscription
privilege, the oversubscribing Purchasers shall be cut back with respect to
their oversubscriptions on a pro rata basis in accordance with their respective
Pro Rata Fractions or as they may otherwise agree among themselves. In the
event that the Purchasers in the aggregate shall not have elected in the manner
set forth below to purchase all of the Offered Shares, the Purchasers shall not
have the right to purchase any of the Offered Shares and the Founder shall have
the right to sell the Offered Shares in accordance with Section 10(E) below.
(D) If the Purchasers, in the aggregate, desire to purchase all of the
Offered Shares, such Purchaser(s) shall communicate in writing their election to
purchase to Founder, which communication shall state the number of Offered
Shares each Purchaser desires to purchase (which shall in the aggregate be equal
to all the Offered Shares) and shall be given to Founder within thirty days of
the date the Offer was made. Such communication shall, when taken in
conjunction with the Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the sale and purchase of such Offered Shares (subject
to the aforesaid limitations as to a Purchaser's right to purchase more than its
Pro Rata Fraction). Sales of the Offered Shares to be sold to purchasing
Purchasers pursuant to this Section 10 shall be made at the offices of the
Corporation on the 45th day following the date the Offer was made (or if such
45th day is not a business day, then on the next succeeding business day). Such
sales shall be effected by Founder's delivery to each purchasing Purchaser of a
certificate or certificates evidencing the Offered Shares to be purchased by it,
free and clear of any liens, claims or encumbrances of any kind (other than
pursuant to this Agreement), duly endorsed for transfer to such purchasing
Purchaser and with any requisite stock transfer stamps attached, against payment
to Founder of the purchase price therefor by such purchasing Purchaser.
(E) If the Purchasers do not purchase all of the Offered Shares, the
Offered Shares may be sold by Founder at any time within six months after the
date the Offer was made, subject to Section 11 below and the other provisions of
this Agreement. Any such sale shall be to the Proposed Transferee, at not less
than the price and upon other terms and conditions, if any, not more favorable
to the Proposed Transferee than those specified in the Offer. Any Offered
Shares not sold within such six-month period shall continue to be subject to the
requirements of a prior offer pursuant to this Section 10.
6
<PAGE>
11. Co-Sale Rights. (A) If at any time a Purchaser desires to sell all or
any part of its Common Stock or Preferred Stock ("Purchaser's Shares") pursuant
to a bona fide offer from a third party (for purposes of this Section 11, also a
"Proposed Transferee"), such Purchaser shall deliver a written notice (the
"Notice") of such proposed sale of such Purchaser's Shares (for purposes of this
Section 11, also "Offered Shares") to the other Purchaser. The Notice shall
disclose the identity of the Proposed Transferee, the Offered Shares proposed to
be sold, the total number of Purchaser's Shares owned by such Purchaser, the
terms and conditions, including price, of the proposed sale, that the proposed
buyer has been informed of the rights and obligations provided for in this
Section 11 and has agreed to purchase Offered Shares in accordance with the
terms of this Agreement, and any other material facts relating to the proposed
sale.
(B) (i) If a Purchaser elects not to purchase any Offered Shares pursuant
to Section 10 above; or (ii) if upon receipt of a Notice pursuant to Section
11(A) above, such Purchaser desires to sell any of such Purchaser's Shares, then
such Purchaser shall have the right, exercisable upon written notice (the "Co-
Sale Acceptance Notice") to the selling Founder or Purchaser, as applicable,
given within thirty (30) days after the Offer or Notice, as applicable has been
delivered pursuant to Section 10 or 11(A) above, to participate in the proposed
sale of Offered Shares pursuant to the terms and conditions specified in the
Offer or Notice, as applicable, and the selling Founder or Purchaser, as
applicable, shall require the Proposed Transferee designated in the Offer or
Notice, as applicable, to purchase from such Founder or Purchaser up to the
number of whole shares of Common Stock or Preferred Stock, as applicable, equal
to the product of (i) the total number of Offered Shares to be transferred in
such proposed sale as specified in the Offer or Notice, as applicable, and (ii)
a fraction, the numerator of which (a) in the case of Offered Shares which are
Common Stock, is the number of outstanding shares of Common Stock held by such
Purchaser (including any Common Stock issuable to such Purchaser upon the
conversion or exchange of any Purchaser's Shares convertible or exchangeable
into Common Stock) or (b) in the case of Offered Shares which are Preferred
Stock, is the number of outstanding shares of Preferred Stock held by such
Purchaser, and the denominator of which (c) in the case of Offered Shares which
are Common Stock, is the total number of shares of Common Stock (on a fully-
diluted basis) then outstanding or (d) in the case of Offered Shares which are
Preferred Stock, is the total number of shares of Preferred Stock (on a fully-
diluted basis) then outstanding . The Co-Sale Acceptance Notice shall state the
number of shares such Purchaser proposes to include in such proposed sale to the
Proposed Transferee (up to the number of shares as calculated pursuant to the
immediately preceding sentence). Any such sale by such Purchaser shall be at
the same price per share (including price and type of consideration) received by
the Proposed Transferee and otherwise on identical terms and conditions as
received by the selling Founder or Purchaser, as the case may be, in its sale to
the Proposed Transferee. In the event that the Proposed Transferee does not
purchase shares of Common Stock and/or Preferred Stock from Purchasers who have
timely delivered a Co-Sale Acceptance Notice as required by this Section 11,
then the selling Founder or
7
<PAGE>
Purchaser, as the case may be, shall not be permitted to, and shall not, sell
any Offered Shares to the Proposed Transferee in the proposed sale.
(C) If no Co-Sale Acceptance Notice is received by the selling Founder or
Purchaser, as the case may be, during the 30-day period referred to in Section
11(A) above, then such Founder or Purchaser, as the case may be, shall have the
right to sell the Offered Shares at any time within six months after the date
the Offer or Notice, as the case may be was delivered, subject to the other
provisions of this Agreement. Any such sale shall be to the Proposed
Transferee, at not less than the price and upon other terms and conditions, if
any, not more favorable to the Proposed Transferee than those specified in the
Offer or Notice, as applicable. Any Offered Shares not sold within such six-
month period shall continue to be subject to the requirements of Section 10 and
this Section 11.
(D) Notwithstanding the foregoing, this Section 11 shall not apply to any
Transfer by any Purchaser or Founder of Shares: (i) to such Purchaser's or
Founder's affiliates, members of such Purchaser's or Founder's immediate family,
family trusts or Purchasers, (ii) constituting a gift or gifts, or (iii)
constituting less than 1% of the outstanding class of Shares to be Transferred.
12. Termination. The Corporation's right to repurchase Vested Shares
pursuant to Section 8 hereof, and the provisions of Sections 7, 9, 10, 11 and 13
hereof, shall terminate immediately upon the closing of a firm commitment,
underwritten public offering registered under the Securities Act, (other than a
registration relating solely to a transaction referred to in Rule 145 under the
Securities Act (or any successor rule) or to an employee benefit plan of the
Corporation), at a public offering price (prior to underwriters' discounts and
expenses) equal to or exceeding $2.50 per share of Common Stock (as adjusted for
any stock dividends, combinations or splits with respect to such shares) and in
which the aggregate proceeds to the Corporation and/or selling stockholders
(before deduction for underwriters' discounts and expenses relating to the
issuance, including without limitation fees of the Corporation's counsel) exceed
$5,000,000.
13. Failure to Deliver Shares. If Founder becomes obligated to sell any
Founder's Shares to a Purchaser or the Corporation under this Agreement and
fails to deliver such Founder's Shares in accordance with the terms of this
Agreement, such Purchaser or the Corporation, as the case may be, may, at its
option, in addition to all other remedies it may have, send to Founder the
purchase price for such Founder's Shares as is herein specified. Thereupon, the
Corporation upon written notice to Founder, (i) shall cancel on its books the
certificate or certificates representing the Founder's Shares to be sold and
(ii) shall issue, in lieu thereof, in the name of such Purchaser or the
corporation, as the case may be, a new certificate or certificates representing
such Founder's Shares, and thereupon all of Founder's rights in and to such
Founder's Shares shall terminate.
8
<PAGE>
14. Lock-up. If requested by the underwriters for the initial
underwritten public offering of securities of the Corporation, Founder and each
Purchaser shall agree not to sell, assign, transfer, pledge, hypothecate,
mortgage, encumber or otherwise dispose of all or any of such Founder's or
Purchaser's Shares, without the written consent of such underwriters, for a
period of not more than 180 days following the effective date of the
registration statement relating to such offering. This Section 14 shall
expressly survive the termination of this Agreement.
15. No Waiver. Any waiver of a breach of any of the terms of this
Agreement shall not operate as a waiver of any other breach of such terms or
conditions or any other terms or conditions, nor shall any failure to enforce
any provision of this Agreement operate as a waiver of such provision or any
other provision.
16. Successors and Assigns. The rights, benefits and obligations of the
Corporation under this Agreement and all covenants and agreements hereunder
shall inure to the benefit of and be enforceable by or against its successors
and assigns. Subject to the limitations set forth herein, this Agreement shall
inure to the benefit of and be binding upon the Founders' heirs, successors and
assigns. Subject to the limitations set forth herein, neither this Agreement
nor any rights or obligations hereunder shall be assigned by any Founder. The
rights of the Purchasers hereunder shall inure to the benefit of and be binding
upon the Purchasers respective successors and assigns.
17. Entire Agreement. The Agreement (with respect to the Corporation and
the Purchasers, together with the Purchase Agreement), constitutes the entire
agreement among the parties. This Founders Agreement may not be amended or
modified, except in writing, and signed by each of the Purchasers and Founder.
18. Severability. If any provision of this Agreement or the application
thereof is held invalid or unenforceable, the invalidity or unenforceability
thereof shall not affect any other provisions or applications of this Agreement
which can be given effect without the invalid or unenforceable provision or
application. To that end, the provisions of this Agreement are to be severable.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York (without giving
effect to its conflicts of laws principles).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
9
<PAGE>
IN WITNESS WHEREOF. the Corporation has caused this Agreement to be signed
and each Founder has executed this Agreement as of the date shown below.
GENOMICA CORPORATION
Dated: ???, 22 , 1996 BY: /s/ James L. Rathmann
---------- ------------------------------------
TITLE:_________________________________
Dated: 3/21/96 , 1996 FOUNDER: /s/ Jacqueline Salit
--------- -------------------------------
Jacqueline Salit
PURCHASERS:
FALCON TECHNOLOGY PARTNERS, L.P.
A Delaware limited partnership
BY: /s/ James L. Rathmann
------------------------------------
TITLE: General Partner
HARRIS & HARRIS GROUP, INC.
A NY corporation
BY: /s/ D.C.J.
------------------------------------
TITLE: Executive Vice President
---------------------------------
10
<PAGE>
SCHEDULE 1
----------
Founder Founders' Vesting Schedule
- ------- --------- ----------------
Shares
------
Salit 30,000 15,000 shares become Vested Shares on the date
($30.00) hereof and the remaining shares become Vested
Shares on the first anniversary of the date
hereof; provided however, that notwithstanding
the above provisions, if Salit leaves the employ
of Cold Spring Harbor for any reason except to
become an employee of the Company, all shares
which have not yet become Vested Shares will
always remain Unvested Shares.
11
<PAGE>
Exhibit A
CONFIDENTIALITY AGREEMENT
-------------------------
Name: Jacqueline Salit Employment Date: 9/9/91
------------------------------ ------------------------
(Type or Print)
In consideration of (i) Genomica Corporation (the "Company") entering
into certain agreements and arrangements with my employer, Cold Spring Harbor
Laboratory ("Cold Spring Harbor"), whereby the Company will, among other things,
sponsor certain research activities in which I may be involved, and (ii) the
Company's issuance and sale to me of shares of its common stock pursuant to a
Common Stock Acquisition Agreement between the Company and me, and for other
good and valuable consideration, the receipt and sufficiency of which are by
acknowledged, I understand and agree to the following provisions for the
protection of the confidential information of the Company.
1. Confidentiality. I agree that without the written
permission of the Company, I will not knowingly use, publish or otherwise
disclose any Confidential Information. The term "Confidential Information"
means any Proprietary Information or any knowledge, information or materials
about the products, services, know-how, research and development, customers, or
business plans of the Company or any confidential information about financial
matters, marketing, pricing, compensation or any other confidential information
of the Company, its customers, or others from whom the Company has received
information under obligations of confidence which have been communicated to me
in writing. The term "Proprietary Information" means all intellectual and/or
physical work product, including without limitation, inventions, whether or not
patentable and whether or not tested or reduced to practice, discoveries, ideas,
conceptions, processes, developments, designs, business plans, trade secrets,
mask works, know-how and tangible expressions, whether or not copyrightable,
computer software, systems, programs or procedures, which (a) relates to the
actual or anticipated business activities of the Company, (b) results from work
which is performed for the Company or which is funded in whole or in part by the
Company or (c) results from any use of premises, equipment or property (tangible
or intangible) owned, leased, licensed or contracted for by the Company.
Notwithstanding the foregoing provisions of this paragraph 1 to the contrary,
"Confidential information" shall not include any information which (i) has been
made available to the general public of information which subsequently comes in
the public domain through no fault or omissions by me, (ii) is subsequently
disclosed by a third party which has the bona fide right to make such
disclosure, (iii) is required to be disclosed by law or a governmental agency
and (iv) is already generally known by personas in the computer software
industry or developed by
<PAGE>
Genomica Corporation
Confidentiality Agreement
Page 2
me independent of my work with the Company or Cold Spring Harbor without use of
any Confidential Information.
2. Confidential Information of Others. I agree not to knowingly
disclose to the Company (a) any confidential information belonging to others or
(b) any prior inventions made by me which the Company is not entitled to learn
of or use.
3. Return of Materials. Upon the written request of the Company at
any time, I will deliver promptly to the Company all documents, materials and
things (if any) in my possession which belong to the Company or have been given
to me by the Company.
4. Prior Agreements. I represent that I have attached hereto a copy
of any agreement (such as a prior employment agreement) which affects my ability
to comply with the terms of this Agreement. If there is no such agreement, I
have written my initials here: JS
------
5. Enforcement. I agree that the Company would not be fairly
compensated by money damages for any breach of this Agreement by me and
therefore, in the event of a breach or threatened breach of this Agreement, the
Company shall be entitled to specific performance, an injunction and other
equitable relief in addition to money damages and other legal remedies.
6. Miscellaneous. This Agreement shall be binding on my executors,
administrators, heirs, legal representatives or assigns, and may not be modified
except in writing with the approval of a duly authorized officer of the Company.
If any provision of this Agreement is determined to be illegal or unenforceable,
because of the duration thereof or the area or scope covered, I hereby request
any court making such determination to reduce the duration, area and/or scope so
that in its reduced form such covenant shall be enforceable and I agree that in
such event all remaining provisions shall remain in full force and effect. This
Agreement shall be governed and construed in accordance with the internal laws
of the State of New York. This document sets forth the entire agreement between
the Company and me with respect to the matters set forth herein.
WITNESS:
/s/ Steven Cozza /s/ Jacqueline Salit
- ----------------------------------- -----------------------------------
Steven Cozza Jacqueline Salit
Date: 3/21/96 Date: 3/21/96
------------------------------ ------------------------------
Social Security No. ###-##-####
----------------
<PAGE>
EXHIBIT 10.4
VOTING AGREEMENT
AGREEMENT dated as of March 22, 1996, by and among Genomica Corporation, a
Delaware corporation (the "Company"), the persons listed as Purchasers in
Schedule I to a certain Series A Convertible Preferred Stock Purchase Agreement
of the Company dated as of the date hereof (the "Purchase Agreement")
(collectively, the "Purchasers" and individually a "Purchaser") and the persons
listed as Stockholders in the signature pages hereto (collectively, the
"Stockholders" and individually, a "Stockholder").
WHEREAS, on the date hereof, the Purchasers are purchasing from the Company
shares of its Series A Preferred Stock (the "Series A Preferred") pursuant to
the terms of the Purchase Agreement, a copy of which is attached hereto as
Exhibit A; and
WHEREAS, the Purchasers and the Stockholders wish to make certain
provisions for the voting of their Shares (as defined below); and
WHEREAS, the purchases by the Purchasers will benefit the Company; and
WHEREAS, it is a condition to the obligations of the Purchasers under the
Purchase Agreement that this Agreement be executed by the parties hereto, and
the parties are willing to execute this Agreement and to be bound by the
provisions hereof;
NOW, THEREFORE, in consideration of the premises, the agreements set forth
below, and the parties' desire to further the interests of the Company and its
present and future stockholders, the parties agree as follows:
1. Definition. As used in this Agreement, the term "Shares" means all
shares of equity securities of the Company (i) now or hereafter owned (either
beneficially or of record) by a Stockholder or a Purchaser, and (ii) which a
Stockholder or a Purchaser does not own (either beneficially or of record) but
as to which it now or hereafter has the right to exercise voting control.
2. Designation of Nominees. (a) Each of Falcon Technology Partners, L.P.
("Falcon") and Harris & Harris Group, Inc. ("Harris") (together, the "Nominating
Purchasers" and individually, a "Nominating Purchaser") so long as they own any
shares shall have the right to designate a nominee (together, the "Nominees" and
individually, a "Nominee") for election as one of the directors of the Company
who shall be elected solely by the holders of the Series A Preferred, voting
separately as a series (the "Series A Directors") pursuant to the Company's
Certificate of Incorporation. Falcon and Harris together shall have the right to
designate a third Nominee who shall be elected as Series A Director. At least 10
days prior to any meeting (or written action in lieu of a meeting) of
stockholders of the Company at or by which directors are to be elected by the
holders of Series A Preferred, voting separately as a series, each Nominating
Purchaser shall
<PAGE>
notify the other Purchaser in writing of the Nominee designated by such
Nominating Purchaser for election as a director. In the absence of any such
notification, it shall be presumed that the Nominating Purchaser's then
incumbent Nominee has been redesignated as its Nominee. The initial Nominees of
Falcon and Harris are James L. Rathmann, Charles Hams and David C. Johnson, Jr.,
respectively.
(b) One of the directors of the Company (the "Common Director") is
elected solely by the holders of Common Stock pursuant to the Company's
Certificate of Incorporation. The holders of a majority in interest of the then
outstanding Common Stock, excluding for this purpose any shares of Common Stock
then owned, or as to which the power to vote is held, by any Purchaser and also
excluding Cold Spring Harbor Laboratory ("CSH") if CSH has the right to
designate a Nominee for election as a director pursuant to Section 2(c) below
(the "Designating Common Holders"), shall have the right to designate the
nominee for election as a director solely by the holders of Common Stock. At
least 10 days prior to any meeting (or written action in lieu of a meeting) of
stockholders of the Company at or by which the Common Directors are to be
elected, the Designating Common Holders shall notify all of the Purchasers and
Stockholders in writing of the person designated for election as the Common
Director. In the absence of any such notification, it shall be presumed that the
incumbent Common Director, if any, has been redesignated for election as the
Common Director. The initial person designated for election as the Common
Director is Dr. Thomas G. Marr.
(c) So long as CSH is the beneficial owner of at least 40% of the
Shares purchased by CSH on the date hereof, CSH shall have the right to
designate a Nominee for election as one of the directors of the Company who
shall be elected solely by the holders of Common Stock (the "CSH Director")
pursuant to the Company's Certificate of Incorporation. At least 10 days prior
to any meeting (or written action in lieu of a meeting) of stockholders of the
Company at or by which the CSH Director is to be elected, CSH shall notify all
of the Purchasers and Stockholders in writing of the person designated for
election as the CSH Director. In the absence of any such notification, it shall
be presumed that the incumbent CSH Director, if any, has been redesignated for
election as the CSH Director. The initial person designated for election as the
CSH Director is [_______]. If CSH shall not be entitled to designate a CSH
Director pursuant to the terms hereof, the Designating Common Holders shall have
the right to nominate two directors (including the Common Director) who shall be
elected soley by the holders of Common Stock. For purposes of Section 3 below,
the CSH Director shall constitute a Common Director.
3. Election of Directors. At each meeting (or written action in lieu of a
meeting) of stockholders of the Company at or by which directors are to be
elected by the holders of the Series A Preferred, voting separately as a series,
each Purchaser shall vote (or execute a written consent with respect to) all of
its Shares to elect, as directors of the Company, the Nominees designated in the
manner provided in Section 2. At each
<PAGE>
meeting (or written action in lieu of a meeting) of stockholders of the Company
at or by which the Common Directors are to be elected, each Purchaser and
Stockholder shall vote (or execute a written consent with respect to) all of its
Shares entitled to vote to elect, as directors of the Company, the Common
Directors designated in the manner provided in Section 2; provided, that, until
an initial public offering of Common Stock (an "IPO"), such Common Directors
shall be a "Founder" or an employee thereof, as such term is defined in a
certain Founders' Agreements with the Company dated as of even date herewith.
4. Successor Directors. (a) If a Nominee shall cease to serve as a
director for any reason, the Nominating Purchaser which designated such Nominee
shall have the right to designate a successor Nominee and each of the other
Purchasers and Stockholders shall use its best efforts (including by voting (or
executing a written consent with respect to) all Shares which it is entitled to
vote) to ensure that such successor Nominee is duly elected as a director. If
the Common Director shall cease to serve as a director for any reason, the
Designating Common Holders may designate a successor Common Director and each of
the Purchasers and Stockholders shall use its best efforts (including by voting
(or executing a written consent with respect to) all Shares which it is entitled
to vote) to ensure that such successor Common Director is duly elected as a
director. If the CSH Director shall cease to serve as a director for any reason
and CSH then has the right to designate a Nominee for elections as a director
pursuant to Section 2(c), then CSH may designate a successor CSH Director and
each of the Purchasers and Stockholders shall use its best efforts (including by
voting (or executing a written consent with respect to) all Shares which it is
entitled to vote) to ensure that such successor CSH Director is duly elected as
a director.
(b) If a Nominating Purchaser notifies the other Purchasers that it
desires to remove its Nominee as a director, each of the other Purchasers shall
use its best efforts (including by voting (or executing a written consent with
respect to) all Shares which it is entitled to vote) to ensure that such Nominee
is duly removed as a director. If the Designating Common Holders notify the
Purchasers and Stockholders that they desire to remove the Common Director as a
director, each of the Purchasers and Stockholders shall use its best efforts
(including by voting (or executing a written consent with respect to) all Shares
which it is entitled to vote) to ensure that such Common Director is duly
removed as a director. If CSH notifies the Purchasers and Stockholders that it
desires to remove the CSH Director as a director and CSH then has the right to
designate a Nominee for elections as a director pursuant to Section 2(c), each
of the Purchasers and Stockholders shall use its best efforts (including by
voting (or executing a written consent with respect to) all Shares which it is
entitled to vote) to ensure that such CSH Director is dub removed as a director.
(c) If (i) a Nominating Purchaser notifies the Company that it desires
to remove its Nominee as a director and/or designate a successor Nominee, (ii)
the
<PAGE>
Designating Common Holders notify the Company that they desire to remove the
Common Director as a director and/or designate a successor Common Director, or
(iii) CSH notifies the Company that it desires to remove the CSH Director as a
director and/or designate a successor CSH Director and CSH then has the right to
designate a Nominee for elections as a director pursuant to Section 2(c), then
the Company shall, at the request of such Nominating Purchaser, Designating
Common Holders or CSH, as the case may be, use its best efforts to ensure that a
meeting of stockholders of the Company is promptly called for such purpose.
5. Term. This Agreement shall continue until the earlier of, and shall
automatically terminate and be of no further force or effect at (i) such time as
no shares of Series A Preferred remain outstanding or (ii) the tenth anniversary
of the date of this Agreement; provided that no such termination shall relieve a
party from liability for prior breaches hereof.
6. Specific Enforcement. Each party hereto expressly agrees that the
Purchasers, Stockholders and the Company 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 a Stockholder, a
Purchaser or the Company, the Purchasers, Stockholders and the Company, as the
case may be, shall, in addition to all other remedies, be entitled to a
temporary or permanent injunction, without showing any actual damage, and/or a
decree for specific performance, in accordance with the provisions hereof.
7. Legend. Each certificate evidencing Shares shall bear a legend
substantially as follows:
"The shares represented by this certificate are subject to the
terms and conditions of a certain Voting Agreement dated as of
March ____, 1996, a copy of which the Company will furnish to
the holder of this certificate upon request and without charge."
8. Amendment of Charter. The Purchasers shall not without the consent of
the holders of 75% of the shares of outstanding Common Stock, take any action to
amend the Bylaws or the Certificate of Incorporation of the Corporation to
increase the stated dividend rate of the Series A Preferred, accelerate the date
upon which such dividends shall accrue or increase the liquidation preference of
the Series A Preferred.
9. Notices. All notices or other communications given hereunder shall be
in writing and shall be deemed effective upon delivery at the address of the
party to be notified and shall be mailed by certified or registered mail, return
receipt requested, delivered by courier, telecopied, or sent by other facsimile
method (notices by telecopy or facsimile must be confirmed by next day courier
delivery to be effective), addressed to
<PAGE>
the address specified below such party's signature hereto or such other address
as such party may subsequently notify the other parties of in writing.
10. Entire Agreement and Amendments. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and neither
this Agreement nor any provision hereof may be waived, modified, amended or
terminated except by a written agreement signed by the Company, Stockholders
owning at least two-thirds of the Shares of Common Stock owned by all
Stockholders and Purchasers owning at least two thirds of the shares of Common
Stock (assuming for such purpose that all shares of Preferred Stock have been
converted into Common Stock at such time) owned by all Purchasers, provided
however that neither Section 2(c) nor any other Section hereof necessary to
effectuate the intent of or to enforce Section 2(c) may be amended without the
consent of CSH.
11. Governing Law Successors and Assigns. This Agreement shall be governed
by the internal laws of the State of Delaware (without giving effect to its
conflict of law principles) and shall bind and inure to the benefit of the
heirs, personal representatives, executors, administrators, successors, assigns
and transferees of the parties. Without limiting the generality of the
foregoing, all covenants and agreements of the Stockholders and Purchasers shall
bind any and all subsequent holders of their Shares, and the Company agrees that
it shall not transfer on its records any such Shares unless (i) the transferor
Stockholder or Purchaser, as the case may be, shall have first delivered to the
Company and the Purchasers the written agreement of the transferee to be bound
by this Agreement to the same extent as if such transferee had originally been a
Stockholder or Purchaser hereunder, as the case may be, and (ii) the certificate
or certificates evidencing the Shares so transferred bear the legend specified
in Section 7.
12. Captions. Captions are for convenience only and are not deemed to be
part of this Agreement.
13. Counterpart. This Agreement may be executed in two or more
counterpart, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written
COMPANY
GENOMICA CORPORATION
By: /s/ James L. Rathmann
------------------------------------
James L. Rathmann
President
Address: c/o
Falcon Technology Partners, L.P.
James L. Rathmann
General Partner
600 Dorset Road
Devon, PA 19333
PURCHASERS:
FALCON TECHNOLOGY PARTNERS, L.P.
By: /s/ James L. Rathmann
------------------------------------
James L. Rathmann
its General Partner
Address: 600 Dorset Road
Devon, PA 19333
HARRIS & HARRIS GROUP, INC.
By: /s/ David C. Johnson
------------------------------------
David C. Johnson, Jr.
Executive Vice President
Address: One Rockefeller Plaza
14 West 49th Street
New York, New York 10020
(Continued)
<PAGE>
STOCKHOLDERS:
COLD SPRING HARBOR LABORATORY
By: /s/ John Maroney
------------------------------------
John Maroney
Assistant Administrative Director
HARRIS & HARRIS GROUP, INC.
By: /s/
------------------------------------
/s/ Thomas Marr
---------------------------------------
Dr. Thomas Marr
/s/ Donald Fisher
---------------------------------------
Donald Fisher
/s/ Steven Cozza
---------------------------------------
Steven Cozza
/s/ Jacqueline Salit
---------------------------------------
Jacqueline Salit
/s/ John Maroney
---------------------------------------
John Maroney
/s/ James L. Rathmann
---------------------------------------
James L. Rathmann
(Continued)
<PAGE>
/s/ Margaret C. Rathmann
---------------------------------------
Margaret C. Rathmann
/s/ Laura Jean Rathmann
---------------------------------------
Laura Jean Rathmann
/s/ Sally A. Rathmann
---------------------------------------
Sally A. Rathmann
/s/ Richard G. Rathmann
---------------------------------------
Richard G. Rathmann
<PAGE>
SUPPLEMENTAL VOTING AGREEMENT
AGREEMENT dated as of February 28, 1997, by and among Genomica Corporation,
a Delaware corporation (the "Company"), the persons listed as Purchasers in
Schedule I to a certain Series A Convertible Preferred Stock Purchase Agreement
of the Company dated as of the date hereof (the "Purchase Agreement")
(collectively, the "Purchasers" and individually a "Purchaser") and the persons
listed as Prior Stockholders in the signature pages hereto (the Prior
Stockholders and the Purchasers are herein defined as the "Stockholders" and
individually, as a "Stockholder").
WHEREAS, on the date hereof, the Purchasers are purchasing from the Company
shares of its Series A Preferred Stock (the "Series A Preferred") pursuant to
the terms of the Purchase Agreement, a copy of which is attached hereto as
Exhibit A; and
WHEREAS, the Prior Stockholders are parties to that certain Voting
Agreement dated as of March 22, 1996 (the "Prior Voting Agreement"); and
WHEREAS, the Purchasers and the Prior Stockholders wish to make certain
provisions for the voting of their Shares (as defined below); and
WHEREAS, the Purchasers and the Prior Stockholders wish to make certain
provisions regarding the transfer of their Shares; and
WHEREAS, the purchases by the Purchasers will benefit the Company; and
WHEREAS, it is a condition to the obligations of the Purchasers under the
Purchase Agreement that this Agreement be executed by the parties hereto, and
the parties are willing to execute this Agreement and to be bound by the
provisions hereof;
NOW, THEREFORE, in consideration of the premises, the agreements set forth
below, and the parties' desire to further the interests of the Company and its
present and future stockholders, the parties agree as follows:
1. Definition. As used in this Agreement, the term "Shares" means all
shares of equity securities of the Company (i) now or hereafter owned (either
beneficially or of record) by a Prior Stockholder or a Purchaser, and (ii) which
a Prior Stockholder or a Purchaser does not own (either beneficially or of
record) but as to which it now or hereafter has the right to exercise voting
control.
2. Designation of Nominees. Each of ARCH Venture Fund III, L.P. ("ARCH'')
and Boulder Ventures L.P. ("Boulder") (together, the "Nominating Purchasers" and
individually, a "Nominating Purchaser"), so long as they each own 400,000 shares
of Series A Preferred, shall have the right to designate a nominee (together,
the "Nominees" and individually, a "Nominee") for election as a director of the
Company. At least 10 days prior to any meeting (or written action
-1-
<PAGE>
in lieu of a meeting) of stockholders of the Company at or by which directors
are to be elected by the holders of Series A Preferred voting separately as a
series, or by all stockholders of the Company, as applicable, each Nominating
Purchaser shall notify the other parties to this Agreement in writing of the
Nominee designated by such Nominating Purchaser for election as a director. In
the absence of any such notification, it shall be presumed that the Nominating
Purchaser's then incumbent Nominee has been redesignated as its Nominee. The
initial Nominees of ARCH and Boulder are Robert Nelson and Marvin Caruthers,
respectively. Each of the Prior Stockholders hereby agrees to designate one of
the Nominees as a "Nominee" pursuant to the Prior Voting Agreement so that the
Prior Stockholders shall together select two directors, one by Falcon Technology
Partners, L.P. and one by Harris and Harris Group, Inc., and the Nominating
Purchasers shall together select two directors, one by ARCH and one by Boulder.
3. Election of Directors. At each meeting (or written action in lieu of a
meeting) of stockholders of the Company at or by which directors are to be
elected by the holders of the Series A Preferred voting separately as a series,
or by all stockholders of the Company, as applicable, each party hereto shall
vote (or execute a written consent with respect to) all of its Shares to elect,
as directors of the Company, the Nominees designated in the manner provided in
Section 2.
4. Successor Directors. (a) If a Nominee shall cease to serve as a
director for any reason, the Nominating Purchaser which designated such Nominee
shall have the right to designate a successor Nominee and each of the other
parties hereto shall use its best efforts (including by voting (or executing a
written consent with respect to) all Shares which it is entitled to vote) to
ensure that such successor Nominee is duly elected as a director.
(b) If a Nominating Purchaser notifies the other parties hereto that
it desires to remove its Nominee as a director, each of the other parties hereto
shall use its best efforts (including by voting (or executing a written consent
with respect to) all Shares which it is entitled to vote) to ensure that such
Nominee is duly removed as a director.
(c) If a Nominating Purchaser notifies the Company that it desires to
remove its Nominee as a director and/or designate a successor Nominee, then the
Company shall, at the request of such Nominating Purchaser, use its best efforts
to ensure that a meeting of stockholders of the Company, or holders of the
Series A Preferred, as applicable, is promptly called for such purpose.
5. Right of First Refusal.
(a) If at any time a Stockholder desires to sell all or any part of
its Shares pursuant to a bona fide offer from a third party other than an
affiliate of such Stockholder who agrees to be bound by the terms of this
Agreement (the "Proposed Buyer"), the Stockholder shall submit a written offer
(the "Offer") to sell such remaining Shares (the "Offered Shares") to the
remaining Stockholders (the "Other Stockholders") on terms and conditions,
including price, not less favorable to the Other Stockholders than those on
which the Stockholder proposes to sell the Offered Shares to the Proposed Buyer.
The Offer shall disclose the identity of the Proposed
-2-
<PAGE>
Buyer, the Offered Shares proposed to be sold, the total number of Shares then
owned by the selling Stockholder, the terms and conditions, including price, of
the proposed sale, and any other material facts relating to the proposed sale.
The Offer shall further state that each Other Stockholders may acquire, in
accordance with the provisions of this Agreement, all or any portion of their
respective pro rata share (based upon the percentage of Shares held by such
Other Stockholder bears to the total of all Shares then held by all Other
Stockholders) of Offered Shares for the price and upon the other terms and
conditions, including deferred payment (if applicable), set forth therein.
(b) If any Other Stockholder desires to purchase all or any part of
the Offered Shares, such Other Stockholder shall communicate in writing its
election to purchase to the selling Stockholder, which communication shall state
the number of Offered Shares such Other Stockholder desires to purchase and
shall be given to the selling Stockholder and each other Other Stockholder
within ten (10) business days of the date the Offer was made. Such communication
shall, when taken in conjunction with the Offer, be deemed to constitute a
valid, legally binding and enforceable agreement for the sale and purchase of
such Offered Shares. Sales of the Offered Shares to be sold to the Other
Stockholders pursuant to this Section 5 shall be made at the offices of the
Company on the 25th day following the date the Offer was made (or if such 25th
day is not a business day, then on the next succeeding business day). Such sales
shall be effected by the selling Stockholder's delivery to the Company of a
certificate or certificates evidencing the Offered Shares to be purchased by the
Other Stockholder, duly endorsed for transfer to the Other Stockholder, against
payment to the selling Stockholder of the purchase price therefor by the Other
Stockholder.
(c) If less than all of the Offered shares are purchased by the Other
Stockholders, then no later than the second business day after the expiration of
the 10-day period referred to in Section 3(b) above, the Company shall offer in
writing (the "Second Notice") to each Other Stockholder which offered to
purchase Offered Shares, an option to purchase its Proportionate Share (as
defined below) of the Offered Securities which were not previously elected to be
purchased. Within five (5) days after the receipt by each of the Other
Stockholders of the Second Notice or attempted delivery during working hours to
his/her/its address shown on the books of the Company (such date is referred to
as the "Second Receipt Date"), each Other Stockholder who received a Second
Notice, by delivering a written notice to the Company (the "Second Reply"), may
elect to purchase, at the price and on the terms specified in the original
Offer, its Proportionate Share of the Offered Shares. As used herein,
"Proportionate Share" equals the total number of Offered Shares not previously
elected to be purchased multiplied by a fraction, the numerator of which is the
number of shares (on a fully-diluted basis) of Common Stock (assuming that all
shares of Series A Preferred had been converted) then held by such Other
Stockholders, and the denominator of which is the sum of all shares (on a fully-
diluted basis) of Common Stock (assuming that all shares of Series A Preferred
had been converted) then held by all Other Stockholders delivering a Second
Reply.
(d) If the Other Stockholders do not purchase all of the Offered
Shares, the Offered Shares not so purchased may be sold by the selling
Stockholder at any time within six
-3-
<PAGE>
months after the date the Offer was made, subject to the provisions of this
Agreement. Any such sale shall be to the Proposed Buyer, at not less than the
price and upon other terms and conditions, if any, not more favorable to the
Proposed Buyer than those specified in the Offer. Any Offered Shares not sold
within such six-month period shall continue to be subject to the requirements of
this Section 5.
6. Term. This Agreement shall continue until the earlier of, and shall
automatically terminate and be of no further force or effect at (i) such time as
no Purchaser holds more than 400,000 shares of Series A Preferred or (ii) the
tenth anniversary of the date of this Agreement; provided that no such
termination shall relieve a party from liability for prior breaches hereof.
7. Specific Enforcement. Each party hereto expressly agrees that the
Purchasers, the Prior Stockholders and the Company 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 a Prior
Stockholder, a Purchaser or the Company, the Purchasers, Prior Stockholders and
the Company, as the case may be, shall, in addition to all other remedies, be
entitled to a temporary or permanent injunction, without showing any actual
damage, and/or a decree for specific performance, in accordance with the
provisions hereof.
8. Legend. Each certificate evidencing Shares shall bear a legend
substantially as follows:
"The shares represented by this certificate are subject to the terms
and conditions of a certain Supplemental Voting Agreement dated as of February
28, 1997, a copy of which the Company will furnish to the holder of this
certificate upon request and without charge."
9. Covenant of the Company. The Company hereby agrees that it will not
issue any of its voting securities to any person, if after giving effect to such
issuance (a) the Stockholders would have insufficient voting power to effect the
transactions contemplated by Sections 3 and 4 hereof or (b) such purchasers do
not agree to the rights of the Stockholders herein contained.
10. Notices. All notices or other communications given hereunder shall be
in writing and shall be deemed effective upon delivery at the address of the
party to be notified and shall be mailed by certified or registered mail, return
receipt requested, delivered by courier, telecopied, or sent by other facsimile
method (notices by telecopy or facsimile must be confirmed by next day courier
delivery to be effective), addressed to the address specified below such party's
signature hereto or such other address as such party may subsequently notify the
other parties of in writing.
11. Entire Agreement and Amendments. This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
neither this Agreement nor any provision hereof may be waived, modified, amended
or terminated except by a written agreement signed by the Company, Prior
Stockholders owning at least two-thirds of the Shares owned by all Prior
Stockholders and Purchasers owning at least two thirds of the Shares owned by
all Purchasers.
-4-
<PAGE>
12. Governing Law; Successors and Assigns. This Agreement shall be
governed by the internal laws of the State of Delaware (without giving effect to
its conflicts of law principles) and shall bind and inure to the benefit of the
heirs, personal representatives, executors, administrators, successors, assigns
and transferees of the parties. Without limiting the generality of the
foregoing, all covenants and agreements of the Prior Stockholders and Purchasers
shall bind any and all subsequent holders of their Shares, and the Company
agrees that it shall not transfer on its records any such Shares unless (i) the
transferor Prior Stockholder or Purchaser, as the case may be, shall have first
delivered to the Company the written agreement of the transferee to be bound by
this Agreement to the same extent as if such transferee had originally been a
Prior Stockholder or Purchaser hereunder, as the case may be, and (ii) the
certificate or certificates evidencing the Shares so transferred bear the legend
specified in Section 7.
13. Captions. Captions are for convenience only and are not deemed to be
part of this Agreement.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
GENOMICA CORPORATION
By: /s/ James L. Rathmann
------------------------------------
James L. Rathmann
President
Address: 600 Dorset Road
Devon, PA 19333
PURCHASERS:
ARCH VENTURE FUND III, L.P.
By: ARCH VENTURE PARTNERS,
L.L.C., general partner
By: /s/
-------------------------------------
Managing Director
BOULDER VENTURES, L.P.
By: BV PARTNERS, L.L.C.
By: /s/
-------------------------------------
Partner
PEGASUS TECHNOLOGY VENTURES, L.L.C.
By: /s/ Kenneth Collins
-------------------------------------
Kenneth Collins, Manager
THE CARUTHERS FAMILY, L.L.C.
By: /s/ Marvin H. Caruthers
-------------------------------------
Marvin H. Caruthers, Manager
-6-
<PAGE>
PRIOR STOCKHOLDERS:
FALCON TECHNOLOGY PARTNERS, L.P.
By: /s/ James L. Rathmann
-------------------------------------
James L. Rathmann
its General Partner
Address: 600 Dorset Road
Devon, PA 19333
HARRIS & HARRIS GROUP, INC.
By: /s/ David C. Johnson, Jr.
-------------------------------------
David C. Johnson, Jr.
Executive Vice President
Address: One Rockefeller Plaza
14 West 49th Street
New York, New York 10020
-7-
<PAGE>
AMENDMENT TO SUPPLEMENTAL VOTING AGREEMENT
This Amendment to Supplemental Voting Agreement (the "Amendment"), dated as
of June ___ , 1997, is by and among Genomica Corporation, a Delaware corporation
(the "Company"), the persons listed as Purchasers in Schedule I to that certain
Series A Convertible Preferred Stock Purchase Agreement (as amended, the
"Purchase Agreement") (individually a "Purchaser" and collectively
"Purchasers"), and the persons listed as Prior Stockholders in the signature
pages hereto.
RECITALS
A. The Company and Purchasers have entered into that certain Amendment to
Series A Convertible Preferred Stock Purchase Agreement (the "Purchase Agreement
Amendment"), of even date herewith, pursuant to which the Purchase Agreement is
amended to make Frank Bonsal ("Bonsal") a party to the Purchase Agreement and
permit him to purchase certain shares of the Company's Series A Convertible
Preferred Stock.
B. As a condition to the execution and delivery of the Purchase Agreement
Amendment, the Company, Purchasers and the Prior Stockholders wish to have
Bonsal execute this Amendment so that he is bound by the terms and conditions of
the Supplemental Voting Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereby amend the
Supplemental Voting Agreement as follows:
1. The signature page of the Supplemental Voting Agreement shall be
amended to add the following Purchaser:
Frank Bonsal
By execution of this Amendment, the Purchasers and the Prior Stockholders
agree that Bonsal shall become a party to the Supplemental Voting Agreement.
Except as expressly modified by this Amendment, the Supplemental Voting
Agreement shall remain in full force and effect without change.
This Amendment may be executed in any number of counterparts, each of which
when executed and delivered shall be an original, but all of which together
shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment to be
effective as of the date first above written.
GENOMICA CORPORATION, a Delaware
corporation
By: /s/ James Rathmann
--------------------------------------
James Rathmann, President
FALCON TECHNOLOGY II PARTNERS, L.P.
By: FALCON TECHNOLOGY MANAGEMENT
CORPORATION, general partner
By: /s/ James Rathmann
--------------------------------------
James Rathmann, President
ARCH VENTURE FUND III, L.P.
By: ARCH VENTURE PARTNERS, L.L.C.,
general partner
By: /s/
--------------------------------------
Managing Director
BOULDER VENTURES, L.P.
By: BV PARTNERS, L.L.C., general partner
By: /s/ Kyle Lefkoff
--------------------------------------
Kyle Lefkoff, Manager
PEGASUS TECHNOLOGY VENTURES, L.L.C.
By: /s/ Kenneth Collins
--------------------------------------
Kenneth Collins, Manager
2
<PAGE>
--------------------------------------
Frank Bonsal
THE CARUTHERS FAMILY, L.L.C.
By: /s/ Marvin H. Caruthers
--------------------------------------
Marvin H. Caruthers, Manager
PRIOR STOCKHOLDERS:
FALCON TECHNOLOGY PARTNERS, L.P.
By: /s/ James Rathmann
--------------------------------------
James Rathmann, General Partner
HARRIS & HARRIS GROUP, INC.
By: /s/ David C. Johnson, Jr.
--------------------------------------
David C. Johnson, Jr., Executive Vice
President
3
<PAGE>
SECOND AMENDMENT TO SUPPLEMENTAL VOTING AGREEMENT
This Second Amendment (the "Amendment"), dated as of October 6, 1997, to
the Supplemental Voting Agreement, dated as of February 28, 1997, as amended
(the "Supplemental Voting Agreement"), by and among Genomica Corporation, a
Delaware corporation (the "Company"), the persons listed as Purchasers in
Schedule I to the Series A Convertible Preferred Stock Purchase Agreement, dated
as of February 28, 1997, as amended (the "Purchase Agreement") (individually, a
"Purchaser" and collectively, the "Purchasers") and the Prior Stockholders
listed in the signature pages thereto (the "Prior Stockholders," and together
with the Purchasers, the "Stockholders"), is by and among the Company and the
Stockholders.
RECITALS
A. The Company and the Purchasers have entered into that certain Second
Amendment to Series A Convertible Preferred Stock Purchase Agreement (the
"Purchase Agreement Amendment") of even date herewith, pursuant to which the
Purchase Agreement is being amended to make those parties listed on the Addendum
to Schedule I thereof (the "Investors") that are not already parties to the
Purchase Agreement parties to the Purchase Agreement (the "New Investors") and
to permit the Investors to purchase shares of the Company's Series A Convertible
Preferred Stock.
B. As a condition to the execution and delivery of the Purchase Agreement
Amendment, the Company and the Stockholders wish to (i) amend the Supplemental
Voting Agreement and (ii) have the New Investors execute this Amendment so that
they will be bound by the terms and conditions of the Supplemental Voting
Agreement.
AGREEMENT
Now, Therefore, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereby amend the
Supplemental Voting Agreement as follows:
1. Section 2 of the Supplemental Voting Agreement is hereby amended and
restated to read in its entirety as follows:
"2. Designation of Nominees. Each of Invesco Global Health Sciences Fund
-----------------------
("Invesco"), ARCH Venture Fund III, L.P. ("ARCH") and Boulder Ventures L.P.
("Boulder") (together, the "Nominating Purchasers" and individually, a
"Nominating Purchaser") shall have the right to designate a nominee (together,
the "Nominees" and individually, a "Nominee") for election as a director of the
Company so long as the Nominating Purchaser in question owns 400,000 shares of
Series A Preferred. At least 10 days prior to any meeting (or written action in
lieu of a meeting) of stockholders of the Company at or by which directors are
to be elected by the holders of Series A Preferred voting separately as a
series, each Nominating Purchaser shall notify the other parties to this
Agreement in writing of the Nominee designated by such Nominating Purchaser for
election as a director. In the absence of any such notification, it shall be
presumed that the Nominating Purchaser's then incumbent Nominee has been
redesignated as
1.
<PAGE>
its Nominee. The initial Nominees of Invesco, ARCH and Boulder are Ralph E.
Christoffersen, Robert Nelsen and Marvin Caruthers, respectively. Each of the
Prior Stockholders hereby agrees to designate one of the Nominees as a "Nominee"
pursuant to the Prior Voting Agreement and Harris & Harris Group, Inc.
("Harris") agrees that it will not have a right to nominate a director
individually, so that the Prior Stockholders shall select only one director (by
Falcon Technology Partners, L.P.), and the Nominating Purchasers shall together
select three directors, one by Invesco, one by ARCH and one by Boulder. Harris
and Invesco shall have the right to attend all meetings of the Board of
Directors in a nonvoting observer capacity, to receive notice of such meetings
at the same time and in the same manner notice is given to the members of the
Board of Directors and to receive the information provided by the Company to the
Board of Directors; provided, however, that the Company may require as a
condition precedent that the representatives of Harris and Invesco proposing to
attend any meeting of the Board of Directors and the representatives of Harris
and Invesco who will have access to any of the information provided by the
Company to the Board of Directors shall agree to hold in confidence and trust
and to act in a fiduciary manner with respect to all information so received
during such meetings or otherwise, and provided further that the failure to give
notice or to provide information to Harris or Invesco shall not affect or
nullify the actions taken by the Board of Directors."
2. Section 5 of the Supplemental Voting Agreement is hereby amended and
restated to read in its entirety as follows:
"5. Right of First Refusal.
----------------------
(a) If at any time a Stockholder desires to sell all or any part of
its Shares pursuant to a bona fide offer from a third party other than an
affiliate (which shall include a mutual fund with a common investment advisor as
a Stockholder) of such Stockholder who agrees to be bound by the terms of this
Agreement (the "Proposed Buyer"), the Stockholder shall submit a written offer
(the "Offer") to sell such Shares (the "Offered Shares") to the remaining
Stockholders (the "Other Stockholders") on terms and conditions, including
price, not less favorable to the Other Stockholders than those on which the
Stockholder proposes to sell the Offered Shares to the Proposed Buyer. The Offer
shall disclose the identity of the Proposed Buyer, the number of Offered Shares
proposed to be sold, the total number of Shares then owned by the selling
Stockholder, the terms and conditions, including price, of the proposed sale,
and any other material facts relating to the proposed sale. The Offer shall
further state that each Other Stockholder may acquire, in accordance with the
provisions of this Agreement, all or any portion of its pro rata share (based
upon the percentage of Shares held by such Other Stockholder bears to the total
of all Shares then held by all Other Stockholders) of Offered Shares for the
price and upon the other terms and conditions, including deferred payment (if
applicable), set forth therein.
(b) If any Other Stockholder desires to purchase all or any part of
the Offered Shares, such Other Stockholder shall communicate in writing its
election to purchase to the selling Stockholder, which communication shall state
the number of Offered Shares such Other Stockholder desires to purchase and
shall be given to the selling Stockholder and each Other Stockholder within ten
(10) business days of the date the Offer was received by such Other
2.
<PAGE>
Stockholder. Such communication shall, when taken in conjunction with the Offer,
be deemed to constitute a valid, legally binding and enforceable agreement for
the sale and purchase of such Offered Shares. Sales of the Offered Shares to be
sold to the Other Stockholders pursuant to this Section 5 shall be made at the
offices of the Company on the 45th day following the date the Offer was made (or
if such 45th day is not a business day, then on the next succeeding business
day). Such sales shall be effected by the selling Stockholder's delivery to the
Company of a certificate or certificates evidencing the Offered Shares to be
purchased by the Other Stockholder, duly endorsed for transfer to the Other
Stockholder, against payment to the selling Stockholder of the purchase price
therefor by the Other Stockholder.
(c) If less than all of the Offered Shares are purchased by the Other
Stockholders, then no later than the second business day after the expiration of
the 10 business day period referred to in Section 3(b) above, the Company shall
offer in writing (the "Second Notice") to each Other Stockholder which offered
to purchase Offered Shares, an option to purchase its Proportionate Share (as
defined below) of the Offered Securities which were not previously elected to be
purchased. Within five (5) days after the receipt by each of the Other
Stockholders of the Second Notice or attempted delivery during working hours to
his/her/its address shown on the books of the Company (such date is referred to
as the "Second Receipt Date"), each Other Stockholder who received a Second
Notice, by delivering a written notice to the Company (the "Second Reply"), may
elect to purchase, at the price and on the terms specified in the original
Offer, up to its Proportionate Share of the Offered Shares. As used herein,
"Proportionate Share" equals the total number of Offered Shares not previously
elected to be purchased multiplied by a fraction, the numerator of which is the
number of shares (on a fully-diluted basis) of Common Stock (assuming that all
shares of Series A Preferred had been converted) then held by such Other
Stockholder, and the denominator of which is the sum of all shares (on a fully-
diluted basis) of Common Stock (assuming that all shares of Series A Preferred
had been converted) then held by all Other Stockholders delivering a Second
Reply.
(d) If the Other Stockholders do not purchase all of the Offered
Shares, the Offered Shares not so purchased may be sold by the selling
Stockholder at any time within three months after the date the Offer was made,
subject to the provisions of this Agreement. Any such sale shall be to the
Proposed Buyer, at not less than the price and upon other terms and conditions,
if any, not more favorable to the Proposed Buyer than those specified in the
Offer. Any Offered Shares not sold within such three-month period shall continue
to be subject to the requirements of this Section 5."
3. Section 6 of the Supplemental Voting Agreement is hereby amended and
restated to read in its entirety as follows:
"6. Term. This Agreement shall continue until the earlier of, and shall
----
automatically terminate and be of no further force or effect at (i) such time as
no Purchaser holds more than 400,000 shares of Series A Preferred; (ii) the
tenth anniversary of the date of this Agreement; or (iii) the completion of a
firmly underwritten public offering of the Company's Common Stock at a price of
at least $2.50 per share and which raises at least $5,000,000 of gross proceeds
to the
3.
<PAGE>
Company; provided that no such termination shall relieve a party from liability
for prior breaches hereof."
4. The signature pages to the Supplemental Voting Agreement shall be
amended to add the following New Investor:
Invesco Global Health Sciences Fund
By execution of this Amendment, the Stockholders and the New Investor agree
that the New Investor shall become a party to the Supplemental Voting Agreement.
Except as expressly modified by this Amendment, the Supplemental Voting
Agreement shall remain in full force and effect without change.
This Amendment may be executed in any number of counterparts, each of which
when executed and delivered shall be an original, but all of which together
shall constitute one and same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
4.
<PAGE>
In Witness Whereof, the parties have executed this Amendment to be
effective as of the date first above written.
Genomica Corporation, a Delaware corporation
By: /s/ Thomas G. Marr,
___________________________________
Dr. Thomas G. Marr, President
Stockholders:
Falcon Technology II Partners, L.P.
By: Falcon Technology Management Corporation,
general partner
By: /s/ James Rathmann
___________________________________
James Rathmann, President
Arch Venture Fund III, L.P.
By: Arch Venture Partners, L.L.C., general
partner
By: /s/ Robert Nelsen
___________________________________
Managing Director
Boulder Ventures, L.P.
By: BV Partners, L.L.C., general partner
By: /s/ Kyle Lefkoff
___________________________________
Kyle Lefkoff, Manager
Pegasus Technology Ventures, L.L.C.
By: /s/ Kenneth Collins
___________________________________
Kenneth Collins, Manager
AMENDMENT TO SUPPLEMENTAL VOTING AGREEMENT
<PAGE>
The Caruthers Family, L.L.C.
By: /s/ Marvin H. Caruthers
_________________________________
Marvin H. Caruthers, Manager
Frank Bonsal
_____________________________________
Frank Bonsal
Falcon Technology Partners, L.P.
By: /s/ James L. Rathmann
_________________________________
James L. Rathmann, General Partner
Harris & Harris Group, Inc.
By: /s/ David C. Johnson, Jr.
_________________________________
David C. Johnson, Jr.,
Executive Vice President
New Investor:
Invesco Global Health Sciences Fund
By: /s/ Ronald L. Grooms
_________________________________
Name: Treasurer
_______________________________
Title: Ronald L. Grooms
______________________________
New Investor:
Invesco Global Health Sciences Fund
By: /s/ Glen A. Payne
_________________________________
Name: Glen A. Payne
_______________________________
Title: Secretary
______________________________
AMENDMENT TO SUPPLEMENTAL VOTING AGREEMENT
<PAGE>
THIRD AMENDMENT TO SUPPLEMENTAL VOTING AGREEMENT
This Third Amendment (the "Amendment"), dated as of October 20, 1997, to
the Supplemental Voting Agreement, dated as of February 28, 1997, as amended
(the "Supplemental Voting Agreement"), by and among Genomica Corporation, a
Delaware corporation (the "Company"), the persons listed as Purchasers in
Schedule I to the Series A Convertible Preferred Stock Purchase Agreement, dated
as of February 28, 1997, as amended (the "Purchase Agreement") (individually, a
"Purchaser" and collectively, the "Purchasers") and the Prior Stockholders
listed in the signature pages thereto (the "Prior Stockholders," and together
with the Purchasers, the "Stockholders"), is by and among the Company and the
Stockholders.
RECITALS
A. The Purchase Agreement is being amended to make the party listed on
the Addendum to Schedule I thereof, which is attached hereto (the "New
Investor"), a party to the Purchase Agreement and to permit the New Investor to
purchase shares of the Company's Series A Convertible Preferred Stock.
B. In connection with the purchase of shares of the Company's Series A
Convertible Preferred Stock by the New Investor, the Company and the
Stockholders wish to have the New Investor execute this Amendment so that the
New Investor will be bound by the terms and conditions of the Supplemental
Voting Agreement.
AGREEMENT
Now, Therefore, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereby amend the
Supplemental Voting Agreement as follows:
The signature pages to the Supplemental Voting Agreement shall be amended
to add the following New Investor:
David B. Musket SEP IRA
By execution of this Amendment, the Stockholders and the New Investor agree
that the New Investor shall become a party to the Supplemental Voting Agreement.
Except as expressly modified by this Amendment, the Supplemental Voting
Agreement shall remain in full force and effect without change.
This Amendment may be executed in any number of counterparts, each of which
when executed and delivered shall be an original, but all of which together
shall constitute one and same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
1.
<PAGE>
In Witness Whereof, the parties have executed this Amendment to be
effective as of the date first above written.
Genomica Corporation, a Delaware corporation
By: /s/ Thomas G. Marr
----------------------------------------
Dr. Thomas G. Marr, President
Stockholders:
Falcon Technology II Partners, L.P.
By: Falcon Technology Management Corporation,
general partner
By: /s/ James Rathmann
----------------------------------------
James Rathmann, President
Arch Venture Fund III, L.P.
By: Arch Venture Partners, L.L.C., general
partner
By: /s/ Robert Nelsen
----------------------------------------
Managing Director
Boulder Ventures, L.P.
By: BV Partners, L.L.C., general partner
By: ________________________________________
Kyle Lefkoff, Manager
Pegasus Technology Ventures, L.L.C.
By: /s/ Kenneth Collins
----------------------------------------
Kenneth Collins, Manager
THIRD AMENDMENT TO SUPPLEMENTAL VOTING AGREEMENT
<PAGE>
The Caruthers Family, L.L.C.
By: ________________________________________
Marvin H. Caruthers, Manager
Frank Bonsal
____________________________________________
Frank Bonsal
Falcon Technology Partners, L.P.
By: /s/ James L. Rathmann
----------------------------------------
James L. Rathmann, General Partner
Harris & Harris Group, Inc.
By: /s/ David C. Johnson, Jr.,
----------------------------------------
David C. Johnson, Jr.,
Executive Vice President
Invesco Global Health Sciences Fund
By: /s/ Glen A. Payne
----------------------------------------
Name: Glen A. Payne
--------------------------------------
Title: Secretary
-------------------------------------
New Investor:
David B. Musket SEP IRA
By: /s/ David B. Musket
----------------------------------------
Name: David B. Musket
--------------------------------------
Title:
-------------------------------------
AMENDMENT TO SUPPLEMENTAL VOTING AGREEMENT
<PAGE>
Exhibit 10.5
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT dated as of March
22, 1996 between Genomica Corporation, a Delaware corporation (the "Company"),
and the several purchasers named in the attached Schedule I (individually a
----------
"Purchaser" and collectively the "Purchasers").
WHEREAS, the Company wishes to issue and sell an aggregate of up to
3,320,400 shares (the "Preferred Shares") of the authorized but unissued Series
A Convertible Preferred Stock, $.001 par value, of the Company (the "Series A
Convertible Preferred Stock"); and
WHEREAS, the Purchasers, severally, wish to purchase some or all of the
Preferred Shares on the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the parties agree as follows:
ARTICLE I
THE PREFERRED SHARES
SECTION 1.1 Issuance, Sale and Delivery of the Preferred Shares. The
---------------------------------------------------
Company agrees to issue and sell to each Purchaser, and each Purchaser hereby
agrees to purchase from the Company, the number of Preferred Shares set forth
opposite the name of such Purchaser under the heading "Number of Preferred
Shares to be Purchased" on Schedule I, at the aggregate purchase price set forth
----------
opposite the name of such Purchaser under the heading "Aggregate Purchase Price
for Preferred Shares" on Schedule I.
----------
SECTION 1.2 Closing. The closing of the purchase and sale of Preferred
-------
Shares hereunder shall take place at the offices of Dechert Price & Rhoads,
Philadelphia, at 10:00 a.m., New York time, on March 22, 1996, or at such other
location, date and time as may be agreed upon between the Purchasers and the
Company (such closing being called the "Closing" and such date and time being
called the "Closing Date"). At the Closing, the Company shall issue and deliver
to each Purchaser a stock certificate or certificates in definitive form,
registered in the name of such Purchaser, representing the Preferred Shares
being purchased by it at the Closing. As payment in full for the Preferred
Shares being purchased by it under this Agreement, and against delivery of the
stock certificate or certificates therefor as aforesaid, on the Closing Date
each Purchaser shall transfer to the account of the Company by wire transfer the
amount set forth opposite the name of such Purchaser under the heading
"Aggregate Purchase Price for Preferred Shares" on Schedule I.
----------
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers that, except as set forth
in the Disclosure Schedule attached as Schedule II:
-----------
SECTION 2.1 Operations. The Company has not commenced any material
----------
operations. As of the date hereof there is no action, suit, claim, proceeding or
investigation pending or threatened against or affecting the Company and the
Company is not subject to any order, writ, injunction or decree entered in any
lawsuit or proceeding. Schedule II contains a complete list of the Company's
-----------
material agreements, obligations and liabilities. The Company does not have an
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974, as amended.
SECTION 2.2 Organization, Qualifications Corporate Power.
--------------------------------------------
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and is duly
licensed or qualified to transact business as a foreign corporation and is in
good standing in the Commonwealth of Pennsylvania and in the State of New York
and each other jurisdiction in which the nature of the business transacted by it
or the character of the properties owned or leased by it requires such licensing
or qualification, except where failure to so qualify would not have a material
adverse effect on the business, affairs or prospects of the Company. The Company
has the corporate power and authority to own and hold its properties and to
carry on its business as now conducted and as proposed to be conducted, to
execute, deliver and perform this Agreement, the Registration Rights Agreement
with the Purchasers in the form attached as Exhibit A (the "Registration Rights
---------
Agreement"), the Founders Agreements with the Purchasers and Dr. Thomas G. Marr,
Donald Fisher, Steven Cozza and Jackie Salit (the "Founders"), in the form
attached as Exhibit B-1 (the "Founders Agreements"), the Stockholders Agreements
-----------
with the Purchasers and JRathmann, MRathmann, LRathmann, SRathmann and
RRathmann, Cold Spring Harbor Laboratory and John Maroney (the "Stockholders")
in the form attached as Exhibit B-2 (the "Stockholders Agreements"), a Voting
-----------
Agreement among the Company, and the Purchasers and the other parties thereto in
the form attached as Exhibit C (the "Voting Agreement"), the license Agreement
---------
by and between the Company and Cold Spring Harbor Laboratory in the form
attached as Exhibit D (the "License Agreement"), the Common Stock Acquisition
---------
Agreements with Harris & Harris Group, Inc., JRathmann, MRathmann, LRathmann,
SRathmann and RRathmann, Cold Spring Harbor Laboratory, John Maroney, Jacqueline
Salit, Steven Cozza, Donald Fisher and Thomas Marr in the form attached as
Exhibit E (the "Common Stock Acquisition Agreements"), and the Consulting
- ---------
Agreement by and between the Company and Thomas Marr in the form attached as
Exhibit F (the "Marr Consulting Agreement)
- ---------
-2-
<PAGE>
to issue, sell and deliver the Preferred Shares and to issue and deliver the
shares of Common Stock issuable upon conversion of the Preferred Shares (the
"Conversion Shares").
(b) The Company has no subsidiaries. The Company does not (i) own of
record or beneficially, directly or indirectly, (A) any shares of capital stock
or securities convertible into capital stock of any other corporation or (B) any
participating interest in any partnership, joint venture or other non-corporate
business enterprise or (ii) control, directly or indirectly, any other entity.
SECTION 2.3 Authorization of Agreements, Etc.
--------------------------------
(a) The execution and delivery by the Company of this Agreement, the
Registration Rights Agreement, the Voting Agreement, the License Agreement, the
Founders Agreements, the Stockholders Agreements, the Common Stock Acquisition
Agreements and the Marr Consulting Agreement (collectively, the "Transaction
Agreements"), the performance by the Company of its obligations hereunder and
thereunder, the issuance, sale and delivery of the Preferred Shares and the
issuance and delivery of the Conversion Shares have been duly authorized by all
requisite corporate action and will not violate any provision of law, any order
of any court or other agency of government, the Certificate of Incorporation of
the Company, as amended (the "Charter") or the By-laws of the Company (the "By-
Laws"), as amended, or any provision of any indenture, agreement or other
instrument to which the Company, any of its subsidiaries or any of their
respective properties or assets is bound, or conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company or any of its
subsidiaries. To the best of the Company's knowledge, the execution, delivery
and performance of the Transaction Agreements does not violate, conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default by any other party under any other indenture, agreement or instrument.
(b) The Preferred Shares have been duly authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable shares of Series A Convertible Preferred Stock with no personal
liability attaching to the ownership thereof and will be free and clear of all
liens, charges, restrictions, claims and encumbrances imposed by or through the
Company except as set forth in the Registration Rights Agreement and the Voting
Agreement. The Conversion Shares have been duly reserved for issuance upon
conversion of the Preferred Shares and, when so issued, will be duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock with no
personal liability attaching to the ownership thereof and will be free and clear
of all liens, charges, restrictions, claims and encumbrances imposed by or
through the
-3-
<PAGE>
Company except as set forth in the Registration Rights Agreement and the Voting
Agreement. Neither the issuance, sale or delivery of the Preferred Shares nor
the issuance or delivery of the Conversion Shares is subject to any preemptive
right of stockholders of the Company or to any right of first refusal or other
right in favor of any person.
SECTION 2.4 Validity. This Agreement has been duly executed and delivered
--------
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, and each other Transaction
Agreements, when executed and delivered by the Company, will constitute the
legal, valid and binding obligations of the Company, enforceable in accordance
with their respective terms (subject in each case, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting the rights of creditors generally and general principles
of equity).
SECTION 2.5 Authorized Capital Stock. The authorized capital stock of the
------------------------
Company consists of (i) 4,000,000 shares of Preferred Stock, $.001 par value
(the "Preferred Stock"), all of which have been designated Series A Convertible
Preferred Stock, and (ii) 12,000,000 shares of Common Stock. Immediately prior
to the Closing, 2,929,600 shares of Common Stock will be validly issued and
outstanding, fully paid and nonassessable with no personal liability attaching
to the ownership thereof and no shares of Preferred Stock shall have been
issued. Immediately after giving effect to the Closing, the stockholders of
record and holders of subscriptions, warrants, options, convertible securities,
and other rights (contingent or other) to purchase or otherwise acquire equity
securities of the Company, and the number of shares of Common Stock and the
number of such subscriptions, warrants, options, convertible securities, and
other such rights held by each, will be as set forth in the attached Schedule
--------
III. The designations, powers, preferences, rights, qualifications, limitations
- ---
and restrictions in respect of each class and series of authorized capital stock
of the Company are as set forth in the Charter, a copy of which is attached as
Exhibit G, and all such designations, powers, preferences, rights,
- ---------
qualifications, limitations and restrictions are valid, binding and enforceable
and in accordance with all applicable laws. Except as set forth in the attached
Schedule III, (i) no person owns of record or is known to the Company to own
- ------------
beneficially any share of Common Stock, (ii) no subscription, warrant, option,
convertible security, or other right (contingent or other) to purchase or
otherwise acquire equity securities of the Company is authorized or outstanding
and (iii) except as provided by this Agreement and the Charter, there is no
commitment by the Company to issue shares, subscriptions, warrants, options,
convertible securities, or other such rights or to distribute to holders of any
of its equity securities any evidence of indebtedness or asset. Except as
provided for in the Charter, the Company has no obligation (contingent or other)
to purchase, redeem or otherwise acquire any of its equity securities or any
interest therein or to pay any dividend or make any other distribution in
respect thereof. Except as provided for in
-4-
<PAGE>
the Charter, the Founders Agreements, Stockholders Agreements and the Voting
Agreement, there are no voting trusts or agreements, pledge agreements, buy-sell
agreements, rights of first refusal, preemptive rights or proxies relating to
any securities of the Company or any of its subsidiaries to which the Company or
any of its subsidiaries or, to the Company's knowledge, any other person or
entity, is a party. All of the outstanding securities of the Company were issued
in compliance with all applicable Federal and state securities laws.
SECTION 2.6 Third Party Approvals. No registration or filing with, or
---------------------
consent or approval of or other action by any third party, is or will be
necessary for the valid execution, delivery and performance by the Company of
the Transaction Agreements, the issuance, sale and delivery of the Preferred
Shares or upon conversion thereof, the issuance and delivery of the Conversion
Shares, other than (i) filings pursuant to state securities laws (all of which
filings have been made by the Company, other than those which are required to be
made after the Closing and which will be duly made on a timely basis) in
connection with the sale of the Preferred Shares and (ii) with respect to the
Registration Rights Agreement, the registration of the shares covered thereby
with the Commission and filings pursuant to state securities laws.
SECTION 2.7 Proprietary Information of Third Parties. To the best
----------------------------------------
knowledge of the Company, no third party has claimed or has reason to claim that
any person employed by or affiliated with (or currently proposed to be employed
by or affiliated with) the Company has (a) violated or may be violating any of
the terms or conditions of his employment, non-competition or non-disclosure
agreement with such third party, (b) disclosed or may be disclosing or utilized
or may be utilizing any trade secret or proprietary information or documentation
of such third party or (c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. No third party has requested information from the Company which
suggests that such a claim might be contemplated. To the best knowledge of the
Company, no person employed by or affiliated with (or currently proposed to be
employed by or affiliated with) the Company has employed or proposes to employ
any trade secret or any information or documentation proprietary to any former
employer, and to the best knowledge of the Company, no person employed by or
affiliated with (or currently proposed to be employed by or affiliated with) the
Company has violated any confidential relationship which such person may have
had with any third party, in connection with the development, manufacture or
sale of any product or proposed product or the development or sale of any
service or proposed service of the Company, and the Company has no reason to
believe there will be any such employment or violation. To the best knowledge
of the Company, none of the execution or delivery of the Transaction Agreements,
or the carrying on of the business of the Company as officers employees or
agents by any officer, director or key employee of the Company (or currently
proposed to be such an officer, director or key employee), or the conduct
-5-
<PAGE>
or proposed conduct of the business of the Company, will conflict with or result
in a breach of the terms, conditions or provisions of or constitute a default
under any contract, covenant or instrument under which any such person is
obligated.
SECTION 2.8 Patents, Trademarks, Etc. (a) Set forth in Schedule II is a
------------------------ -----------
list and brief description of all domestic and foreign patents, patent rights,
patent applications, trademarks, trademark applications, service marks, service
mark applications, trade names and copyrights, and all applications for such
which are in the process of being prepared, owned by or registered in the name
of the Company, or of which the Company is a licensor or licensee or in which
the Company has any right, and in each case a brief description of the nature of
such right. The Company owns or possesses adequate licenses or other rights to
use all patents, patent applications, trademarks, trademark applications,
service marks, service mark applications, trade names, copyrights, manufacturing
processes, formulae, trade secrets, customer lists and know how (collectively,
"Intellectual Property") necessary or desirable to the conduct of its business
as conducted and as proposed to be conducted, and no claim is pending or, to the
best of the Company's knowledge, threatened to the effect that the operations of
the Company as conducted and as proposed to be conducted infringe upon or
conflict with the asserted rights of any other person under any Intellectual
Property, and to the best of the Company's knowledge there is no basis for any
such claim (whether or not pending or threatened). No claim is pending or, to
the best of the Company's knowledge, threatened to the effect that any such
Intellectual Property owned or licensed by the Company, or which the Company
otherwise has the right to use, is invalid or unenforceable by the Company, and
there is no basis for any such claim (whether or not pending or threatened). To
the best of the Company's knowledge, all technical information developed by and
belonging to the Company which has not been patented has been kept confidential.
(b) No person or entity has any right, title or interest of any kind
in or to any of the research and other work which has been performed prior to
the date hereof by or under the direction of the Founders with respect to the
matters described in the Company's summary of proposed business set forth on
Exhibit H hereto (the "Plan"), except for (i) the Founders, each of whom has
- ---------
executed either an Employee Nondisclosure and Developments Agreement or a
Nondisclosure Agreement (in the case of employees of Cold Spring Harbor
Laboratory) in substantially the form of Exhibit I-1 or Exhibit I-2,
----------- -----------
respectively, (ii) Cold Spring Harbor Laboratory, which has licensed its entire
right, title and interest in and to all such research and other work to the
Company pursuant to the License Agreement, and (iii) the rights of any
governmental agency as set forth on Schedule II.
-----------
SECTION 2.9 Disclosure. There is no state of facts known to the Company
----------
relating to the business, affairs, condition or prospects of the Company which
materially adversely affects the same, or which may in the future (so far as the
Company can now
-6-
<PAGE>
reasonably foresee) materially adversely the same, which has not been disclosed
to the Purchasers by the Company.
SECTION 2.10 Knowledge. As used in this Article II, the phrase "known to
---------
the Company" (or words to such effect) shall mean the knowledge, after due
inquiry, of Dr. Thomas G. Marr and Cold Spring Harbor Laboratory.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser severally represents and warrants to the Company that:
(a) it is an "accredited investor" within the meaning of Rule 501 under the
Securities Act of 1933, as amended (the "Securities Act") and was not organized
for the specific purpose of acquiring the Preferred Shares;
(b) it has sufficient knowledge and experience in investing in companies
similar to the Company in terms of the Company's stage of development so as to
be able to evaluate the risks and merits of its investment in the Company and it
is able financially to bear the risks thereof;
(c) it has had an opportunity to discuss the Company's business, management
and financial affairs with the Company's management;
(d) the Preferred Shares being purchased by it are being acquired for its
own account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof in violation of the Securities Act;
(e) it understands that (i) the Preferred Shares and the Conversion Shares
have not been registered under the Securities Act by reason of their issuance in
a transaction exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated under the
Securities Act, (ii) the Preferred Shares (and, upon conversion thereof, the
Conversion Shares) must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration, (iii) the Preferred Shares and Conversion Shares will bear a
legend to such effect and (iv) the Company will make a notation on its transfer
books to such effect; and
-7-
<PAGE>
(f) if it sells any Conversion Shares pursuant to Rule 144A promulgated
under the Securities Act, it will take all necessary steps in order to perfect
the exemption from registration provided thereby, including (i) obtaining
information to enable it to establish a reasonable belief that the purchaser is
a qualified institutional buyer and (ii) advising such purchaser that Rule 144A
is being relied upon with respect to such resale.
ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS
The obligation of each Purchaser to purchase and pay for the Preferred Shares
being purchased by it on the Closing Date is, at its option, subject to the
satisfaction, on or before the Closing Date, of the following conditions:
(a) Opinion of Company's Counsel. The Purchasers shall have received from
----------------------------
Dechert, Price, & Rhoads, counsel for the Company, an opinion dated the Closing
Date, in substantially the form attached as Exhibit J hereto.
---------
(b) Representations and Warranties to be True and Correct. The
-----------------------------------------------------
representations and warranties contained in Article II shall be true, complete
and correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, and the
President and Treasurer of the Company shall have certified to such effect to
the Purchasers in writing.
(c) Performance. The Company shall have performed and complied with all
-----------
agreements contained herein required to be performed or complied with by it
prior to or at the Closing Date, and the President and Treasurer of the Company
shall have certified to the Purchasers in writing to such effect and to the
further effect that all of the conditions set forth in this Article IV have been
satisfied.
(d) All Proceedings to be Satisfactory. All corporate and other
----------------------------------
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to the Purchasers and their counsel, and the Purchasers and
their counsel shall have received all such counterpart originals or certified or
other copies of such documents as they reasonably may request.
(e) Supporting Documents. The Purchasers and their counsel shall have
--------------------
received copies of the following documents:
-8-
<PAGE>
(i) (A) the Charter, certified as of a recent date by the Secretary
of State of the State of Delaware, and (B) a certificate of said Secretary dated
as of a recent date as to the due incorporation and good standing of the
Company, the payment of all franchise taxes by the Company and listing all
documents of the Company on file with said Secretary.
(ii) a certificate of the Secretary or an Assistant Secretary of the
Company dated the Closing Date and certifying: (A) that attached thereto is a
true and complete copy of the By-laws of the Company as in effect on the date of
such certification; (B) that attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors or the stockholders of the Company
authorizing the execution, delivery and performance of the Transaction
Agreements, the issuance, sale and delivery of the Preferred Shares and the
reservation, issuance and delivery of the Conversion Shares, and that all such
resolutions are in full force and effect and are all the resolutions adopted in
connection with the transactions contemplated by the Transaction Agreements; (C)
that the Charter has not been amended since the date of the last amendment
referred to in the certificate delivered pursuant to clause (i)(B) above; and
(D) to the incumbency and specimen signature of each officer of the Company
executing the Transaction Agreements, the stock certificates representing the
Preferred Shares and any certificate or instrument furnished pursuant hereto,
and a certification by another officer of the Company as to the incumbency and
signature of the officer signing the certificate referred to in this clause
(ii); and
(iii) such additional supporting documents and other information with
respect to the operations and affairs of the Company as the Purchasers or their
counsel reasonably may request.
(f) Transaction Agreements. The Transaction Agreements (other than this
----------------------
Agreement) shall have been duly executed and delivered by the parties thereto.
(g) Charter. The Charter shall read in its entirety as set forth in
-------
Exhibit G.
- ---------
(h) By-Laws. The By-Laws shall read in their entirety as set forth in
-------
Exhibit K.
- ---------
(i) Proprietary Information. Each of the Founders and the persons listed
-----------------------
on Exhibit L shall have executed and delivered either an Employee Nondisclosure
---------
and Developments Agreement or a Nondisclosure Agreement (in the case of
employees of Cold Spring Harbor Laboratory) substantially in the form of Exhibit
-------
I-1 or Exhibit I-2, respectively.
- --- -----------
ARTICLE V
-9-
<PAGE>
COVENANTS OF THE COMPANY
The Company covenants and agrees with each of the Purchasers that for so long as
any Series A Convertible Preferred Stock is outstanding:
SECTION 5.1 Financial Statements, Reports, Etc. The Company shall furnish
----------------------------------
to each Purchaser who holds at least 1,000,000 Preferred Shares:
(a) within ninety (90) days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company and its subsidiaries as of
the end of such fiscal year and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal year then ended, prepared in
accordance with generally accepted accounting principles and certified by a firm
of independent public accountants of recognized national standing selected by
the Board of Directors of the Company, provided that the Company's obligations
under this Section 5.1(a) shall terminate upon (i) the registration of the
Company's securities under Section 12(b) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") or (ii) the registration of the Company's
securities under Section 12(g) of the Exchange Act and the admission to listing
of such securities on the Nasdaq Stock Market;
(b) within thirty days after the end of each month and each quarter in
each fiscal year (other than the last month in each fiscal year), a consolidated
balance sheet of the Company and its subsidiaries and the related consolidated
statements of income, stockholders' equity and cash flows, unaudited but
prepared in accordance with generally accepted accounting principles and
certified by the Chief Financial Officer of the Company, such consolidated
balance sheet to be as of the end of such month or quarter, as the case may be,
and such consolidated statements of income, stockholders' equity and cash flows
to be for such month or quarter, as the case may be, and for the period from the
beginning of the fiscal year to the end of such month or quarter, as the case
may be, in each case with comparative statements for the prior fiscal year,
provided that the Company's obligations under this Section 5.1(b) shall
terminate upon (i) the registration of the Company's securities under Section
12(b) of the Exchange Act or (ii) the registration of the Company's securities
under Section 12(g) of the Exchange Act and the admission to listing of such
securities on the Nasdaq Stock Market;
(c) at the time of any delivery of each annual financial statement
pursuant to Section 5.1 (a), a certificate executed by the Chief Executive
Officer of the Company stating that such officer has caused this Agreement and
the Series A Convertible Preferred Stock to be reviewed and has no knowledge of
any default by the Company in the performance or observance of any of the
provisions of this Agreement or the Series A Convertible Preferred Stock or, if
such officer has such knowledge, specifying such default and the nature thereof,
-10-
<PAGE>
(d) at the time of any delivery of each monthly and quarterly
statement pursuant to Section 5.1(b), a management narrative report explaining
all material variances from forecasts and all material current developments in
staffing, marking, sales and operations;
(e) no later than sixty (60) days prior to the start of each fiscal
year, consolidated capital and operating expense budgets, cash flow projections
and income and loss projections for the Company and its subsidiaries in respect
of such fiscal year, all itemized in reasonable detail and prepared on a monthly
basis, and, promptly after preparation, any revisions to any of the foregoing;
(f) promptly following receipt by the Company, each audit response
letter, accountant's management letter and other written report submitted to the
Company by its independent public accountants in connection with an annual or
interim audit of the books of the Company or any of its subsidiaries;
(g) promptly after the commencement thereof, notice of all actions,
suits, claims, proceedings, investigations and inquiries of the type described
in Sections 2.1, 2.7 or 2.8 that could materially adversely affect the Company
or any of its subsidiaries;
(h) promptly upon sending, making available or filing the same, (i)
all press releases, and (ii) all reports and financial statements that the
Company sends or makes available to its stockholders or directors or files with
the Securities and Exchange Commission; and
(i) promptly, from time to time, such other information regarding the
business, prospects, financial condition, operations, property or affairs of the
Company and its subsidiaries as such Purchaser reasonably may request.
SECTION 5.2 Reserve for Conversion Shares. The Company shall at all times
-----------------------------
reserve and keep available out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of the Preferred Shares and
otherwise complying with the terms of this Agreement, such number of its duly
authorized shares of Common Stock as shall be sufficient to effect the
conversion of the Preferred Shares from time to time outstanding or otherwise to
comply with the terms of this Agreement. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of the Preferred Shares or otherwise to comply with the terms of
this Agreement, the Company will forthwith take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes. The Company will
obtain any authorization, consent, approval or other action by or make any
filing with any court or administrative body that may be required under
applicable state securities laws in
-11-
<PAGE>
connection with the issuance of shares of Common Stock upon conversion of the
Preferred Shares.
SECTION 5.3 Corporate Existence. The Company shall maintain and, except
-------------------
as otherwise permitted by Section 5.14 cause each of its subsidiaries to
maintain, their respective corporate existence, rights and franchises in full
force and effect.
SECTION 5.4 Properties, Business, Insurance. The Company shall maintain
-------------------------------
and cause each of its subsidiaries to maintain as to their respective properties
and business, with financially sound and reputable insurers, insurance against
such casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated, which insurance shall be deemed by
the Company to be sufficient.
SECTION 5.5 Inspection, Consultation and Advice. The Company shall permit
-----------------------------------
and cause each of its subsidiaries to permit each Purchaser and such persons as
such Purchaser may designate, at such Purchaser's expense, to visit and inspect
any of the properties of the Company and its subsidiaries, examine their books
and take copies and extracts therefrom (subject to the prior execution and
delivery to the Company of a confidentiality agreement in a reasonable form
provided by the Company from time to time), discuss the affairs, finances and
accounts of the Company and its subsidiaries with their officers, employees and
public accountants (and the Company hereby authorizes said accountants to
discuss with such Purchaser and such designees such affairs, finances and
accounts), and consult with and advise the management of the Company and its
subsidiaries as to their affairs, finances and accounts, all at reasonable times
and upon reasonable notice.
SECTION 5.6 Restrictive Agreements Prohibited. Neither the Company nor
---------------------------------
any of its subsidiaries shall become a party to any agreement which by its terms
restricts the Company's performance of any Transaction Agreement, the By-Laws or
the Charter.
SECTION 5.7 Transactions with Affiliates. Except for transactions
----------------------------
contemplated by this Agreement or as otherwise approved by the Board of
Directors, neither the Company nor any of its subsidiaries shall enter into any
transaction with any director, officer, employee or holder of more than 5% of
the outstanding capital stock of any class or series of capital stock of the
Company or any of its subsidiaries, member of the family of any such person, or
any corporation, partnership, trust or other entity in which any such person, or
member of the family of any such person, is a director, officer, trustee,
partner or holder of more than 5% of the outstanding capital stock thereof,
except for transactions on customary terms related to such person's employment
with the Company.
-12-
<PAGE>
SECTION 5.8 Expenses of Directors. The Company shall promptly reimburse
---------------------
in full each director of the Company who is not an employee of the Company and
who was elected as a director solely or in part by the holders of Series A
Convertible Preferred Stock for all of his reasonable out-of-pocket expenses
incurred in attending each meeting of the Board of Directors of the Company or
any committee thereof.
SECTION 5.9 Use of Proceeds. The Company shall use the proceeds from the
---------------
sale of the Preferred Shares solely for working capital.
SECTION 5.10 Board of Directors Meetings. The Company shall use its best
---------------------------
efforts to ensure that meetings of its Board of Directors are held at least four
times each year and at least once each quarter. The Company shall permit each
Purchaser owning at least 1,000,000 Preferred Shares to have one representative
attend each meeting of the Board of Directors of the Company and each meeting of
any committee thereof and to participate in all discussions during each such
meeting. The Company shall send to each Purchaser and each such representative
the notice of the time and place of such meeting in the same manner and at the
same time as it shall send such notice to its directors or committee members, as
the case may be; provided, however, that the Company shall have no obligations
-------- -------
with respect to notice or permitted attendance of a non-director Purchaser's
representative under this Section 5.10 in the event of any meeting of the Board
of Directors, or portion thereof, as to which the Board shall reasonably
conclude (and shall have notified each Purchaser of such conclusion) that the
existence or potential existence of a significant conflict of interest or the
necessity of confidentiality in the best interests of the Company and the
stockholders precludes such notice or attendance. As a condition to attendance
at any Board of Directors meeting, each Purchaser agrees that such Purchaser's
representative may be required to sign and deliver to the Company a
confidentiality agreement in a reasonable form provided by the Company from time
to time. The Company shall also provide to each Purchaser and designee copies
of all notices, reports, minutes and consents at the time and in the manner as
they are provided to the Board of Directors or committee, except for information
reasonably designated as proprietary information by the Board of Directors.
SECTION 5.11 By-Laws. The Company shall at all times maintain provisions
-------
in its By-laws and/or Charter indemnifying all directors and officers against
liability (and providing for expense reimbursement thereof to the extent
contained therein on the date hereof) and absolving all directors from liability
to the Company and its stockholders to the maximum extent permitted under the
laws of the State of Delaware.
SECTION 5.12 Performance of Contracts. The Company shall not amend,
------------------------
modify, terminate, waive or otherwise alter, in whole or in part, any of the
Transaction Agreements or any Nondisclosure and Developments Agreement or any
Nondisclosure Agreement with any person without the written consent of those
members of the Company's Board of Directors elected solely by the holders of
Series A Preferred Stock.
-13-
<PAGE>
SECTION 5.13 Vesting of Reserved Employee Shares. The Company shall not
-----------------------------------
grant to any of its directors, employees or consultants options to purchase
Common Stock which will become exercisable at a rate in excess of 20% per annum
from the date of such grant without the unanimous written consent of those
members of the Company's Board of Directors elected solely by the holders of
Series A Convertible Preferred Stock.
SECTION 5.14 Employee Nondisclosure and Developments Agreements. The
--------------------------------------------------
Company shall obtain, and shall cause its subsidiaries to obtain, an Employee
Nondisclosure and Developments Agreement or a Nondisclosure Agreement (in the
case of employees of Cold Spring Harbor Laboratory) in substantially the form of
Exhibit I-2 or Exhibit I-2, respectively from all future officers, key employees
- ----------- -----------
and all other employees who may have access to confidential information of the
Company or any of its subsidiaries, upon their employment by the Company or any
of its subsidiaries or by Cold Spring Harbor Laboratory pursuant to any
agreement between Cold Spring Harbor Laboratory and the Company.
SECTION 5.15 Activities of Subsidiaries. Without the unanimous consent of
--------------------------
the Company's Board of Directors (or unanimous consent of a special committee of
the Board of Directors appointed by unanimous consent of the whole Board of
Directors): (i) the Company shall not permit any subsidiary to consolidate or
merge into or with or sell or transfer all or substantially all its assets,
except that any wholly-owned subsidiary may (A) consolidate or merge into or
with or sell or transfer assets to any other wholly-owned subsidiary, or (B)
merge into or sell or transfer assets to the Company; (ii) the Company shall not
sell or otherwise transfer any shares of capital stock of any subsidiary, except
to the Company or any wholly-owned subsidiary, or permit any subsidiary to
issue, sell or otherwise transfer any shares of its capital stock or the capital
stock of any subsidiary, except to the Company or any wholly-owned subsidiary;
or (iii) the Company shall not permit any subsidiary to purchase or set aside
any sums for the purchase of, or pay any dividend or make any distribution on,
any shares of its stock, except for dividends or other distributions payable to
the Company or any wholly-owned subsidiary.
SECTION 5.16 Compliance with Laws. The Company shall comply, and cause
--------------------
each subsidiary to comply, in all material respects with all applicable laws,
rules, regulations and orders.
SECTION 5.17 Keeping of Records and Books of Account. The Company shall
---------------------------------------
keep, and cause each subsidiary to keep, adequate and accurate records and books
of account, in which complete entries will be made in accordance with generally
accepted accounting principles consistently applied, reflecting all financial
transactions of the Company and such subsidiary, and in which, for each fiscal
year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
-14-
<PAGE>
SECTION 5.18 Change in Nature of Business. The Company shall not make, or
----------------------------
permit any subsidiary to make, any material change in the nature of its business
as contemplated in the Plan.
SECTION 5.19 U.S. Real Property Interest Statement. The Company shall
-------------------------------------
provide prompt written notice to each Purchaser following any "determination
date" (as defined in Treasury Regulation Section 1.897-2(c)(i)) on which the
Company becomes a United States real property holding corporation. In addition,
upon a written request by any Purchaser, the Company shall provide such
Purchaser with a written statement informing the Purchaser whether such
Purchaser's interest in the Company constitutes a U.S. real property interest.
The Company's determination shall comply with the requirements of Treasury
Regulation Section 1.897-2(h)(1) or any successor regulation, and the Company
shall provide timely notice to the Internal Revenue Service, in accordance with
and to the extent required by Treasury Regulation Section 1.897-2(h)(2) or any
successor regulation, that such statement has been made. The Company's written
statement to any Purchaser shall be delivered to such Purchaser within ten (10)
days of such Purchaser's written request therefor. The Company's obligation to
furnish a written statement pursuant to this Section 5.19 shall continue
notwithstanding the fact that a class of the Company's stock may be regularly
traded on an established securities market.
SECTION 5.20 Rule 144A Information. The Company shall, at all times
---------------------
during which it is neither subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, nor exempt from reporting pursuant to Rule 12g3-
2(b) under the Exchange Act, provide in writing, upon the written request of any
Purchaser or a prospective buyer of Preferred Shares or Conversion Shares from
any Purchaser, all information required by Rule 144A(d)(4)(i) of the General
Regulations promulgated by the Commission under the Securities Act ("Rule 144A
Information"). The Company also shall, upon the written request of any
Purchaser, cooperate with and assist such Purchaser or any member of the
National Association of Securities Dealers, Inc. PORTAL system in applying to
designate and thereafter maintain the eligibility of the Preferred Shares or
Conversion Shares, as the case may be, for trading through PORTAL. The
Company's obligations under this Section 5.20 shall at all times be contingent
upon the relevant Purchaser's obtaining from the prospective buyer of Preferred
Shares or Conversion Shares a written agreement to take all reasonable
precautions to safeguard the Rule 144A Information from disclosure to anyone
other than a person who will assist such buyer in evaluating the purchase of any
Preferred Shares or Conversion Shares.
SECTION 5.21 Termination of Covenants. The covenants set forth in
------------------------
Sections 5.19 and 5.20 shall terminate and be of no further force or effect as
to each of the Purchasers when such Purchaser no longer holds any shares of
capital stock of the Company. All of the other covenants set forth in this
Article V shall terminate and be of no further force or effect as to a Purchaser
when such Purchaser owns less than 50,000
-15-
<PAGE>
Preferred Shares (appropriately adjusted to reflect stock splits, stock
dividends, combinations of shares and the like with respect to the Series A
Convertible Preferred Stock).
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Expenses. Each party hereto will pay its own expenses in
--------
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated, provided, however, that assuming a successful
completion of such transactions, the Company shall pay the reasonable fees and
disbursements of the Purchasers' special counsel Skadden, Arps, Slate, Meagher &
Flom and Dechert Price & Rhoads, in connection with such transactions and any
subsequent amendment, waiver, consent or enforcement thereof.
SECTION 6.2 Survival of Agreements. Except as otherwise specified herein,
----------------------
all covenants, agreements, representations and warranties made herein or in the
Registration Rights Agreement, the Founders Agreements, the Stockholders
Agreements, the Voting Agreement or any certificate or instrument delivered to
the Purchasers pursuant to or in connection with this Agreement, the
Registration Rights Agreement, the Founders Agreements, the Stockholders
Agreements or the Voting Agreement, shall survive the execution and delivery of
this Agreement, the Registration Rights Agreement, the Founders Agreements, the
Stockholders Agreements and the Voting Agreement, the issuance, sale and
delivery of the Preferred Shares, and the issuance and delivery of the
Conversion Shares, and all statements contained in any certificate or other
instrument delivered by the Company hereunder or thereunder or in connection
herewith or therewith shall be deemed to constitute representations and
warranties made by the Company.
SECTION 6.3 Brokerage. Each party hereto will indemnify and hold harmless
---------
the others against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.
SECTION 6.4 Parties in Interest. All representations, covenants and
-------------------
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants and agreements
benefiting the Purchasers shall inure to the
-16-
<PAGE>
benefit of any and all subsequent holders from time to time of Preferred Shares
or Conversion Shares.
SECTION 6.5 Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or sent by
telecopier or telex, addressed as follows:
(a) if to the Company, c/o Falcon Technology Partners, L.P., 600
Dorset Road, Devon, PA 19333 Attention: President, with a copy to: Henry
Nassau, Esq., Dechert, Price & Rhoads, 4000 Bell Atlantic Tower, 1717 Arch
Street, Philadelphia, PA 19103-2793 (Facsimile No. (215) 994-2222); and
(b) if to any Purchaser, at the address of such Purchaser set forth in
Schedule I, with a copy to Kent Coit, Esq., Skadden, Arps, Slate, Meagher &
- ----------
Flom, One Beacon Street, Boston, Massachusetts 02108 (Facsimile No. (617) 573-
4822);
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 6.6 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
SECTION 6.7 Entire Agreement. This Agreement, including the Schedules and
----------------
Exhibits hereto, constitutes the sole and entire agreement of the parties with
respect to the subject matter hereof. All Schedules and Exhibits hereto are
hereby incorporated herein by reference.
SECTION 6.8 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 6.9 Amendments. This Agreement may not be amended or modified,
----------
and no provisions hereof may be waived, except with the written consent of the
Company and the holders of Preferred Shares which are convertible into a number
of shares of Common Stock, and/or shares of Common Stock issued upon conversion
of Preferred Shares, constituting at least two-thirds of the outstanding shares
of Common Stock issued or issuable upon conversion of the Preferred Shares.
SECTION 6.10 Severability. If any provision of this Agreement shall be
------------
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
-17-
<PAGE>
SECTION 6.11 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
SECTION 6.12 Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
(a) "person" shall mean an individual, corporation, trust,
partnership, joint venture, unincorporated organization, government agency or
any agency or political subdivision thereof, or other entity.
(b) "subsidiary" shall mean, as to the Company, (i) any corporation of
which more than 50% of the outstanding stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) or (ii) any partnership, limited liability company or similar
entity of which more than 50% of the ownership interests, or any percentage of
general partner or managing member interest, is at the time directly or
indirectly owned by the Company, or by one or more of its subsidiaries, or by
the Company and one or more of its subsidiaries.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-18-
<PAGE>
IN WITNESS WHEREOF, the Company, and the Purchasers have executed this
Agreement as of the day and year first above written.
GENOMICA CORPORATION
By: /s/ James L. Rathmann
-------------------------------
James L. Rathmann
President
[Corporate Seal]
PURCHASERS:
FALCON TECHNOLOGY PARTNERS, L.P.
By: /s/ James L. Rathmann
-------------------------------
James L. Rathmann
General Partner
HARRIS & HARRIS GROUP, INC.
By: /s/ David C. Johnson, Jr.
-------------------------------
David C. Johnson, Jr.
Title: Executive Vice President
-19-
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of Preferred Aggregate Purchase Price
Purchaser Shares to be Purchased for Preferred Shares
- --------- ---------------------- ------------------------
<S> <C> <C>
Falcon Technology Partners, L.P. 1,660,200 $1,000,104.48*
Harris & Harris Group, Inc. 1,660,200 $1,000,104.48
</TABLE>
* Partial payment for shares in the amount of $403,229.14 is being made
Falcon Technology Partners as cancellation of certain indebtedness,
described in the following chart, owed by the Company to Falcon Technology
Partners, L.P.
=================================================================
Origination Interest Rate Principal Interest Due as
Date of 3/22/96
-----------------------------------------------------------------
3/12/96 6% $100,000 $ 164.38
-----------------------------------------------------------------
2/16/96 6% $200,000 $ 1150.68
-----------------------------------------------------------------
1/2/96 6% $ 50,000 $ 657.53
-----------------------------------------------------------------
10/18/95 5.88% $ 50,000 $1,256.55
=================================================================
-20-
<PAGE>
SCHEDULE II
Section 2.1 The Transaction Agreements, as such term is defined in the Series A
Convertible Preferred Stock Purchase Agreement to which this Schedule II is
attached (the "Agreement")
Section 2.8 (a) Pursuant to the License Agreement, as such term is defined in
the Agreement and attached thereto as Exhibit D and incorporated by reference
---------
herein, the Company is the licensee of the Patent Rights, Licensed Copyrights
and Technical Information as such terms are defined in the License Agreement,
subject to the rights of Cold Spring Harbor Laboratory ("CSHL") and the federal
government as set forth therein.
(b) Pursuant to a certain Letter Agreement dated March 15, 1996
between CSHL and the Company, the Company is the licensee of future inventions
made by Marr and the Company prior to January 1, 2001.
-21-
<PAGE>
SCHEDULE III
Genomica Corporation Capitalization Table March ___, 1996
<TABLE>
<CAPTION>
Common Stock % of Common Series A Preferred % Series A Total Shares $ of Total
<S> <C> <C> <C> <C> <C> <C>
Falcon Technology Partners L.P. 1,660,200 50.00% 1,660,200 26.06%
Rathmann Family 600,000 19.67% 600,000 9.42%
Harris and Harris Group, Inc. 199,800 6.55% 1,660,200 50.00% 1,860,000 29.20%
Cold Spring Harbor Laboratories 679,679 22.29% 679,679 10.67%
John Maroney 60,121 1.97% 60,121 0.94%
Thomas Marr 1,080,000 35.41% 1,080,000 16.95%
Donald Fisher 250,000 8.20% 250,000 3.92%
Jackie Salit 30,000 0.98% 30,000 0.47%
Steve Cozza 30,000 0.98% 30,000 0.47%
Pool for inventions 120,000 3.93% 120,000 1.88%
Total 3,049,600 100.00% 3,320,400 100.00% 6,370,000 100.00%
</TABLE>
<PAGE>
Exhibit 10.6
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT dated as of
February 28, 1997 between Genomica Corporation, a Delaware corporation (the
"Company"), and the several purchasers named in the attached Schedule I
(individually a "Purchaser" and collectively the "Purchasers").
WHEREAS, the Company wishes to issue and sell an aggregate of up to
4,980,100 shares (the "Preferred Shares") of the authorized but unissued Series
A Convertible Preferred Stock, $.001 par value, of the Company (the "Series A
Convertible Preferred Stock"); and
WHEREAS, the Purchasers, severally, wish to purchase some or all of the
Preferred Shares on the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the parties agree as follows:
SECTION 1. THE PREFERRED SHARES
--------------------
SECTION 1.1 Issuance, Sale and Delivery of the Preferred Shares. The
---------------------------------------------------
Company agrees to issue and sell to each Purchaser, and each Purchaser hereby
agrees to purchase from the Company, the number of Preferred Shares set forth
opposite the name of such Purchaser under the heading "Number of Preferred
Shares to be Purchased" on Schedule I, at the aggregate purchase price set forth
opposite the name of such Purchaser under the heading "Aggregate Purchase Price
for Preferred Shares" on Schedule 1.
SECTION 1.2 Closing. The closing of the purchase and sale of Preferred
-------
Shares hereunder shall take place at the offices of Dechert Price & Rhoads,
Philadelphia, at 10:00 a.m., New York time, on February 28, 1997, or at such
other location, date and time as may be agreed upon between the Purchasers and
the Company (such closing being called the "Closing" and such date and time
being called the "Closing Date"). At the Closing, the Company shall issue and
deliver to each Purchaser a stock certificate or certificates in definitive
form, registered in the name of such Purchaser, representing the Preferred
Shares being purchased by it at the Closing. As payment in full for the
Preferred Shares being purchased by it under this Agreement, and against
delivery of the stock certificate or certificates therefor as aforesaid, on the
Closing Date each Purchaser shall (i) transfer to the account of the Company by
wire transfer the amount set forth opposite the name of such Purchaser under the
heading "Aggregate Purchase Price for Preferred Shares" on Schedule I, (ii) if
----------
applicable, deliver to the Company for cancellation promissory notes issued by
the Company in the amount of such sum or (iii) deliver or transfer such sum to
the Company by any combination of such methods of payments. Notwithstanding the
preceding sentence, a Purchaser may give written notice to the Company not later
than two (2) business days prior to the Closing Date, that such Purchaser
desires to deliver its consideration at such other time not later than sixty
(60) days following the Closing Date. Upon delivery of such notice, such
Purchaser shall be obligated, without any further condition, to deliver its
consideration no later than the date specified in the notice. The Company shall
not be obligated to deliver any stock certificates and such Purchaser shall have
no rights as a stockholder in the Company until such Purchaser delivers its
consideration to the Company.
-1-
<PAGE>
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the Purchasers that, as of the Closing
Date, except as set forth in the Disclosure Schedule attached as Schedule II:
-----------
SECTION 2.1 Organization, Qualifications Corporate Power.
--------------------------------------------
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and is duly
licensed or qualified to transact business as a foreign corporation and is in
good standing in the Commonwealth of Pennsylvania and in the State of New York
and each other jurisdiction in which the nature of the business transacted by it
or the character of the properties owned or leased by it requires such licensing
or qualification, except where failure to so qualify would not have a material
adverse effect on the business, affairs or prospects of the Company. The Company
has the corporate power and authority to own and hold its properties and to
carry on its business as now conducted and as proposed to be conducted, to
execute, deliver and perform this Agreement, to issue, sell and deliver the
Preferred Shares and to issue and deliver the shares of Common Stock issuable
upon conversion of the Preferred Shares (the "Conversion Shares").
(b) The Company has no subsidiaries. The Company does not (i) own of
record or beneficially, directly or indirectly, (A) any shares of capital stock
or securities convertible into capital stock of any other corporation or (B) any
participating interest in any partnership, joint venture or other non-corporate
business enterprise or (ii) control, directly or indirectly, any other entity.
SECTION 2.2 Authorization of Agreements, Etc.
--------------------------------
(a) The execution and delivery by the Company of this Agreement, the
performance by the Company of its obligations hereunder, the issuance, sale and
delivery of the Preferred Shares and the issuance and delivery of the Conversion
Shares have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Certificate of Incorporation of the Company, as amended (the
"Charter") or the By-laws of the Company (the "By-Laws"), as amended, or any
provision of any indenture, agreement or other instrument to which the Company,
any of its subsidiaries or any of their respective properties or assets is
bound, or conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien, charge,
restriction, claim or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company or any of its subsidiaries. To the best of
the Company's knowledge, the execution, delivery and performance of this
Agreement does not violate, conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default by any other party under
any other indenture, agreement or instrument.
(b) The Preferred Shares have been duly authorized and, when issued
in accordance with this Agreement, will be validly issued, fully paid and
nonassessable shares of Series A Convertible Preferred Stock with no personal
liability attaching to the ownership thereof and will be free and clear of all
liens, charges, restrictions, claims and encumbrances
-2-
<PAGE>
imposed by or through the Company. The Conversion Shares have been duly reserved
for issuance upon conversion of the Preferred Shares and, when so issued, will
be duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock with no personal liability attaching to the ownership thereof and
will be free and clear of all liens, charges, restrictions, claims and
encumbrances imposed by or through the Company. Neither the issuance, sale nor
delivery of the Preferred Shares nor the issuance nor delivery of the Conversion
Shares is subject to any preemptive right of stockholders of the Company or to
any right of first refusal or other right in favor of any person which has not
been waived.
(c) Immediately after the Closing, the Purchasers shall have obtained
the same benefits as the purchasers of the Company's Series A Preferred Stock
pursuant to that certain Series A Convertible Preferred Stock Purchase Agreement
dated as of March 22, 1996 between the Company and the purchasers named therein
(the "Initial Purchase Agreement"), as if the Purchasers purchased the Preferred
Shares on such date, in and to the following: (i) that certain Registration
Rights Agreement dated as of March 22, 1996 by and among the Company and Harris
and Harris Group, Inc. ("Harris"), Falcon Technology Partners, L.P. ("Falcon"),
Cold Spring Harbor Laboratory ("CSH"), John Maroney ("Maroney"), James L.
Rathmann ("JRathmann"), Margaret C. Rathmann ("MRathmann"), Sally A. Rathmann
("SRathmann"), Laura Jean Rathmann ("LRathmann"), Richard G. Rathmann
("RRathmann"), Thomas G. Marr ("Marr"), Jacqueline Salit ("Salit"), Steven Cozza
("Cozza") and Donald Fisher ("Fisher") (the "Registration Rights Agreement");
(ii) Sections 6, 7 and 9 through 19 of those certain Founders Agreements, each
dated as of March 22, 1996 by and between the Company and each of Marr, Salit,
Cozza and Fisher (the "Founders Agreements"); (iii) Sections 2, 3 and 5 through
15 of those certain Stockholders Agreements, each dated as of March 22, 1996 by
and between the Company and each of CSH and Maroney (the "CSH Stockholders
Agreements"); and (iv) Sections 3 through 14 of that certain Stockholders
Agreement dated as of March 22, 1996 by and among the Company and JRathmann,
MRathmann, SRathmann, LRathmann and RRathmann (the "Rathmann Stockholders
Agreement") (each of the Registration Rights Agreement, the Founders Agreements,
the CSH Stockholders Agreements and the Rathmann Stockholders Agreement, and
that certain Voting Agreement dated as of March 22, 1996 by and among Harris,
Falcon, CSH, Maroney, JRathmann, MRathmann, SRathmann, LRathmann, RRathmann,
Marr, Salit, Cozza and Fisher (the "Voting Agreement") are hereinafter
collectively referred to as the "Transaction Agreements").
SECTION 2.3 Validity. This Agreement has been duly executed and delivered
--------
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, and the Transaction
Agreements, when this Agreement is executed and delivered by the Consenting
Stockholders, will constitute the legal, valid and binding obligations of the
Company, enforceable in accordance with their respective terms (subject in each
case, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting the rights of
creditors generally and general principles of equity).
SECTION 2.4 Authorized Capital Stock. The authorized capital stock of the
------------------------
Company consists of (i) 18,000,000 shares of Preferred Stock, $.001 par value
(the "Preferred Stock"), all of which have been designated Series A Convertible
Preferred Stock, and (ii) 22,000,000 shares of Common Stock. Immediately prior
to the Closing, 3,320,400 shares of
-3-
<PAGE>
Series A Convertible Preferred Stock and 2,747,308 shares of Common Stock will
be validly issued and outstanding, fully paid and nonassessable with no personal
liability attaching to the ownership thereof, and 3,320,400 shares of Common
Stock reserved for issuance upon conversion of the Series A Preferred Stock.
Immediately after giving effect to the Closing, the stockholders of record and
holders of subscriptions, warrants, options, convertible securities, and other
rights (contingent or other) to purchase or otherwise acquire equity securities
of the Company, and the number of shares of Common Stock and the number of such
subscriptions, warrants, options, convertible securities, and other such rights
held by each, will be as set forth in the attached Schedule III. The
------------
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
the Company are as set forth in the Charter, a copy of which is attached as
Exhibit A, and all such designations, powers, preferences, rights,
- ---------
qualifications, limitations and restrictions are valid, binding and enforceable
and in accordance with all applicable laws. Except as set forth in the attached
Schedule III, (i) no person owns of record or is known to the Company to own
- ------------
beneficially any share of Common Stock, (ii) no subscription, warrant, option,
convertible security, or other right (contingent or other) to purchase or
otherwise acquire equity securities of the Company is authorized or outstanding
and (iii) except as provided by this Agreement and the Charter, there is no
commitment by the Company to issue shares, subscriptions, warrants, options,
convertible securities, or other such rights or to distribute to holders of any
of its equity securities any evidence of indebtedness or asset. Except as
provided for in the Charter, the Company has no obligation (contingent or other)
to purchase, redeem or otherwise acquire any of its equity securities or any
interest therein or to pay any dividend or make any other distribution in
respect thereof Except as provided for in the Charter, and the agreements set
forth on Schedule II, there are no voting trusts or agreements, pledge
-----------
agreements, buy-sell agreements, rights of first refusal, preemptive rights or
proxies relating to any securities of the Company or any of its subsidiaries to
which the Company or any of its subsidiaries or, to the Company's knowledge, any
other person or entity, is a party. All of the outstanding securities of the
Company were issued in compliance with all applicable Federal and state
securities laws.
SECTION 2.5 Third Party Approvals. No registration or filing with, or
---------------------
consent or approval of or other action by any third party, including any
governmental entity, is or will be necessary for the valid execution, delivery
and performance by the Company of this Agreement, the Transaction Agreements,
the issuance, sale and delivery of the Preferred Shares or upon conversion
thereof, the issuance and delivery of the Conversion Shares, other than filings
pursuant to state securities laws (all of which filings have been made by the
Company, other than those which are required to be made after the Closing and
which will be duly made on a timely basis) in connection with the sale of the
Preferred Shares.
SECTION 2.6 Proprietary Information of Third Parties. To the best
----------------------------------------
knowledge of the Company, no third party has claimed or has reason to claim that
any person employed by or affiliated with (or currently proposed to be employed
by or affiliated with) the Company has (a) violated or may be violating any of
the terms or conditions of his employment, non-competition or non-disclosure
agreement with such third party, (b) disclosed or may be disclosing or utilized
or may be utilizing any trade secret or proprietary information or documentation
of such third party or (c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. No third party has requested information from the Company that
suggests that such a claim might be contemplated. To the best knowledge of
-4-
<PAGE>
the Company, no person employed by or affiliated with (or currently proposed to
be employed by or affiliated with) the Company has employed or proposes to
employ any trade secret or any information or documentation proprietary to any
former employer, and to the best knowledge of the Company, no person employed by
or affiliated with (or currently proposed to be employed by or affiliated with)
the Company has violated any confidential relationship which such person may
have had with any third party, in connection with the development, manufacture
or sale of any product or proposed product or the development or sale of any
service or proposed service of the Company, and the Company has no reason to
believe there will be any such employment or violation. To the best knowledge of
the Company, none of the execution or delivery of this Agreement, or the
carrying on of the business of the Company as officers, employees or agents by
any officer, director or key employee of the Company (or currently proposed to
be such an officer, director or key employee), or the conduct or proposed
conduct of the business of the Company, will conflict with or result in a breach
of the terms, conditions or provisions of or constitute a default under any
contract, covenant or instrument under which any such person is obligated.
SECTION 2.7 Material Agreements. The Company is not in default in the
-------------------
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party that
may result in any material adverse change in the business, operations or
financial condition of the Company. The Company is not obligated under any
contract or agreement or subject to any charter or other corporate restriction
which materially adversely affects the Company's business, properties, assets,
prospects or condition (financial or otherwise).
SECTION 2.8 Patents, Trademarks, Etc.
------------------------
(a) Set forth in Schedule II is a list and brief description of all
-----------
domestic and foreign patents, patent rights, patent applications, trademarks,
trademark applications, service marks, service mark applications, trade names
and copyrights, and all applications for such which are in the process of being
prepared, owned by or registered in the name of the Company, or of which the
Company is a licensor or licensee or in which the Company has any right, and in
each case a brief description of the nature of such right. The Company owns or
possesses adequate licenses or other rights to use all patents, patent
applications, trademarks, trademark applications, service marks, service mark
applications, trade names, copyrights, manufacturing processes, formulae, trade
secrets, customer lists and know how (collectively, "Intellectual Property")
necessary or desirable to the conduct of its business as conducted and as
proposed to be conducted, and no claim is pending or, to the best of the
Company's knowledge, threatened to the effect that the operations of the Company
as conducted and as proposed to be conducted infringe upon or conflict with the
asserted rights of any other person under any Intellectual Property, and to the
best of the Company's knowledge there is no basis for any such claim (whether or
not pending or threatened). No claim is pending or, to the best of the
Company's knowledge, threatened to the effect that any such Intellectual
Property owned or licensed by the Company, or which the Company otherwise has
the right to use, is invalid or unenforceable by the Company, and there is no
basis for any such claim (whether or not pending or threatened). To the best of
the Company's knowledge, all technical information developed by and belonging to
the Company that has not been patented has been kept confidential.
-5-
<PAGE>
(b) No person or entity has any right, title or interest of any kind
in or to any of the research and other work which has been performed prior to
the date hereof by or under the direction of the Founders with respect to the
business of the Company, except for (i) the parties to the Founders Agreements,
each of whom has executed either an Employee Nondisclosure and Developments
Agreement or a Nondisclosure Agreement (in the case of employees of CSH), (ii)
CSH, which has licensed its entire right, title and interest in and to all such
research and other work to the Company pursuant to a License Agreement dated as
of March 22, 1996, and (iii) the rights of any governmental agency as set forth
on Schedule II.
-----------
SECTION 2.9 Financial Statements; Undisclosed Liabilities. The Company
---------------------------------------------
has furnished to the Purchasers the unaudited consolidated balance sheet of the
Company as of December 31, 1996 and the related unaudited consolidated
statements of operations, shareholders' equity (net capital deficiency), and
cash flows of the Company for the twelve-month period then ended, certified by
the principal financial officer of the Company. Such financial statements are
complete and correct, subject to final year-end and audit adjustments, have been
prepared in accordance with generally accepted accounting principles,
consistently applied ("GAAP"), and fairly present in all material respects the
consolidated financial position of the Company as of such respective dates, and
the consolidated results of its operations and cash flows for the respective
periods then ended. To the best knowledge of the Company, as of December 31,
1996, the Company had no liability or obligation of a nature required to be set
forth on balance sheet according to GAAP, except to the extent reflected as a
liability on the financial statements described in this Section 2.9.
SECTION 2.10 Litigation. There are no (a) actions, suits, proceedings or
----------
investigations at law or in equity or by or before any governmental
instrumentality or other agency now pending or to the Company's knowledge,
threatened against or affecting the Company, or (b) judgments, decrees,
injunctions or orders of any court, governmental department, commission, agency,
instrumentality or arbitrator against or affecting the Company.
SECTION 2.11 Events Subsequent to December 31, 1996. Since December 31,
--------------------------------------
1996, there has not been any material adverse change in the assets, liabilities,
income, business, operations or prospects of the Company. Since December 31,
1996, except as set forth in Schedule II hereto or as contemplated hereby, the
Company has not (i) issued any stock, bonds or other securities, (ii) borrowed
any amount or incurred any liabilities (absolute or contingent), except current
liabilities incurred, and liabilities under contracts entered into, in the
ordinary course of business, (iii) discharged or satisfied any lien or incurred
or paid any obligation or liability (absolute or contingent other than current
liabilities shown on its balance sheet as of December 31, 1996 referred to in
Section 2.9 hereof and current liabilities incurred since that date; in the
ordinary course of business, (iv) declared or made any payment or distribution
to stockholders or purchased or redeemed any shares of its capital stock or
other securities or interests, (v) mortgaged, pledged or subjected to lien any
of its assets, tangible or intangible, other than liens of current real property
taxes not yet due and payable, (vi) sold, assigned or transferred any of its
tangible assets, except in the ordinary course of business, or canceled any
debts or claims, (vii) sold, assigned or transferred any patents, trademarks,
trade names, copyrights, trade secrets or other intangible assets, (viii) made
any changes in officer compensation, or (ix) entered into any transaction except
in the ordinary course of business.
-6-
<PAGE>
SECTION 2.12 Title to Properties. The Company has good and marketable
-------------------
title to all of its owned properties and assets, free and clear of all
mortgages, pledges, security interests, liens, charges and other encumbrances,
except for Permitted Encumbrances (as defined below). As of the Closing and
after giving effect to the transactions contemplated hereby, the Company will
have good and marketable title to all its properties and assets free and clear
of mortgages, pledges, security interests, liens, charges and other
encumbrances, except under for Permitted Encumbrances. As used herein,
"Permitted Encumbrances" means any mortgages, pledges, security interests,
liens, charges and other encumbrances (i) as described in Schedule II hereto,
-----------
(ii) liens for current taxes, assessments and other governmental charges not
overdue, (iii) mechanic's, materialmen's and similar liens which may have arisen
in the ordinary course of business and which, in the aggregate, would not be
material to the financial condition of the Company, (iv) security interests
securing indebtedness not in default for the purchase price of or lease rental
payments on property purchased or leased under capital lease arrangements in the
ordinary course of business, and (v) minor imperfections of title, if any, not
material in amount and not materially detracting from the value or impairing the
use of the property subject thereto or impairing the operations or proposed
operations of the Company.
SECTION 2.13 Taxes. The Company has filed or caused to be filed all
-----
Federal, state, local and foreign tax returns that are required to be filed and
has paid or caused to be paid all taxes shown as due on all such returns or on
any assessment received by it.
SECTION 2.14 Insurance. All policies of liability, theft, fidelity,
---------
business interruption, life, fire, product liability, workmen's compensation,
health and other forms of insurance held by the Company are valid and
enforceable policies and are outstanding and duly in force and all premiums with
respect thereto are paid to date. The amounts of coverage under such policies
of insurance for the assets and properties of the Company are adequate against
risks usually insured against by persons operating similar businesses and
operating similar properties.
SECTION 2.15 Compensation Arrangements. Except as set forth in Schedule
-------------------------
II hereto, (i) the Company is not a party to any employment or deferred
compensation agreements that require payments by the Company to any individual
in excess of $100,000, or in the aggregate, in excess of $500,000, in each case,
in any year (ii) the Company does not have any bonus, incentive or profit-
sharing plans that would require payments by the Company to any individual in an
amount equal to or exceeding $50,000 in any one year, and (iii) there are no
existing material arrangements or proposed material transactions between the
Company and any officer or director or holder of more than 5% of the capital
stock of the Company. Complete and correct copies of all written arrangements
described in the preceding sentence as in effect on the date hereof have been
delivered to Purchasers and shall be amended to the satisfaction of Purchasers
prior to the Closing.
SECTION 2.16 Securities Laws. Assuming the accuracy of the
---------------
representations and warranties of each Purchaser set forth in Section 3 below
are true and correct, the issuance, sale and delivery of the Preferred Shares to
each Purchaser on the Closing Date, under the circumstances contemplated by this
Agreement, are exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act").
-7-
<PAGE>
SECTION 2.17 Environmental Matters. The Company has complied with each and
---------------------
is not in violation of any, federal, state or local law, regulation, permit,
provision or ordinance relating to the generation, storage, transportation,
treatment or disposal of hazardous, toxic or polluting substances, except where
such noncompliance or violation would not result in any material adverse effect
on the business, operations or financial condition of the Company, or its
properties or assets. The Company has obtained and adhered to all necessary
permits and other approvals necessary to store, dispose, and otherwise handle
hazardous, toxic and polluting substances, the failure of which to obtain or
adhere to would result in any material adverse effect on the business,
operations or financial condition of the Company, or its properties or assets.
The Company has reported, to the extent required by federal, state and local
law, all past and present sites where hazardous, toxic or polluting substances,
if any, from the Company have been treated, stored or disposed. The Company has
not transported any hazardous, toxic or polluting substances or arranged for the
transportation of such substances to any location which is the subject of
federal, state or local enforcement actions or other investigations which may
lead to claims against the Company for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including, but not limited to,
claims under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended which claims would result in a material
adverse effect on the business, operations or financial condition of the
Company, or its properties or assets.
SECTION 2.18 Employee Benefit Plans.
----------------------
(a) The Company has complied and currently is in compliance, both as
to form and operation, with the applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the Internal Revenue
Codes of 1954 and/or 1986, as amended, respectively (the "Code"), with respect
to each "employee benefit plan" as defined under Section 3(3) of ERISA ("Plan")
which the Company (i) has ever adopted, maintained, established or to which the
Company has ever been required to contribute or to which the Company has ever
contributed or (ii) currently maintains or to which the Company currently
contributes or is required to contribute or (iii) currently participates in or
is required to participate in.
(b) The Company has never maintained, adopted or established,
contributed or been required to contribute to, or otherwise participated in or
been required to participate in, a "multi-employer plan" (as defined in Section
3(37) of ERISA). No amount is due or owing from the Company on account of a
"multi-employer plan" (as defined in Section 3(37) of ERISA) or on account of
any withdrawal therefrom.
(c) Notwithstanding anything else set forth herein, the Company has
not incurred any liability with respect to a Plan, including, without
limitation, under ERISA (including, without limitation, Title I or Title IV of
ERISA and other than liability for premiums due to the Pension Benefit Guaranty
Corporation), the Code or other applicable law, which has not been satisfied in
full, and no event has occurred, and there exists no condition or set of
circumstances which could result in the imposition of any liability with respect
to a Plan, including, without limitation, under ERISA (including, without
limitation, Title I or Title IV of ERISA), the Code or other applicable law with
respect to the Plan.
-8-
<PAGE>
(d) The Company has not committed itself, orally or in writing, to
(i) provide or cause to be provided to any person any payments or benefits in
addition to, or in lieu of, those payments or benefits set forth under any Plan,
or (ii) continue the payment of, or accelerate the payment of, benefits under
any Plan, except as expressly set forth thereunder.
(e) The Company has not committed itself, orally or in writing, to
provide or cause to be provided any severance or other post-employment benefit,
salary continuation, termination, disability, death, retirement, health or
medical benefit, or similar benefit to any person (including, without
limitation, any former or current employee) except as set forth under any Plan.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
------------------------------------------------
Each Purchaser severally represents and warrants to the Company that:
(a) it is an "accredited investor" within the meaning of Rule 501
under the Securities Act and was not organized for the specific purpose of
acquiring the Preferred Shares;
(b) it has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's stage of development
so as to be able to evaluate the risks and merits of its investment in the
Company and it is able financially to bear the risks thereof;
(c) it has had an opportunity to discuss the Company's business,
management and financial affairs with the Company's management;
(d) the Preferred Shares being purchased by it are being acquired for
its own account for the purpose of investment and not with a view to or for sale
in connection with any distribution thereof in violation of the Securities Act;
(e) it understands that (i) the Preferred Shares and the Conversion
Shares have not been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated
under the Securities Act, (ii) the Preferred Shares (and, upon conversion
thereof, the Conversion Shares) must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration, (iii) the Preferred Shares and Conversion Shares will bear a
legend to such effect and (iv) the Company will make a notation on its transfer
books to such effect; and
(f) if it sells any Conversion Shares pursuant to Rule 144A
promulgated under the Securities Act, it will take all necessary steps in order
to perfect the exemption from registration provided thereby, including (i)
obtaining information to enable it to establish a reasonable belief that the
purchaser is a qualified institutional buyer and (ii) advising such purchaser
that Rule 144A is being relied upon with respect to such resale.
-9-
<PAGE>
SECTION 4. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS.
-----------------------------------------------
The obligation of each Purchaser to purchase and pay for the Preferred Shares
being purchased by it on the Closing Date is, at its option, subject to the
satisfaction, on or before the Closing Date, of the following conditions:
(a) Opinion of Company's Counsel. The Purchasers shall have received
----------------------------
from Dechert Price & Rhoads, counsel for the Company, an opinion dated the
Closing Date, in substantially the form attached as Exhibit B hereto.
---------
(b) Representations and Warranties to be True and Correct. The
-----------------------------------------------------
representations and warranties contained in Section 2 shall be true, complete
and correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, and the
President and Treasurer of the Company shall have certified to such effect to
the Purchasers in writing.
(c) Performance. The Company shall have performed and complied with
-----------
all agreements contained herein required to be performed or complied with by it
prior to or at the Closing Date, and the President and Treasurer of the Company
shall have certified to the Purchasers in writing to such effect and to the
further effect that all of the conditions set forth in this Section 4 have been
satisfied.
(d) All Proceedings to be Satisfactory. All corporate and other
----------------------------------
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to the Purchasers and their counsel, and the Purchasers and
their counsel shall have received all such counterpart originals or certified or
other copies of such documents as they reasonably may request.
(e) Supporting Documents. The Purchasers and their counsel shall
--------------------
have received copies of the following documents:
(i) (A) the Charter, certified as of a recent date by the
Secretary of State of the State of Delaware, and (B) a certificate of said
Secretary dated as of a recent date as to the due incorporation and good
standing of the Company, the payment of all franchise taxes by the Company and
listing all documents of the Company on file with said Secretary.
(ii) a certificate of the Secretary or an Assistant Secretary of
the Company dated the Closing Date and certifying: (A) that attached thereto is
a true and complete copy of the By-laws of the Company as in effect on the date
of such certification; (B) that attached thereto is a true and complete copy of
all resolutions adopted by the Board of Directors or the stockholders of the
Company authorizing the execution, delivery and performance of this Agreement,
the issuance, sale and delivery of the Preferred Shares and the reservation,
issuance and delivery of the Conversion Shares, and that all such resolutions
are in full force and effect and are all the resolutions adopted in connection
with the transactions contemplated by this Agreement; (C) that the Charter has
not been amended since the date of the last amendment referred to in the
certificate delivered pursuant to clause (i)(B) above; and (D) to the incumbency
and specimen signature of each officer of the Company executing this Agreement,
the stock certificates representing the Preferred Shares and any certificate or
instrument furnished pursuant
-10-
<PAGE>
hereto, and a certification by another officer of the Company as to the
incumbency and signature of the officer signing the certificate referred to in
this clause (ii); and
(iii) such additional supporting documents and other information
with respect to the operations and affairs of the Company as the Purchasers or
their counsel reasonably may request.
(f) Charter. The Charter shall read in its entirety as set forth in
-------
Exhibit A.
- ---------
(g) By-Laws. The By-Laws shall read in their entirety as set forth
-------
in Exhibit C.
---------
(h) Transaction Agreements. The Transaction Agreements shall remain
----------------------
in full force and effect and the Company shall have obtained the necessary
consents of the parties (other than from Fisher) to the Transaction Documents in
order to enable the Purchasers to obtain the rights and benefits to the
Transaction Documents (other than the Voting Agreement and other than with
respect to 67,708 shares of Common Stock held by Fisher) as set forth in Section
2.2(c) above. The Purchasers hereby agree to be bound by the terms of the
Operative Documents, as amended as contemplated by the preceding sentence.
(i) Supplemental Voting Agreement. The Company, the Purchasers and
-----------------------------
the existing holders of the Series A Convertible Preferred Stock shall have
entered into a Supplemental Voting Agreement dated as of the date hereof in
substantially the form set forth in Exhibit D (the "Supplemental Voting
---------
Agreement").
SECTION 5. COVENANTS OF THE COMPANY.
------------------------
The Company covenants and agrees with each of the Purchasers that for so long as
any Series A Convertible Preferred Stock is outstanding:
SECTION 5.1 Financial Statements, Reports, Etc. The Company shall furnish
----------------------------------
to each Purchaser who holds at least 400,000 Preferred Shares:
(a) within ninety (90) days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company and its subsidiaries as of
the end of such fiscal year and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal year then ended, prepared in
accordance with generally accepted accounting principles and certified by a firm
of independent public accountants of recognized national standing selected by
the Board of Directors of the Company, provided that the Company's obligations
under this Section 5.1 (a) shall terminate upon (i) the registration of the
Company's securities under Section 12(b) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") or (ii3 the registration of the Company's
securities under Section 1 2(g) of the Exchange Act and the admission to listing
of such securities on the Nasdaq Stock Market;
(b) within thirty days after the end of each month and each quarter in
each fiscal year (other than the last month in each fiscal year), a consolidated
balance sheet of the Company and its subsidiaries and the related consolidated
statements of income, stockholders' equity and cash flows, unaudited but
prepared in accordance with generally accepted accounting
-11-
<PAGE>
principles and certified by the Chief Financial Officer of the Company, such
consolidated balance sheet to be as of the end of each month or quarter, as the
case may be, and such consolidated statements of income, stockholders' equity
and cash flows to be for such month or quarter, as the case may be, and for the
period from the beginning of the fiscal year to the end of such month or
quarter, as the case may be, in each case with comparative statements for the
prior fiscal year, provided that the Company's obligations under this Section
5.1 (b) shall terminate upon (i) the registration of the Company's securities
under Section 12(b) of the Exchange Act or (ii) the registration of the
Company's securities under Section 12(g) of the Exchange Act and the admission
to listing of such securities on the Nasdaq Stock Market;
(c) at the time of any delivery of each annual financial statement
pursuant to Section 5.1 (a), a certificate executed by the Chief Executive
Officer of the Company stating that such officer has caused this Agreement and
the Series A Convertible Preferred Stock to be reviewed and has no knowledge of
any default by the Company in the performance or observance of any of the
provisions of this Agreement or the Series A Convertible Preferred Stock or, if
such officer has such knowledge, specifying such default and the nature thereof,
(d) at the time of any delivery of each monthly and quarterly
statement pursuant to Section 5.1 (b), a management narrative report explaining
all material variances from forecasts and all material current developments in
staffing, marking, sales and operations;
(e) no later than sixty (60) days prior to the start of each fiscal
year, consolidated capital and operating expense budgets, cash flow projections
and income and loss projections for the Company and its subsidiaries in respect
of such fiscal year, all itemized in reasonable detail and prepared on a monthly
basis, and, promptly after preparation, any revisions to any of the foregoing;
(f) promptly following receipt by the Company, each audit response
letter, accountant's management letter and other written report submitted to the
Company by its independent public accountants in connection with an annual or
interim audit of the books of the Company or any of its subsidiaries;
(g) promptly after the commencement thereof, notice of all actions,
suits, claims, proceedings, investigations and inquiries of the type described
in Sections 2.6 or 2.8 that could materially adversely affect the Company or any
of its subsidiaries;
(h) promptly upon sending, making available or filing the same, (i)
all press releases, and (ii) all reports and financial statements that the
Company sends or makes available to its stockholders or directors or files with
the Securities and Exchange Commission; and
(i) promptly, from time to time, such other information regarding the
business, prospects, financial condition, operations, property or affairs of the
Company and its subsidiaries as such Purchaser reasonably may request.
SECTION 5.2 Reserve for Conversion Shares. The Company shall at all times
-----------------------------
reserve and keep available out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of the Preferred Shares and
otherwise complying with the terms of this Agreement, such number of its duly
authorized shares of Common Stock as shall be
-12-
<PAGE>
sufficient to effect the conversion of the Preferred Shares from time to time
outstanding or otherwise to comply with the terms of this Agreement. If at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of the Preferred Shares or otherwise to
comply with the terms of this Agreement, the Company will forthwith take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes. The Company will obtain any authorization, consent, approval or other
action by or make any filing with any court or administrative body that may be
required under applicable state securities laws in connection with the issuance
of shares of Common Stock upon conversion of the Preferred Shares.
SECTION 5.3 Corporate Existence. The Company shall maintain and, except
-------------------
as otherwise permitted by Section 5.14 cause each of its subsidiaries to
maintain, their respective corporate existence, rights and franchises in full
force and effect.
SECTION 5.4 Properties, Business, Insurance. The Company shall maintain
-------------------------------
and cause each of its subsidiaries to maintain as to their respective properties
and business, with financially sound and reputable insurers, insurance against
such casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated, which insurance shall be deemed by
the Company to be sufficient.
SECTION 5.5 Inspection, Consultation and Advice. The Company shall permit
-----------------------------------
and cause each of its subsidiaries to permit each Purchaser and such persons as
such Purchaser may designate, at such Purchaser's expense, to visit and inspect
any of the properties of the Company and its subsidiaries, examine their books
and take copies and extracts therefrom (subject to the prior execution and
delivery to the Company of a confidentiality agreement in a reasonable form
provided by the Company from time to time), discuss the affairs, finances and
accounts of the Company and its subsidiaries with their officers, employees and
public accountants (and the Company hereby authorizes said accountants to
discuss with such Purchaser and such designees such affairs, finances and
accounts), and consult with and advise the management of the Company and its
subsidiaries as to their affairs, finances and accounts, all at reasonable times
and upon reasonable notice.
SECTION 5.6 Restrictive Agreements Prohibited. Neither the Company nor
---------------------------------
any of its subsidiaries shall become a party to any agreement which by its terms
restricts the Company's performance of this Agreement, any Transaction
Agreement, the By-Laws or the Charter.
SECTION 5.7 Transactions with Affiliates. Except for transactions
----------------------------
contemplated by this Agreement or as otherwise approved by the Board of
Directors, neither the Company nor any of its subsidiaries shall enter into any
transaction with any director, officer, employee or holder of more than 5% of
the outstanding capital stock of any class or series of capital stock of the
Company or any of its subsidiaries, member of the family of any such person, or
any corporation, partnership, trust or other entity in which any such person, or
member of the family of any such person, is a director, officer, trustee,
partner or holder of more than 5% of the outstanding capital stock thereof,
except for transactions on customary terms related to such person's employment
with the Company.
-13-
<PAGE>
SECTION 5.8 Expenses of Directors. The Company shall promptly reimburse
---------------------
in full each director of the Company who is not an employee of the Company and
who was elected as a director solely or in part by the holders of Series A
Convertible Preferred Stock for all of his reasonable out-of-pocket expenses
incurred in attending each meeting of the Board of Directors of the Company or
any committee thereof
SECTION 5.9 Use of Proceeds. The Company shall use the proceeds from the
---------------
sale of the Preferred Shares solely for working capital.
SECTION 5.10 Board of Directors Meetings. The Company shall use its best
---------------------------
efforts to ensure that meetings of its Board of Directors are held at least four
times each year and at least once each quarter. In addition to the rights of
the Purchasers set forth in the Supplemental Voting Agreement, the Company shall
permit each Purchaser owning at least 400,000 Preferred Shares to have one
representative attend each meeting of the Board of Directors of the Company and
each meeting of any committee thereof and to participate in all discussions
during each such meeting. The Company shall send to each Purchaser and each
such representative the notice of the time and place of such meeting in the same
manner and at the same time as it shall send such notice to its directors or
committee members, as the case may be; provided, however, that the Company shall
-------- -------
have no obligations with respect to notice or permitted attendance of a
nondirector Purchaser's representative under this Section 5.10 in the event of
any meeting of the Board of Directors, or portion thereof, as to which the Board
shall reasonably conclude (and shall have notified each Purchaser of such
conclusion) that the existence or potential existence of a significant conflict
of interest or the necessity of confidentiality in the best interests of the
Company and the stockholders precludes such notice or attendance. As a
condition to attendance at any Board of Directors meeting, each Purchaser agrees
that such Purchaser's representative may be required to sign and deliver to the
Company a confidentiality agreement in a reasonable form provided by the Company
from time to time. The Company shall also provide to each Purchaser and
designee copies of all notices, reports, minutes and consents at the time and in
the manner as they are provided to the Board of Directors or committee, except
for information reasonably designated as proprietary information by the Board of
Directors.
SECTION 5.11 By-Laws. The Company shall at all times maintain provisions
-------
in its Bylaws and/or Charter indemnifying all directors and officers against
liability (and providing for expense reimbursement thereof to the extent
contained therein on the date hereof) and absolving all directors from liability
to the Company and its stockholders to the maximum extent permitted under the
laws of the State of Delaware.
SECTION 5.12 Performance of Contracts. The Company shall not amend,
------------------------
modify, terminate, waive or otherwise alter, in whole or in part, any of the
Transaction Agreements with any person without the written consent of those
members of the Company's Board of Directors elected solely by the holders of
Series A Preferred Stock, if any.
SECTION 5.13 Vesting of Reserved Employee Shares. The Company shall not
-----------------------------------
grant to any of its directors, employees or consultants options to purchase
Common Stock which will become exercisable at a rate in excess of 20% per annum
from the date of such grant without the unanimous written consent of those
members of the Company's Board of Directors elected solely by the holders of
Series A Convertible Preferred Stock.
-14-
<PAGE>
SECTION 5.14 Activities of Subsidiaries. Without the unanimous consent of
--------------------------
the Company's Board of Directors (or unanimous consent of a special committee of
the Board of Directors appointed by unanimous consent of the whole Board of
Directors): (i) the Company shall not permit any subsidiary to consolidate or
merge into or with or sell or transfer all or substantially all its assets,
except that any wholly-owned subsidiary may (A) consolidate or merge into or
with or sell or transfer assets to any other wholly-owned subsidiary, or (B)
merge into or sell or transfer assets to the Company; (ii) the Company shall not
sell or otherwise transfer any shares of capital stock of any subsidiary, except
to the Company or any wholly-owned subsidiary, or permit any subsidiary to
issue, sell or otherwise transfer any shares of its capital stock or the capital
stock of any subsidiary, except to the Company or any wholly-owned subsidiary;
or (iii) the Company shall not permit any subsidiary to purchase or set aside
any sums for the purchase of, or pay any dividend or make any distribution on,
any shares of its stock, except for dividends or other distributions payable to
the Company or any wholly-owned subsidiary.
SECTION 5.15 Compliance with Laws. The Company shall comply, and cause
--------------------
each subsidiary to comply, in all material respects with all applicable laws,
rules, regulations and orders.
SECTION 5.16 Keeping of Records and Books of Account. The Company shall
---------------------------------------
keep, and cause each subsidiary to keep, adequate and accurate records and books
of account in which complete entries will be made in accordance with generally
accepted accounting principles consistently applied, reflecting all financial
transactions of the Company and such subsidiary, and in which, for each fiscal
year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
SECTION 5.17 Change in Nature of Business. The Company shall not make, or
----------------------------
permit any subsidiary to make, any material change in the nature of its business
as contemplated on the date hereof.
SECTION 5.18 U.S. Real Property Interest Statement. The Company shall
-------------------------------------
provide prompt written notice to each Purchaser following any "determination
date" (as defined in Treasury Regulation Section 1.897-2(c)(i)) on which the
Company becomes a United States real property holding corporation. In addition,
upon a written request by any Purchaser, the Company shall provide such
Purchaser with a written statement informing the Purchaser whether such
Purchaser's interest in the Company constitutes a U.S. real property interest.
The Company's determination shall comply with the requirements of Treasury
Regulation Section 1.897-2(h)(1) or any successor regulation, and the Company
shall provide timely notice to the Internal Revenue Service, in accordance with
and to the extent required by Treasury Regulation Section 1.897-2(h)(2) or any
successor regulation, that such statement has been made. The Company's written
statement to any Purchaser shall be delivered to such Purchaser within ten (10)
days of such Purchaser's written request therefor. The Company's obligation to
furnish a written statement pursuant to this Section 5.18 shall continue
notwithstanding the fact that a class of the Company's stock may be regularly
traded on an established securities market.
SECTION 5.19 Rule 144A Information. The Company shall, at all times
---------------------
during which it is neither subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, nor
-15-
<PAGE>
exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, provide
in writing, upon the written request of any Purchaser or a prospective buyer of
Preferred Shares or Conversion Shares from any Purchaser, all information
required by Rule 144A(d)(4)(i) of the General Regulations promulgated by the
Commission under the Securities Act ("Rule 144A Information"). The Company also
shall, upon the written request of any Purchaser, cooperate with and assist such
Purchaser or any member of the National Association of Securities Dealers, Inc.
PORTAL system in applying to designate and thereafter maintain the eligibility
of the Preferred Shares or Conversion Shares, as the case may be, for trading
through PORTAL. The Company's obligations under this Section 5.19 shall at all
times be contingent upon the relevant Purchaser's obtaining from the prospective
buyer of Preferred Shares or Conversion Shares a written agreement to take all
reasonable precautions to safeguard the Rule 144A Information from disclosure to
anyone other than a person who will assist such buyer in evaluating the purchase
of any Preferred Shares or Conversion Shares.
(a) Termination of Covenants. The covenants set forth in Sections
------------------------
5.18 and 5.19 shall terminate and be of no further force or effect as to each of
the Purchasers when such Purchaser no longer holds any shares of capital stock
of the Company. All of the other covenants set forth in this Section 5 shall
terminate and be of no further force or effect as to a Purchaser when such
Purchaser owns less than 50,000 Preferred Shares (appropriately adjusted to
reflect stock splits, stock dividends, combinations of shares and the like with
respect to the Series A Convertible Preferred Stock).
SECTION 6. SURVIVAL AND INDEMNIFICATION
----------------------------
SECTION 6.1 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of the Company contained in Section 2 hereof
shall survive the Closing, but shall expire upon the earlier of (i) two (2)
years from the Closing Date or (ii) three (3) months from the date that a
Purchaser reasonably knew of a breach of a representation, warranty or covenant
of the Company, except (a) with respect to and to the extent of any claim of
which written notice specifying, in reasonable detail, the nature and amount of
the claim has been given by a Purchaser to the Company prior to such expiration
and (b) the representations and warranties contained in Sections 2.2(a), 2.2(b)
and 2.4 shall survive indefinitely.
SECTION 6.2 Indemnification by the Company.
------------------------------
(a) Subject to Section 6.1, the Company hereby agrees to indemnify
and hold each Purchaser harmless from and against, and agrees promptly to defend
each Purchaser from and reimburse each Purchaser for, any and all actions,
suits, proceedings, losses, damages, costs, expenses, liabilities, obligations,
and claims of any kind or nature whatsoever which may be incurred by or asserted
against or involve a Purchaser, including, without limitation, reasonable
attorneys' fees and other legal costs and expenses ("Losses"), arising out of or
in any way relating to (i) any breach by the Company in any material respect of
any of the Company's representations or warranties set forth in Section 2; or
(ii) any failure by the Company to carry out, perform, satisfy and discharge any
covenants, agreements, undertakings, liabilities or obligations to be performed
by it pursuant to the terms of this Agreement of any of the documents delivered
by the Company pursuant to this Agreement.
-16-
<PAGE>
(b) In the event of a claim against a Purchaser arises to which the
indemnity of Section 6.2(a) of this Agreement is applicable, notice shall be
given promptly by such Purchaser to the Company and the Company shall have the
right to control all settlements (unless such Purchaser agrees to assume the
cost of settlement) and to select lead counsel to defend any and all such claims
at the sole cost and expense of the Company. A Purchaser asserting a claim may
select counsel to participate in any such defense at the sole cost and expense
of such Purchaser. In connection with any such claim, action, or proceeding,
the parties shall cooperate with each other and provide each with access to
relevant books and records in their possession.
(c) The Purchasers may not make any claim for indemnification as to
any matter disclosed as an exception in Schedule II.
-----------
SECTION 7. MISCELLANEOUS
-------------
SECTION 7.1 Expenses. Each party hereto will pay its own expenses in
--------
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated provided, however, the Company will reimburse
the Purchasers for legal fees and expenses incurred in connection with this
transaction, up to a maximum of $15,000.
SECTION 7.2 Survival of Agreements. Except as otherwise specified herein,
----------------------
all covenants, agreements, representations and warranties made herein or in the
Transaction Agreements or any certificate or instrument delivered to the
Purchasers pursuant to or in connection with this Agreement shall survive the
execution and delivery of this Agreement and the issuance, sale and delivery of
the Preferred Shares, and the issuance and delivery of the Conversion Shares,
and all statements contained in any certificate or other instrument delivered by
the Company hereunder or thereunder or in connection herewith or therewith shall
be deemed to constitute representations and warranties made by the Company.
SECTION 7.3 Brokerage. Each party hereto will indemnify and hold harmless
---------
the others against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.
SECTION 7.4 Parties in Interest. All representations, covenants and
-------------------
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants and agreements
benefiting the Purchasers shall inure to the benefit of any and all subsequent
holders from time to time of Preferred Shares or Conversion Shares.
SECTION 7.5 Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing and shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or sent by
telecopier or telex, addressed as follows:
(a) if to the Company, c/o Falcon Technology Partners, L.P., 600
Dorset Road, Devon, PA 19333 Attention: President, with a copy to: Henry Nassau,
Esq., Dechert, Price
-17-
<PAGE>
& Rhoads, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia, PA 19103-
2793 (Facsimile No. (215) 994-2222); and
(b) if to any Purchaser, at the address of such Purchaser set forth
in Schedule I
----------
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 7.6 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware.
SECTION 7.7 Entire Agreement. This Agreement, including the Schedules and
----------------
Exhibits hereto, constitutes the sole and entire agreement of the parties with
respect to the subject matter hereof. All Schedules and Exhibits hereto are
hereby incorporated herein by reference.
SECTION 7.8 Purchasers' Representations and Warranties Several and Not
----------------------------------------------------------
Joint. The Company acknowledges and agrees that the representations and
- -----
warranties of each of the Purchasers set forth in Section 3 hereof are made
severally and not jointly, and any liability of a Purchaser for breach of such
representations and warranties made by such Purchaser shall be the sole
liability and obligation of such Purchaser and no other Purchaser shall be held
liable for such breach.
SECTION 7.9 Further Assurances. Each party hereto shall cooperate and
------------------
take such action as may be reasonably requested by another party in order to
carry out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
SECTION 7.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 7.11 Amendments. This Agreement may not be amended or modified,
----------
and no provisions hereof may be waived, except with the written consent of the
Company and the holders of Preferred Shares which are convertible into a number
of shares of Common Stock, and/or shares of Common Stock issued upon conversion
of Preferred Shares, constituting at least two-thirds of the outstanding shares
of Common Stock issued or issuable upon conversion of the Preferred Shares.
SECTION 7.12 Severability. If any provision of this Agreement shall be
------------
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
SECTION 7.13 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
SECTION 7.14 Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
-18-
<PAGE>
(a) "person" shall mean an individual, corporation, trust,
partnership, joint venture, unincorporated organization, government agency or
any agency or political subdivision thereof, or other entity.
(b) "subsidiary" shall mean, as to the Company, (i) any corporation of
which more than 50% of the outstanding stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) or (ii) any partnership, limited liability company or similar
entity of which more than 50% of the ownership interests, or any percentage of
general partner or managing member interest, is at the time directly or
indirectly owned by the Company, or by one or more of its subsidiaries, or by
the Company and one or more of its subsidiaries.
-19-
<PAGE>
IN WITNESS WHEREOF, the Company, and the Purchasers have executed this
Agreement as of the day and year first above written.
GENOMICA CORPORATION
By: /s/ James L. Rathmann
------------------------------------------
James L. Rathmann
President
[Corporate Seal]
PURCHASERS:
FALCON TECHNOLOGY II PARTNERS, L.P.
By: FALCON TECHNOLOGY MANAGEMENT CORPORATION,
general partner
By: /s/ James L. Rathmann
------------------------------------------
James L. Rathmann
President
ARCH VENTURE FUND III, L.P.
By: ARCH VENTURE PARTNERS, L.L.C., general
partner
By: /s/ Robert Nelson
------------------------------------------
Managing Director
BOULDER VENTURES, L.P.
By: BV PARTNERS, L.L.C.
General Partner
By: /s/ Kyle Lefkoff
------------------------------------------
Manager
-20-
<PAGE>
PEGASUS TECHNOLOGY VENTURES, L.L.C.
By: /s/ Kenneth Collins, Manager
------------------------------------------
Kenneth Collins, Manager
THE CARUTHERS FAMILY, L.L.C.
By: /s/ Marvin H. Caruthers, Manager
------------------------------------------
Marvin H. Caruthers, Manager
-21-
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Aggregate Purchase Price
Number of Preferred for Preferred Shares at
Purchaser Shares to be Purchased $.6024 per share
- --------- ---------------------- ------------------------
<S> <C> <C>
Falcon Technology Partners, L.P. 1,660,050 $1,000,000
ARCH Venture Fund III, L.P. 830,025 $ 500,000
Boulder Ventures, L.P. 581,017 $ 350,000
Pegasus Technology Ventures, L.L.C. 124,504 $ 75,000
The Caruthers Family, L.L.C. 124,504 $ 75,000
3,320,100 2,000,000
</TABLE>
-22-
<PAGE>
SCHEDULE II
Section 2.8(a) Pursuant to a certain License Agreement between the Company and
Cold Spring Harbor Laboratory dated as of January 6, 1996, the Company is
licensee of the Patent Rights, Licensed Copyrights and Technical Information (as
such terms are defined in such agreement), subject to the rights of the Cold
Spring Harbor Laboratory and the federal government as set forth therein.
Section 2.15 Except for the Transaction Documents (as defined in the Agreement
to which this Schedule II is attached), there are no agreements with officers,
directors or 5% holders except for:
1. The License Agreement referred to in Section 2. 8(a) of this Schedule
II; and
2. A Letter Agreement dated October 28, 1996 between the Company and Dr.
Thomas Marr, whereby Dr. Marr will become Chief Executive Officer of the Company
following completion of the transactions contemplated by this Agreement.
-23-
<PAGE>
AMENDMENT TO SERIES A
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
THIS AMENDMENT TO SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
(the "Amendment") is entered into as of the ____ day of June 1997, by and among
Genomica Corporation, a Delaware corporation (the "Company"), and the persons
and entities listed on the Schedule of Purchasers attached hereto (the
"Purchasers").
WHEREAS, the Purchasers are parties to that certain Series A Convertible
Preferred Stock Purchase Agreement by and among the Company and such Purchasers,
dated as of February 28, 1997 (the "Agreement"); and
WHEREAS, the Company and the Purchasers desire to amend that Agreement.
NOW THEREFORE, in consideration of the foregoing, the Agreement is hereby
amended as follows:
1. Section 1.2 Closing This paragraph is amended in its entirety to read
-------
as follows:
SECTION 1.2 Closing
-------
(a) Closing. The closing of the purchase and sale of Preferred Shares
hereunder (the "Closing") shall take place at the offices of Dechert Price
& Rhoads, Philadelphia, at 10:00 a.m., New York time, on February 28, 1997
(the "First Closing Date"), or at such other location, date and time as may
be agreed upon between the Purchasers and the Company. At the Closing, the
Company shall issue and deliver to each Purchaser a stock certificate or
certificates in definitive form, registered in the name of such Purchaser,
representing the Preferred Shares being purchased by it at the Closing. As
payment in full for the Preferred Shares being purchased by it under this
Agreement, and against delivery of the stock certificate or certificates
therefor as aforesaid, on the Closing Date each Purchaser shall (i)
transfer to the account of the Company by wire transfer the amount set
forth opposite the name of such Purchaser under the heading "Aggregate
Purchase Price for Preferred Shares" on Schedule I, (ii) if applicable,
----------
deliver to the Company for cancellation promissory notes issued by the
Company in the amount of such sum or (iii) delivery or transfer such sum to
the Company by any combination of such methods of payment. Notwithstanding
the preceding sentence, a Purchaser may give written notice to the Company
not later than (2) business days prior to the Closing Date, that such
Purchaser desires to deliver its consideration at such time not later than
sixty (60) days following the Closing Date. Upon delivery of such notice,
such Purchaser shall be obligated, without any further condition, to
deliver its consideration no later than the date specified in the notice.
The Company shall not be obligated to deliver any stock certificates and
such Purchaser shall have no rights as a stockholder in the Company until
such Purchaser delivers its consideration to the Company.
1.
<PAGE>
(b) Purchases and Sales Subsequent to the Closing. If less than all of the
Shares are sold on the First Closing Date, subject to the terms and conditions
of this Agreement, the Company may sell, on or before June 29, 1997 up to the
balance of the authorized but unissued Shares to such persons as the Company may
determine at the same price per share as the Shares purchased and sold on the
First Closing Date. Any such sale shall be upon the same terms and conditions as
those contained herein, may occur on one or more occasions and such persons or
entities shall become parties to this Agreement and shall have the rights and
obligations of a Purchaser hereunder. Such persons or entities may become
parties to such agreements (i) by appending additional signature pages to such
agreements containing their signatures and (ii) by appending additional pages to
or revising the Schedule I of each such agreement appropriately. In the event
there is more than one Closing, the term "Closing" shall apply to each such
Closing unless otherwise specified and the term "Shares" shall apply to all
shares of the Company's Series A Convertible Preferred Stock sold and issued at
each such closing.
2. Section 4(a) is amended to read as follows:
(a) Opinion of Company's Counsel. The Purchasers on First Closing Date
----------------------------
shall have received from Dechert Price & Rhoads, counsel for the Company, an
opinion dated the First Closing Date, in substantially the form attached as
Exhibit B hereto. Subsequent Purchasers shall not receive an opinion from
counsel for the Company.
3. Governing Law. This Amendment shall be governed by and construed under the
-------------
laws of the State of Colorado as applied to agreements among Colorado residents,
made and to be performed entirely within the State of Colorado.
4. Counterparts. This Amendment 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. Continuing Effect. The Series A Convertible Preferred Stock Purchase
-----------------
Agreement, as amended hereby, shall remain in full force and effect.
2.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment to be effective as
of June __, 1997.
Gemonica Corporation, a Delaware corporation
By: /s/ James Rathmann
-----------------------------------------
James Rathmann, President
Falcon Technology II Partners, L.P.
By: Falcon Technology Management
Corporation, general partner
By: /s/ James Rathmann
-----------------------------------------
James Rathmann, President
Arch Venture Fund III, L.P.
By: Arch Venture Partners, L.L.C., general
partner
By: /s/ Robert Nelson
-----------------------------------------
Managing Director
Boulder Ventures, L.P.
By: BV Partners, L.L.C., general partner
By: /s/ Kyle Lefkoff
-----------------------------------------
Kyle Lefkoff, Manager
Pegasus Technology Ventures, L.L.C
By: /s/ Kenneth Collins
-----------------------------------------
Kenneth Collins, Manager
The Caruthers Family, L.L.C.
By: /s/ Marvin H. Caruthers
-----------------------------------------
Marvin H. Caruthers, Manager
3.
<PAGE>
Prior Stockholders:
Falcon Technology Partners, L.P.
By: /s/ James Rathmann
--------------------------------------
James Rathmann, General Partner
Harris & Harris Group, Inc.
By: /s/ David C. Johnson, Jr.
--------------------------------------
David C. Johnson, Jr., Executive Vice
President
4.
<PAGE>
SECOND AMENDMENT TO SERIES A
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Amendment to the Series A Convertible Preferred Stock Purchase
Agreement (the "Second Amendment") is entered into as of the 6th day of October,
1997, by and among Genomica Corporation, a Delaware corporation (the "Company")
and the holders of shares of Series A Convertible Preferred Stock (individually,
a "Purchaser" and collectively, the "Purchasers").
Whereas, the Purchasers are parties to that certain Series A
Convertible Preferred Stock Purchase Agreement by and among the Company and such
Purchasers, dated as of February 28, 1997, as amended (the "Purchase
Agreement"); and
Whereas, the Company and the Purchasers desire to amend the Purchase
Agreement.
Now Therefore, in consideration of the foregoing, the Purchase
Agreement is hereby amended and restated as follows:
1. Subsection (b) of Section 1.2 is amended and restated to read in its
entirety as follows:
"(b) Purchases and Sales Subsequent to the Closing. If less than all
of the Shares are sold on the First Closing Date and the closing on June 14,
1997 (the "Second Closing Date"), subject to the terms and conditions of this
Agreement, the Company may sell, on or before October 31, 1997, up to the
balance of the authorized but unissued Shares to such persons as the Company may
determine at the same price per share as the Shares purchased and sold on the
First and Second Closing Dates. Any such sale shall be upon the same terms and
conditions as those contained herein, may occur on one or more occasions and
such persons or entities shall become parties to the Agreement and the Second
Amendment hereto dated as of October 6, 1997 (the "Second Amendment") and shall
have the rights and obligations of a Purchaser hereunder. Such persons or
entities may become parties to this Agreement (i) by appending additional
signature pages to the Second Amendment containing their signatures and (ii) by
appending additional pages to or revising the Schedule I of this Agreement
appropriately pursuant to the Second Amendment. In the event there is more than
one closing, the term "Closing" shall apply to each such closing unless
otherwise specified and the term "Shares" shall apply to all shares of the
Company's Series A Convertible Preferred Stock sold and issued at each such
closing."
2. Section 2.2(a) is amended and restated to read in its entirety as follows:
"(a) The execution and delivery by the Company of the Second
Amendment, the Second Amendment dated as of October 6, 1997 (the "Second Voting
Amendment") to the Supplemental Voting Agreement (as hereinafter defined), the
Amendment dated as of October 6, 1997 (the "Registration Rights Amendment") to
the Registration Rights Agreement (as hereinafter defined), and the Series A
Rights Agreement dated as of October 6, 1997 (the "Series A Rights Agreement")
(collectively, the "October Series A Documents") and the performance by the
Company of its obligations under this Agreement and under the Registration
1.
<PAGE>
Rights Agreement, as amended to date, the Supplemental Voting Agreement, as
amended to date, and the Series A Rights Agreement, the issuance, sale and
delivery of the Preferred Shares and the issuance and delivery of the Conversion
Shares have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Restated Certificate of Incorporation of the Company, as amended
(the "Charter") or the By-laws of the Company (the "By-Laws"), as amended, or
any provision of any indenture, agreement or other instrument to which the
Company, any of its subsidiaries or any of their respective properties or assets
is bound, or conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien, charge,
restriction, claim or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company or any of its subsidiaries. To the best of
the Company's knowledge, the execution, delivery and performance of this
Agreement does not violate, conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default by any other party under
any other indenture, agreement or instrument."
3. Section 2.4 is amended and restated to read in its entirety as follows:
"SECTION 2.4 Authorized Capital Stock. The authorized capital stock of the
------------------------
Company consists of (i) 18,000,000 shares of Preferred Stock, $.001 par value
(the "Preferred Stock"), all of which have been designated Series A Convertible
Preferred Stock, and (ii) 22,000,000 shares of Common Stock. Immediately prior
to the Closing, 6,723,500 shares of Series A Convertible Preferred Stock and
2,747,308 shares of Common Stock will be validly issued and outstanding, fully
paid and nonassessable with no personal liability attaching to the ownership
thereof, and 6,723,500 shares of Common Stock reserved for issuance upon
conversion of the Series A Preferred Stock. Immediately after giving effect to
the Closing, the stockholders of record and holders of subscriptions, warrants,
options, convertible securities, and other rights (contingent or other) to
purchase or otherwise acquire equity securities of the Company, and the number
of shares of Common Stock and the number of such subscriptions, warrants,
options, convertible securities, and other such rights held by each, will be as
set forth in the attached Schedule III. The designations, powers, preferences,
rights, qualifications, limitations and restrictions in respect of each class
and series of authorized capital stock of the Company are as set forth in the
Charter, a copy of which is attached as Exhibit A, and all such designations,
powers, preferences, rights, qualifications, limitations and restrictions are
valid, binding and enforceable and in accordance with all applicable laws.
Except as set forth in the attached Schedule III, (i) no person owns of record
or is known to the Company to own beneficially any share of Common Stock, (ii)
no subscription, warrant, option, convertible security, or other right
(contingent or other) to purchase or otherwise acquire equity securities of the
Company is authorized or outstanding and (iii) except as provided by this
Agreement and the Charter, there is no commitment by the Company to issue
shares, subscriptions, warrants, options, convertible securities, or other such
rights or to distribute to holders of any of its equity securities any evidence
of indebtedness or asset. Except as provided for in the Charter, the Company has
no obligation (contingent or other) to purchase, redeem or otherwise acquire any
of its equity securities or any interest therein or to pay any dividend or make
any other distribution in respect thereof. Except as provided for in the
Charter, and the agreements set forth on
2.
<PAGE>
Schedule II, there are no voting trusts or agreements, pledge agreements, buy-
sell agreements, rights of first refusal, preemptive rights or proxies relating
to any securities of the Company or any of its subsidiaries to which the Company
or any of its subsidiaries or, to the Company's knowledge, any other person or
entity, is a party. All of the outstanding securities of the Company were issued
in compliance with all applicable Federal and state securities laws."
4. Sections 2.9, 2.10, 2.11, 2.12, 2.13 and 2.15 are hereby amended and
restated to read in their entirety as follows:
"SECTION 2.9 Financial Statements; Undisclosed Liabilities. The Company
---------------------------------------------
has furnished to the Purchasers the unaudited consolidated balance sheet of the
Company as of December 31, 1996 and August 31, 1997 and the related unaudited
consolidated statements of operations, shareholders' equity (net capital
deficiency), and cash flows of the Company for the respective twelve and eight
month periods then ended, certified by the principal financial officer of the
Company. Such financial statements are complete and correct, subject to final
year-end and audit adjustments, have been prepared in accordance with generally
accepted accounting principles, consistently applied ("GAAP"), and fairly
present in all material respects the consolidated financial position of the
Company as of such respective dates, and the consolidated results of its
operations and cash flows for the respective periods then ended. To the best
knowledge of the Company, as of August 31, 1997, the Company had no liability or
obligation of a nature required to be set forth on balance sheet according to
GAAP, except to the extent reflected as a liability on the financial statements
described in this Section 2.9."
"SECTION 2.10 Litigation. Other than as set forth on Schedule 2.10
----------
hereto, there are no (nor to the Company's knowledge is there any reasonable
basis for any) (a) actions, suits, proceedings or investigations at law or in
equity or by or before any governmental instrumentality or other agency now
pending or to the Company's knowledge, threatened against or affecting the
Company, or (b) judgments, decrees, injunctions or orders of any court,
governmental department, commission, agency, instrumentality or arbitrator
against or affecting the Company."
"SECTION 2.11 Events Subsequent to August 31, 1997. Since August 31,
------------------------------------
1997, there has not been any material adverse change, whether individually or in
the aggregate, in the assets, liabilities, income, business, operations or
prospects of the Company. Since August 31, 1997, except as set forth in
Schedule II hereto or as contemplated hereby, the Company has not (i) issued any
stock, bonds or other securities, (ii) borrowed any amount or incurred any
liabilities (absolute or contingent), including guarantees, except current
liabilities incurred, and liabilities under contracts entered into, in the
ordinary course of business, (iii) discharged or satisfied any lien or incurred
or paid any obligation or liability (absolute or contingent) other than current
liabilities shown on its balance sheet as of August 31, 1997 referred to in
Section 2.9 hereof and current liabilities incurred since that date in the
ordinary course of business, (iv) declared or made any payment or distribution
to stockholders or purchased or redeemed any shares of its capital stock or
other securities or interests, (v) mortgaged, pledged or subjected to lien any
of its assets, tangible or intangible, other than liens of current real property
taxes not yet due and payable, (vi) sold, assigned or transferred any of its
tangible assets, except in the
3.
<PAGE>
ordinary course of business, or canceled any debts or claims, (vii) sold,
assigned or transferred any patents, trademarks, trade names, copyrights, trade
secrets or other intangible assets, (viii) made any changes in officer
compensation, or (ix) entered into any transaction except in the ordinary course
of business."
"SECTION 2.12 Title to Properties. The Company has good and marketable
-------------------
title to all of its owned properties and assets, free and clear of all
mortgages, pledges, security interests, liens, charges and other encumbrances,
except for Permitted Encumbrances (as defined below). As of the Closing and
after giving effect to the transactions contemplated hereby, the Company will
have good and marketable title to all its properties and assets free and clear
of mortgages, pledges, security interests, liens, charges and other
encumbrances, except under for Permitted Encumbrances. As used herein,
"Permitted Encumbrances" means any mortgages, pledges, security interests,
liens, charges and other encumbrances (i) as described in Schedule II hereto,
(ii) liens for current taxes, assessments and other governmental charges not
overdue, (iii) mechanic's, materialmen's and similar liens which may have arisen
in the ordinary course of business and which, in the aggregate, would not be
material to the financial condition of the Company, (iv) security interests
securing indebtedness not in default for the purchase price of or lease rental
payments on property purchased or leased under capital lease arrangements in the
ordinary course of business, and (v) minor imperfections of title, if any, not
material in amount and not materially detracting from the value or impairing the
use of the property subject thereto or impairing the operations or proposed
operations of the Company. The Company is in compliance with all of its leases
and, to its knowledge, holds a valid leasehold interest in all of its properties
free and clear of all liens, charges and other encumbrances."
"SECTION 2.13 Taxes. The Company has timely filed all tax returns
-----
(federal, state and local) required to be filed by it. All taxes shown to be
due and payable on such returns, any assessments imposed, and to the Company's
knowledge all other taxes due and payable by the Company on or before the
Closing have been paid or will be paid prior to the time they become delinquent.
The Company has not been advised (i) that any of its returns, federal, state or
other, have been or are being audited as of the date hereof, or (ii) of any
deficiency in assessment or proposed judgment to its federal, state or other
taxes. The Company has no knowledge of any liability of any tax to be imposed
upon its properties or assets as of the date of this Agreement that is not
adequately provided for."
"SECTION 2.15 Compensation Arrangements. Except as set forth in Schedule
-------------------------
II hereto, (i) the Company is not a party to any employment or deferred
compensation agreements that require payments by the Company to any individual
in excess of $100,000, or in the aggregate, in excess of $500,000, in each case,
(ii) the Company does not have any bonus, incentive or profit-sharing plans that
would require payments by the Company to any individual in an amount equal to or
exceeding $50,000 in any one year, and (iii) there are no existing material
arrangements or proposed material transactions between the Company and any
officer or director or holder of more than 5% of the capital stock of the
Company. Complete and correct copies of all written arrangements described in
the preceding sentence as in effect on the date hereof have been delivered to
Purchasers and shall be amended to the satisfaction of Purchasers prior to the
Closing."
4.
<PAGE>
5. The following Sections 2.19 and 2.20 shall be added to read as follows:
"SECTION 2.19 Compliance with Other Instruments. The Company is not in
---------------------------------
violation or default of any provision of the Charter or By-laws or of any
instrument, judgment, order, writ, decree, or contract to which it is a party or
by which it is bound or, to its knowledge, of any provision of federal or state
statute, rule or regulation, license, or permit applicable to the Company which
would have a material adverse effect on the Company. The Company does not have
any knowledge of any termination or material breach or anticipated termination
or material breach by the other parties to any material contract or commitment
to which it is a party or to which any of its assets is subject. To the
Company's knowledge, there are no warranty claims or other uninsured claims
against the Company under completed contracts which might involve a material
monetary liability which is not reserved against in the Financial Statements."
"SECTION 2.20 Disclosure/Business Plan. The Company has fully provided
------------------------
each Investor with all the information which such Investor has requested for
deciding whether to purchase the Series A Preferred Stock sold hereunder and all
information which the Company believes is reasonably necessary to enable such
Investor to make such decision. Neither this Agreement, the Registration Rights
Agreement, the Voting Agreement, the Consent and Amendment Agreement dated as of
February 28, 1997, nor any other statements or certificates made or delivered in
connection herewith, contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements herein or therein not
misleading."
6. Section 4(a) shall be amended and restated to read as follows:
"(a) Opinion of Company's Counsel. Invesco shall have received from Cooley
----------------------------
Godward LLP, counsel for the Company, an opinion dated as of the date of the
Closing, in substantially the form attached hereto as Exhibit B."
7. New Sections 4(j) and 4(k) shall be added to read as follows:
"(j) Minimum Sale. With respect to the October 1997 Closing, the Company
------------
shall have received subscriptions to invest at least $3,000,000 in shares of the
Company's Series A Convertible Preferred Stock at such Closing.
"(k) Execution of Agreements; Filing of Certificate. The October Series A
----------------------------------------------
Documents shall be executed by the parties thereto and the Certificate of
Amendment to the Charter to be filed in connection with the October 1997 Closing
shall be filed with the Secretary of State of Delaware."
8. The first sentence of Section 5 shall be amended and restated to read in
its entirety as follows:
"The Company covenants and agrees with each of the Purchasers that, until
the completion of a firmly underwritten public offering of the Company's Common
Stock at a price of at least $2.50 per share and which raises at least
$5,000,000 of gross proceeds to the Company, for so long as any Series A
Convertible Preferred Stock is outstanding:"
5.
<PAGE>
9. Section 6.1 shall be amended and restated to read in its entirety as
follows:
"SECTION 6.1 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of the Company contained in Section 2 hereof
shall survive the Closing, but shall expire upon the earlier of (i) two (2)
years from the Closing Date or (ii) three (3) months from the date that a
Purchaser learned of a breach of a representation, warranty or covenant of the
Company, except (a) with respect to and to the extent of any claim of which
written notice specifying, in reasonable detail, the nature and amount of the
claim has been given by a Purchaser to the Company prior to such expiration and
(b) the representations and warranties contained in Sections 2.2(a), 2.2(b) and
2.4 shall survive indefinitely.
10. Section 7.1 shall be amended and restated to read in its entirety as
follows:
"SECTION 7.1 Expenses. Each party hereto will pay its own expenses in
--------
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated; provided, however, that the Company will
reimburse the reasonable fees and expenses of Freeborn and Peters, special
counsel to Invesco Global Health Sciences Fund, in an aggregate amount not to
exceed $7,500."
11. Section 7.5 shall be amended and restated to read in its entirety as
follows:
"SECTION 7.5 Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing and shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or sent by
telecopier or telex, addressed as follows:
(a) if to the Company, 4001 Discovery Drive, Boulder, Colorado 80303,
Attention: President, with a copy to James C. T. Linfield, 2595 Canyon
Boulevard, Suite 250, Boulder, Colorado 80302; and
(b) if to any Purchaser, at the address of such Purchaser set forth
in Schedule I,
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. Such notice shall be
effective upon receipt, if hand delivered, five days after deposit in a U.S.
post office box if mailed, or upon confirmation of receipt if sent by telecopier
or telex.
12. Schedule I and the signature pages to the Purchase Agreement and the
Amendment are hereby amended by appending thereto the subscriptions or
additional subscriptions (as the case may be) set forth in the Addendum to
Schedule I attached hereto and the Closing Signature Pages attached hereto,
respectively.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6.
<PAGE>
In Witness Whereof, the parties have executed this Amendment to be
effective as of the 6th day of October, 1997.
Genomica Corporation, a Delaware
corporation
By: /s/ Thomas G. Marr
_______________________________
Dr. Thomas G. Marr, President
Purchasers:
Falcon Technology II Partners, L.P.
By:/s/ James Rathmann
________________________________
James Rathmann, General Partner
Arch Venture Fund III, L.P.
By: Arch Venture Partners, L.L.C.,
general partner
By: /s/ Steve Lazarus
________________________________
Managing Member
Boulder Ventures, L.P.
By: BV Partners, L.L.C., general partner
By: /s/ Kyle Lefkoff
________________________________
Kyle Lefkoff, Manager
Pegasus Technology Ventures, L.L.C.
By: /s/ Kenneth Collins
________________________________
Kenneth Collins, Manager
Second Amendment to Series A Stock Purchase Agreement
<PAGE>
The Caruthers Family, L.L.C.
By: /s/ Marvin H. Caruthers
______________________________
Marvin H. Caruthers, Manager
Frank Bonsal
__________________________________
Frank Bonsal
Second Amendment to Series A Stock Purchase Agreement
<PAGE>
Genomica Corporation
Series A Convertible Preferred Stock Purchase Agreement
Signature Page
Invesco Global Health Sciences Fund
By: /s/ Ronald L. Grooms
_______________________________
Name: Ronald L. Grooms
_____________________________
Title: Treasurer
____________________________
Invesco Global Health Sciences Fund
By: /s/ Glen A. Payne
_______________________________
Name: Glen A. Payne
_____________________________
Title: Secretary
____________________________
Second Amendment to Series A Stock Purchase Agreement
<PAGE>
Series A Convertible Preferred Stock Purchase Agreement
Addendum to Schedule I - Schedule of Purchasers
Purchaser Number of Shares Price
- --------- ---------------- ----------
Invesco Global Health Sciences Fund 2,490,075 $1,500,000
Falcon Technology Partners, L.P. 1,660,050 $1,000,000
Arch Venture Fund III, L.P. 1,245,038 $ 750,000
Boulder Ventures, L.P. 249,008 $ 150,000
Pegasus Technology Ventures, L.L.C. 41,501 $ 25,000
Caruthers Family, L.L.C. 83,003 $ 50,000
Addendum to Schedule I
<PAGE>
Exhibit 10.7
NOTE AND WARRANT PURCHASE AGREEMENT
This Note and Warrant Purchase Agreement is made as of October 9, 1998 by
and between Genomica Corporation, a Delaware corporation (the "Company"), and
the persons or entities named on the signature page attached hereto
(individually, a "Purchaser" and collectively, the "Purchasers").
The Parties hereby agree as follows:
1. Amount and Terms of the Loan; Purchase and Sale of the Warrants
1.1 The Loan. Subject to the terms of this Agreement, the Company shall
borrow from the Purchaser and the Purchaser, severally and not jointly, shall
lend to the Company up to the amount set forth opposite the Purchaser's name on
the attached Schedule of Purchasers (each, a "Loan Amount") pursuant to
convertible promissory notes in the form attached hereto as Exhibit A (the
"Notes"). The Loan Amounts are hereinafter referred to collectively as the
"Loan." The Company will borrow fifty percent (50%) of the Loan initially and
thereafter may, but shall not be required to, borrow an additional amount up to
the remaining fifty percent (50%) of the Loan.
1.2 Purchase and Sale of Warrants. The Company will issue and sell to the
Purchaser and the Purchaser will purchase, severally and not jointly, warrants
in the form attached hereto as Exhibit B (the "Warrants") to purchase up to that
number of shares of the Company's Applicable Series Preferred Stock (as defined
below) as set forth opposite the Purchaser's name on the Schedule of Purchasers
(each, a "Warrant Amount") on the following terms: (i) the per share exercise
price will be the price per share (the "Applicable Series Preferred Stock
Price") at which the next round of Preferred Stock issued and sold by the
Company in which the gross proceeds to the Borrower are at least $3,000,000, not
including any conversion of the Notes (a "Qualified Financing"). The "Applicable
Series Preferred Stock" shall be the series of Preferred Stock next issued and
sold by the Company in a Qualified Financing. The Company will issue and sell
Warrants to purchase fifty percent (50%) of the Warrant Amount initially and
thereafter, will issue and sell an additional number of Warrants if and only if
the Company has a Second Closing (as defined below) with respect to the Loan. In
the case of a Second Closing, the number of additional Warrants to be issued in
the Second Closing will be in proportion to the additional amount of the Loan
that is borrowed by the Company in the Second Closing.
2. The Closing
2.1 Closing Dates. The first closing as to the purchase and sale of the
Notes and the Warrants (the "First Closing") shall be held no later than October
9, 1998, at the offices of Cooley Godward llp, 2595 Canyon Blvd., Suite 250,
Boulder, Colorado 80302, or at such other time as the Company and the Purchasers
of a majority of the Notes shall agree (the
<PAGE>
"First Closing Date"). Any second closing (the "Second Closing") as to the
purchase and sale of the Notes and Warrants may be held at the place and time
determined by the Company, provided that the Company shall provide the
Purchasers with seven (7) days advance written notice of the Second Closing. The
First Closing and the Second Closing are referred to collectively hereinafter as
the "Closings."
2.2 Delivery. At the First Closing (i) the Purchaser will deliver to the
Company a check or wire transfer of funds in the amount of fifty percent (50%)
of such Purchaser's Loan Amount; and (ii) the Company shall deliver to the
Purchaser a Note representing fifty percent (50%) of such Purchaser's Loan
Amount, an executed Warrant and an amendment to the Registration Rights
Agreement dated as of March 22, 1996, as amended, by and among the Company and
certain investors, to the effect that the shares of Common Stock underlying the
shares of Preferred Stock issuable upon conversion of the Notes and exercise of
the Warrants will have the registration rights provided for in that agreement.
At the Second Closing, if any, (i) each Purchaser will deliver to the Company a
check or wire transfer of funds in the amount of the portion of the remaining
amount of such Purchaser's Loan Amount that the Company is borrowing; and (ii)
the Company shall deliver to the Purchaser a Note representing the remaining
amount of such Purchaser's Loan Amount that the Company is borrowing and an
executed Warrant.
3. Representations and Warranties of the Company
The Company hereby represents and warrants to each Purchaser as follows:
3.1 Operations. As of the date hereof there is no action, suit, claim,
proceeding or investigation pending or threatened against or affecting the
Company and the Company is not subject to any order, writ, injunction or decree
entered in any lawsuit or proceeding.
3.2 Organization, Qualifications Corporate Power
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and is duly
licensed or qualified to transact business as a foreign corporation and is in
good standing in each other jurisdiction in which the nature of the business
transacted by it or the character of the properties owned or leased by it
requires such licensing or qualification, except where failure to so qualify
would not have a material adverse effect on the business, affairs or prospects
of the Company. The Company has the corporate power and authority to own and
hold its properties and to carry on its business as now conducted and as
proposed to be conducted, to execute, deliver and perform this Agreement.
3.3 Authorization of Agreements, Etc.
(a) The execution and delivery by the Company of this Agreement, the
Notes and the Warrants (the "Transaction Documents") the performance by the
Company of its obligations hereunder and thereunder, have been duly authorized
by all requisite corporate action and will not violate any provision of law, any
order of any court or other agency of
2.
<PAGE>
government, the Certificate of Incorporation of the Company, as amended (the
"Charter") or the Bylaws of the Company (the "Bylaws"), as amended, or any
provision of any indenture, agreement or other instrument to which the Company
or its properties or assets are bound, or conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company. To the best of
the Company's knowledge, the execution, delivery and performance of the
Transaction Agreements does not violate, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default by any other
party under any other indenture, agreement or instrument.
3.4 Third Party Approvals. No registration or filing with, or consent or
approval of or other action by any third party, is or will be necessary for the
valid execution, delivery and performance by the Company of the Transaction
Agreements, the issuance, any eventual sale and delivery of the preferred stock
or upon conversion thereof, the issuance and delivery of any shares issuable
upon conversion of the preferred stock, other than filings pursuant to state
securities laws (all of which filings have been made by the Company, other than
those which are required to be made after the Closing and which will be duly
made on a timely basis).
3.5 Proprietary Information of Third Parties. To the best knowledge of the
Company, no third party has claimed or has reason to claim that any person
employed by or affiliated with (or currently proposed to be employed by or
affiliated with) the Company has (a) violated or may be violating any of the
terms and conditions of his employment, non-competition or non-disclosure
agreement with such third party, (b) disclosed or may be disclosing or utilized
or may be utilizing any trade secret or proprietary information or documentation
of such third party or (c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. No third party has requested information from the Company which
suggests that such a claim might be contemplated. To the best knowledge of the
Company, no person employed by or affiliated with (or currently proposed to be
employed by or affiliated with) the Company has employed or proposes to employ
any trade secret or any information or documentation proprietary to any former
employer, and to the best knowledge of the Company, no person employed by or
affiliated with (or currently proposed to be employed by or affiliated with) the
Company has violated any confidential relationship with such person may have had
with any third party, in connection with the development, manufacture or sale of
any product or proposed product or the development or sale of any service or
proposed service of the Company, and the Company has no reason to believe there
will be any such employment or violation. To the best knowledge of the Company,
none of the execution or delivery of the Transaction Agreements, or the carrying
on of the business of the Company as officers, employees or agents by any
officer, director or key employee of the Company (or currently proposed to be
such an officer, director or key employee), or the conduct or proposed conduct
of the business of the Company, will conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under any contract,
covenant or instrument under which any such person is obligated.
3.
<PAGE>
3.6 Patents, Trademarks, Etc. The Company owns or possesses adequate
licenses or other rights to use all patents, patent applications, trademarks,
trademark applications, service marks, service mark applications, trade names,
copyrights, manufacturing processes, formulae, trade secrets, customer lists and
know how (collective, "Intellectual Property") necessary or desirable to the
conduct of its business as conducted and as proposed to be conducted, and no
claim is pending or, to the best of the Company's knowledge, threatened to the
effect that the operations of the Company as conducted and as proposed to be
conducted infringe upon or conflict with the asserted rights of any other person
under any Intellectual Property, and to the best of the Company's knowledge,
there is no basis for any such claim (whether or not pending or threatened). No
claim is pending or, to the best of the Company's knowledge, threatened to the
effect that any such Intellectual Property owned or licensed by the Company, or
which the Company otherwise has the right to use, is invalid or unenforceable by
the Company, and there is no basis for any such claim (whether or not pending or
threatened). To the best of the Company's knowledge, all technical information
developed by and belonging to the Company which has not been patented has been
kept confidential.
3.7 Authorized Capital Stock. The authorized capital stock of the Company
consists of (i) 18,000,000 shares of Preferred Stock, $.001 par value (the
"Preferred Stock"), of which 12,688,178 shares have been designated Series A
Convertible Preferred Stock, and (ii) 22,000,000 shares of Common Stock.
Immediately prior to the Closing, 12,533,676 shares of Series A Convertible
Preferred Stock and 2,747,308 shares of Common Stock will be validly issued and
outstanding, fully paid and nonassessable with no personal liability attaching
to the ownership thereof, and 12,533,676 shares of Common Stock reserved for
issuance upon conversion of the Series A Preferred Stock.
3.8 Litigation. There are no (nor to the Company's knowledge is there any
reasonable basis for any) (a) actions, suits, proceedings or investigations at
law or in equity or by or before any governmental instrumentality or other
agency now pending or to the Company's knowledge, threatened against or
affecting the Company, or (b) judgments, decrees, injunctions or orders of any
court, governmental department, commission, agency, instrumentality or
arbitrator against or affecting the Company.
3.9 Title to Properties. The Company has good and marketable title to all
of its owned properties and assets, free and clear of all mortgages, pledges,
security interests, liens, charges and other encumbrances, except for Permitted
Encumbrances (as defined below). As of the Closing and after giving effect to
the transactions contemplated hereby, the Company will have good and marketable
title to all its properties and assets free and clear of mortgages, pledges,
security interests, liens, charges and other encumbrances, except under for
Permitted Encumbrances. As used herein, "Permitted Encumbrances" means any
mortgages, pledges, security interests, liens, charges and other encumbrances
(i) as described in Schedule II hereto, (ii) liens for current taxes,
assessments and other governmental charges not overdue, (iii) mechanic's,
materialmen's and similar liens which may have arisen in the ordinary course of
business and which, in the aggregate, would not be material to the financial
condition of the Company, (iv) security interests securing indebtedness not in
default for the purchase price of
4.
<PAGE>
or lease rental payments on property purchased or leased under capital lease
arrangements in the ordinary course of business, and (v) minor imperfections of
title, if any, not material in amount and not materially detracting from the
value or impairing the use of the property subject thereto or impairing the
operations or proposed operations of the Company. The Company is in compliance
with all of its leases and, to its knowledge, holds a valid leasehold interest
in all of its properties free and clear of all liens, charges and other
encumbrances.
3.10 Taxes. The Company has timely filed all tax returns (federal, state
and local) required to be filed by it. All taxes shown to be due and payable on
such returns, any assessments imposed, and to the Company's knowledge all other
taxes due and payable by the Company on or before the Closing have been paid or
will be paid prior to the time they become delinquent. The Company has not been
advised (i) that any of its returns, federal, state or other, have been or are
being audited as of the date hereof, or (ii) of any deficiency in assessment or
proposed judgment to its federal, state or other taxes. The Company has no
knowledge of any liability of any tax to be imposed upon its properties or
assets as of the date of this Agreement that is not adequately provided for.
3.11 Compliance with Other Instruments. The Company is not in violation or
default of any provision of the Charter or By-laws or of any instrument,
judgment, order, writ, decree, or contract to which it is a party or by which it
is bound or, to its knowledge, of any provision of federal or state statute,
rule or regulation, license, or permit applicable to the Company which would
have a material adverse effect on the Company. The Company does not have any
knowledge of any termination or material breach or anticipated termination or
material breach by the other parties to any material contract or commitment to
which it is a party or to which any of its assets is subject. To the Company's
knowledge, there are no warranty claims or other uninsured claims against the
Company under completed contracts which might involve a material monetary
liability which is not reserved against in the Financial Statements.
4. Representations and Warranties of the Purchaser
4.1 Purchase for Own Account. The Purchaser represents that it is
acquiring the Notes, the equity securities issuable upon conversion of the
Notes, the Warrants and the equity securities issuable upon exercise of the
Warrants (collectively, the "Securities") solely for its own account and
beneficial interest for investment and not for sale or with a view to
distribution of the Securities or any part thereof, has no present intention of
selling (in connection with a distribution or otherwise), granting any
participation in, or otherwise distributing the same, and does not presently
have reason to anticipate a change in such intention.
4.2 Information and Sophistication. The Purchaser acknowledges that it has
received all the information it has requested from the Company and considers
necessary or appropriate for deciding whether to acquire the Notes and Warrants.
The Purchaser represents that it has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the
offering of the Notes and Warrants and to obtain any
5.
<PAGE>
additional information necessary to verify the accuracy of the information given
the Purchaser. The Purchaser further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risk of this investment.
4.3 Ability to Bear Economic Risk. The Purchaser acknowledges that
investment in the Notes and Warrants involves a high degree of risk, and
represents that it is able, without materially impairing its financial
condition, to hold the Securities for an indefinite period of time and to suffer
a complete loss of its investment.
4.4 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, the Purchaser further agrees not to make any
disposition of all or any portion of the Securities unless and until:
(a) There is then in effect a registration statement under the 1933
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) (i) The Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by the Company, such Purchaser shall have furnished the Company with
an opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration under the 1933 Act.
(c) Notwithstanding the provisions of paragraphs (a) and (b) above, no
such registration statement or opinion of counsel shall be necessary for a
transfer by such Purchaser to a stockholder or partner (or retired partner) of
such Purchaser, or a registered investment company with a common investment
advisor, or transfers by gift, will or intestate succession to any spouse or
lineal descendants or ancestors (or to a custodian or trustee for the benefit of
the Purchaser or his or her spouse, lineal descendants or ancestors), if all
transferees agree in writing to be subject to the terms hereof to the same
extent as if they were Purchasers hereunder.
4.5 Accredited Investor. The Purchaser is an "accredited investor" as such
term is defined in Rule 501 under the 1933 Act.
5. Miscellaneous
5.1 Binding Agreement. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any third party any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
6.
<PAGE>
5.2 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Colorado as applied to agreements among Colorado
residents, made and to be performed entirely within the State of Colorado.
5.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.4 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
5.5 Notices. Any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given upon personal
delivery, one business day after deposit with a reputable overnight courier, or
four business days after deposit with the United States Post Office, by
registered or certified mail, postage prepaid, addressed to the Company at 4001
Discovery Drive, Suite 130, Boulder, Colorado 80303, or to the Purchaser at its
address shown on the signature page, or at such other address as such party may
designate by ten (10) days advance written notice to the other party.
5.6 Modification; Waiver. No modification or waiver of any provision of
this Agreement, the Notes or the Warrants or consent to departure therefrom
shall be effective unless in writing and approved by the Company and a majority
in interest of the Notes (determined by reference to the principal amount of the
Notes outstanding).
5.7 Survival of Warranties. The warranties, representations, and covenants
of the Company and the Purchasers contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Purchasers or the Company.
5.8 Finder's Fee. Each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. The Company agrees to indemnify and hold harmless the Purchasers
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.
5.9 Invalidity. If any of the provisions of this Agreement are held
invalid or unenforceable, such invalidity or unenforceability shall not affect
in any way the validity or enforceability of any other provision of this
Agreement except those which the invalidated or unenforceable provision
comprises an integral part of or is otherwise clearly inseparable from. In the
event any provision is held invalid or unenforceable, the parties shall attempt
to agree on a valid or enforceable provision which shall be a reasonable
substitute for such invalid or unenforceable provision in light of the tenor of
this Agreement and, on so agreeing, shall incorporate such substitute provision
in this Agreement.
7.
<PAGE>
5.10 Expenses. The Company shall reimburse the reasonable fees and
expenses of counsel to the Purchasers, incurred in connection with this
Agreement and the transactions contemplated herein in an amount not to exceed
$25,000.
In Witness Whereof, the parties have executed this Agreement as of the date
first written above.
Company
Genomica Corporation
By:/s/ Thomas G. Marr
__________________________
Thomas G. Marr
President
Purchaser:
/s/ William Galvin
_______________________________________
Assistant Secretary
_______________________________________
_______________________________________
Address: Invesco Global Health Sciences
_______________________________
c/o Invesco Funds Group, Inc.
_______________________________________
7800 East Union Ave
_______________________________________
Denver, CO 80237
_______________________________________
Attn: Buck Phillips
_______________________________________
Purchaser:
Falcon Technology Partners, L.P.
_______________________________________
/s/ James L. Rathmann
_______________________________________
General Partner
_______________________________________
Address: 600 Dorset Rd.
_______________________________
Devon, PA 19333
_______________________________________
_______________________________________
_______________________________________
Purchaser:
/s/ Robert Nelson
_______________________________________
_______________________________________
_______________________________________
Purchaser:
/s/ Kyle Lefkoff
_______________________________________
Kyle Lefkoff, Partner
_______________________________________
Boulder, Co 80302
_______________________________________
Address:
_______________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
Purchaser:
The Caruthers Family LLC
_______________________________________
by: Marvin H. Caruthers, Manager
_______________________________________
/s/ Marvin H. Caruthers
_______________________________________
Address: 2450 Cragmoor Rd.
_______________________________
Boulder, CO 80303
_______________________________________
_______________________________________
_______________________________________
_______________________________________
8.
<PAGE>
Schedule of Purchasers
----------------------
First Closing
- -------------
<TABLE>
<CAPTION>
Convertible Total
Purchaser Notes Warrants Investment
- ----------------------------------- ----------- --------------------- -------------
<S> <C> <C> <C>
Invesco Global Health Sciences Fund $ 362,500 Note Amount x 15% $ 362,500.00
---------------------
Applicable Series
Preferred Stock Price
Falcon Technology Partners, L.P. $ 362,500 $ 362,500.00
Arch Venture Fund III, L.P. $ 237,500 $ 237,500.00
Boulder Ventures, L.P. $ 25,000 $ 25,000.00
The Caruthers Family, L.L.C. $ 12,500 $ 12,500.00
----------- --------------------- -------------
TOTALS $ 1,000,000 $1,000,000.00
Second Closing
- --------------
Convertible Total
Purchaser Notes Warrants Investment
- ----------------------------------- ----------- --------------------- -------------
Invesco Global Health Sciences Fund $ 362,500 Note Amount x 15% $ 362,500.00
---------------------
Applicable Series
Preferred Stock Price
Falcon Technology Partners, L.P. $ 362,500 $ 362,500.00
Arch Venture Fund III, L.P. $ 237,500 $ 237,500.00
Boulder Ventures, L.P. $ 25,000 $ 25,000.00
The Caruthers Family, L.L.C. $ 12,500 $ 12,500.00
----------- --------------------- -------------
TOTALS: $ 1,000,000 $1,000,000.00
</TABLE>
9.
<PAGE>
Exhibit 10.8
GENOMICA CORPORATION
SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
December 16, 1998
<PAGE>
Table Of Contents
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Section 1. AGREEMENT TO SELL AND PURCHASE........................ 1
1.1 Authorization of Shares............................... 1
1.2 Sale and Purchase..................................... 1
Section 2. CLOSING, DELIVERY AND PAYMENT......................... 2
2.1 Closing............................................... 2
2.2 Delivery.............................................. 2
Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY......... 2
3.1 Organization, Good Standing and Qualification......... 2
3.2 Subsidiaries.......................................... 2
3.3 Capitalization; Voting Rights......................... 2
3.4 Authorization; Binding Obligations.................... 3
3.5 Financial Statements.................................. 3
3.6 Liabilities........................................... 3
3.7 Agreements; Action.................................... 4
3.8 Obligations to Related Parties........................ 4
3.9 Absence of Changes.................................... 5
3.10 Title to Properties and Assets; Liens, Etc............ 6
3.11 Patents and Trademarks................................ 6
3.12 Compliance with Other Instruments..................... 6
3.13 Litigation............................................ 7
3.14 Tax Returns and Payments.............................. 7
3.15 Employees............................................. 7
3.16 Proprietary Information and Inventions Agreements..... 8
3.17 Obligations of Management............................. 8
3.18 Registration Rights................................... 8
3.19 Compliance with Laws; Permits......................... 8
3.20 Offering Valid........................................ 8
3.21 Full Disclosure....................................... 9
Section 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS...... 9
4.1 Requisite Power and Authority......................... 9
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i.
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Table Of Contents
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4.2 Investment Representations............................ 9
4.3 Transfer Restrictions................................. 10
Section 5. CONDITIONS TO CLOSING................................. 10
5.1 Conditions to Purchasers' Obligations at the Closing.. 10
5.2 Conditions to Obligations of the Company.............. 11
Section 6. MISCELLANEOUS......................................... 12
6.1 Governing Law......................................... 12
6.2 Survival.............................................. 12
6.3 Successors and Assigns................................ 12
6.4 Entire Agreement...................................... 12
6.5 Severability.......................................... 13
6.6 Amendment and Waiver.................................. 13
6.7 Delays or Omissions................................... 13
6.8 Notices............................................... 13
6.9 Titles and Subtitles.................................. 13
6.10 Counterparts.......................................... 13
6.11 Broker's Fees......................................... 14
6.12 Expenses.............................................. 14
6.13 Attorneys' Fees....................................... 14
6.14 Exculpation Among Purchasers.......................... 14
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ii.
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Index of Exhibits
Schedule of Purchasers Exhibit A
Restated Certificate of Incorporation Exhibit B
Investors' Rights Agreement Exhibit C
Form of Legal Opinion Exhibit D
1.
<PAGE>
GENOMICA CORPORATION
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
This Series B Preferred Stock Purchase Agreement (the "Agreement") is
entered into as of this 16/th/ day of December, 1998, by and among Genomica
Corporation, a Delaware corporation (the "Company"), and each of those persons
and entities, severally and not jointly, whose names are set forth on the
Schedule of Purchasers attached hereto as Exhibit A (which persons and entities
are hereinafter collectively referred to as "Purchasers" and each individually
as a "Purchaser").
RECITALS
Whereas, the Company has authorized the sale and issuance of an aggregate
of fourteen million ninety-seven thousand two hundred twenty-two (14,097,222)
shares of its Series B Preferred Stock (the "Shares");
Whereas, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
Whereas, the Company desires to issue and sell the Shares to Purchasers on
the terms and conditions set forth herein.
Now, Therefore, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1. AGREEMENT TO SELL AND PURCHASE
1.1 Authorization of Shares. On or prior to the Closing (as defined in
Section 2 below), the Company shall have authorized (i) the sale and issuance to
Purchasers of the Shares and (ii) the issuance of such shares of Common Stock to
be issued upon conversion of the Shares (the "Conversion Shares"). The Shares
and the Conversion Shares shall have the rights, preferences, privileges and
restrictions set forth in the Restated Certificate of Incorporation of the
Company, in the form attached hereto as Exhibit B (the "Certificate").
1.2 Sale and Purchase. Subject to the terms and conditions hereof, at the
Closing (as hereinafter defined), the Company hereby agrees to issue and sell to
each Purchaser, severally and not jointly, and each Purchaser agrees to purchase
from the Company, severally and not jointly, the number of Shares set forth
opposite such Purchaser's name on Exhibit A at a purchase price of $0.72 per
share.
1.
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SECTION 2. CLOSING, DELIVERY AND PAYMENT
2.1 Closing. The closing of the sale and purchase of the Shares under
this Agreement (the "Closing") shall take place on the date hereof, at the
offices of Cooley Godward LLP, 2595 Canyon Boulevard, Suite 250, Boulder,
Colorado 80302, or at such other time or place as the Company and Purchasers may
mutually agree (such date is hereinafter referred to as a "Closing Date").
2.2 Delivery. At the Closing, subject to the terms and conditions hereof,
the Company will deliver to the Purchasers certificates representing the number
of Shares to be purchased at the Closing by each Purchaser, against payment of
the purchase price therefor, by check or wire transfer made payable to the order
of the Company or cancellation of indebtedness.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions delivered to the
Purchasers, the Company hereby represents and warrants to each Purchaser as
follows:
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and the Investors' Rights Agreement, in the form attached hereto
as Exhibit C (the "Investors' Rights Agreement"), to issue and sell the Shares
and the Conversion Shares and to carry out the provisions of this Agreement, the
Investors' Rights Agreement and the Certificate and to carry on its business as
presently conducted and as presently proposed to be conducted. The Company is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) make such qualifications
necessary, except for those jurisdictions in which failure to do so would not
have a material adverse effect on the Company or its business. The Company has
made available to the Purchasers true, correct and complete copies of the
Company's Certificate of Incorporation and Bylaws, each as amended to date.
3.2 Subsidiaries. The Company owns no equity securities of any other
corporation, limited partnership or similar entity. The Company is not a
participant in any joint venture, partnership or similar arrangement.
3.3 Capitalization; Voting Rights. The authorized capital stock of the
Company, immediately prior to the Closing, will consist of (a) thirty-four
million (34,000,000) shares of Common Stock, of which three million one hundred
sixty-one thousand six hundred eighty-five (3,161,685) shares are issued and
outstanding, and (b) twenty-six million seven hundred eighty-five thousand four
hundred (26,785,400) shares of Preferred Stock, of which twelve million six
hundred eighty-eight thousand one hundred seventy-eight (12,688,178) shares are
designated Series A Preferred Stock, of which twelve million five hundred
thirty-three thousand six hundred seventy-six (12,533,676) are issued and
outstanding, and of which fourteen million ninety-seven thousand two hundred
twenty-two (14,097,222) shares are designated Series B Preferred Stock, none of
which are issued and outstanding. All issued and outstanding shares of the
Company's
2.
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Common Stock and Preferred Stock (i) have been duly authorized and validly
issued, (ii) are fully paid and nonassessable and (iii) were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities. The rights, preferences, privileges and restrictions of the Shares
are as stated in the Certificate. The Conversion Shares have been duly and
validly reserved for issuance. Except as may be granted pursuant to this
Agreement, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
stockholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. The Shares and the
Conversion Shares have been duly authorized and, when issued in compliance with
the provisions of this Agreement and the Certificate, will be validly issued
(including, without limitation, issued in compliance with applicable state and
federal securities laws), fully paid and nonassessable and will be free of any
liens or encumbrances; provided, however, that the Shares and the Conversion
Shares may be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time transfer is proposed.
3.4 Authorization; Binding Obligations. All corporate action on the part
of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement and the Investors' Rights Agreement, the
performance of all obligations of the Company hereunder and thereunder at the
Closing and the authorization, sale, issuance and delivery of the Shares
pursuant hereto and the Conversion Shares pursuant to the Certificate has been
taken or will be taken prior to the Closing. The Agreement and the Investors'
Rights Agreement, when executed and delivered, will be valid and binding
obligations of the Company enforceable in accordance with their terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors' rights;
(ii) general principles of equity that restrict the availability of equitable
remedies; and (iii) to the extent that the enforceability of the indemnification
provisions in Section 3.11 of the Investors' Rights Agreement may be limited by
applicable laws. The sale of the Shares and the subsequent conversion of the
Shares into Conversion Shares are not and will not be subject to any preemptive
rights or rights of first refusal that have not been properly waived or complied
with.
3.5 Financial Statements. The Company has delivered to each Purchaser (i)
its audited balance sheet as at December 31, 1997 and audited statement of
income and cash flows for the twelve months ending December 31, 1997 and (ii)
its unaudited balance sheet as at October 31, 1998 (the "Statement Date") and
unaudited statement of income and cash flows for the ten month period ending on
the Statement Date (collectively, the "Financial Statements"). The Financial
Statements, together with the notes thereto, are complete and correct in all
material respects, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated, except as disclosed therein, and present fairly the financial
condition and position of the Company as of December 31, 1997 and the Statement
Date; provided, however, that the unaudited financial statements are subject to
normal recurring year-end audit adjustments (which are not expected to be
material), and do not contain all footnotes required under generally accepted
accounting principles.
3.6 Liabilities. The Company has no material liabilities and, to the best
of its knowledge, has no material contingent liabilities not otherwise disclosed
in the Financial Statements, except current liabilities incurred in the ordinary
course of business subsequent to
3.
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the Statement Date which have not been, either in any individual case or in the
aggregate, materially adverse.
3.7 Agreements; Action.
(a) Except for agreements explicitly contemplated hereby and
agreements between the Company and its employees with respect to the sale of the
Company's Common Stock, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
is a party or to its knowledge by which it is bound which may involve (i)
obligations (contingent or otherwise) of, or payments to, the Company in excess
of $25,000, or (ii) the license of any patent, copyright, trade secret or other
proprietary right to or from the Company (other than licenses arising from the
purchase of "off the shelf" or other standard products), or (iii) provisions
restricting or affecting the development, manufacture or distribution of the
Company's products or services, or (iv) indemnification by the Company with
respect to infringements of proprietary rights.
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities (other than with respect to dividend obligations,
distributions, indebtedness and other obligations incurred in the ordinary
course of business or as disclosed in the Financial Statements) individually in
excess of $25,000 or, in the case of indebtedness and/or liabilities
individually less than $25,000, in excess of $75,000 in the aggregate, (iii)
made any loans or advances to any person, other than ordinary advances for
travel expenses or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
3.8 Obligations to Related Parties. There are no obligations of the
Company to officers, directors, stockholders, or employees of the Company other
than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). No such officer, director or stockholder, or any
member of their immediate families is, directly or indirectly, interested in any
material contract with the Company (other than such contracts as relate to any
such person's ownership of capital stock or other securities of the Company).
The Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
4.
<PAGE>
3.9 Absence of Changes. Except as set forth in Schedule 3.9, since the
Statement Date, there has not been to the Company's knowledge:
(a) Any change in the assets, liabilities, financial condition or
operations of the Company from that reflected in the Financial Statements, other
than changes in the ordinary course of business, none of which individually or
in the aggregate has had or is expected to have a material adverse effect on
such assets, liabilities, financial condition or operations of the Company;
(b) Any resignation or termination of any key officers of the Company;
and the Company, to the best of its knowledge, does not know of the impending
resignation or termination of employment of any such officer;
(c) Any material change, except in the ordinary course of business, in
the contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or of a material
debt owed to it;
(f) Any direct or indirect loans made by the Company to any
stockholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business;
(g) Any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder;
(h) Any declaration or payment of any dividend or other distribution
of the assets of the Company or any direct or indirect redemptions of shares of
the Company's stock;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or guaranteed
by the Company, except those for immaterial amounts and for current liabilities
incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets or any sale, transfer lease
or pledge of a material asset, except in the ordinary course of business;
(l) Any change in any material agreement to which the Company is a
party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
the Company; or
5.
<PAGE>
(m) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
the Company. For purposes of this subsection (m), a material and adverse effect
shall only be deemed to occur if its monetary impact exceeds, or with the
passage of time, will exceed $75,000.
3.10 Title to Properties and Assets; Liens, Etc. The Company has good and
marketable title to its properties and assets, and good title to its leasehold
estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance
or charge, other than (i) those resulting from taxes which have not yet become
delinquent, (ii) minor liens and encumbrances which do not materially detract
from the value of the property subject thereto or materially impair the
operations of the Company and (iii) those that have otherwise arisen in the
ordinary course of business. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company are in good
operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used. The Company is in compliance with all
material terms of each lease to which it is a party or is otherwise bound.
3.11 Patents and Trademarks. To its knowledge, the Company owns or
possesses sufficient legal rights to all patents, trademarks, service marks,
trade names, copyrights, trade secrets, information and other proprietary rights
and processes necessary for its business as now conducted and as proposed to be
conducted, without any known infringement of the rights of others. There are no
outstanding options, licenses or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase of "off the shelf" or standard
products. The Company has not received any communications alleging that the
Company has violated or, by conducting its business as proposed, would violate
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. The Company
is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments or any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their duties to the Company's business by the
employees of the Company. The conduct of the Company's business as proposed,
will not, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated. The Company
does not believe it is or will be necessary to utilize any inventions, trade
secrets or proprietary information of any of its employees made prior to their
employment by the Company, except for inventions, trade secrets or proprietary
information that have been assigned to the Company.
3.12 Compliance with Other Instruments. The Company is not in violation or
default of any term of its Certificate or Bylaws, or of any provision of any
mortgage, indenture, contract, agreement, instrument or contract to which it is
party or by which it is bound or of any judgment, decree, order, writ or, to its
knowledge, any statute, rule or regulation applicable to the Company which would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. The execution, delivery, and
performance of
6.
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and compliance with this Agreement and the Investors' Rights Agreement, and the
issuance and sale of the Shares pursuant hereto and of the Conversion Shares
pursuant to the Certificate, will not, with or without the passage of time or
giving of notice, result in any such material violation, or be in conflict with
or constitute a default under any such term, or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company or the suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to the
Company, its business or operations or any of its assets or properties.
3.13 Litigation. There is no action, suit, proceeding or investigation
pending, or to the Company's knowledge, currently threatened against the Company
that questions the validity of this Agreement or the Investors' Rights Agreement
or the right of the Company to enter into any of such agreements, or to
consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse change
in the assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor is
the Company aware that there is any basis for the foregoing. The foregoing
includes, without limitation, actions pending or threatened (or any basis
therefor known to the Company) involving the prior employment of any of the
Company's employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
3.14 Tax Returns and Payments. The Company has timely filed all tax returns
(federal, state and local) required to be filed by it. All taxes shown to be due
and payable on such returns, any assessments imposed, and to the Company's
knowledge all other taxes due and payable by the Company on or before the
Closing have been paid or will be paid prior to the time they become delinquent.
The Company has not been advised (i) that any of its returns, federal, state or
other, have been or are being audited as of the date hereof, or (ii) of any
deficiency in assessment or proposed judgment to its federal, state or other
taxes. The Company has no knowledge of any liability of any tax to be imposed
upon its properties or assets as of the date of this Agreement that is not
adequately provided for.
3.15 Employees. The Company is not a party to or bound by any currently
effective employment contract, deferred compensation arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. To the Company's knowledge, no employee of the
Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company; and to the Company's knowledge the
continued employment by the Company of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. The Company has not received any notice
alleging that any such violation has occurred. No employee of the Company has
been granted the right to continued employment by the Company or to any material
compensation
7.
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following termination of employment with the Company. The Company is not aware
that any officer or key employee, or that any group of key employees, intends to
terminate, his, her or their employment with the Company, nor does the Company
have a present intention to terminate the employment of any officer, key
employee or group of key employees.
3.16 Proprietary Information and Inventions Agreements. Each current
employee, officer and consultant of the Company has executed a Proprietary
Information and Inventions Agreement in a form acceptable to the Purchasers. No
current employee, officer or consultant of the Company has excluded works or
inventions made prior to his or her employment with the Company from his or her
assignment of inventions pursuant to such employee, officer or consultant's
Proprietary Information and Inventions Agreement.
3.17 Obligations of Management. Each officer of the Company is currently
devoting one hundred percent (100%) of his business time to the conduct of the
business of the Company. The Company is not aware of any officer or key employee
of the Company who plans to work less than full time at the Company in the
future.
3.18 Registration Rights. Except as required pursuant to the Investors'
Rights Agreement, the Company is presently not under any obligation, and has not
granted any rights, to register (as defined in Section 1 of the Investors'
Rights Agreement) any of the Company's presently outstanding securities or any
of its securities that may hereafter be issued.
3.19 Compliance with Laws; Permits. The Company is not in violation of any
applicable statute, rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which violation would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. No governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection with
the execution and delivery of this Agreement and the issuance of the Shares or
the Conversion Shares, except such as has been duly and validly obtained or
filed, or with respect to any filings that must be made after the Closing, as
will be filed in a timely manner. The Company has all franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could materially and adversely
affect the business, properties, prospects or financial condition of the Company
and believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted.
3.20 Offering Valid. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.2 hereof, the offer, sale
and issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws. Neither the
Company nor any agent on its behalf has solicited or will solicit any offers to
sell or has offered to sell or will offer to sell all or any part of the Shares
to any person or persons so as to bring the sale of such Shares by the Company
within the registration provisions of the Securities Act or any state securities
laws.
8.
<PAGE>
3.21 Full Disclosure. This Agreement, the Exhibits hereto, the Investors'
Rights Agreement and all other documents delivered by the Company to Purchasers
or their attorneys or agents in connection herewith or therewith or with the
transactions contemplated hereby or thereby, do not contain any untrue statement
of a material fact nor, to the Company's knowledge, omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
4.1 Requisite Power and Authority. Purchaser has all necessary power and
authority under all applicable provisions of law to execute and deliver this
Agreement and the Investors' Rights Agreement and to carry out their provisions.
All action on Purchaser's part required for the lawful execution and delivery of
this Agreement and the Investors' Rights Agreement have been or will be
effectively taken prior to the Closing. Upon their execution and delivery, this
Agreement and the Investors' Rights Agreement will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights,
(ii) general principles of equity that restrict the availability of equitable
remedies and (iii) to the extent that the enforceability of the indemnification
provisions of the Investors' Rights Agreement may be limited by applicable laws.
4.2 Investment Representations. Purchaser understands that neither the
Shares nor the Conversion Shares have been registered under the Securities Act.
Purchaser also understands that the Shares are being offered and sold pursuant
to an exemption from registration contained in the Securities Act based in part
upon Purchaser's representations contained in the Agreement. Purchaser hereby
represents and warrants as follows:
(a) Purchaser Bears Economic Risk. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares (or the Conversion Shares) are
registered pursuant to the Securities Act, or an exemption from registration is
available. Purchaser understands that the Company has no present intention of
registering the Shares, the Conversion Shares or any shares of its Common Stock.
Purchaser also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow Purchaser to transfer all or any portion
of the Shares or the Conversion Shares under the circumstances, in the amounts
or at the times Purchaser might propose.
9.
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(b) Acquisition for Own Account. Purchaser is acquiring the Shares
and the Conversion Shares for Purchaser's own account for investment only, and
not with a view towards their distribution.
(c) Purchaser Can Protect Its Interest. Purchaser represents that by
reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Further, Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated in the Agreement.
(d) Accredited Investor. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) Rule 144. Purchaser acknowledges and agrees that the Shares, and,
if issued, the Conversion Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act as in effect from
time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the availability of certain current public information about the
Company, the resale occurring following the required holding period under Rule
144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
(f) Residence. If the Purchaser is an individual, then the Purchaser
resides in the state or province identified in the address of the Purchaser set
forth on Exhibit A; if the Purchaser is a partnership, corporation, limited
liability company or other entity, then the office or offices of the Purchaser
in which its investment decision was made is located at the address or addresses
of the Purchaser set forth on Exhibit A.
4.3 Transfer Restrictions. Each Purchaser acknowledges and agrees that
the Shares and, if issued, the Conversion Shares are subject to restrictions on
transfer as set forth in the Investors' Rights Agreement.
SECTION 5. CONDITIONS TO CLOSING
5.1 Conditions to Purchasers' Obligations at the Closing. Purchasers'
obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
(a) Representations and Warranties True; Performance of Obligations.
The representations and warranties made by the Company in Section 3 hereof shall
be true and correct in all material respects as of the Closing Date with the
same force and effect as if they had been made as of the Closing Date, and the
Company shall have performed all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing.
(b) Legal Investment. On the Closing Date, the sale and issuance of
the Shares and the proposed issuance of the Conversion Shares shall be legally
permitted by all laws and regulations to which Purchasers and the Company are
subject.
10.
<PAGE>
(c) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the
Investors' Rights Agreement (except for such as may be properly obtained
subsequent to the Closing).
(d) Filing of Certificate. The Certificate shall have been filed with
the Secretary of State of the State of Delaware.
(e) Reservation of Conversion Shares. The Conversion Shares issuable
upon conversion of the Shares shall have been duly authorized and reserved for
issuance upon such conversion.
(f) Compliance Certificate. The Company shall have delivered to
Purchasers a Compliance Certificate, executed by an officer of the Company,
dated as of the Closing Date, to the effect that the conditions specified in
subsections (a), (c), (d) and (e) of this Section 5.1 have been satisfied.
(g) Investors' Rights Agreement. An Investors' Rights Agreement,
substantially in the form attached hereto as Exhibit C, shall have been executed
and delivered by the parties thereto.
(h) Board of Directors. Upon the Closing, the authorized size of the
Board of Directors of the Company shall be six (6) members and the Board shall
consist of Drs. Marvin Caruthers, Ralph Christoffersen, Arnold Levine and Thomas
Marr and Messrs. Robert Nelsen and James Rathmann.
(i) Legal Opinion. The Purchasers shall have received from legal
counsel to the Company an opinion addressed to them, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit D.
(j) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing hereby, all
documents and instruments incident to such transactions and all documents,
instruments and proceedings related to the Purchasers' business, technical and
legal due diligence shall be reasonably satisfactory in substance and form to
the Purchasers and their special counsel, and the Purchasers and such special
counsel shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
(k) Minimum Investment. The Company shall have received a minimum
investment of $5,000,000 at the first closing, including cancellation of
indebtedness.
5.2 Conditions to Obligations of the Company. The Company's obligation to
issue and sell the Shares at the Closing is subject to the satisfaction, on or
prior to the Closing, of the following conditions:
(a) Representations and Warranties True. The representations and
warranties made by the Purchasers in Section 4 hereof shall be true and correct
in all material
11.
<PAGE>
respects as of the Closing Date, with the same force and effect as if they had
been made on and as of said date.
(b) Performance of Obligations. Purchasers shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by Purchasers on or before the Closing.
(c) Filing of Certificate. The Certificate shall have been filed with
the Secretary of State of the State of Delaware.
(d) Investors' Rights Agreement. An Investors' Rights Agreement,
substantially in the form attached hereto as Exhibit C, shall have been executed
and delivered by the Purchasers.
(e) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the
Investors' Rights Agreement (except for such as may be properly obtained
subsequent to the Closing).
(f) Minimum Investment. The Company shall have received a minimum
investment of $5,000,000 at the first Closing, including cancellation of
indebtedness.
SECTION 6. MISCELLANEOUS
6.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Colorado as such laws are applied to agreements between
Colorado residents entered into and performed entirely in Colorado.
6.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Purchaser and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
6.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
6.4 Entire Agreement. This Agreement, the Exhibits and Schedules hereto,
including the Investors' Rights Agreement, and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
12.
<PAGE>
6.5 Severability. In case any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
6.6 Amendment and Waiver.
(a) This Agreement may be amended or modified only upon the written
consent of the Company and holders of at least a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
(b) The obligations of the Company and the rights of the holders of
the Shares and the Conversion Shares under the Agreement may be waived only with
the written consent of the holders of at least a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
6.7 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Investors'
Rights Agreement or the Certificate, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance thereafter occurring. It is further agreed that any waiver,
permit, consent or approval of any kind of character on any Purchaser's part of
any breach, default or noncompliance under this Agreement, the Investors' Rights
Agreement or under the Certificate or any waiver on such party's part of any
provisions or conditions of the Agreement, the Investors' Rights Agreement or
the Certificate must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, the Investors' Rights Agreement, the Certificate, by law, or
otherwise afforded to any party, shall be cumulative and not alternative.
6.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at the address as set forth on the signature page hereof and to
Purchaser at the address set forth on Exhibit A attached hereto or at such other
address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
6.9 Titles and Subtitles. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
6.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
13.
<PAGE>
6.11 Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein; provided, however, that the Company is
obligated to pay a fee to Punk, Ziegel & Co. related to purchases by certain of
the Purchasers. Each party hereto further agrees to indemnify each other party
for any claims, losses or expenses incurred by such other party as a result of
the representation in this Section 6.11 being untrue.
6.12 Expenses. The Company shall pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of the
Agreement. The Company shall reimburse the reasonable fees and expenses of one
counsel to the Purchasers, not to exceed $25,000, incurred in connection with
the negotiation, execution and delivery of this Agreement.
6.13 Attorneys' Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
6.14 Exculpation Among Purchasers. Each Purchaser acknowledges that it is
not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Shares and Conversion
Shares.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14.
<PAGE>
In Witness Whereof, the parties hereto have executed the Series B Preferred
Stock Purchase Agreement as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASERS:
Genomica Corporation Falcon Technology Partners, L.P.
4001 Discovery Drive
Boulder, CO 80303
By: /s/ Thomas G. Marr By: /s/ James L. Rathmann
-------------------------- ------------------------------
Name: Name: James L. Rathmann
------------------------ ----------------------------
Title: Title: General Partner
----------------------- ---------------------------
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation ARCH Ventures Fund III, L.P.
4001 Discovery Drive
Boulder, CO 80303 By: ARCH Venture Partners, L.L.C.,
general partner
By: By: /s/ Robert Nelson
____________________________ ____________________________
Name: Name: Robert Nelson
__________________________ __________________________
Title: Title: Managing Director
_________________________ _________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation Boulder Ventures, L.P.
4001 Discovery Drive
Boulder, CO 80303 By: BV Partners, L.L.C., general partner
By: By: /s/ Kyle Lefkoff
____________________________ ____________________________
Name: Name:
__________________________ __________________________
Title: Title:
_________________________ _________________________
Boulder Ventures II, L.P.
By: BV Partners II, L.L.C., general partner
By: /s/ Kyle Lefkoff
____________________________
Name:
__________________________
Title:
_________________________
Boulder Ventures II (Annex), L.P.
By: BV Partners II, L.L.C., general partner
By: /s/ Kyle Lefkoff
____________________________
Name:
__________________________
Title:
_________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation The Caruthers Family L.L.C.
4001 Discovery Drive
Boulder, CO 80303
By: By: /s/ Marvin H. Caruthers
______________________________ ______________________________
Name: Name: Marvin H. Caruthers
____________________________ ____________________________
Title: Title: Manager
___________________________ ___________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation Nominee of INVESCO
4001 Discovery Drive GlobalHealthSciencesFund
Boulder, CO 80303
By: By: /s/ Glen A. Payne
_____________________________ _____________________________
Name: Name: Glen A. Payne
___________________________ ___________________________
Title: Title: Secretary
__________________________ __________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation Anvers, L.P.
4001 Discovery Drive by: FSIP LLC
Boulder, CO 80303 General Partner
By: By: /s/ Leopold Swergold
_______________________________ ___________________________
Name: Name: Leopold Swergold
_____________________________ _________________________
Title: Title: Sr. Managing Director
____________________________ ________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation Anvers II, L.P.
4001 Discovery Drive by FSIP LLC
Boulder, CO 80303 General Partner
By: By: /s/ Leopold Swergold
__________________________ __________________________
Name: Name: Leopold Swergold
________________________ ________________________
Title: Title: Sr. Managing Director
_______________________ _______________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation GC&H Investments
4001 Discovery Drive
Boulder, CO 80303
By: By: /s/ John L. Cardoza
___________________________ ___________________________
Name: Name: John L. Cardoza
_________________________ _________________________
Title: Title: Executive Partner
________________________ ________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation
4001 Discovery Drive
Boulder, CO 80303
By:___________________________ By: /s/ Marc Epstein
Name:_________________________ Name: Marc Epstein
Title:________________________ Title:__________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation
4001 Discovery Drive
Boulder, CO 80303
By:___________________________ By: /s/ Stuart Epstein
Name:_________________________ Name: Stuart Epstein
Title:________________________ Title:__________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation
4001 Discovery Drive
Boulder, CO 80303
By:___________________________ By: /s/ Marc Epstein
Name:_________________________ Name: Marc Epstein
Title:________________________ Title:__________________________
Series B Preferred Stock Purchase Agreement
Exhibit A
Series B Preferred Stock Purchase Agreement
Name and Address Shares of Series B Purchase Price
- ---------------- ------------------ --------------
Preferred Stock
---------------
Total ================== ==============
<PAGE>
Exhibit B
Restated Certificate of Incorporation
<PAGE>
Exhibit C
Investors' Rights Agreement
<PAGE>
Exhibit D
Legal Opinion
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Delaware.
2. The Company has the requisite corporate power to own its property and
assets and to conduct its business as it is currently being conducted.
3. The Series B Preferred Stock Purchase Agreement (the "Purchase
Agreement") and the Investors' Rights Agreement (collectively, the "Agreements")
have been duly and validly authorized, executed and delivered by the Company and
constitute valid and binding obligations of the Company enforceable against the
Company in accordance with their terms.
4. The authorized capital stock of the Company, immediately prior to the
Closing, will consist of (a) thirty-four million (34,000,000) shares of Common
Stock, of which three million one hundred sixty-one thousand six hundred eighty-
five (3,161,685) shares are issued and outstanding, and (b) twenty-six million
seven hundred eighty-five thousand four hundred (26,785,400) shares of Preferred
Stock, of which twelve million six hundred eighty-eight thousand one hundred
seventy-eight (12,688,178) shares are designated Series A Preferred Stock, of
which twelve million five hundred thirty-three thousand six hundred seventy-six
(12,533,676) are issued and outstanding, and of which fourteen million ninety-
seven thousand two hundred twenty-two (14,097,222) shares are designated Series
B Preferred Stock, none of which are issued and outstanding. The outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable. The rights, preferences and privileges of the
Series B Preferred Stock are as stated in the Restated Certificate of
Incorporation. The Shares have been duly authorized, and upon issuance and
delivery against payment therefor in accordance with the terms of the Purchase
Agreement, will be validly issued, outstanding, fully paid and nonassessable.
The shares of Common Stock issuable upon conversion of the Shares have been duly
authorized and reserved for issuance, and upon issuance and delivery against
payment therefor in accordance with the terms of the Shares, will be validly
issued, outstanding, fully paid and nonassessable. Except as disclosed in the
Purchase Agreement or the Schedule of Exceptions, there are no options,
warrants, conversion privileges, preemptive rights or other rights presently
outstanding to purchase any of the authorized but unissued capital stock of the
Company, other than the conversion privileges of the Series A Preferred Stock
and Series B Preferred Stock and rights created in connection with the
transactions contemplated by the Agreements.
5. The execution and delivery of the Agreements by the Company and the
issuance of the Shares pursuant to the Purchase Agreement do not violate any
provision of the Company's Restated Certificate of Incorporation or Bylaws.
6. There is no action, proceeding or investigation pending or threatened
against the Company before any court or administrative agency that questions the
validity of the Agreements or might result, either individually on in the
aggregate, in any material adverse change in the assets, financial condition, or
operations of the Company.
<PAGE>
Exhibit 10.9
GENOMICA CORPORATION
SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
February 12, 1999
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. AGREEMENT TO SELL AND PURCHASE................................ 1
1.1 Authorization of Shares............................................ 1
1.2 Sale and Purchase.................................................. 1
Section 2. CLOSING, DELIVERY AND PAYMENT................................. 2
2.1 Closing............................................................ 2
2.2 Delivery........................................................... 2
Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 2
3.1 Organization, Good Standing and Qualification...................... 2
3.2 Subsidiaries....................................................... 2
3.3 Capitalization; Voting Rights...................................... 2
3.4 Authorization; Binding Obligations................................. 3
3.5 Financial Statements............................................... 3
3.6 Liabilities........................................................ 3
3.7 Agreements; Action................................................. 4
3.8 Obligations to Related Parties..................................... 4
3.9 Absence of Changes................................................. 5
3.10 Title to Properties and Assets; Liens, Etc......................... 6
3.11 Patents and Trademarks............................................. 6
3.12 Compliance with Other Instruments.................................. 6
3.13 Litigation......................................................... 7
3.14 Tax Returns and Payments........................................... 7
3.15 Employees.......................................................... 7
3.16 Proprietary Information and Inventions Agreements.................. 8
3.17 Obligations of Management.......................................... 8
3.18 Registration Rights................................................ 8
3.19 Compliance with Laws; Permits...................................... 8
3.20 Offering Valid..................................................... 8
3.21 Full Disclosure.................................................... 9
Section 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.............. 9
4.1 Requisite Power and Authority...................................... 9
</TABLE>
i.
<PAGE>
Table of Contents
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
4.2 Investment Representations......................................... 9
4.3 Transfer Restrictions.............................................. 10
Section 5. CONDITIONS TO CLOSING......................................... 10
5.1 Conditions to Purchasers' Obligations at the Closing............... 10
5.2 Conditions to Obligations of the Company........................... 11
Section 6. MISCELLANEOUS................................................. 12
6.1 Governing Law...................................................... 12
6.2 Survival........................................................... 12
6.3 Successors and Assigns............................................. 12
6.4 Entire Agreement................................................... 12
6.5 Severability....................................................... 13
6.6 Amendment and Waiver............................................... 13
6.7 Delays or Omissions................................................ 13
6.8 Notices............................................................ 13
6.9 Titles and Subtitles............................................... 13
6.10 Counterparts....................................................... 13
6.11 Broker's Fees...................................................... 14
6.12 Expenses........................................................... 14
6.13 Attorneys' Fees.................................................... 14
6.14 Exculpation Among Purchasers....................................... 14
</TABLE>
ii.
<PAGE>
Index of Exhibits
Schedule of Purchasers Exhibit A
Restated Certificate of Incorporation Exhibit B
Investors' Rights Agreement Exhibit C
Form of Legal Opinion Exhibit D
<PAGE>
GENOMICA CORPORATION
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
This Series B Preferred Stock Purchase Agreement (the "Agreement") is
entered into as of this 12/th/ day of February, 1999, by and among Genomica
Corporation, a Delaware corporation (the "Company"), and each of those persons
and entities, severally and not jointly, whose names are set forth on the
Schedule of Purchasers attached hereto as Exhibit A (which persons and entities
are hereinafter collectively referred to as "Purchasers" and each individually
as a "Purchaser").
RECITALS
Whereas, the Company has authorized the sale and issuance of an aggregate
of twenty five million (25,000,000) shares of its Series B Preferred Stock (the
"Shares");
Whereas, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
Whereas, the Company desires to issue and sell the Shares to Purchasers on
the terms and conditions set forth herein.
Now, Therefore, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1. AGREEMENT TO SELL AND PURCHASE
1.1 Authorization of Shares. On or prior to the Closing (as defined in
Section 2 below), the Company shall have authorized (i) the sale and issuance to
Purchasers of the Shares and (ii) the issuance of such shares of Common Stock to
be issued upon conversion of the Shares (the "Conversion Shares"). The Shares
and the Conversion Shares shall have the rights, preferences, privileges and
restrictions set forth in the Restated Certificate of Incorporation of the
Company, in the form attached hereto as Exhibit B (the "Certificate").
1.2 Sale and Purchase. Subject to the terms and conditions hereof, at
the Closing (as hereinafter defined), the Company hereby agrees to issue and
sell to each Purchaser, severally and not jointly, and each Purchaser agrees to
purchase from the Company, severally and not jointly, the number of Shares set
forth opposite such Purchaser's name on Exhibit A at a purchase price of $0.72
per share.
SECTION 2. CLOSING, DELIVERY AND PAYMENT
2.1 Closing. The closing of the sale and purchase of the Shares under
this Agreement (the "Closing") shall take place on the date hereof, at the
offices of Cooley Godward llp, 2595 Canyon Boulevard, Suite 250, Boulder,
Colorado 80302, or at such other time or place as the Company and Purchasers may
mutually agree (such date is hereinafter referred to as a "Closing Date").
1.
<PAGE>
2.2 Delivery. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to the Purchasers certificates representing the
number of Shares to be purchased at the Closing by each Purchaser, against
payment of the purchase price therefor, by check or wire transfer made payable
to the order of the Company or cancellation of indebtedness.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions delivered to the
Purchasers, the Company hereby represents and warrants to each Purchaser as
follows:
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and the Investors' Rights Agreement, in the form attached hereto
as Exhibit C (the "Investors' Rights Agreement"), to issue and sell the Shares
and the Conversion Shares and to carry out the provisions of this Agreement, the
Investors' Rights Agreement and the Certificate and to carry on its business as
presently conducted and as presently proposed to be conducted. The Company is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) make such qualifications
necessary, except for those jurisdictions in which failure to do so would not
have a material adverse effect on the Company or its business. The Company has
made available to the Purchasers true, correct and complete copies of the
Company's Certificate of Incorporation and Bylaws, each as amended to date.
3.2 Subsidiaries. The Company owns no equity securities of any other
corporation, limited partnership or similar entity. The Company is not a
participant in any joint venture, partnership or similar arrangement.
3.3 Capitalization; Voting Rights. The authorized capital stock of the
Company, immediately prior to the Closing, will consist of (a) thirty-four
million (34,000,000) shares of Common Stock, of which three million one hundred
thirty-five thousand two hundred ninety-six (3,135,296) shares are issued and
outstanding, and (b) twenty-six million seven hundred eighty-five thousand four
hundred (26,785,400) shares of Preferred Stock, of which twelve million six
hundred eighty-eight thousand one hundred seventy-eight (12,688,178) shares are
designated Series A Preferred Stock, of which twelve million five hundred
thirty-three thousand six hundred seventy-six (12,533,676) are issued and
outstanding, and of which fourteen million ninety-seven thousand two hundred
twenty-two (14,097,222) shares are designated Series B Preferred Stock, none of
which are issued and outstanding. All issued and outstanding shares of the
Company's Common Stock and Preferred Stock (i) have been duly authorized and
validly issued, (ii) are fully paid and nonassessable and (iii) were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities. The rights, preferences, privileges and restrictions of the Shares
are as stated in the Certificate. The Conversion Shares have been duly and
validly reserved for issuance. Except as may be granted pursuant to this
Agreement, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
stockholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. The Shares and the
Conversion Shares
2.
<PAGE>
have been duly authorized and, when issued in compliance with the provisions of
this Agreement and the Certificate, will be validly issued (including, without
limitation, issued in compliance with applicable state and federal securities
laws), fully paid and nonassessable and will be free of any liens or
encumbrances; provided, however, that the Shares and the Conversion Shares may
be subject to restrictions on transfer under state and/or federal securities
laws as set forth herein or as otherwise required by such laws at the time
transfer is proposed.
3.4 Authorization; Binding Obligations. All corporate action on the part
of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement and the Investors' Rights Agreement, the
performance of all obligations of the Company hereunder and thereunder at the
Closing and the authorization, sale, issuance and delivery of the Shares
pursuant hereto and the Conversion Shares pursuant to the Certificate has been
taken or will be taken prior to the Closing. The Agreement and the Investors'
Rights Agreement, when executed and delivered, will be valid and binding
obligations of the Company enforceable in accordance with their terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors' rights;
(ii) general principles of equity that restrict the availability of equitable
remedies; and (iii) to the extent that the enforceability of the indemnification
provisions in Section 3.11 of the Investors' Rights Agreement may be limited by
applicable laws. The sale of the Shares and the subsequent conversion of the
Shares into Conversion Shares are not and will not be subject to any preemptive
rights or rights of first refusal that have not been properly waived or complied
with.
3.5 Financial Statements. The Company has delivered to each Purchaser
(i) its audited balance sheet as at December 31, 1997 and audited statement of
income and cash flows for the twelve months ending December 31, 1997 and (ii)
its unaudited balance sheet as at October 31, 1998 (the "Statement Date") and
unaudited statement of income and cash flows for the ten month period ending on
the Statement Date (collectively, the "Financial Statements"). The Financial
Statements, together with the notes thereto, are complete and correct in all
material respects, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated, except as disclosed therein, and present fairly the financial
condition and position of the Company as of December 31, 1997 and the Statement
Date; provided, however, that the unaudited financial statements are subject to
normal recurring year-end audit adjustments (which are not expected to be
material), and do not contain all footnotes required under generally accepted
accounting principles.
3.6 Liabilities. The Company has no material liabilities and, to the
best of its knowledge, has no material contingent liabilities not otherwise
disclosed in the Financial Statements, except current liabilities incurred in
the ordinary course of business subsequent to the Statement Date which have not
been, either in any individual case or in the aggregate, materially adverse.
3.7 Agreements; Action.
(a) Except for agreements explicitly contemplated hereby and
agreements between the Company and its employees with respect to the sale of the
Company's Common
3.
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Stock, there are no agreements, understandings or proposed transactions between
the Company and any of its officers, directors, affiliates or any affiliate
thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or to its knowledge by which it is bound which may
involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of $25,000, or (ii) the license of any patent, copyright,
trade secret or other proprietary right to or from the Company (other than
licenses arising from the purchase of "off the shelf" or other standard
products), or (iii) provisions restricting or affecting the development,
manufacture or distribution of the Company's products or services, or (iv)
indemnification by the Company with respect to infringements of proprietary
rights.
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities (other than with respect to dividend obligations,
distributions, indebtedness and other obligations incurred in the ordinary
course of business or as disclosed in the Financial Statements) individually in
excess of $25,000 or, in the case of indebtedness and/or liabilities
individually less than $25,000, in excess of $75,000 in the aggregate, (iii)
made any loans or advances to any person, other than ordinary advances for
travel expenses or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
3.8 Obligations to Related Parties. There are no obligations of the
Company to officers, directors, stockholders, or employees of the Company other
than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). No such officer, director or stockholder, or any
member of their immediate families is, directly or indirectly, interested in any
material contract with the Company (other than such contracts as relate to any
such person's ownership of capital stock or other securities of the Company).
The Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
3.9 Absence of Changes. Except as set forth in Schedule 3.9, since the
Statement Date, there has not been to the Company's knowledge:
(a) Any change in the assets, liabilities, financial condition or
operations of the Company from that reflected in the Financial Statements, other
than changes in the ordinary course of business, none of which individually or
in the aggregate has had or is expected to have a material adverse effect on
such assets, liabilities, financial condition or operations of the Company;
4.
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(b) Any resignation or termination of any key officers of the
Company; and the Company, to the best of its knowledge, does not know of the
impending resignation or termination of employment of any such officer;
(c) Any material change, except in the ordinary course of business,
in the contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or of a material
debt owed to it;
(f) Any direct or indirect loans made by the Company to any
stockholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business;
(g) Any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder;
(h) Any declaration or payment of any dividend or other distribution
of the assets of the Company or any direct or indirect redemptions of shares of
the Company's stock;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets or any sale, transfer lease
or pledge of a material asset, except in the ordinary course of business;
(l) Any change in any material agreement to which the Company is a
party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
the Company; or
(m) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
the Company. For purposes of this subsection (m), a material and adverse effect
shall only be deemed to occur if its monetary impact exceeds, or with the
passage of time, will exceed $75,000.
3.10 Title to Properties and Assets; Liens, Etc. The Company has good and
marketable title to its properties and assets, and good title to its leasehold
estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance
or charge, other than (i) those resulting
5.
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from taxes which have not yet become delinquent, (ii) minor liens and
encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company and (iii)
those that have otherwise arisen in the ordinary course of business. All
facilities, machinery, equipment, fixtures, vehicles and other properties owned,
leased or used by the Company are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used. The
Company is in compliance with all material terms of each lease to which it is a
party or is otherwise bound.
3.11 Patents and Trademarks. To its knowledge, the Company owns or
possesses sufficient legal rights to all patents, trademarks, service marks,
trade names, copyrights, trade secrets, information and other proprietary rights
and processes necessary for its business as now conducted and as proposed to be
conducted, without any known infringement of the rights of others. There are no
outstanding options, licenses or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase of "off the shelf" or standard
products. The Company has not received any communications alleging that the
Company has violated or, by conducting its business as proposed, would violate
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. The Company
is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments or any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their duties to the Company's business by the
employees of the Company. The conduct of the Company's business as proposed,
will not, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated. The Company
does not believe it is or will be necessary to utilize any inventions, trade
secrets or proprietary information of any of its employees made prior to their
employment by the Company, except for inventions, trade secrets or proprietary
information that have been assigned to the Company.
3.12 Compliance with Other Instruments. The Company is not in violation or
default of any term of its Certificate or Bylaws, or of any provision of any
mortgage, indenture, contract, agreement, instrument or contract to which it is
party or by which it is bound or of any judgment, decree, order, writ or, to its
knowledge, any statute, rule or regulation applicable to the Company which would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. The execution, delivery, and
performance of and compliance with this Agreement and the Investors' Rights
Agreement, and the issuance and sale of the Shares pursuant hereto and of the
Conversion Shares pursuant to the Certificate, will not, with or without the
passage of time or giving of notice, result in any such material violation, or
be in conflict with or constitute a default under any such term, or result in
the creation of any mortgage, pledge, lien, encumbrance or charge upon any of
the properties or assets of the Company or the suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization or
approval applicable to the Company, its business or operations or any of its
assets or properties.
6.
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3.13 Litigation. There is no action, suit, proceeding or investigation
pending, or to the Company's knowledge, currently threatened against the Company
that questions the validity of this Agreement or the Investors' Rights Agreement
or the right of the Company to enter into any of such agreements, or to
consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse change
in the assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor is
the Company aware that there is any basis for the foregoing. The foregoing
includes, without limitation, actions pending or threatened (or any basis
therefor known to the Company) involving the prior employment of any of the
Company's employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
3.14 Tax Returns and Payments. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the Closing have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised (i) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (ii) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any tax
to be imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.
3.15 Employees. The Company is not a party to or bound by any currently
effective employment contract, deferred compensation arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. To the Company's knowledge, no employee of the
Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company; and to the Company's knowledge the
continued employment by the Company of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. The Company has not received any notice
alleging that any such violation has occurred. No employee of the Company has
been granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. The Company
is not aware that any officer or key employee, or that any group of key
employees, intends to terminate, his, her or their employment with the Company,
nor does the Company have a present intention to terminate the employment of any
officer, key employee or group of key employees.
3.16 Proprietary Information and Inventions Agreements. Each current
employee, officer and consultant of the Company has executed a Proprietary
Information and Inventions Agreement in a form acceptable to the Purchasers. No
current employee, officer or consultant of the Company has excluded works or
inventions made prior to his or her employment with the
7.
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Company from his or her assignment of inventions pursuant to such employee,
officer or consultant's Proprietary Information and Inventions Agreement.
3.17 Obligations of Management. Each officer of the Company is currently
devoting one hundred percent (100%) of his business time to the conduct of the
business of the Company. The Company is not aware of any officer or key
employee of the Company who plans to work less than full time at the Company in
the future.
3.18 Registration Rights. Except as required pursuant to the Investors'
Rights Agreement, the Company is presently not under any obligation, and has not
granted any rights, to register (as defined in Section 1 of the Investors'
Rights Agreement) any of the Company's presently outstanding securities or any
of its securities that may hereafter be issued.
3.19 Compliance with Laws; Permits. The Company is not in violation of any
applicable statute, rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which violation would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. No governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection with
the execution and delivery of this Agreement and the issuance of the Shares or
the Conversion Shares, except such as has been duly and validly obtained or
filed, or with respect to any filings that must be made after the Closing, as
will be filed in a timely manner. The Company has all franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could materially and adversely
affect the business, properties, prospects or financial condition of the Company
and believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted.
3.20 Offering Valid. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.2 hereof, the offer, sale
and issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws. Neither the
Company nor any agent on its behalf has solicited or will solicit any offers to
sell or has offered to sell or will offer to sell all or any part of the Shares
to any person or persons so as to bring the sale of such Shares by the Company
within the registration provisions of the Securities Act or any state securities
laws.
3.21 Full Disclosure. This Agreement, the Exhibits hereto, the Investors'
Rights Agreement and all other documents delivered by the Company to Purchasers
or their attorneys or agents in connection herewith or therewith or with the
transactions contemplated hereby or thereby, do not contain any untrue statement
of a material fact nor, to the Company's knowledge, omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading.
8.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
4.1 Requisite Power and Authority. Purchaser has all necessary power and
authority under all applicable provisions of law to execute and deliver this
Agreement and the Investors' Rights Agreement and to carry out their provisions.
All action on Purchaser's part required for the lawful execution and delivery of
this Agreement and the Investors' Rights Agreement have been or will be
effectively taken prior to the Closing. Upon their execution and delivery, this
Agreement and the Investors' Rights Agreement will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights,
(ii) general principles of equity that restrict the availability of equitable
remedies and (iii) to the extent that the enforceability of the indemnification
provisions of the Investors' Rights Agreement may be limited by applicable laws.
4.2 Investment Representations. Purchaser understands that neither the
Shares nor the Conversion Shares have been registered under the Securities Act.
Purchaser also understands that the Shares are being offered and sold pursuant
to an exemption from registration contained in the Securities Act based in part
upon Purchaser's representations contained in the Agreement. Purchaser hereby
represents and warrants as follows:
(a) Purchaser Bears Economic Risk. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares (or the Conversion Shares) are
registered pursuant to the Securities Act, or an exemption from registration is
available. Purchaser understands that the Company has no present intention of
registering the Shares, the Conversion Shares or any shares of its Common Stock.
Purchaser also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow Purchaser to transfer all or any portion
of the Shares or the Conversion Shares under the circumstances, in the amounts
or at the times Purchaser might propose.
(b) Acquisition for Own Account. Purchaser is acquiring the Shares
and the Conversion Shares for Purchaser's own account for investment only, and
not with a view towards their distribution.
(c) Purchaser Can Protect Its Interest. Purchaser represents that by
reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Further, Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated in the Agreement.
9.
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(d) Accredited Investor. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) Rule 144. Purchaser acknowledges and agrees that the Shares,
and, if issued, the Conversion Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act as in effect from
time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the availability of certain current public information about the
Company, the resale occurring following the required holding period under Rule
144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
(f) Residence. If the Purchaser is an individual, then the Purchaser
resides in the state or province identified in the address of the Purchaser set
forth on Exhibit A; if the Purchaser is a partnership, corporation, limited
liability company or other entity, then the office or offices of the Purchaser
in which its investment decision was made is located at the address or addresses
of the Purchaser set forth on Exhibit A.
4.3 Transfer Restrictions. Each Purchaser acknowledges and agrees that
the Shares and, if issued, the Conversion Shares are subject to restrictions on
transfer as set forth in the Investors' Rights Agreement.
SECTION 5. CONDITIONS TO CLOSING
5.1 Conditions to Purchasers' Obligations at the Closing. Purchasers'
obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
(a) Representations and Warranties True; Performance of Obligations.
The representations and warranties made by the Company in Section 3 hereof shall
be true and correct in all material respects as of the Closing Date with the
same force and effect as if they had been made as of the Closing Date, and the
Company shall have performed all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing.
(b) Legal Investment. On the Closing Date, the sale and issuance of
the Shares and the proposed issuance of the Conversion Shares shall be legally
permitted by all laws and regulations to which Purchasers and the Company are
subject.
(c) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the
Investors' Rights Agreement (except for such as may be properly obtained
subsequent to the Closing).
(d) Filing of Certificate. The Certificate shall have been filed
with the Secretary of State of the State of Delaware.
10.
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(e) Reservation of Conversion Shares. The Conversion Shares issuable
upon conversion of the Shares shall have been duly authorized and reserved for
issuance upon such conversion.
(f) Compliance Certificate. The Company shall have delivered to
Purchasers a Compliance Certificate, executed by an officer of the Company,
dated as of the Closing Date, to the effect that the conditions specified in
subsections (a), (c), (d) and (e) of this Section 5.1 have been satisfied.
(g) Investors' Rights Agreement. An Investors' Rights Agreement,
substantially in the form attached hereto as Exhibit C, shall have been executed
and delivered by the parties thereto.
(h) Board of Directors. Upon the Closing, the authorized size of the
Board of Directors of the Company shall be six (6) members and the Board shall
consist of Drs. Marvin Caruthers, Ralph Christoffersen, Arnold Levine and Thomas
Marr and Messrs. Robert Nelsen and James Rathmann.
(i) Legal Opinion. The Purchasers shall have received from legal
counsel to the Company an opinion addressed to them, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit D.
(j) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing hereby, all
documents and instruments incident to such transactions and all documents,
instruments and proceedings related to the Purchasers' business, technical and
legal due diligence shall be reasonably satisfactory in substance and form to
the Purchasers and their special counsel, and the Purchasers and such special
counsel shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
(k) Minimum Investment. The Company shall have received a minimum
investment of $5,000,000 at the first closing, including cancellation of
indebtedness.
5.2 Conditions to Obligations of the Company. The Company's obligation to
issue and sell the Shares at the Closing is subject to the satisfaction, on or
prior to the Closing, of the following conditions:
(a) Representations and Warranties True. The representations and
warranties made by the Purchasers in Section 4 hereof shall be true and correct
in all material respects as of the Closing Date, with the same force and effect
as if they had been made on and as of said date.
(b) Performance of Obligations. Purchasers shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by Purchasers on or before the Closing.
(c) Filing of Certificate. The Certificate shall have been filed
with the Secretary of State of the State of Delaware.
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(d) Investors' Rights Agreement. An Investors' Rights Agreement,
substantially in the form attached hereto as Exhibit C, shall have been executed
and delivered by the Purchasers.
(e) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the
Investors' Rights Agreement (except for such as may be properly obtained
subsequent to the Closing).
(f) Minimum Investment. The Company shall have received a minimum
investment of $5,000,000 at the first Closing, including cancellation of
indebtedness.
SECTION 6. MISCELLANEOUS
6.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Colorado as such laws are applied to agreements between
Colorado residents entered into and performed entirely in Colorado.
6.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Purchaser and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
6.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
6.4 Entire Agreement. This Agreement, the Exhibits and Schedules
hereto, including the Investors' Rights Agreement, and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and no party
shall be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein and
therein.
6.5 Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.6 Amendment and Waiver.
(a) This Agreement may be amended or modified only upon the written
consent of the Company and holders of at least a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
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(b) The obligations of the Company and the rights of the holders of
the Shares and the Conversion Shares under the Agreement may be waived only with
the written consent of the holders of at least a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
6.7 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Investors'
Rights Agreement or the Certificate, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance thereafter occurring. It is further agreed that any waiver,
permit, consent or approval of any kind of character on any Purchaser's part of
any breach, default or noncompliance under this Agreement, the Investors' Rights
Agreement or under the Certificate or any waiver on such party's part of any
provisions or conditions of the Agreement, the Investors' Rights Agreement or
the Certificate must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, the Investors' Rights Agreement, the Certificate, by law, or
otherwise afforded to any party, shall be cumulative and not alternative.
6.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at the address as set forth on the signature page hereof and to
Purchaser at the address set forth on Exhibit A attached hereto or at such other
address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
6.9 Titles and Subtitles. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
6.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.11 Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein; provided, however, that the Company is
obligated to pay a fee to Punk, Ziegel & Co. related to purchases by certain of
the Purchasers. Each party hereto further agrees to indemnify each other party
for any claims, losses or expenses incurred by such other party as a result of
the representation in this Section 6.11 being untrue.
6.12 Expenses. The Company shall pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of the
Agreement. The Company
13.
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shall reimburse the reasonable fees and expenses of one counsel to the
Purchasers, not to exceed $25,000, incurred in connection with the negotiation,
execution and delivery of this Agreement.
6.13 Attorneys' Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
6.14 Exculpation Among Purchasers. Each Purchaser acknowledges that it is
not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Shares and Conversion
Shares.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14.
<PAGE>
In Witness Whereof, the parties hereto have executed the Series B Preferred
Stock Purchase Agreement as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASERS:
Genomica Corporation Falcon Technology Partners, L.P.
4001 Discovery Drive
Boulder, CO 80303
By: /s/ Thomas G. Marr By: /s/ James L. Rathmann
- ----------------------------------- -----------------------------------
Name: Thomas G. Marr Name: James L. Rathmann
- ----------------------------------- -----------------------------------
Title: President & Chief Scientist Title: General Partner
- ----------------------------------- -----------------------------------
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation ARCH Ventures Fund III, L.P.
4001 Discovery Drive
Boulder, CO 80303 By: ARCH Venture Partners, L.L.C.,
general partner
By:________________________________ By: /s/ Robert Nelsen
Name:______________________________ Name: Robert Nelsen
Title:_____________________________ Title: Managing Director
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation Boulder Ventures, L.P.
4001 Discovery Drive
Boulder, CO 80303 By: BV Partners, L.L.C., general
partner
By:________________________________ By: /s/ Kyle Lefkoff
Name:______________________________ Name:______________________________
Title:_____________________________ Title:_____________________________
Boulder Ventures II, L.P.
By: BV Partners II, L.L.C., general
partner
By: /s/ Kyle Lefkoff
Name:______________________________
Title:_____________________________
Boulder Ventures II (Annex), L.P.
By: BV Partners II, L.L.C., general
partner
By: /s/ Kyle Lefkoff
Name:______________________________
Title:_____________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation The Caruthers Family L.L.C.
4001 Discovery Drive
Boulder, CO 80303
By: By: /s/ Marvin H. Caruthers
________________________________ ________________________________
Name: Name: Marvin H. Caruthers
______________________________ ______________________________
Title: Title: Manager
_____________________________ _____________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation Nominee of Invesco
4001 Discovery Drive Global Health Sciences Fund
Boulder, CO 80303
By:________________________________ By: /s/ Glen A. Payne
Name:______________________________ Name: Glen A. Payne
Title:_____________________________ Title: Secretary
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation Anvers, L.P.
4001 Discovery Drive by: FSIP LLC
Boulder, CO 80303 General Partner
By: By: /s/ Leopold Swergold
________________________________ ________________________________
Name: Name: Leopold Swergold
______________________________ ______________________________
Title: Title: Sr. Managing Director
_____________________________ _____________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation Anvers II, L.P.
4001 Discovery Drive by: FSIP LLC
Boulder, CO 80303 General Partner
By: By: /s/ Leopold Swergold
________________________________ _______________________________
Name: Name: Leopold Swergold
______________________________ _____________________________
Title: Title: Sr. Managing Director
_____________________________ ____________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation
4001 Discovery Drive
Boulder, CO 80303
By: By: /s/ Stuart Epstein
________________________________ ________________________________
Stuart Epstein
Name:______________________________
Title:_____________________________
2.
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation
4001 Discovery Drive
Boulder, CO 80303
By: By: /s/ Marc Epstein
________________________________ ________________________________
Marc Epstein
Name:______________________________
Title:_____________________________
3.
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation GC&H Investments
4001 Discovery Drive
Boulder, CO 80303
By: By: /s/ John L. Cardoza
________________________________ ________________________________
Name: Name: John L. Cardoza
______________________________ ______________________________
Title: Title: Executive Partner
_____________________________ _____________________________
Series B Preferred Stock Purchase Agreement
<PAGE>
COMPANY: PURCHASERS:
Genomica Corporation
4001 Discovery Drive
Boulder, CO 80303
By:________________________________ By: /s/ Joseph Klein III
--------------------------------
Name:______________________________ Name: Joseph Klein III
------------------------------
Title:_____________________________ Title: Health Analyst
-----------------------------
Series B Preferred Stock Purchase Agreement
<PAGE>
Tyjo Corp. Defined Benefit
Plan and Trust
70 Redland Woods Way
Tiburon, CA 94920
By: /s/ Robert K. Schalter
-------------------------------------
Name: Robert K. Schalter
-----------------------------------
Title: President
----------------------------------
<PAGE>
Exhibit A
Series B Preferred Stock Purchase Agreement
<TABLE>
<CAPTION>
Shares of Series B
------------------
Name Preferred Stock Purchase Price
- ---- --------------- --------------
<S> <C> <C>
Initial Closing December 16, 1998:
Falcon Technology Partners, L.P.
Attn: James L. Rathmann
600 Dorset Road 2,594,310 $ 1,867,903.20
Devon, PA 19333
Invesco Global Health Sciences Fund
Attn: Buck Phillips
7800 East Union Avenue
Mail Stop 1102
Denver, CO 80237 1,899,865 1,367,902.80
ARCH Ventures Fund III, L.P.
Attn: Robert Nelsen
1000 2/nd/ Avenue, Suite 3700
Seattle, WA 98104 1,723,667 1,241,040.24
Boulder Ventures II, L.P.
Attn: Kyle Lefkoff
1634 Walnut Street, Suite 301
Boulder, CO 80302 1,208,334 870,000.48
Anvers, L.P.
Attn: Leo Swergold
230 Park Avenue, 13/th/ Floor
New York, NY 10169 555,556 400,000.32
Anvers II, L.P.
Attn: Leo Swergold
230 Park Avenue, 13/th/ Floor
New York, NY 10169 277,778 200,000.16
Boulder Ventures II (Annex), L.P.
Attn: Kyle Lefkoff
1634 Walnut Street, Suite 301
Boulder, CO 80302 180,556 130,000.32
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares of Series B
------------------
Name Preferred Stock Purchase Price
- ---- --------------- --------------
<S> <C> <C>
The Caruthers Family L.L.C.
Attn: Marvin H. Caruthers
2450 Cragmoor
Boulder, CO 80303 108,600 78,192.00
Boulder Ventures, L.P.
Attn: Kyle Lefkoff
1634 Walnut Street, Suite 301
Boulder, CO 80302 69,962 50,372.64
GC&H Investments
Attn: Jim Kindler
One Maritime Plaza, 20/th/ Floor
San Francisco, CA 94111 69,444 49,999.68
Second Closing: December 17, 1998
Marc Epstein
3091 Miro Drive North
Palm Beach Gardens, FL 33411 34,722 24,999.84
Stuart A. Epstein
3091 Miro Drive North
Palm Beach Gardens, FL 33411 34,722 24,999.84
Third Closing: February 12, 1999
Kaufmann Fund, Inc.
Attn: Skip Klein
25 Light Street, Suite 300 9,722,222 6,999,999.84
Baltimore, MD 21202
Punk, Ziegel & Company
Investors, L.L.C. 208,333 149,999.76
520 Madison Avenue
New York, NY 10022
Tyjo Corporation Defined Benefit
Plan and Trust 138,888 99,999.36
70 Reedland Woods Way
Tiburon, CA 94920
Total 18,826,959 $13,555,410.48
</TABLE>
2.
<PAGE>
Exhibit B
Restated Certificate of Incorporation
See Tabs 5 and 22
<PAGE>
Exhibit C
Investors' Rights Agreement
See Tab 21
<PAGE>
Exhibit 10.10
GENOMICA CORPORATION
SERIES C PREFERRED STOCK
PURCHASE AGREEMENT
March 13, 2000
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. AGREEMENT TO SELL AND PURCHASE.............................
1.1 Authorization of Shares...................................
1.2 Sale and Purchase.........................................
Section 2. CLOSING, DELIVERY AND PAYMENT..............................
2.1 Closing...................................................
2.2 Delivery..................................................
Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............
3.1 Organization, Good Standing and Qualification.............
3.2 Subsidiaries..............................................
3.3 Capitalization; Voting Rights.............................
3.4 Authorization; Binding Obligations........................
3.5 Financial Statements......................................
3.6 Liabilities...............................................
3.7 Agreements; Action........................................
3.8 Obligations to Related Parties............................
3.9 Absence of Changes........................................
3.10 Title to Properties and Assets; Liens, Etc................
3.11 Patents and Trademarks....................................
3.12 Compliance with Other Instruments.........................
3.13 Litigation................................................
3.14 Tax Returns and Payments..................................
3.15 Employees.................................................
3.16 Proprietary Information and Inventions Agreements.........
3.17 Obligations of Management.................................
3.18 Registration Rights.......................................
3.19 Compliance with Laws; Permits.............................
3.20 Offering Valid............................................
3.21 Full Disclosure...........................................
Section 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS...........
4.1 Requisite Power and Authority.............................
</TABLE>
i.
<PAGE>
Table of Contents
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
4.2 Investment Representations................................
4.3 Transfer Restrictions.....................................
Section 5. CONDITIONS TO CLOSING......................................
5.1 Conditions to Purchasers' Obligations at the Closing......
5.2 Conditions to Obligations of the Company..................
Section 6. MISCELLANEOUS..............................................
6.1 Governing Law.............................................
6.2 Survival..................................................
6.3 Successors and Assigns....................................
6.4 Entire Agreement..........................................
6.5 Severability..............................................
6.6 Amendment and Waiver......................................
6.7 Delays or Omissions.......................................
6.8 Notices...................................................
6.9 Titles and Subtitles......................................
6.10 Counterparts..............................................
6.11 Broker's Fees.............................................
6.12 Expenses..................................................
6.13 Attorneys' Fees...........................................
6.14 Exculpation Among Purchasers..............................
</TABLE>
ii.
<PAGE>
Index of Exhibits
Schedule of Purchasers Exhibit A
Restated Certificate of Incorporation Exhibit B
Amended and Restated Investors'
Rights Agreement Exhibit C
<PAGE>
GENOMICA CORPORATION
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
This Series C Preferred Stock Purchase Agreement (the "Agreement") is
entered into as of this ___ day of March, 2000, by and among Genomica
Corporation, a Delaware corporation (the "Company"), and each of those persons
and entities, severally and not jointly, whose names are set forth on the
Schedule of Purchasers attached hereto as Exhibit A (which persons and entities
---------
are hereinafter collectively referred to as "Purchasers" and each individually
as a "Purchaser").
RECITALS
Whereas, the Company has authorized the sale and issuance of up to an
aggregate of ten million two-hundred fifty thousand (10,250,000) shares of its
Series C Preferred Stock (the "Shares");
Whereas, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
Whereas, the Company desires to issue and sell the Shares to Purchasers on
the terms and conditions set forth herein.
Now, Therefore, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1. AGREEMENT TO SELL AND PURCHASE
1.1 Authorization of Shares. On or prior to the Closing (as defined in
Section 2 below), the Company shall have authorized (i) the sale and issuance to
Purchasers of the Shares and (ii) the issuance of such shares of Common Stock to
be issued upon conversion of the Shares (the "Conversion Shares"). The Shares
and the Conversion Shares shall have the rights, preferences, privileges and
restrictions set forth in the Restated Certificate of Incorporation of the
Company, in the form attached hereto as Exhibit B (the "Certificate").
---------
1.2 Sale and Purchase. Subject to the terms and conditions hereof, at the
Closing (as hereinafter defined), the Company hereby agrees to issue and sell to
each Purchaser, severally and not jointly, and each Purchaser agrees to purchase
from the Company, severally and not jointly, the number of Shares set forth
opposite such Purchaser's name on Exhibit A at a purchase price of $1.50 per
---------
share.
1.
<PAGE>
SECTION 2. CLOSING, DELIVERY AND PAYMENT
2.1 Closing. The closing of the sale and purchase of the Shares under
this Agreement (the "Closing") shall take place on the date hereof, at the
offices of Cooley Godward llp, 2595 Canyon Boulevard, Suite 250, Boulder,
Colorado 80302, or at such other time or place as the Company and Purchasers may
mutually agree (such date is hereinafter referred to as a "Closing Date").
2.2 Delivery. At the Closing, subject to the terms and conditions hereof,
the Company will deliver to the Purchasers certificates representing the number
of Shares to be purchased at the Closing by each Purchaser, against payment of
the purchase price therefor, by check or wire transfer made payable to the order
of the Company or cancellation of indebtedness.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions delivered to the
Purchasers, the Company hereby represents and warrants to each Purchaser as
follows:
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and the Amended and Restated Investors' Rights Agreement, in the
form attached hereto as Exhibit C (the "Investors' Rights Agreement"), to issue
---------
and sell the Shares and the Conversion Shares and to carry out the provisions of
this Agreement, the Investors' Rights Agreement and the Certificate and to carry
on its business as presently conducted and as presently proposed to be
conducted. The Company is duly qualified and is authorized to do business and is
in good standing as a foreign corporation in all jurisdictions in which the
nature of its activities and of its properties (both owned and leased) make such
qualifications necessary, except for those jurisdictions in which failure to do
so would not have a material adverse effect on the Company or its business. The
Company has made available to the Purchasers true, correct and complete copies
of the Company's Certificate of Incorporation and Bylaws, each as amended to
date.
3.2 Subsidiaries. The Company owns no equity securities of any other
corporation, limited partnership or similar entity. The Company is not a
participant in any joint venture, partnership or similar arrangement.
3.3 Capitalization; Voting Rights. The authorized capital stock of the
Company, immediately prior to the Closing, will consist of (a) sixty-five
million (65,000,000) shares of Common Stock, of which five million five hundred
seven thousand four hundred fifty-seven (5,507,457) shares are issued and
outstanding, and (b) forty-seven million nine hundred thirty-eight thousand one
hundred seventy-eight (47,938,178) shares of Preferred Stock, of which twelve
million six hundred eighty-eight thousand one hundred seventy-eight (12,688,178)
shares are designated Series A Preferred Stock, of which twelve million five
hundred thirty-three thousand six hundred seventy-six (12,533,676) are issued
and outstanding, of which twenty-five million (25,000,000) shares are designated
Series B Preferred Stock, eighteen million eight
2.
<PAGE>
hundred twenty-six thousand nine hundred fifty-nine (18,826,959) of which are
issued and outstanding and of which ten million two-hundred fifty thousand
(10,250,000) shares are designated Series C Preferred Stock, none of which are
issued and outstanding. All issued and outstanding shares of the Company's
Common Stock and Preferred Stock (i) have been duly authorized and validly
issued, (ii) are fully paid and nonassessable and (iii) were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities. The rights, preferences, privileges and restrictions of the Shares
are as stated in the Certificate. The Conversion Shares have been duly and
validly reserved for issuance. Except as may be granted pursuant to this
Agreement, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
stockholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. The Shares and the
Conversion Shares have been duly authorized and, when issued in compliance with
the provisions of this Agreement and the Certificate, will be validly issued
(including, without limitation, issued in compliance with applicable state and
federal securities laws), fully paid and nonassessable and will be free of any
liens or encumbrances; provided, however, that the Shares and the Conversion
Shares may be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time transfer is proposed.
3.4 Authorization; Binding Obligations. All corporate action on the part
of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement and the Investors' Rights Agreement, the
performance of all obligations of the Company hereunder and thereunder at the
Closing and the authorization, sale, issuance and delivery of the Shares
pursuant hereto and the Conversion Shares pursuant to the Certificate has been
taken or will be taken prior to the Closing. The Agreement and the Investors'
Rights Agreement, when executed and delivered, will be valid and binding
obligations of the Company enforceable in accordance with their terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors' rights;
(ii) general principles of equity that restrict the availability of equitable
remedies; and (iii) to the extent that the enforceability of the indemnification
provisions in Section 3.11 of the Investors' Rights Agreement may be limited by
applicable laws. The sale of the Shares and the subsequent conversion of the
Shares into Conversion Shares are not and will not be subject to any preemptive
rights or rights of first refusal that have not been properly waived or complied
with.
3.5 Financial Statements. The Company has delivered to each Purchaser its
unaudited balance sheet as at December 31, 1999 (the "Statement Date"), its
unaudited statement of operations, its unaudited statement of stockholders'
equity and its unaudited statement of cash flows for the twelve months ending
December 31, 1999 (collectively, the "Financial Statements"). The Financial
Statements are subject to normal recurring year-end audit adjustments, and do
not contain all footnotes required under generally accepted accounting
principles.
3.6 Liabilities. The Company has no material liabilities and, to the best
of its knowledge, has no material contingent liabilities not otherwise disclosed
in the Financial Statements, except current liabilities incurred in the ordinary
course of business subsequent to
3.
<PAGE>
the Statement Date which have not been, either in any individual case or in the
aggregate, materially adverse.
3.7 Agreements; Action.
(a) Except for agreements explicitly contemplated hereby and
agreements between the Company and its employees with respect to the sale of the
Company's Common Stock, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
is a party or to its knowledge by which it is bound which may involve (i)
obligations (contingent or otherwise) of, or payments to, the Company in excess
of $25,000, or (ii) the license of any patent, copyright, trade secret or other
proprietary right to or from the Company (other than licenses arising from the
purchase of "off the shelf" or other standard products), or (iii) provisions
restricting or affecting the development, manufacture or distribution of the
Company's products or services, or (iv) indemnification by the Company with
respect to infringements of proprietary rights.
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities (other than with respect to dividend obligations,
distributions, indebtedness and other obligations incurred in the ordinary
course of business or as disclosed in the Financial Statements) individually in
excess of $25,000 or, in the case of indebtedness and/or liabilities
individually less than $25,000, in excess of $75,000 in the aggregate, (iii)
made any loans or advances to any person, other than ordinary advances for
travel expenses or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
3.8 Obligations to Related Parties. There are no obligations of the
Company to officers, directors, stockholders, or employees of the Company other
than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). No such officer, director or stockholder, or any
member of their immediate families is, directly or indirectly, interested in any
material contract with the Company (other than such contracts as relate to any
such person's ownership of capital stock or other securities of the Company).
The Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
4.
<PAGE>
3.9 Absence of Changes. Except as set forth in Schedule 3.9, since the
Statement Date, there has not been to the Company's knowledge:
(a) Any change in the assets, liabilities, financial condition or
operations of the Company from that reflected in the Financial Statements, other
than changes in the ordinary course of business, none of which individually or
in the aggregate has had or is expected to have a material adverse effect on
such assets, liabilities, financial condition or operations of the Company;
(b) Any resignation or termination of any key officers of the
Company; and the Company, to the best of its knowledge, does not know of the
impending resignation or termination of employment of any such officer;
(c) Any material change, except in the ordinary course of business,
in the contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or of a material
debt owed to it;
(f) Any direct or indirect loans made by the Company to any
stockholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business;
(g) Any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder;
(h) Any declaration or payment of any dividend or other distribution
of the assets of the Company or any direct or indirect redemptions of shares of
the Company's stock;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or guaranteed
by the Company, except those for immaterial amounts and for current liabilities
incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets or any sale, transfer lease
or pledge of a material asset, except in the ordinary course of business;
(l) Any change in any material agreement to which the Company is a
party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
the Company; or
5.
<PAGE>
(m) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
the Company. For purposes of this subsection (m), a material and adverse effect
shall only be deemed to occur if its monetary impact exceeds, or with the
passage of time, will exceed $75,000.
3.10 Title to Properties and Assets; Liens, Etc. The Company has good and
marketable title to its properties and assets, and good title to its leasehold
estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance
or charge, other than (i) those resulting from taxes which have not yet become
delinquent, (ii) minor liens and encumbrances which do not materially detract
from the value of the property subject thereto or materially impair the
operations of the Company and (iii) those that have otherwise arisen in the
ordinary course of business. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company are in good
operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used. The Company is in compliance with all
material terms of each lease to which it is a party or is otherwise bound.
3.11 Patents and Trademarks. To its knowledge, the Company owns or
possesses sufficient legal rights to all patents, trademarks, service marks,
trade names, copyrights, trade secrets, information and other proprietary rights
and processes necessary for its business as now conducted and as proposed to be
conducted, without any known infringement of the rights of others. There are no
outstanding options, licenses or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase of "off the shelf" or standard
products. The Company has not received any communications alleging that the
Company has violated or, by conducting its business as proposed, would violate
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. The Company
is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments or any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their duties to the Company's business by the
employees of the Company. The conduct of the Company's business as proposed,
will not, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated. The Company
does not believe it is or will be necessary to utilize any inventions, trade
secrets or proprietary information of any of its employees made prior to their
employment by the Company, except for inventions, trade secrets or proprietary
information that have been assigned to the Company.
3.12 Compliance with Other Instruments. The Company is not in violation
or default of any term of its Certificate or Bylaws, or of any provision of any
mortgage, indenture, contract, agreement, instrument or contract to which it is
party or by which it is bound or of any judgment, decree, order, writ or, to its
knowledge, any statute, rule or regulation applicable to the Company which would
materially and adversely affect the business, assets, liabilities, financial
6.
<PAGE>
condition, operations or prospects of the Company. The execution, delivery, and
performance of and compliance with this Agreement and the Investors' Rights
Agreement, and the issuance and sale of the Shares pursuant hereto and of the
Conversion Shares pursuant to the Certificate, will not, with or without the
passage of time or giving of notice, result in any such material violation, or
be in conflict with or constitute a default under any such term, or result in
the creation of any mortgage, pledge, lien, encumbrance or charge upon any of
the properties or assets of the Company or the suspension, revocation,
impairment, forfeiture or non-renewal of any permit, license, authorization or
approval applicable to the Company, its business or operations or any of its
assets or properties.
3.13 Litigation. There is no action, suit, proceeding or investigation
pending, or to the Company's knowledge, currently threatened against the Company
that questions the validity of this Agreement or the Investors' Rights Agreement
or the right of the Company to enter into any of such agreements, or to
consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse change
in the assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor is
the Company aware that there is any basis for the foregoing. The foregoing
includes, without limitation, actions pending or threatened (or any basis
therefor known to the Company) involving the prior employment of any of the
Company's employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
3.14 Tax Returns and Payments. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the Closing have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised (i) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (ii) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any tax
to be imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.
3.15 Employees. The Company is not a party to or bound by any currently
effective employment contract, deferred compensation arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. To the Company's knowledge, no employee of the
Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company; and to the Company's knowledge the
continued employment by the Company of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. The Company has not received
7.
<PAGE>
any notice alleging that any such violation has occurred. No employee of the
Company has been granted the right to continued employment by the Company or to
any material compensation following termination of employment with the Company.
The Company is not aware that any officer or key employee, or that any group of
key employees, intends to terminate, his, her or their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any officer, key employee or group of key employees.
3.16 Proprietary Information and Inventions Agreements. Each current
employee, officer and consultant of the Company has executed a Proprietary
Information and Inventions Agreement in a form acceptable to the Purchasers. No
current employee, officer or consultant of the Company has excluded works or
inventions made prior to his or her employment with the Company from his or her
assignment of inventions pursuant to such employee, officer or consultant's
Proprietary Information and Inventions Agreement.
3.17 Obligations of Management. Each officer of the Company is currently
devoting one hundred percent (100%) of his business time to the conduct of the
business of the Company. The Company is not aware of any officer or key employee
of the Company who plans to work less than full time at the Company in the
future.
3.18 Registration Rights. Except as required pursuant to the Investors'
Rights Agreement, the Company is presently not under any obligation, and has not
granted any rights, to register (as defined in Section 1 of the Investors'
Rights Agreement) any of the Company's presently outstanding securities or any
of its securities that may hereafter be issued.
3.19 Compliance with Laws; Permits. The Company is not in violation of
any applicable statute, rule, regulation, order or restriction of any domestic
or foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which violation would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. No governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection with
the execution and delivery of this Agreement and the issuance of the Shares or
the Conversion Shares, except such as has been duly and validly obtained or
filed, or with respect to any filings that must be made after the Closing, as
will be filed in a timely manner. The Company has all franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could materially and adversely
affect the business, properties, prospects or financial condition of the Company
and believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted.
3.20 Offering Valid. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.2 hereof, the offer, sale
and issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws. Neither the
Company nor any agent on its behalf has solicited or will solicit any offers to
sell or has offered to sell or will offer to sell all or
8.
<PAGE>
any part of the Shares to any person or persons so as to bring the sale of such
Shares by the Company within the registration provisions of the Securities Act
or any state securities laws.
3.21 Full Disclosure. This Agreement, the Exhibits hereto, the Investors'
Rights Agreement and all other documents delivered by the Company to Purchasers
or their attorneys or agents in connection herewith or therewith or with the
transactions contemplated hereby or thereby, do not contain any untrue statement
of a material fact nor, to the Company's knowledge, omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
4.1 Requisite Power and Authority. Purchaser has all necessary power and
authority under all applicable provisions of law to execute and deliver this
Agreement and the Investors' Rights Agreement and to carry out their provisions.
All action on Purchaser's part required for the lawful execution and delivery of
this Agreement and the Investors' Rights Agreement have been or will be
effectively taken prior to the Closing. Upon their execution and delivery, this
Agreement and the Investors' Rights Agreement will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights,
(ii) general principles of equity that restrict the availability of equitable
remedies and (iii) to the extent that the enforceability of the indemnification
provisions of the Investors' Rights Agreement may be limited by applicable laws.
4.2 Investment Representations. Purchaser understands that neither the
Shares nor the Conversion Shares have been registered under the Securities Act.
Purchaser also understands that the Shares are being offered and sold pursuant
to an exemption from registration contained in the Securities Act based in part
upon Purchaser's representations contained in the Agreement. Purchaser hereby
represents and warrants as follows:
(a) Purchaser Bears Economic Risk. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares (or the Conversion Shares) are
registered pursuant to the Securities Act, or an exemption from registration is
available. Purchaser understands that the Company has no present intention of
registering the Shares, the Conversion Shares or any shares of its Common Stock.
Purchaser also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow Purchaser to transfer all or any portion
of the Shares or
9.
<PAGE>
the Conversion Shares under the circumstances, in the amounts or at the times
Purchaser might propose.
(b) Acquisition for Own Account. Purchaser is acquiring the Shares
and the Conversion Shares for Purchaser's own account for investment only, and
not with a view towards their distribution.
(c) Purchaser Can Protect Its Interest. Purchaser represents that by
reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Further, Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated in the Agreement.
(d) Accredited Investor. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) Rule 144. Purchaser acknowledges and agrees that the Shares,
and, if issued, the Conversion Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act as in effect from
time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the availability of certain current public information about the
Company, the resale occurring following the required holding period under Rule
144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
(f) Residence. If the Purchaser is an individual, then the Purchaser
resides in the state or province identified in the address of the Purchaser set
forth on Exhibit A; if the Purchaser is a partnership, corporation, limited
---------
liability company or other entity, then the office or offices of the Purchaser
in which its investment decision was made is located at the address or addresses
of the Purchaser set forth on Exhibit A.
---------
4.3 Transfer Restrictions. Each Purchaser acknowledges and agrees that
the Shares and, if issued, the Conversion Shares are subject to restrictions on
transfer as set forth in the Investors' Rights Agreement.
SECTION 5. CONDITIONS TO CLOSING
5.1 Conditions to Purchasers' Obligations at the Closing. Purchasers'
obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
(a) Representations and Warranties True; Performance of Obligations.
The representations and warranties made by the Company in Section 3 hereof shall
be true and correct in all material respects as of the Closing Date with the
same force and effect as if they had been made as of the Closing Date, and the
Company shall have performed all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing.
10.
<PAGE>
(b) Legal Investment. On the Closing Date, the sale and issuance of
the Shares and the proposed issuance of the Conversion Shares shall be legally
permitted by all laws and regulations to which Purchasers and the Company are
subject.
(c) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the
Investors' Rights Agreement (except for such as may be properly obtained
subsequent to the Closing).
(d) Filing of Certificate. The Certificate shall have been filed
with the Secretary of State of the State of Delaware.
(e) Reservation of Conversion Shares. The Conversion Shares issuable
upon conversion of the Shares shall have been duly authorized and reserved for
issuance upon such conversion.
(f) Compliance Certificate. The Company shall have delivered to
Purchasers a Compliance Certificate, executed by an officer of the Company,
dated as of the Closing Date, to the effect that the conditions specified in
subsections (a), (c), (d) and (e) of this Section 5.1 have been satisfied.
(g) Amended and Restated Investors' Rights Agreement. An Amended and
Restated Investors' Rights Agreement, substantially in the form attached hereto
as Exhibit C, shall have been executed and delivered by the parties thereto.
---------
(h) Board of Directors. Upon the Closing, the authorized size of the
Board of Directors of the Company shall be seven (7) members and the Board shall
consist of Drs. Marvin Caruthers, Ralph Christoffersen, Arnold Levine and Thomas
Marr and Messrs. Robert Nelsen and James Rathmann and Ms. Teresa Ayers.
(i) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing hereby, all
documents and instruments incident to such transactions and all documents,
instruments and proceedings related to the Purchasers' business, technical and
legal due diligence shall be reasonably satisfactory in substance and form to
the Purchasers and their special counsel, and the Purchasers and such special
counsel shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
5.2 Conditions to Obligations of the Company. The Company's obligation to
issue and sell the Shares at the Closing is subject to the satisfaction, on or
prior to the Closing, of the following conditions:
(a) Representations and Warranties True. The representations and
warranties made by the Purchasers in Section 4 hereof shall be true and correct
in all material respects as of the Closing Date, with the same force and effect
as if they had been made on and as of said date.
11.
<PAGE>
(b) Performance of Obligations. Purchasers shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by Purchasers on or before the Closing.
(c) Filing of Certificate. The Certificate shall have been filed with
the Secretary of State of the State of Delaware.
(d) Amended and Restated Investors' Rights Agreement. An Amended and
Restated Investors' Rights Agreement, substantially in the form attached hereto
as Exhibit C, shall have been executed and delivered by the Purchasers.
---------
(e) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the
Investors' Rights Agreement (except for such as may be properly obtained
subsequent to the Closing).
SECTION 6. MISCELLANEOUS
6.1 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Colorado without regard to its
conflict-of-laws rules; provided, however, that all matters of corporate law
shall be governed by Delaware General Corporation Law.
6.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Purchaser and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
6.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
6.4 Entire Agreement. This Agreement, the Exhibits and Schedules hereto,
including the Investors' Rights Agreement, and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
6.5 Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
12.
<PAGE>
6.6 Amendment and Waiver.
(a) This Agreement may be amended or modified only upon the written
consent of the Company and holders of at least a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
(b) The obligations of the Company and the rights of the holders of
the Shares and the Conversion Shares under the Agreement may be waived only with
the written consent of the holders of at least a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
6.7 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Investors'
Rights Agreement or the Certificate, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance thereafter occurring. It is further agreed that any waiver,
permit, consent or approval of any kind of character on any Purchaser's part of
any breach, default or noncompliance under this Agreement, the Investors' Rights
Agreement or under the Certificate or any waiver on such party's part of any
provisions or conditions of the Agreement, the Investors' Rights Agreement or
the Certificate must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, the Investors' Rights Agreement, the Certificate, by law, or
otherwise afforded to any party, shall be cumulative and not alternative.
6.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at the address as set forth on the signature page hereof and to
Purchaser at the address set forth on Exhibit A attached hereto or at such other
---------
address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
6.9 Titles and Subtitles. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
6.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.11 Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly
13.
<PAGE>
in connection with the transactions contemplated herein. Each party hereto
further agrees to indemnify each other party for any claims, losses or expenses
incurred by such other party as a result of the representation in this Section
6.11 being untrue.
6.12 Expenses. The Company shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement. The Company shall reimburse the reasonable fees and expenses of
one counsel to the Purchasers, not to exceed $25,000, incurred in connection
with the negotiation, execution and delivery of this Agreement.
6.13 Attorneys' Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
6.14 Exculpation Among Purchasers. Each Purchaser acknowledges that it is
not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Shares and Conversion
Shares.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14.
<PAGE>
In Witness Whereof, the parties hereto have executed the Series C Preferred
Stock Purchase Agreement as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASERS:
Genomica Corporation _______________________________
4001 Discovery Drive
Boulder, CO 80303
By:___________________________ By:____________________________
Name: Teresa W. Ayers Name:__________________________
Title: Chief Executive Officer Title:_________________________
Series C Preferred Stock Purchase Agreement
<PAGE>
Exhibit A
Series C Preferred Stock Purchase Agreement
Shares of Series C
------------------
Name Preferred Stock Purchase Price
- ---- --------------- --------------
The Kaufmann Fund, Inc. 2,245,595 $ 3,368,392.00
Attn: Mary Ann Gray, Ph.D.
140 East 45/th/ Street
43/rd/ Floor
New York, NY 10017
Falcon Technology Partners, L.P. 1,333,333 $ 2,000,000.00
Attn: James L. Rathmann
600 Dorset Road
Devon, PA 19333
Invesco Global Health Sciences Fund 3,333,333 $ 5,000,000.00
Attn: Mr. John R. Shroer
7800 East Union Avenue
Mail Stop 1100
Denver, CO 80237
ARCH Ventures Fund III, L.P. 1,333,333 $ 2,000,000.00
Attn: Robert Nelsen
1000 2/nd/ Avenue
Suite 3700
Seattle, WA 98104
Boulder Ventures II, L.P. 681,500 $ 1,022,250.00
Attn: Kyle Lefkoff
1634 Walnut Street
Suite 301
Boulder, CO 80302
Boulder Ventures II (Annex), L.P. 101,834 $ 152,751.00
Attn: Kyle Lefkoff
1634 Walnut Street
Suite 301
Boulder, CO 80302
<PAGE>
Shares of Series C
------------------
Name Preferred Stock Purchase Price
- ---- --------------- --------------
Anvers, L.P. 128,320 $ 192,480.00
Attn: Leo Swergold
230 Park Avenue
13/th/ Floor
New York, NY 10169
Anvers II, L.P. 64,160 $ 96,240.00
Attn: Leo Swergold
230 Park Avenue
13/th/ Floor
New York, NY 10169
Punk, Ziegel & Company Investors, L.L.C. 200,178 $ 300,268.00
520 Madison Avenue
New York, NY 10022
Tyjo Corporation Defined Benefit Plan and 66,666 $ 100,000.00
Trust
C/O Reedland Capital Partners
Attn: President
21 Tamal Vista Blvd., Suite 201
Corte Madera, CA 94925
The Caruthers Family, L.L.C. 33,333 $ 50,000.00
Attn: Dr. Marvin Caruthers
2450 Cragmoor
Boulder, CO 80303
GC&H Investments 16,040 $ 24,060.00
Attn: Jim Kindler
One Maritime Plaza, 20/th/ Floor
San Francisco, CA 94111
Marc Epstein 33,333 $ 50,000.00
3091 Miro Drive North
Palm Beach Gardens, FL 33411
Stuart A. Epstein 33,333 $ 50,000.00
3091 Miro Drive North
Palm Beach Gardens, FL 33411
Frank A. Bonsal, Jr. 30,000 $ 45,000.00
NEA Development Corp.
1119 St. Paul Street
Baltimore, MD 21202
Harris and Harris Group, Inc. 33,333 $ 500,000.00
1 Rockefeller Plaza
Rockefeller Center
14 West 49/th/ Street
New York, NY 10020
2.
<PAGE>
Shares of Series C
------------------
Name Preferred Stock Purchase Price
- ---- --------------- --------------
David B. Musket 16,667 $ 25,000.00
MRA
125 Cambridge Park Drive
Cambridge MA 02140
Pegasus Technology Ventures, L.L.C. 38,343 $ 57,515.00
4430 Arapahoe Avenue
Suite 200
Boulder, CO 80303
- ------------------------------------------------------------------------------
Total 10,022,636 $15,033,953.00
3.
<PAGE>
Exhibit B
Restated Certificate of Incorporation
<PAGE>
Exhibit C
Amended and Restated Investors' Rights Agreement
<PAGE>
Exhibit 10.11
________________________________________________________________________________
GENOMICA CORPORATION
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
March 13, 2000
________________________________________________________________________________
<PAGE>
Table Of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
1. General........................................................ 1
1.1 Termination of Prior Agreement........................... 1
1.2 Definitions.............................................. 1
2. Restrictions On Transfer....................................... 3
2.1 Restrictions on Transfer................................. 3
2.2 "Market Stand Off" Agreement............................. 4
3. Registration................................................... 4
3.1 Demand Registration...................................... 4
3.2 Piggyback Registrations.................................. 6
3.3 Form S-3 Registration.................................... 7
3.4 Registration Expenses.................................... 8
3.5 Obligations of the Company............................... 8
3.6 Termination of Registration Rights....................... 9
3.7 Furnish Information...................................... 9
3.8 Delay of Registration.................................... 9
3.9 Assignment of Registration Rights........................ 9
3.10 Amendment or Waiver of Registration Rights............... 9
3.11 Indemnification.......................................... 10
3.12 Rule 144 Reporting....................................... 12
4. Covenants of the Company....................................... 12
4.1 Basic Financial Information and Reporting................ 12
4.2 Inspection Rights........................................ 12
4.3 Confidentiality of Records............................... 13
4.4 Reservation of Common Stock.............................. 13
4.5 SEC Compliance........................................... 13
4.6 Proprietary Information and Inventions Agreement......... 13
4.7 Termination of Covenants................................. 13
5. Preemptive Rights.............................................. 13
5.1 Subsequent Offerings..................................... 13
5.2 Exercise of Rights....................................... 13
</TABLE>
i.
<PAGE>
Table Of Contents
(Continued)
<TABLE>
<CAPTION>
Page
<S> <C>
5.3 Issuance of Equity Securities to Other Investors.......... 14
5.4 Termination of Preemptive Rights.......................... 14
5.5 Transfer of Preemptive Rights............................. 14
5.6 Excluded Securities....................................... 14
6. Miscellaneous................................................... 15
6.1 Governing Law............................................. 15
6.2 Successors and Assigns.................................... 15
6.3 Severability.............................................. 15
6.4 Amendment and Waiver...................................... 15
6.5 Notices, Etc.............................................. 15
6.6 Attorneys' Fees........................................... 16
6.7 Titles and Subtitles...................................... 16
6.8 Complete Agreement........................................ 16
6.9 Counterparts.............................................. 16
</TABLE>
ii.
<PAGE>
<PAGE>
GENOMICA CORPORATION
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
This Amended and Restated Investors' Rights Agreement (the "Agreement") is
entered into as of this 13th day of March, 2000, by and among Genomica
Corporation, a Delaware corporation (the "Company"), and the holders of the
Company's Series A Preferred Stock (the "Series A Stock"), Series B Preferred
Stock (the "Series B Stock") and the Company's Series C Preferred Stock (the
"Series C Stock") and certain other parties set forth on Exhibit A hereto. The
holders of the Series A Stock, the Series B Stock and the Series C Stock and the
other parties set forth on Exhibit A shall be collectively referred to
hereinafter as the "Investors" and each individually as an "Investor."
Whereas, the Company has granted registration rights and certain other
rights to the holders of the Company's Series A Stock and Series B Stock
pursuant to that certain Investors' Rights Agreement, dated as of February 12,
1999 (the "Prior Agreement");
Whereas, the Company proposes to sell and issue shares of its Series C
Stock pursuant to the Series C Preferred Stock Purchase Agreement of even date
herewith (the "Purchase Agreement"); and
Whereas, as a condition to entering into the Purchase Agreement, the
prospective purchasers have requested that the Company extend to them
registration rights, information rights and other rights as set forth below, and
the Company and the parties to the Prior Agreement are willing to amend the
rights given to them pursuant to the Prior Agreement by replacing such rights in
their entirety with the rights set forth in this Agreement.
Now, Therefore, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and the
Purchase Agreement, the parties mutually agree as follows:
1. General
1.1 Termination of Prior Agreement. The undersigned parties who constitute
the requisite parties necessary to amend the Prior Agreement hereby agree that,
effective upon the date hereof, the Prior Agreement is null and void and
superseded by the rights and obligations set forth in this Agreement, and any
application of preemptive rights (including any notice requirements) set forth
in Section 5 of the Prior Agreement as to the issuance of the Company's Series C
Stock under the Purchase Agreement is waived.
1.2 Definitions.
(a) "Common Stock" shall mean the common stock, $.001 par value per
share, of the Company.
(b) "Equity Securities" shall mean (i) any Common Stock, Preferred
Stock or other security of the Company, (ii) any security convertible into any
Common Stock, Preferred
1.
<PAGE>
Stock or other security (including any option to purchase such a convertible
security), (iii) any security carrying any warrant or right to subscribe to or
purchase any Common Stock, Preferred Stock or other security or (iv) any such
warrant or right.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(d) "Form S-3" means such form under the Securities Act as in effect
on the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
(e) "Holder" means any Investor owning of record Registrable
Securities that have not been sold to the public or any assignee of record of
such Registrable Securities in accordance with Section 3.9 hereof.
(f) "Initial Offering" shall mean the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act.
(g) "Preferred Stock" shall mean the preferred stock, $.001 par value
per share, of the Company.
(h) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of
effectiveness of such registration statement or document.
(i) The term "Registrable Securities" shall mean (a) Common Stock
held by the Investors listed on Exhibit A hereto and their permitted assigns;
(b) Common Stock of the Company issued or issuable upon conversion of the
Shares; (c) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, the securities referred to in clause (a) or (b) above; (d)
Common Stock of the Company issuable upon exercise of those certain warrants to
purchase Common Stock issued to Punk Ziegel & Company; (e) Common Stock of the
Company issuable upon conversion of the Series A Stock issuable upon exercise of
those certain Warrants to purchase Series A Stock issued to Falcon Technology
Partners, L.P. and Silicon Valley Bank; and (f) Common Stock of the Company
issuable upon conversion of the Series B Stock issuable upon exercise of those
certain Warrants to purchase Series B Stock issued to ARCH Ventures Fund III,
L.P., Boulder Ventures, L.P., The Caruthers Family L.L.C., Falcon Technology
Partners, L.P. and Invesco Global Health Sciences Fund. Notwithstanding the
foregoing, Registrable Securities shall not include any securities sold by a
person to the public either pursuant to a registration statement or Rule 144 or
sold in a private transaction in which the transferor's rights under Section 3
of this Agreement with respect to such registration rights are not assigned.
(j) "Registrable Securities then outstanding" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (i) are then issued and
outstanding or (ii) are issuable pursuant to then exercisable or convertible
securities.
(k) "Rule 144" shall mean Rule 144 of the rules and regulations
promulgated under the Securities Act.
(l) "SEC" means the Securities and Exchange Commission.
2.
<PAGE>
(m) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(n) "Shares" shall mean the Company's Series C Stock issued pursuant
to the Purchase Agreement and the Company's Series A Stock and Series B Stock
held by the Investors listed on Exhibit A hereto and their permitted assigns.
---------
2. Restrictions On Transfer.
2.1 Restrictions on Transfer.
(a) Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities unless and until the transferee
has agreed in writing for the benefit of the Company to be bound by this Section
2.1 unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(ii) (A) Such Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition and (B) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
(iii) Notwithstanding the provisions of paragraphs (i) and (ii)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by a Holder which is (A) a partnership to any or all of its
partners or former partners, (B) a corporation to its stockholders in accordance
with their interest in the corporation, (C) a limited liability company to its
members or former members in accordance with their membership interest, (D) by a
trust to its beneficiaries in accordance with their interests in the trust or
(E) to the Holder's family member or trust for the benefit of an individual
Holder; provided, that, the transferee will be subject to the terms of this
Agreement to the same extent as if he were an original Holder hereunder.
(b) Each certificate representing Shares or Registrable Securities
shall (unless otherwise permitted by the provisions of the Agreement) be stamped
or otherwise imprinted with a legend substantially similar to the following (in
addition to any legend required under applicable state securities laws or as
provided elsewhere in this Agreement):
First Legend:
-------------
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS
3.
<PAGE>
AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED.
Second Legend:
--------------
THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN
COMPLIANCE WITH THE INVESTORS' RIGHTS AGREEMENT, DATED MARCH 13, 2000,
COPIES OF WHICH ARE ON FILE AT THE OFFICE OF THE ISSUER.
(c) The Company shall reissue promptly unlegended certificates at the
request of any holder thereof if the holder shall have obtained an opinion of
counsel (which counsel may be counsel to the Company) reasonably acceptable to
the Company to the effect that the securities proposed to be disposed of may
lawfully be so disposed of without registration, qualification or legend.
(d) Any legend endorsed on an instrument pursuant to applicable state
securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 "Market Stand Off" Agreement. Each Holder hereby agrees that during
the one hundred eighty (180) day period following the effective date of a
registration statement of the Company filed under the Securities Act, it shall
not, to the extent requested by the Company and the managing underwriter, sell
or otherwise transfer or dispose of (other than to donees who agree to be
similarly bound) any Common Stock of the Company held by it at any time during
such period except Common Stock included in such registration; provided, that,
all officers and directors of the Company enter into similar agreements.
In order to enforce the foregoing covenant, the Company may impose stop-
transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such one hundred eighty (180) day
period.
3. Registration.
3.1 Demand Registration.
(a) Subject to the conditions of this Section 3.1, if the Company
shall receive a written request from the Holders of at least a majority of the
Registrable Securities then outstanding on an as-converted basis (the
"Initiating Holders") that the Company file a registration statement under the
Securities Act covering the registration of Registrable Securities having an
aggregate offering price to the public of at least $15,000,000 and constituting
at least
4.
<PAGE>
twenty percent (20%) of the outstanding shares of the Company's Common Stock on
an as-converted basis, then the Company shall, within thirty (30) days of the
receipt thereof, give written notice of such request to all Holders, and subject
to the limitations of this Section 3.1, use its best efforts to effect, as soon
as practicable, the registration under the Securities Act of all Registrable
Securities that the Holders request to be registered.
(b) Any registration pursuant to this Section 3.1 shall be effected
by means of a firm underwriting and the Company shall include such information
in the written notice referred to in Section 3.1(a). The right of any Holder to
include its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders (which underwriter or underwriters shall be
of nationally recognized standing and shall be reasonably acceptable to the
Company). Notwithstanding any other provision of this Section 3.1, if the
underwriter advises the Company that marketing factors require a limitation of
the number of securities to be underwritten (including Registrable Securities),
then the Company shall so advise all Holders of Registrable Securities which
would otherwise be underwritten pursuant hereto, and the number of shares that
may be included in the underwriting shall be allocated to the Holders of such
Registrable Securities on a pro rata basis based on the number of Registrable
Securities held by all such Holders (including Initiating Holders). Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.
(c) The Company shall not be required to effect a registration
pursuant to this Section 3.1:
(i) prior to December 11, 2001; or
(ii) after the Company has filed one (1) registration statement
pursuant to this Section 3.1, and either: (A) such registration has been
declared or ordered effective; or (B) the request for such registration has been
subsequently withdrawn by the Initiating Holders, unless the withdrawal is based
upon material adverse information concerning the Company of which the Initiating
Holders were not aware at the time of such request; or
(iii) during the period starting with the date of filing of, and
ending on the date ninety (90) days following the closing of the Company's
Initial Offering; provided, that, the Company makes reasonable good faith
efforts to cause such registration statement to become effective; or
(iv) if within thirty (30) days of receipt of a written request
from Initiating Holders pursuant to Section 3.1(a), the Company gives notice to
the Holders of the Company's intention to make an Initial Offering within ninety
(90) days; or
(v) if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 3.1, a certificate signed by the
Chairman of the Board stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously
5.
<PAGE>
detrimental to the Company and its stockholders for such registration statement
to be effected at such time, in which event the Company shall have the right to
defer such filing for a period of not more than ninety (90) days after receipt
of the request of the Initiating Holders; provided, that, the right to delay a
request shall be exercised by the Company not more than once in any twelve (12)
month period; or
(vi) if the Initiating Holders propose to dispose of shares of
Registrable Securities that may be immediately registered on Form S-3 (or a
successor or similar form) pursuant to a request made pursuant to Section 3.3
below.
3.2 Piggyback Registrations. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company and to offerings of securities of the Company initiated by any party
exercising its demand registration rights, but excluding registration statements
relating to employee benefit plans and corporate reorganizations or other
transactions under Rule 145 of the Securities Act) and will afford each such
Holder an opportunity to include in such registration statement all or part of
such Registrable Securities held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the Registrable
Securities held by it shall, within fifteen (15) days after receipt of the
above-described notice from the Company, so notify the Company in writing. Such
notice shall state the intended method of disposition of the Registrable
Securities by such Holder. If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.
If the registration statement under which the Company gives notice under
this Section 3.2 is for an underwritten offering, the Company shall so advise
the Holders of Registrable Securities. In such event, the right of any such
Holder to be included in a registration pursuant to this Section 3.2 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated as follows:
(i) first, to the Company, (ii) second, to the Holders of the Company's Series A
Stock, Series B Stock and Series C Stock on a pro rata basis based on the total
number of Registrable Securities held by such Holders and (iii) third, to any
stockholder of the Company (other than a Holder) on a pro rata basis. No such
reduction shall reduce the securities being offered by the Company for its own
account to be included in the registration and underwriting. In no event will
shares of any other selling stockholder be included in such registration which
would reduce the number of shares which may be included by the Holders, without
the written consent of Holders of a majority of the Registrable Securities
proposed to be sold in the offering. The Company shall have the right to
terminate or withdraw
6.
<PAGE>
any registration initiated by it under this Section 3.2 prior to the
effectiveness of such registration whether or not any Holder has elected to
include securities in such registration. The registration expenses of such
withdrawn registration shall be borne by the Company in accordance with Section
3.4 hereof. For any Holder which is a partnership or corporation, the partners,
retired partners and stockholders of such Holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing person shall be deemed to be a single "Holder", and any
pro rata reduction with respect to such "Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "Holder," as defined in this sentence.
3.3 Form S-3 Registration. In case the Company shall receive a written
request from the Holders of at least twenty-five percent (25%) of the
Registrable Securities then outstanding on an as-converted basis that the
Company effect a registration on Form S-3 (or any successor to Form S-3) or any
similar short-form registration statement and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 3.3:
(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders; or
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than $1,000,000; or
(iii) if within thirty (30) days of receipt of a written request
from Initiating Holders pursuant to Section 2.2(a), the Company gives notice to
the Holders of the Company's intent to make its Initial Offering within ninety
(90) days; or
(iv) if the Company shall furnish to the Holders a certificate
signed by the Chairman of the Board of Directors of the Company stating that, in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such Form S-3
registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than ninety (90) days after receipt of the request of the
Holder or Holders
7.
<PAGE>
under this Section 3.3; provided, that, the right to delay a request shall be
exercised by the Company not more than once in any twelve (12) month period; or
(v) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance; or
(vi) if the Company has already effected two (2) registrations on
Form S-3 (or any successor or similar form) for the Holders pursuant to this
Section 3.3.
(c) Subject to the foregoing, the Company shall file a Form S-3 (or
any successor or similar form) registration statement covering the Registrable
Securities and other securities so requested to be registered as soon as
practicable after receipt of the request or requests of the Holders.
3.4 Registration Expenses. The Company shall bear all fees and expenses
incurred in connection with any registration under this Agreement, including
without limitation all registration, filing, qualification, printers' and
accounting fees, fees and disbursements of counsel to the Company, except that
each participating Holder shall bear its proportionate share of all amounts
payable to underwriters in connection with such offering for discounts and
commissions. The Company shall not, however, be required to pay for expenses of
any registration proceeding begun pursuant to Sections 3.1 or 3.3, the request
of which has been subsequently withdrawn by the Holders, unless the withdrawal
is based upon material adverse information concerning the Company of which the
Holders initiating the registration request were not aware at the time of such
request. If the Holders are required to pay their registration expenses, such
expenses shall be borne by the holders of securities (including Registrable
Securities) requesting such registration in proportion to the number of shares
for which registration was requested.
3.5 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to ninety (90) 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
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
8.
<PAGE>
(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 requested by the Holders,
provided, that, the Company shall not be required in connection therewith or as
a condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing.
3.6 Termination of Registration Rights. All registration rights granted
under this Section 3 shall terminate and be of no further force and effect five
(5) years after the Company has completed its Initial Offering. In addition,
the right of any Holder to request inclusion of Registrable Securities in any
registration pursuant to this Section 3 shall terminate if (a) such Holder
(together with its affiliates, partners and former partners) holds less than one
percent (1%) of the Company's outstanding Common Stock (treating all shares of
convertible Preferred Stock on an as-converted basis) and (b) all Registrable
Securities held by and issuable to such Holder (and its affiliates, partners,
former partners, members and former members) may be sold to the public under
Rule 144(k) during any ninety (90) day period.
3.7 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 3 that
the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.
3.8 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 3.
3.9 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 3 may be assigned by a
Holder to a transferee or assignee of Registrable Securities which (a) is a
subsidiary, parent, general partner, limited partner, retired partner, member,
retired member, affiliate or trust beneficiaries of a Holder, (b) is a Holder's
family member or trust for the benefit of an individual Holder or (c) acquires
at least two hundred fifty thousand (250,000) shares of Registrable Securities
(as adjusted for stock dividends, stock splits and combinations); provided,
however, (A) the transferor shall, within ten (10) days after such transfer,
furnish to the Company written notice of the name and address of such transferee
or assignee and the securities with respect to which such registration rights
are
9.
<PAGE>
being assigned and (B) such transferee shall agree to be subject to all
restrictions set forth in this Agreement.
3.10 Amendment or Waiver of Registration Rights. Any provision of this
Section 3 may be amended, and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holders of
at least a majority of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this Section 3.10 shall be
binding upon each Holder and the Company. By acceptance of any benefits under
this Agreement, Holders of Registrable Securities hereby agree to be bound by
the provisions hereunder.
3.11 Indemnification. In the event any Registrable Securities are included
in a registration statement under Sections 3.1, 3.2 or 3.3:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers, directors and legal counsel
of each Holder, any underwriter (as defined in the Securities Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will reimburse each such Holder, partner, officer or director,
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 3.11(a) 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 the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration qualifications or compliance is being effected, indemnify and hold
harmless the Company, each of its directors, its officers, and legal counsel and
each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's partners, directors or
officers or any
10.
<PAGE>
person who controls such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, or partner,
director, officer or controlling person of such other Holder may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will reimburse any legal
or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, or partner, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 3.11(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 the Holder, which
consent shall not be unreasonably withheld; provided further, that in no event
shall any indemnity under this Section 3.11(b) exceed the net proceeds from the
offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
3.11 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 3.11, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or reasonably likely differing interests between such indemnified
party and any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 3.11, but the omission to
so deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 3.11.
(d) If the indemnification provided for in this Section 3.11 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged
11.
<PAGE>
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided, that, in
no event shall any contribution by a Holder hereunder exceed the net proceeds
from the offering received by such Holder.
(e) The obligations of the Company and Holders under this Section
3.11 shall survive completion of any offering of Registrable Securities in a
registration statement. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
3.12 Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public.
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act;
(c) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 of the
Securities Act, and of the Exchange 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 Company; and such other reports and documents as a Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing it to sell any such securities without registration.
4. Covenants of the Company.
4.1 Basic Financial Information and Reporting.
(a) The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.
(b) So long as an Investor (with its affiliates) shall own not less
than two hundred fifty thousand (250,000) shares of Registrable Securities (as
adjusted for stock dividends, stock splits, recapitalizations and the like) (a
"Major Investor"), as soon as practicable after the end of each fiscal year of
the Company, and in any event within ninety (90) days thereafter, the Company
will furnish each such Major Investor an audited consolidated
12.
<PAGE>
balance sheet of the Company, as at the end of such fiscal year, an audited
consolidated statement of income and an audited consolidated statement of cash
flows of the Company, for such year, all prepared in accordance with generally
accepted accounting principles and setting forth in each case, in comparative
form, the figures for the previous fiscal year, all in reasonable detail.
4.2 Inspection Rights. Each Major Investor shall have the right to visit
and inspect any of the properties of the Company or any of its subsidiaries, and
to discuss the affairs, finances and accounts of the Company or any of its
subsidiaries with its officers, and to review such information as is reasonably
requested; provided, however, that the Company shall not be obligated under this
Section 4.2 with respect to a competitor of the Company or with respect to
information which the Board of Directors determines in good faith is
confidential and should not, therefore, be disclosed.
4.3 Confidentiality of Records. Each Investor agrees to use, and to use
its best efforts to insure that its authorized representatives uses, the same
degree of care as such Investor uses to protect its own confidential information
to keep confidential any information furnished to it which the Company
identifies as being confidential or proprietary (so long as such information is
not in the public domain), except that such Investor may disclose such
proprietary or confidential information to any partner, subsidiary or parent of
such Investor for the purpose of evaluating its investment in the Company as
long as such partner, subsidiary or parent is advised of the confidentiality
provisions of this Section 4.3.
4.4 Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the conversion of the
Series A Stock, Series B Stock and Series C Stock, all Common Stock issuable
from time to time upon such conversion.
4.5 SEC Compliance. During any time that the Company is subject to the
reporting requirements of the Exchange Act, the Company shall timely file all
required reports pursuant to the Exchange Act. Additionally, the Company shall
make available to Investors the information contemplated by Rule 144A. At such
time that any stock held by an Investor is eligible for transfer pursuant to
Rule 144(k), the Company shall, upon the request of such Investor, remove any
restrictive legend from the applicable stock certificate at no cost to such
Investor.
4.6 Proprietary Information and Inventions Agreement. The Company shall
require all employees and consultants to execute and deliver a Proprietary
Information and Inventions Agreement.
4.7 Termination of Covenants. All covenants of the Company contained in
Section 4 of this Agreement shall expire and terminate as to each Investor on
the effective date of the registration statement pertaining to the Initial
Offering.
5. Preemptive Rights.
5.1 Subsequent Offerings. Each Major Investor shall have a preemptive
right to purchase up to its pro rata share of all Equity Securities that the
Company may, from time to time, propose to sell and issue after the date of this
Agreement, other than the Equity Securities excluded by Section 5.6 hereof.
Each Investor's pro rata share is equal to the ratio of (A) the
13.
<PAGE>
number of shares of the Company's Common Stock (including all shares of Common
Stock issued or issuable upon conversion of the Shares) which such Investor is
deemed to be a holder immediately prior to the issuance of such Equity
Securities to (B) the total number of shares of the Company's outstanding Common
Stock on a fully-diluted basis (including all shares of Common Stock issued or
issuable upon the exercise of outstanding options, warrants or convertible
securities) immediately prior to the issuance of the Equity Securities.
5.2 Exercise of Rights. If the Company proposes to issue any Equity
Securities, it shall give each Investor written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Investor shall have fifteen
(15) days from the giving of such notice to agree to purchase up to its pro rata
share of the Equity Securities for the price and upon the terms and conditions
specified in the notice by giving written notice to the Company and stating
therein the quantity of Equity Securities to be purchased. Notwithstanding the
foregoing, the Company shall not be required to offer or sell such Equity
Securities to any Investor who would cause the Company to be in violation of
applicable federal securities laws by virtue of such offer or sale.
5.3 Issuance of Equity Securities to Other Investors. If not all of the
Investors elect to purchase their pro rata share of the Equity Securities, then
the Company shall promptly notify in writing the Investors who do so elect and
shall offer such Investors the right to acquire such unsubscribed shares. The
Investors shall have five (5) days after receipt of such notice to notify the
Company of its election to purchase all or a portion thereof of the unsubscribed
shares. If the Investors fail to exercise in full their preemptive rights, the
Company shall have ninety (90) days thereafter to sell the Equity Securities in
respect of which the Investor's rights were not exercised, at a price and upon
general terms and conditions materially no more favorable to the purchasers
thereof than specified in the Company's notice to the Investors pursuant to
Section 5.2 hereof. If the Company has not sold such Equity Securities within
one hundred twenty (120) days of the notice provided pursuant to Section 5.2,
the Company shall not thereafter issue or sell any Equity Securities, without
first offering such securities to the Investors in the manner provided above.
5.4 Termination of Preemptive Rights. The preemptive rights established by
this Section 5 shall not apply to, and shall terminate upon, the effective date
of the registration statement pertaining to the Initial Offering.
5.5 Transfer of Preemptive Rights. The preemptive rights of each Investor
under this Section 5 may be transferred to the same parties, subject to the same
restrictions, as any transfer of registration rights pursuant to Section 3.9.
5.6 Excluded Securities. The preemptive rights established by this Section
5 shall have no application to any of the following Equity Securities:
(a) shares of Common Stock (and/or options, warrants or other Common
Stock purchase rights issued pursuant to such options, warrants or other rights)
(as adjusted for stock splits, recapitalizations and the like) issued or to be
issued to employees, officers or directors of, or consultants or advisors to the
Company or any subsidiary, pursuant to stock
14.
<PAGE>
purchase or stock option plans or other arrangements that are approved by the
Board of Directors;
(b) stock issued pursuant to any rights or agreements outstanding as
of the date of this Agreement, options, warrants and convertible promissory
notes outstanding as of the date of this Agreement; and stock issued pursuant to
any such rights or agreements granted after the date of this Agreement,
provided, that, the preemptive rights established by this Section 5 applied with
respect to the initial sale or grant by the Company of such rights or
agreements;
(c) any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business combination
in which the stockholders of the Company immediately prior to such transaction
own less than 50% of the voting power of the surviving entity;
(d) shares of Common Stock issued in connection with any stock split,
stock dividend or recapitalization by the Company;
(e) shares of Common Stock issued upon conversion of the Shares;
(f) any Equity Securities that are issued by the Company pursuant to
a registration statement filed under the Securities Act; and
(g) any Equity Securities issued pursuant to any commercial loan or
leasing transaction.
6. Miscellaneous.
6.1 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of Colorado as such laws are applied to agreements between
Colorado residents entered into and performed entirely in Colorado.
6.2 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of Registrable Securities from time to time; provided, however, that
prior to the receipt by the Company of adequate written notice of the transfer
of any Registrable Securities specifying the full name and address of the
transferee, the Company may deem and treat the person listed as the holder of
such shares in its records as the absolute owner and holder of such shares for
all purposes, including the payment of dividends or any redemption price.
6.3 Severability. In case any provision of the Agreement shall be invalid,
illegal, or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
15.
<PAGE>
6.4 Amendment and Waiver.
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least a majority of the Registrable Securities.
(b) Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of at least a majority of the Registrable Securities.
6.5 Notices, Etc. All notices required or permitted hereunder shall be
deemed effectively given: (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient; if not, then on the next business day, (iii)
five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (iv) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
to be notified at the address set forth on the signature pages hereto or Exhibit
-------
A hereto or at such other address as such party may designate by ten (10) days
- -
advance written notice to the other parties hereto.
6.6 Attorneys' Fees. If legal action is brought to enforce or interpret
this Agreement, the prevailing party shall be entitled to recover from the
losing party all fees, costs and expenses of enforcing any rights of such
prevailing party under or with respect to this Agreement, including without
limitation, such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and expenses of
appeals.
6.7 Titles and Subtitles. The titles of the paragraphs and subparagraphs
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.8 Complete Agreement. This Agreement constitutes the entire agreement
and supersedes all other prior and contemporaneous agreements and undertakings,
both written and oral, between the parties hereto with regard to the subject
matter hereof.
6.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
16.
<PAGE>
In Witness Whereof, the parties hereto have executed this Agreement as of
the date set forth in the first paragraph hereof.
COMPANY: INVESTORS:
Genomica Corporation ______________________________
4001 Discovery Drive
Boulder, CO 80303
By: ____________________________ By: __________________________
Name: Teresa W. Ayers Name: ________________________
Title: Chief Executive Officer Title: _______________________
Amended and Restated Investor's Rights Agreement
<PAGE>
Exhibit A
Genomica Corporation
Investors' Rights Agreement
Series A Stockholders
Name and Address
- ----------------
Invesco Global Health Sciences Fund
Mr. John R. Shroer
7800 East Union Avenue
Mail Stop 1100
Denver, CO 80237
Falcon Technology Partners, L.P.
Attn: James L. Rathmann
600 Dorset Road
Devon, PA 19333
Arch Venture Fund III, L.P.
Attn: Robert Nelsen
1000 2/nd/ Avenue
Suite 3700
Seattle, WA 98104
Boulder Ventures, L.P.
Attn: Kyle Lefkoff
1634 Walnut Street
Suite 301
Boulder, CO 80302
Pegasus Technology Ventures, L.L.C.
4430 Arapahoe Avenue
Suite 200
Boulder, CO 80303
The Caruthers Family, L.L.C.
Attn: Dr. Marvin Caruthers
2450 Cragmoor
Boulder, CO 80303
Frank A. Bonsal, Jr.
NEA Development Corp.
1119 St. Paul Street
Baltimore, MD 21202
David B. Musket SEP IRA
MRA
125 Cambridge Park Drive
Cambridge MA 02140
Harris and Harris Group, Inc.
1 Rockefeller Plaza
1
<PAGE>
Rockefeller Center
14 West 49/th/ Street
New York, NY 10020
Series B Stockholders
Name and Address
- ----------------
Falcon Technology Partners, L.P.
Attn: James L. Rathmann
600 Dorset Road
Devon, PA 19333
Invesco Global Health Sciences Fund
Mr. John R. Shroer
7800 East Union Avenue
Mail Stop 1100
Denver, CO 80237
ARCH Ventures Fund III, L.P.
Attn: Robert Nelsen
1000 2/nd/ Avenue
Suite 3700
Seattle, WA 98104
Boulder Ventures II, L.P.
Attn: Kyle Lefkoff
1634 Walnut Street
Suite 301
Boulder, CO 80302
Anvers, L.P.
Attn: Leo Swergold
230 Park Avenue
13/th/ Floor
New York, NY 10169
Anvers II, L.P.
Attn: Leo Swergold
230 Park Avenue
13/th/ Floor
New York, NY 10169
Boulder Ventures II (Annex), L.P.
Attn: Kyle Lefkoff
1634 Walnut Street
Suite 301
Boulder, CO 80302
The Caruthers Family L.L.C.
Attn: Marvin H. Caruthers
2450 Cragmoor
Boulder, CO 80303
2.
<PAGE>
Series B Stockholders
Name and Address
- ----------------
Boulder Ventures, L.P.
Attn: Kyle Lefkoff
1634 Walnut Street, Suite 301
Boulder, CO 80302
GC&H Investments
Attn: Jim Kindler
One Maritime Plaza, 20/th/ Floor
San Francisco, CA 94111
Marc Epstein
3091 Miro Drive North
Palm Beach Gardens, FL 33411
Stuart A. Epstein
3091 Miro Drive North
Palm Beach Gardens, FL 33411
Kaufmann Fund, Inc.
Attn: Mary Ann Gray, Ph.D.
140 East 45/th/ Street
43/rd/ Floor
New York, NY 10017
Punk, Ziegel & Company
Investors, L.L.C.
520 Madison Avenue
New York, NY 10022
Tyjo Corporation Defined Benefit
Plan and Trust
C/O Reedland Capital Partners
Attn: President
21 Tamal Vista Blvd., Suite 201
Corte Madera, CA 94925
Series C Stockholders
Name and Address
- ----------------
The Kaufmann Fund, Inc.
Attn: Mary Ann Gray, Ph.D.
140 East 45/th/ Street
43/rd/ Floor
New York, NY 10017
Falcon Technology Partners, L.P.
Attn: James L. Rathmann
600 Dorset Road
3.
<PAGE>
Series C Stockholders
Name and Address
- ----------------
Devon, PA 19333
Invesco Global Health Sciences Fund
Attn: Mr. John R. Shroer
7800 East Union Avenue
Mail Stop 1100
Denver, CO 80237
ARCH Ventures Fund III, L.P.
Attn: Robert Nelsen
1000 2/nd/ Avenue
Suite 3700
Seattle, WA 98104
Boulder Ventures II, L.P.
Attn: Kyle Lefkoff
1634 Walnut Street
Suite 301
Boulder, CO 80302
Boulder Ventures II (Annex), L.P.
Attn: Kyle Lefkoff
1634 Walnut Street
Suite 301
Boulder, CO 80302
Anvers, L.P.
Attn: Leo Swergold
230 Park Avenue
13/th/ Floor
New York, NY 10169
Anvers II, L.P.
Attn: Leo Swergold
230 Park Avenue
13/th/ Floor
New York, NY 10169
Punk, Ziegel & Company Investors, L.L.C.
520 Madison Avenue
New York, NY 10022
Tyjo Corporation Defined Benefit
Plan and Trust
C/O Reedland Capital Partners
Attn: President
21 Tamal Vista Blvd., Suite 201
Corte Madera, CA 94925
The Caruthers Family, L.L.C.
4.
<PAGE>
Series C Stockholders
Name and Address
- ----------------
Attn: Dr. Marvin Caruthers
2450 Cragmoor
Boulder, CO 80303
GC&H Investments
Attn: Jim Kindler
One Maritime Plaza, 20/th/ Floor
San Francisco, CA 94111
Marc Epstein
3091 Miro Drive North
Palm Beach Gardens, FL 33411
Stuart A. Epstein
3091 Miro Drive North
Palm Beach Gardens, FL 33411
Frank A. Bonsal, Jr.
NEA Development Corp.
1119 St. Paul Street
Baltimore, MD 21202
Harris and Harris Group, Inc.
1 Rockefeller Plaza
Rockefeller Center
14 West 49/th/ Street
New York, NY 10020
David B. Musket
MRA
125 Cambridge Park Drive
Cambridge MA 02140
Pegasus Technology Ventures, L.L.C.
4430 Arapahoe Avenue
Suite 200
Boulder, CO 80303
________________________
Other Investors
Name and Address
- ----------------
Thomas G. Marr
484 Stoneham Road
Saginaw, MI 48603
James L. Rathmann
600 Dorset Road
Devon, PA 19333
5.
<PAGE>
Other Investors
Name and Address
- ----------------
Margaret C. Rathmann
600 Dorset Road
Devon, PA 19333
Laura Jean Rathmann
600 Dorset Road
Devon, PA 19333
Sally A. Rathmann
600 Dorset Road
Devon, PA 19333
Richard G. Rathmann
600 Dorset Road
Devon, PA 19333
Jacqueline Salit
16 Fairchild St.
Huntington, NY 11743
Steven Cozza
7701 Devonshire Ct.
Boulder, CO 80301
Donald Fisher
828 Camp Circle
Phoenixville, PA 19460
Cold Spring Harbor Laboratory
1 Bungtown Road
Cold Spring Harbor, NY 11724
John Maroney
Cold Spring Harbor Lab
PO Box 100
1 Bungtown Road
Cold Spring New York 11724
6.
<PAGE>
Exhibit 10.12
WARRANT NO. 1
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE
STOCK OF GENOMICA CORPORATION
This certifies that FALCON TECHNOLOGY PARTNERS, L.P., or its assigns
(the "Holder"), for value received, is entitled to purchase from GENOMICA
CORPORATION, a Delaware corporation (the "Company"), the Maximum Number, as
hereinafter defined, (i) if a Qualified Financing (as such term is defined in
that Convertible Promissory Note (the "Note"), of even date herewith, between
the Company and Holder) is completed on or before May 31, 1997, of fully paid
and nonassessable shares of the Company's New Preferred Stock (as such term is
defined in the Note) for cash at the original issue price per share of the New
Preferred Stock issued in such Qualified Financing; or (ii) if a Qualified
Financing shall not have occurred prior to the date of exercise (and such
exercise occurs prior to May 31, 1997) or if a Qualified Financing shall not
have occurred on or before May 31, 1997, at all times thereafter, of fully paid
and nonassessable shares of the Company's Series A Convertible Preferred Stock,
par value $.001 per share (the "Series A Preferred"), for cash at the
liquidation preference (currently, $.6024) of the Series A Preferred then in
effect at the time of exercise (in either case, the "Stock Purchase Price").
Such purchase may occur at any time or from time to time during the
Exercise Period, as hereinafter defined, upon surrender to the Company at its
principal office (or at such other location as the Company may advise the Holder
in writing) of this Warrant properly endorsed with the Form of Subscription,
attached as Exhibit A hereto, duly filled in and signed and upon payment in cash
or by check of the aggregate Stock Purchase Price for the number of shares for
which this Warrant is being exercised determined in accordance with the
provisions hereof. The "Exercise Period" shall commence on the date hereof (the
"Commencement Date"); and shall extend up to and including 5:00 p.m. (Eastern
time) on the earlier of (X) the closing of the initial public offering of the
Company's Common Stock pursuant to a registration statement (other than on Form
S-4 or S-8 or a successor form thereto) under the Securities Act of 1933, as
amended (an "Initial Public Offering") or (Y) November 30, 2001, such earlier
day being referred to herein as the "Expiration Date".
"Maximum Number" shall mean that number computed using the following
formula:
1.
<PAGE>
M = (.15)x(P)
---------
S
Where M = Maximum Number
P = the principal amount disbursed by the Holder
pursuant to the Note
S = the Stock Purchase Price.
The Stock Purchase Price and the number of shares purchasable
hereunder are subject to adjustment as provided in Section 3 of this Warrant.
This Warrant is subject to the following terms and conditions:
Exercise; Issuance of Certificates; Payment for Shares.
------------------------------------------------------
General. This Warrant is exercisable at the option of the
-------
Holder of record hereof, at any time or from time to time, commencing on the
Commencement Date up to the Expiration Date for all or any part of the shares
(but not for a fraction of a share) of New Preferred Stock, Series A Preferred
or any other security which may be purchased hereunder (hereinafter referred to
as "Stock"). The Company agrees that the shares of Stock purchased under this
Warrant shall be and are deemed to be issued to the Holder hereof as the record
owner of such shares as of the close of business on the date on which this
Warrant shall have been surrendered, properly endorsed, the completed, executed
Form of Subscription delivered and payment made for such shares. Certificates
for the shares of Stock so purchased, together with any other securities or
property to which the Holder hereof is entitled upon such exercise, shall be
delivered to the Holder hereof by the Company at the Company's expense within a
reasonable time after the rights represented by this Warrant have been so
exercised. In case of a purchase of less than all the shares which may be
purchased under this Warrant, the Company shall cancel this Warrant and execute
and deliver a new Warrant or Warrants of like tenor for the balance of the
shares purchasable under the Warrant surrendered upon such purchase to the
Holder hereof within a reasonable time. Each stock certificate so delivered
shall be in such denominations of Stock as may be reasonably requested by the
Holder hereof and shall be registered in the name of such Holder.
Net Issue Exercise. Notwithstanding any provisions herein to the
------------------
contrary, if the fair market value of one share of the Company's Stock is
greater than the Stock Purchase Price (at the date of calculation as set forth
below), in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with the properly endorsed Form of Subscription
and notice of such election in which event the Company shall issue to the Holder
a number of shares of Stock computed using the following formula:
X = Y(A-B)
2.
<PAGE>
A
Where X = the number of shares of Stock to be issued to the Holder
Y = the number of shares of Stock purchasable under the
Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled
(at the date of such calculation)
A = the fair market value of one share of Stock (at the
date of such calculation)
B = Stock Purchase Price (as adjusted to the date of such
calculation)
For purposes of this Warrant, fair market value of one share of Stock shall be
determined by the Company's Board of Directors in good faith; provided, however,
that in the event the Company makes an Initial Public Offering, the fair market
value per share of Stock shall be the per share offering price to the public of
the Company's Initial Public Offering.
Shares to be Fully Paid; Reservation of Shares. The Company
----------------------------------------------
covenants and agrees that all shares of Stock which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any shareholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved, for the
purpose of issue or transfer upon exercise of the subscription rights evidenced
by this Warrant, a sufficient number of shares of authorized but unissued Stock,
or other securities and property, when and as required to provide for the
exercise of the rights represented by this Warrant. The Company will take all
such action as may be necessary to assure that such shares of Stock may be
issued as provided herein without violation of any applicable law or regulation,
or of any requirements of any domestic securities exchange upon which the Stock
may be listed; provided, however, that the Company shall not be required to
effect a registration under Federal or State securities laws with respect to
such exercise, except as provided by other agreements between the Company and
Holder. The Company will not take any action which would result in any
adjustment of the Stock Purchase Price (as defined in Section 3 hereof) if the
total number of shares of Stock issuable after such action upon exercise of all
outstanding warrants, together with all shares of Stock then issuable upon
exercise of all options and upon the conversion of all convertible securities
then outstanding, would exceed the total number of shares of Stock then
authorized by the Company's Articles.
Adjustment of Stock Purchase Price and Number of Shares. Upon
-------------------------------------------------------
each adjustment of the Stock Purchase Price as provided in Section 3, the holder
of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase
Price resulting from such adjustment, the number of shares (calculated to the
nearest tenth of a share) obtained by multiplying the Stock
3.
<PAGE>
Purchase Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Stock Purchase Price resulting from such
adjustment.
Section Adjustment of Price upon Issuance of Stock. If and whenever
------------------------------------------
the Company shall issue or sell any shares of its Stock for a consideration per
share less than the Stock Purchase Price in effect at the time of such issue or
sale, then, forthwith upon such issue or sale the Stock Purchase Price shall be
adjusted (calculated to the nearest $.01) determined by multiplying the Stock
Purchase Price by a fraction, the numerator of which is the amount equal to the
sum of (a) the number of shares of Stock outstanding immediately prior to such
issue or sale multiplied by the Stock Purchase Price in effect prior to such
issuance or sale, and (b) the consideration, if any, received by the Company
upon such issue or sale, and the denominator of which is the amount equal to the
total number of shares of Stock outstanding immediately after such issue or sale
multiplied by the Stock Purchase Price in effect prior to such issuance or sale.
No adjustments of the Stock Purchase Price, however, shall be made in an amount
less than $.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which together with any adjustments so carried forward shall amount
to $.01 per share or more.
For purposes of this Section 3, the following paragraphs (a) to (k),
inclusive, shall also be applicable:
Issuance of Rights or Options. In case at any time the Company
-----------------------------
shall in any manner grant (whether directly or by assumption in a merger or
otherwise) any rights to subscribe for or to purchase, or any options for
the purchase of, Stock or any stock or securities convertible into or
exchangeable for Stock (such rights or options being herein called
"Options", and such convertible or exchangeable stock or securities being
herein called "Convertible Securities") whether or not such Options or the
right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Stock is
issuable upon the exercise of such Options or upon conversion or exchange
of such Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for
the granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise of all
such Options, plus, in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if
any, payable upon the issue or sale of such Convertible Securities and upon
the conversion or exchange thereof, by (ii) the total maximum number of
shares of Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Stock Purchase Price then
in effect at the time of the granting of such Options, then the total
maximum number of shares of Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such price per share as of the date of
granting of such Options and thereafter shall be deemed to be outstanding.
Except as otherwise provided in paragraph (c), no adjustment of the Stock
Purchase Price shall be made upon the actual issue of
4.
<PAGE>
such Stock or of such Convertible Securities upon exercise of such Options
or upon the actual issue of such Stock upon conversion or exchange of such
Convertible Securities.
Issuance of Convertible Securities. In case the Company shall in
----------------------------------
any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price
per share for which Stock is issuable upon such conversion or exchange
(determined by dividing (i) the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the conversion or exchange of all such
Convertible Securities by (ii) the total number of shares of Stock into
which all such Convertible Securities are convertible) shall be less than
the Stock Purchase Price then in effect at the time of such issue or sale,
then the total maximum number of shares of Stock issuable upon conversion
or exchange of all such Convertible Securities shall be deemed to have been
issued for such price per share as of the date of the issue or sale of such
Convertible Securities and thereafter shall be deemed to be outstanding,
provided that (i) except as otherwise provided in paragraph (c) below, no
adjustment of the Stock Purchase Price shall be made upon the actual issue
of such Stock upon conversion or exchange of such Convertible Securities,
and (ii) if any such issue or sale of such Convertible Securities is made
upon exercise of any Option to purchase any such Convertible Securities for
which adjustments of the Stock Purchase Price have been or are to be made
pursuant to other provisions of this Section 3, no further adjustment of
the Stock Purchase Price shall be made by reason of such issue or sale.
Change in Option Price or Conversion Rate. Upon the happening of
-----------------------------------------
any of the following events, namely, if the purchase price provided for in
any Option referred to in paragraph (a), the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities
referred to in paragraph (a) or (b), or the rate at which any Convertible
Securities referred to in paragraph (a) or (b) are convertible into or
exchangeable for Stock shall change at any time (other than under or by
reason of provisions designed to protect against dilution), the Stock
Purchase Price in effect at the time of such event shall forthwith be
readjusted to the Stock Purchase Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding at
the time of such change originally provided for such changed purchase
price, additional consideration or conversion rate, as the case may be, at
the time initially granted, issued or sold; and on the expiration of any
such Option or the termination of any such right to convert or exchange
such Convertible Securities, the Stock Purchase Price then in effect
hereunder shall forthwith be increased to the Stock Purchase Price which
would have been in effect at the time of such expiration or termination had
such Option or Convertible Security, to the extent outstanding immediately
prior to such expiration or termination, never been issued, and the Stock
issuable thereunder shall no longer be deemed to be outstanding.
If the purchase price provided for in any such Option referred to in
paragraph (a) or the rate at which any Convertible Securities referred to
in paragraph (a) or (b) are convertible
5.
<PAGE>
into or exchangeable for Stock, shall be reduced at any time under or by
reason of provisions with respect thereto designed to protect against
dilution, then in case of the delivery of Stock upon the exercise of any
such Option or upon conversion or exchange of any such Convertible
Security, the Stock Purchase Price then in effect hereunder shall forthwith
be adjusted to such respective amount as would have been obtained had such
Option or Convertible Security never been issued as to such Stock and had
adjustments been made upon the issuance of the shares of Stock delivered as
aforesaid, but only if as a result of such adjustment the Stock Purchase
Price then in effect hereunder is thereby reduced.
Stock Dividends. In case the Company shall declare a dividend or
---------------
make any other distribution upon any stock of the Company payable in Stock,
Options or Convertible Securities, any Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
Consideration for Stock. In case any shares of Stock, Options or
-----------------------
Convertible Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the amount received by the Company
therefor, without deduction therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Company in
connection therewith. In case any shares of Stock, Options or Convertible
Securities shall be issued or sold for a consideration other than cash, the
amount of the consideration other than cash received by the Company shall
be deemed to be the fair value of such consideration as determined by the
Board of Directors of the Company, without deduction of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the Company in connection therewith. The amount of consideration deemed to
be received by the Company pursuant to the foregoing provisions of this
paragraph (e) upon any issuance and/or sale, pursuant to an established
compensation plan of the Company, to directors, officers or employees of
the Company in connection with their employment of shares of Stock, Options
or Convertible Securities, shall be increased by the amount of any tax
benefit realized by the Company as a result of such issuance and/or sale,
the amount of such tax benefit being the amount by which the Federal and/or
State income or other tax liability of the Company shall be reduced by
reason of any deduction or credit in respect of such issuance and/or sale.
In case any Options shall be issued in connection with the issue and sale
of other securities of the Company, together comprising one integral
transaction in which no specific consideration is allocated to such Options
by the parties thereto, such Options shall be deemed to have been issued
without consideration. In case any shares of Stock, Options or Convertible
Securities shall be issued in connection with any merger or consolidation
in which the Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value as determined
by the Board of Directors of the Company of such portion of the assets and
business of the non-surviving corporation as such Board shall determine to
be attributable to such Stock, Options or Convertible Securities, as the
case may be. In the event of any consolidation or merger of the Company in
which the Company is not the surviving corporation or in the event of any
sale of all or substantially all of the assets of the Company for stock or
other securities of
6.
<PAGE>
any corporation, the Company shall be deemed to have issued a number of
shares of its Stock for stock or securities of the other corporation
computed on the basis of the actual exchange ratio on which the transaction
was predicated and for a consideration equal to the fair market value on
the date of such transaction of such stock or securities of the other
corporation, and if any such calculation results in adjustment of the Stock
Purchase Price, the determination of the number of shares of Stock
receivable under this Warrant immediately prior to such merger,
consolidation or sale, for purposes of paragraph (i), shall be made after
giving effect to such adjustment of the Stock Purchase Price.
Record Date. In case the Company shall take a record of the
-----------
holders of its Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Stock, Options or Convertible
Securities, or (ii) to subscribe for or purchase Stock, Options or
Convertible Securities, then such record date shall be deemed to be the
date of the issue or sale of the shares of Stock deemed to have been issued
or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
Treasury Shares. The number of shares of Stock outstanding at
---------------
any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares shall be considered
an issue or sale of Stock for the purposes of this Section 3.
Subdivision or Combination of Stock. In case the Company shall
-----------------------------------
at any time subdivide its outstanding shares of Stock into a greater number
of shares, the Stock Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Stock of the Company shall be combined into a smaller
number of shares, the Stock Purchase Price in effect immediately prior to
such combination shall be proportionately increased.
Reorganization, Reclassification, Consolidation, Merger or Sale.
---------------------------------------------------------------
If any capital reorganization or reclassification of the capital stock of
the Company or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of Stock
shall be entitled to receive stock, securities or assets with respect to or
in exchange for Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate
provisions shall be made whereby each holder of the Warrants shall
thereafter have the right to receive upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Stock of the
Company immediately theretofore receivable upon the exercise of such
Warrant or Warrants, such shares of stock, securities or assets (including
cash) as may be issued or payable with respect to or in exchange for a
number of outstanding shares of such Stock equal to the number of shares of
such stock immediately theretofore so receivable had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any
such case appropriate provision shall be made with respect to the rights
and interests of such holder to the end that the provisions hereof
(including without limitation provisions for adjustments of the Stock
Purchase Price) shall thereafter be applicable, as
7.
<PAGE>
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of such exercise rights (including
an immediate adjustment, by reason of such reorganization or
reclassification, of the Stock Purchase Price to the value for the Common
stock reflected by the terms of such reorganization or reclassification if
the value so reflected is less than the Stock Purchase Price in effect
immediately prior to such reorganization or reclassification). In the event
of a merger or consolidation of the Company as a result of which a greater
or lesser number of shares of common stock of the surviving corporation are
issuable to holders of Stock of the Company outstanding immediately prior
to such merger or consolidation, the Stock Purchase Price in effect
immediately prior to such merger or consolidation shall be adjusted in the
same manner as though there were a subdivision or combination of the
outstanding shares of Stock of the Company. The Company will not effect any
such consolidation, merger or any sale of all or substantially all of its
assets of properties, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall
assume by written instrument executed and mailed or delivered to each
holder of the Warrants at the last address of such holder appearing on the
books of the Company, the obligation to deliver to such holder such shares
of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to receive.
Notice of Adjustment. Upon any adjustment of the Stock Purchase
--------------------
Price, then and in each such case, the Company shall give written notice
thereof, by first class mail, postage prepaid, addressed to each holder of
the Warrants at the address of such holder as shown on the books of the
Company, which notice shall state the Stock Purchase Price resulting from
such adjustment, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
Stock to Be Reserved. The Company will at all times reserve and
--------------------
keep available out of its authorized Stock or its treasury shares, solely
for the purpose of issue upon the exercise of this Warrant as herein
provided, such number of shares of Stock as shall then be issuable upon the
exercise of this Warrant. The Company covenants that all shares of Stock
which shall be so issued shall be duly and validly issued and fully paid
and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof, and, without limiting the generality of the
foregoing, the Company covenants that it will from time to time take all
such action as may be requisite to assure that the par value per share of
the Stock is at all times equal to or less than the effective Stock
Purchase Price. The Company will take all such action as may be necessary
to assure that all such shares of Stock may be so issued without violation
of any applicable law or regulation, or of any requirements of any national
securities exchange upon which the stock of the Company may be listed. The
Company will not take any action which results in any adjustment of the
Stock Purchase Price if the total number of shares of Stock issued and
issuable after such action upon exercise of this Warrant would exceed the
total number of shares of Stock then authorized by the Company's Articles
of Incorporation. The Company has not granted and will not grant any right
of first refusal with respect to
8.
<PAGE>
shares issuable upon exercise of this Warrant, and there are no preemptive
rights associated with such shares.
Other Notices. If at any time:
-------------
the Company shall declare any cash dividend upon its
Stock or Common Stock;
the Company shall declare any dividend upon its Stock
or Common Stock payable in stock or make any special dividend or other
distribution to the holders of its Stock or Common Stock;
the Company shall offer for subscription pro rata to
the holders of its Stock or Common Stock any additional shares of stock of any
class or other rights;
there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidate or merger
of the Company with, or sale of all or substantially all of its asset to,
another corporation;
there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
there shall be an Initial Public Offering of Company
securities;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, (a) at least 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 or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up or public
offering, at least 20 days' prior written notice of the date when the same shall
take place; provided, however, that the Holder shall make a best efforts attempt
to respond to such notice as early as possible after the receipt thereof. Any
notice given in accordance with the foregoing clause (a) shall also specify, in
the case of any such dividend, distribution or subscription rights, the date on
which the holders of Stock or Common Stock, as the case may be, shall be
entitled thereto. Any notice given in accordance with the foregoing clause (b)
shall also specify the date on which the holders of Stock shall be entitled to
exchange their Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up, conversion or public offering, as the case may be.
Certain Events. If any change in the outstanding Stock or
--------------
Common Stock of the Company or any other event occurs as to which the other
provisions of this Section 3 are not strictly applicable or if strictly
applicable would not fairly protect the
9.
<PAGE>
purchase rights of the Holder of the Warrant in accordance with such provisions,
then the Board of Directors of the Company shall make an adjustment in the
number and class of shares available under the Warrant, the Stock Purchase Price
or the application of such provisions, so as to protect such purchase rights as
aforesaid. The adjustment shall be such as will give the Holder of the Warrant
upon exercise for the same aggregate Stock Purchase Price the total number,
class and kind of shares as he would have owned had the Warrant been exercised
prior to the event and had he continued to hold such shares until after the
event requiring adjustment.
Issue Tax. The issuance of certificates for shares of Stock
---------
upon the exercise of the Warrant shall be made without charge to the Holder of
the Warrant for any issue tax (other than any applicable income taxes) in
respect thereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the then
holder of the Warrant being exercised.
Closing of Books. The Company will at no time close its transfer
----------------
books against the transfer of any warrant or of any shares of Stock issued or
issuable upon the exercise of any warrant in any manner which interferes with
the timely exercise of this Warrant.
No Voting or Dividend Rights; Limitation of Liability. Nothing
-----------------------------------------------------
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder of
the Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
Holder to purchase shares of Stock, and no mere enumeration herein of the rights
or privileges of the Holder hereof, shall give rise to any liability of such
Holder for the Stock Purchase Price or as a shareholder of the Company, whether
such liability is asserted by the Company or by its creditors.
Warrants Transferable. Subject to compliance with applicable
---------------------
federal and state securities laws, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the Holder hereof (except
for transfer taxes), upon surrender of this Warrant properly endorsed. Each
taker and holder of this Warrant, by taking or holding the same, consents and
agrees that this Warrant, when endorsed in blank, shall be deemed negotiable,
and that the Holder hereof, when this Warrant shall have been so endorsed, may
be treated by the Company, at the Company's option, and all other persons
dealing with this Warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented by this Warrant, or to
the transfer hereof on the books of the Company any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered owner hereof as the owner for all purposes.
Modification and Waiver. This Warrant and any provision hereof
-----------------------
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the Company and the Holder.
10.
<PAGE>
Notices. Any notice, request or other document required or
-------
permitted to be given or delivered to the Holder hereof or the Company shall be
delivered or shall be sent by certified mail, postage prepaid, to each such
Holder as its address as shown on the books of the Company or to the Company c/o
Falcon Technology Partners, L.P., 600 Dorset Road, Devon, PA 19333, or such
other address as either may from time to time provide to the other.
Binding Effect on Successors. This Warrant shall be binding
----------------------------
upon any corporation succeeding the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets. All of the
obligations of the Company relating to the Stock issuable upon the exercise of
this Warrant shall survive the exercise and termination of this Warrant. All of
the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder hereof.
Descriptive Headings and Governing Law. The description headings
--------------------------------------
of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of Delaware.
Lost Warrants. The Company represents and warrants to the Holder
-------------
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
Fractional Shares. No fractional shares shall be issued upon
-----------------
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Stock Purchase Price.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officer, thereunto duly authorized this _____th day of
November, 1996.
GENOMICA CORPORATION, a Delaware
corporation
By:____________________________________
James L. Rathmann
Title: President
11.
<PAGE>
Exhibit 10.13
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL
(WHICH MAY BE COMPANY COUNSEL) IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
Warrant to Purchase Stock
Corporation: Genomica Corporation
Number of Shares: See Below
Class of Stock: Series A Preferred
Initial Exercise Price: See Below
Issue Date: September 10, 1997
Expiration Date: September 9, 2004
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, SILICON VALLEY BANK ("Holder") is
entitled to purchase the number of fully paid and nonassessable shares of the
class of securities (the "Shares") of the corporation (the "Company") at the
initial exercise price per Share (the "Warrant Price") all as set forth herein
and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions
and upon the terms and conditions set forth of this Warrant. The Warrant Price
shall be equal to the price at which the Company sold its Series A Preferred
Stock pursuant to the Stock Purchase Agreement between the Company and the
Purchasers named therein; provided that the Warrant Price shall be equal to the
price per share at which the Company after the date hereof first sells its
shares of capital stock in an offering (the "Equity Event") in which the Company
receives not less than Two Million Dollars ($2,000,000) if the Company receives
the proceeds from such sale by November 30, 1997. The number of Shares that
Holder may purchase under this Warrant is equal to Twelve Thousand Dollars
($12,000) divided by the Warrant Price; provided that, beginning September 15,
1997, and continuing on the fifteenth calendar day of each month thereafter
until Borrower receives the proceeds from the Equity Event, Holder may purchase
an additional number of Shares equal to Six Thousand Dollars ($6,000) divided by
the Warrant Price for each such month; provided the maximum number of Shares
that Holder may purchase pursuant to the terms of this sentence shall be equal
to Forty Thousand Dollars ($40,000) divided by the Warrant Price.
ARTICLE 1. EXERCISE
1.1 Method of Exercise. Holder may exercise this Warrant by
delivering a duly executed Notice of Exercise in substantially the form attached
as Appendix 1 to the principal office of the Company. Unless Holder is
exercising the conversion right set forth in Section 1.2, Holder shall also
deliver to the Company a check for the aggregate Warrant Price for the Shares
being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as
specified in Section 1.1, Holder may from time to time convert this Warrant, in
whole or in part, into a number of Shares
1.
<PAGE>
determined by dividing (a) the aggregate fair market value of the Shares or
other securities otherwise issuable upon exercise of this Warrant minus the
aggregate Warrant Price of such Shares by (b) the fair market value of one
Share. The fair market value of the Shares shall be determined pursuant Section
1.4.
1.3 [Intentionally omitted.]
1.4 Fair Market Value. If the Shares are traded in a public
market, the fair market value of the Shares shall be the closing price of the
Shares (or the closing price of the Company's stock into which the Shares are
convertible) reported for the business day immediately before Holder delivers
its Notice of Exercise to the Company. If the Shares are not traded in a public
market, the Board of Directors of the Company shall determine fair market value
in its reasonable good faith judgment. The foregoing notwithstanding, if Holder
advises the Board of Directors in writing that Holder disagrees with such
determination, then the Company and Holder shall promptly agree upon a reputable
investment banking firm to undertake such valuation. If the valuation of such
investment banking firm is more than 5% greater than that determined by the
Board of Directors, then all fees and expenses of such investment banking firm
shall be paid by the Company. In all other circumstances, such fees and expenses
shall be paid by Holder.
1.5 Delivery of Certificate and New Warrant. Promptly after Holder
exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.6 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, or surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this warrant, a
new warrant of like tenor.
1.7 Repurchase on Sale, Merger, or Consolidation of the Company.
1.7.1 "Acquisition". For the purpose of this Warrant,
"Acquisition" means any sale, license, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where the holders of the Company's
securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity after the transaction.
1.7.2 Assumption of Warrant. Upon the closing of any
Acquisition the successor entity shall assume the obligations of this Warrant,
and this Warrant shall be exercisable for the same securities, cash, and
property as would be payable for the Shares issuable upon exercise of the
unexercised portion of this warrant as if such Shares were outstanding on the
record date for the Acquisition and subsequent closing. The Warrant Price shall
be adjusted accordingly.
1.7.3 Purchase Rights. Notwithstanding the foregoing, at the
election of Holder, the Company shall purchase the unexercised portion of this
Warrant for cash upon the closing of any Acquisition for an amount equal to (a)
the fair market value of any consideration that would have been received by
Holder in consideration of the Shares had Holder exercised the unexercised
portion of this Warrant immediately before the record date for determining the
shareholders entitled to participate in the proceeds of the Acquisition, less
(b) the aggregate Warrant Price of the Shares, but in no event less than zero.
2
<PAGE>
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays
a dividend on its common stock (or the Share if the Shares are securities other
than common stock) payable in common stock, or other securities, subdivides the
outstanding common stock into a greater amount of common stock, or, if the
Shares are securities other than common stock, subdivides the Shares in a
transaction that increases the amount of common stock into which the Shares are
convertible, then upon exercise of this Warrant, for each Share acquired, Holder
shall receive, without cost to Holder, the total number and kind of securities
to which Holder would have been entitled had Holder owned the Shares of record
as of the date the dividend or subdivision occurred.
2.2 Reclassification, Exchange or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or
other event. Such an event shall include any automatic conversion of the
outstanding or issuable securities of the Company of the same class or series as
the Shares to common stock pursuant to the terms of the Company's Certificate of
Incorporation upon the closing of a registered public offering of the Company's
common stock. The Company or its successor shall promptly issue to Holder a new
Warrant for such new securities or other property. The new Warrant shall provide
for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 2 including, without limitation,
adjustments to the Warrant Price and to the number of securities or property
issuable upon exercise of the new Warrant. The provisions of this Section 2.2
shall similarly apply to successive reclassifications, exchanges, substitutions,
or other events.
2.3 Adjustments for Combination, Etc. If the outstanding Shares
are combined or consolidated, by reclassification or otherwise, into a lesser
number of shares, the Warrant Price shall be proportionately increased.
2.4 Adjustments for Diluting Issuances. The Warrant Price and the
number of Shares issuable upon exercise of this Warrant or, if the Shares are
Preferred Stock, the number of shares of common stock issuable upon conversion
of the Shares, shall be subject to adjustment, from time to time in accordance
with the Company's Certificate of Incorporation, as amended. In the event of the
issuance (a "Diluting Issuance") by the Company, after the Issue Date of the
Warrant, of securities at a price per share less than the Warrant Price, then
the number of shares of common stock issuable upon conversion of the Shares
shall be adjusted in accordance with those provisions (the "Provisions") of the
Company's Certificate of Incorporation which apply to Diluting Issuances. The
Company agrees that the Provisions, as in effect on the Issue Date, shall be
deemed to remain in full force and effect during the term of the Warrant at all
times prior to the sale by the Company of its equity securities in an initial
public offering, notwithstanding any subsequent amendment, waiver or termination
thereof by the Company's shareholders. Under no circumstances shall the
aggregate Warrant Price payable by the Holder upon exercise of the Warrant
increase as a result of any adjustment arising from a Diluting Issuance.
2.5 No Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or through a 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 under this Warrant by the Company, but
shall at all times in good faith assist in carrying out of all the provisions of
this Article 2 and in taking all such action as may be necessary or appropriate
to protect Holder's rights under this Article against impairment. If the
3
<PAGE>
Company takes any action affecting the Shares or its common stock other than as
described above that adversely affects Holder's rights under this Warrant, the
Warrant Price shall be adjusted downward and the number of Shares issuable upon
exercise of this Warrant shall be adjusted upward in such a manner that the
aggregate Warrant Price of this Warrant is unchanged.
2.6 Fractional Shares. No fractional Shares shall be issuable upon
exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying Holder amount computed by
multiplying the fractional interest by the fair market value of a full Share.
2.7 Certificate as to Adjustments. Upon each adjustment of the
Warrant Price, the Company at its expense shall promptly compute such
adjustment, and furnish Holder with a certificate of its Chief Financial Officer
setting forth such adjustment and the facts upon which such adjustment is based.
The Company shall, upon written request, furnish Holder a certificate setting
forth the Warrant Price in effect upon the date thereof and the series of
adjustments leading to such Warrant Price.
2.8 No Rights As Shareholders. This Warrant does not entitle
Holder to any voting rights or other rights as a stockholder of the Company
prior to the exercise of the Holder's rights to purchase Preferred Stock as
provided for herein.
2.9 Minimum Adjustment. No adjustment in the Warrant Price under
this Section 2 shall be required unless such adjustment would require an
increase or decrease of at least [twenty-five cents] in such Warrant Price;
provided, however, that any adjustments which by reason of this subsection are
not required to be made, shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 2 shall be made to
the nearest cent or the nearest share, as the case may be.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company hereby represents
and warrants to the Holder that all Shares which may be issued upon the exercise
of the purchase right represented by this Warrant, and all securities, if any,
issuable upon conversion of the Shares, shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws.
3.2 Notice of Certain Events. If the Company proposes at any time
(a) to declare any dividend or distribution upon its common stock, whether in
cash, property, stock, or other securities and whether or not a regular cash
dividend; (b) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class of series or
other rights; (c) to effect any reclassification or recapitalization of common
stock; (d) to merge or consolidate with or into any other corporation, or sell,
lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the company's
securities for cash, then, in connection with each such event, the Company shall
give Holder (1) at least 20 days prior written notice of the date on which a
record will be taken for such dividend, distribution, or subscription rights
(and specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to in
(c) and (d) above at least 20 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property
4
<PAGE>
deliverable upon the occurrence of such event); and (3) in the case of the
matter referred to in (e) above, the same notice as is given to the holders of
such registration rights.]
3.3 Information Rights. So long as the Holder holds this Warrant
and/or any of the Shares, the Company shall deliver to the Holder promptly after
mailing copies of all notices or other written communications to the
shareholders of the Company, generally.
3.4 Registration Under Securities Act of 1933, as amended. The
Company agrees that the Shares or, if the Shares are convertible into common
stock of the Company, such common stock, shall be subject to the registration
rights set forth on Exhibit A, if attached.
ARTICLE 4. REPRESENTATIONS AND COVENANTS OF HOLDER.
This Warrant has been entered into the Company in reliance upon the
following representations and covenants of Holder, which by its acceptance
hereof the Holder (including any permitted transferee of Holder on behalf of
such transferee) hereby confirms:
4.1 Investment Purpose. The right to acquire Preferred Stock or
the Preferred Stock issuable upon exercise of Holder's rights contained herein
will be acquired for investment and not with a view to the sale or distribution
of any part thereof, and the Holder has no present intention of selling or
engaging in any public distribution of the same except pursuant to a
registration or exemption.
4.2 Private Issue. Holder understands (i) that the Preferred
Stock, issuable upon exercise of the Holder's rights contained herein is not
registered under the 1933 Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by this Warrant Agreement will
be exempt 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 4.
4.3 Financial Risk. Holder 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
investments.
4.4 Risk of No Registration. Holder understands that if the
Company does not register with the Securities and Exchange commission pursuant
to Section 12 of the 1933 Act, or file reports pursuant to Section 15(d) of the
Securities Exchange Act of 1934 (the "1934 Act"), or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Preferred Stock pursuant to this Warrant
Agreement, or (ii) the Preferred Stock issuable upon exercise of the right to
purchase, it may be required to hold such securities for an indefinite period.
The Holder also understands that any sale of the rights of the Holder to
purchase Preferred Stock 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.
4.5 Accredited Investor. Holder is an "accredited investor" within
the meaning of Rule 501 of Regulation D under the Act, as presently in effect.
ARTICLE 5. MISCELLANEOUS.
5.1 Term: Notice of Expiration. This Warrant is exercisable, in
whole or in part, at any time and from time to time on or before the Expiration
Date set forth above. To the extent this Warrant is not previously exercised,
and if the fair market value of one Share is greater than the Warrant
5
<PAGE>
Price then in effect, this Warrant shall be deemed automatically exercised
pursuant to Section 1.2 above immediately before its expiration. For purposes of
such automatic exercise, the fair market value of one Share upon expiration
shall be determined pursuant to Section 1.3 above.
5.2 Legends. This Warrant and the Shares (and the securities
issuable, directly or indirectly, upon conversion of the Shares, if any) shall
be imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
5.3 Compliance with Securities Laws on Transfer. This Warrant and
the Shares issuable upon exercise this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to an affiliate of Holder or if there is
no material questions as to the availability of current information as
referenced in Rule 144(c), Holder represents that it has complied with Rule
144(d) and (e) in reasonable detail, the selling broker represents that it has
complied with Rule 144(f), and the Company is provided with a copy of Holder's
notice of proposed sale.
5.4 Transfer Procedure. Subject to the provisions of Section 5.3,
Holder may transfer all or part of this Warrant or the Shares issuable upon
exercise of this Warrant (or the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) by giving the Company notice of the
portion of the Warrant being transferred setting forth the name, address and
taxpayer identification number of the transferee and surrendering this Warrant
to the Company for reissuance to the transferee(s) (and Holder if applicable).
Unless the Company is filing financial information with the SEC pursuant to the
Securities Exchange Act of 1934, the Company shall have the right to refuse to
transfer any portion of this Warrant to any person who directly competes with
the Company.
5.5 Notices. All notices and other communications from the Company
to the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such holder from time
to time.
5.6 Waiver. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.
6
<PAGE>
5.7 Attorneys Fees. In the event of any dispute between the
parties concerning the terms and provisions of this Warrant, the party
prevailing in such dispute shall be entitled to collect from the other party all
costs incurred in such dispute, including reasonable attorneys' fees.
5.8 Governing Law. This Warrant shall be governed by and
constructed in accordance with the laws of the State of California, without
giving effect to its principles regarding conflicts of law.
GENOMICA CORPORATION,
a Delaware corporation
By: /s/ Thomas G. Marr
-------------------------------------
Name: Thomas G. Marr
-----------------------------------
(Print)
Title: Chairman of the Board, President,
or Vice President
By: /s/ Kenneth J. Collins
-------------------------------------
Name: Kenneth J. Collins, CFO
-----------------------------------
(Print)
Title: Chief Financial Officer,
Secretary Assistant Treasurer, or
Assistant Secretary
7
<PAGE>
EXHIBIT A
---------
Investor Rights Agreement
-------------------------
The Company agrees that no amendments will be made to the Agreement which
would treat the Holder in a manner differently than the other holders of like
securities of the Company without the consent of Holder.
The Company agrees, and by acceptance of the Warrant to which this Exhibit
A is attached Holder agrees, that at such time this Warrant is exercised, Holder
shall become a party to the Registration Rights Agreement dated as of March 22,
1996 by and among the Company and certain of the Company's stockholders (as
amended, modified, supplemented or restated, the "Registration Rights
Agreement"), shall be treated as a "Purchaser" of "Preferred Shares" thereunder,
shall have the rights, privileges and responsibilities of a party thereto, and
agrees to execute counterpart signature pages thereto at the request of the
Company.
8.
<PAGE>
APPENDIX 1
NOTICE OF EXERCISE
------------------
1. The undersigned hereby elects to purchase ________ shares of the Series
__ Preferred Stock of Genomica Corporation pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
1. The undersigned hereby elects to convert the attached Warrant into
Shares/cash [strike one] in the manner specified in the Warrant. This conversion
is exercised with respect to __________________ of the Shares covered by the
Warrants.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
_________________________
(Name)
_________________________
_________________________
(Address)
3. The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws.
_________________________________________
(Signature)
_________________________
(Date)
9.
<PAGE>
Exhibit 10.14
Warrant No. WP__5
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
WARRANT TO PURCHASE
SHARES OF PREFERRED STOCK OF
GENOMICA CORPORATION
(Void after the date that is 5 years after the date hereof)
This certifies that [ ] (the "Holder"), or assigns, for value received,
is entitled to purchase from Genomica Corporation, a Delaware corporation (the
"Company"), having a place of business at 4001 Discovery Drive, Suite 130,
Boulder, Colorado 80303, a number of fully paid and non-assessable shares of the
Company's Applicable Series Preferred (as defined below) up to the Coverage
Amount (as defined below), and any security into or for which such Applicable
Series Preferred may hereafter be converted or exchanged pursuant to the
Certificate of Incorporation of the Company as from time to time amended as
provided by law, for cash at a price per share equal to the price per share (the
"Stock Purchase Price") at which the next round of Preferred Stock issued and
sold by the Company in which the gross proceeds to the Borrower are at least
$3,000,000, not including the conversion of any Notes (such an issuance and
sale, a "Qualified Financing"), at any time on or after the date that the
Applicable Series Preferred is first issued and sold or from time to time up to
and including 5:00 p.m. (Mountain Time) on, until the date 5 years after the
date of such Qualified Financing, such day being referred to herein as the
"Expiration Date," upon surrender to the Company at its principal office (or at
such other location as the Company may advise the Holder in writing) of this
Warrant properly endorsed with the Subscription Form attached hereto as Exhibit
A and the Investment Representations Letter attached hereto as Exhibit B duly
filled in and signed and, if applicable, upon payment in cash or by check of the
aggregate Stock Purchase Price for the number of shares for which this Warrant
is being exercised determined in accordance with the provisions hereof. The
"Applicable Series Preferred" shall be the series of Preferred Stock next issued
and sold by the Company in a Qualified Financing. The "Coverage Amount" shall
equal a number of shares computed as follows:
(the principal amount of the Convertible Promissory Note(s)
issued by the Company x 15% to the Holder on the date hereof)
----------------------------------------------------------------
Stock Purchase Price
The Stock Purchase Price and the number of shares purchasable hereunder are
subject to adjustment as provided in Section 3 of this Warrant.
1.
<PAGE>
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 General. This Warrant is exercisable at the option of the Holder
of record hereof, at any time or from time to time, commencing on the date
hereof up to the Expiration Date for all or any part of the shares of Applicable
Series Preferred (but not for a fraction of a share) which may be purchased
hereunder.
1.2 Issuance of Certificates. The Company agrees that the shares of
Applicable Series Preferred purchased under this Warrant shall be and are deemed
to be issued to the Holder hereof as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been surrendered,
properly endorsed, the completed, executed Subscription Form (a copy of which is
attached hereto as Exhibit A) and Investment Representations Letter (a copy of
which is attached hereto as Exhibit B) delivered and payment (if any) made for
such shares. Certificates for the shares of Applicable Series Preferred so
purchased, together with any other securities or property to which the Holder
hereof is entitled upon such exercise, shall be delivered to the Holder hereof
by the Company at the Company's expense promptly after the rights represented by
this Warrant have been so exercised. Each stock certificate so delivered shall
be in such denominations of Applicable Series Preferred as may be requested by
the Holder hereof and shall be registered in the name of such Holder. In case
of a purchase of less than all the shares which may be purchased under this
Warrant, the Company shall cancel this Warrant and execute and deliver a new
Warrant or Warrants of like tenor for the balance of the shares purchasable
under the Warrant surrendered upon such purchase to the Holder hereof within a
reasonable time.
1.3 Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Applicable
Series Preferred is greater than the Stock Purchase Price (at the date of
calculation as set forth below), in lieu of exercising this Warrant for cash,
the Holder may elect to receive shares equal to the value (as determined below)
of this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with the properly
endorsed Form of Subscription and notice of such election in which event the
Company shall issue to the Holder a number of shares of Applicable Series
Preferred computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Applicable Series Preferred to be issued
to the Holder
Y = the number of shares of Applicable Series Preferred purchasable
under the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled (at the
date of such calculation)
A = the fair market value of one share of the Company's Applicable
Series Preferred (at the date of such calculation)
2.
<PAGE>
B = Stock Purchase Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, the fair market value of one share of
Applicable Series Preferred shall be determined by the Company's Board of
Directors in good faith; provided, however, that in the event the Company makes
an initial public offering of its Common Stock the fair market value per share
shall be: (i) if the Warrant is being converted in connection with and
contingent upon a public offering of the Company's securities, and if the
Company's registration statement relating to such public offering has been
declared effective by the U.S. Securities and Exchange Commission, then the fair
market value of the Applicable Series Preferred shall be the initial "Price to
Public" specified in the final prospectus with respect to such offering
multiplied by the number of shares of Common Stock into which each share of
Applicable Series Preferred is then convertible; or (ii) if the Warrant is not
being converted in connection with and contingent upon a public offering of the
Company's securities, then as follows: (x) if traded on a securities exchange,
the Nasdaq National Market or the Nasdaq SmallCap Market, the fair market value
of the Common Stock shall be deemed to be the average of the closing or last
reported sale prices of the Common Stock on such exchange or market over the 30-
day period ending five business days prior to the date of calculation, and the
fair market value of the Applicable Series Preferred shall be deemed to be such
fair market value of the Common Stock multiplied by the number of shares of
Common Stock into which each share of Applicable Series Preferred is then
convertible or (y) if otherwise traded in an over-the-counter market, the fair
market value of the Common Stock shall be deemed to be the median of the average
of the reported closing bid and ask prices of the Common Stock over the 30-day
period ending five business days prior to the date of calculation, and the fair
market value of the Applicable Series Preferred shall be deemed to be such fair
market value of the Common Stock multiplied by the number of shares of Common
Stock into which each share of Applicable Series Preferred is then convertible.
2. Shares to be Fully Paid; Reservation of Shares. The Company covenants
and agrees that all shares of Applicable Series Preferred that may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance,
be duly authorized, validly issued, fully paid and non-assessable and free from
all preemptive rights of any stockholder and free of all taxes, liens and
charges with respect to the issue thereof. The Company further covenants and
agrees that, during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved, for the purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Warrant, a sufficient number of shares of authorized
but unissued Applicable Series Preferred, or other securities and property, when
and as required to provide for the exercise of the rights represented by this
Warrant. The Company will take all such action as may be necessary to assure
that such shares of Applicable Series Preferred may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
any domestic securities exchange upon which the Applicable Series Preferred may
be listed; provided, however, that the Company shall not be required to effect a
registration under federal or state securities laws with respect to such
exercise. The Company will not take any action which would result in any
adjustment of the Stock Purchase Price (as set forth in Section 3 hereof) (i) if
the total number of shares of Applicable Series Preferred issuable after such
action upon exercise of all outstanding warrants and options, together with all
shares of Applicable Series Preferred then outstanding and all
3.
<PAGE>
shares of Applicable Series Preferred then issuable upon the conversion of all
convertible securities then outstanding, would exceed the total number of shares
of Applicable Series Preferred then authorized by the Company's Certificate of
Incorporation, or (ii) if the total number of shares of Common Stock issuable
after such action upon the conversion of all outstanding shares of Applicable
Series Preferred, together with all shares of Common Stock then issuable upon
the conversion of all shares of Applicable Series Preferred then issuable upon
exercise of all outstanding warrants and options, together with all shares of
Common Stock then outstanding and all shares of Common Stock then issuable upon
exercise of all warrants and options and upon the conversion of all convertible
securities then outstanding would exceed the total number of shares of Common
Stock then authorized by the Company's Certificate of Incorporation.
3. Adjustment of Stock Purchase Price and Number of Shares. The Stock
Purchase Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 3. Upon each adjustment of the Stock
Purchase Price, the Holder of this Warrant shall thereafter be entitled to
purchase, at the Stock Purchase Price resulting from such adjustment, the number
of shares obtained by multiplying the Stock Purchase Price in effect immediately
prior to such adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment, and dividing the product thereof by the
Stock Purchase Price resulting from such adjustment.
3.1 Subdivision of Combination of Stock. In case the Company shall
at any time subdivide its outstanding shares of Applicable Series Preferred into
a greater number of shares, the Stock Purchase Price in effect immediately prior
to such subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Applicable Series Preferred of the Company shall be
combined into a smaller number of shares, the Stock Purchase Price in effect
immediately prior to such combination shall be proportionately increased.
3.2 Dividends in Common Stock, Other Stock, Property,
Reclassification. If at any time or from time to time the holders of Applicable
Series Preferred (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received or become
entitled to receive, without payment therefor,
3.2.1 Applicable Series Preferred or any shares of stock or
other securities which are at any time directly or indirectly convertible into
or exchangeable for Applicable Series Preferred, or any rights or options to
subscribe for, purchase or otherwise acquire any of the foregoing by way of
dividend or other distribution;
3.2.2 Any cash paid or payable otherwise than as a cash
dividend; or
3.2.3 Applicable Series Preferred or additional stock or other
securities or property (including cash) by way of spin-off, split-up,
reclassification, combination of shares or similar corporate rearrangement
(other than (i) shares of Applicable Series Preferred issued as a stock split,
adjustments in respect of which shall be covered by the terms of Section 3.1
above or (ii) an event for which adjustment is otherwise made pursuant to
Section 3.3 below);
4.
<PAGE>
then and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of
Applicable Series Preferred receivable thereupon, and without payment of any
additional consideration therefor, the amount of stock and other securities and
property (including cash in the cases referred to in clauses 3.2.2 and 3.2.3
above) which such Holder would hold on the date of such exercise had he been the
Holder of record of such Applicable Series Preferred as of the date on which
holders of Applicable Series Preferred received or became entitled to receive
such shares or all other additional stock and other securities and property.
3.3 Reorganization, Reclassification, Consolidation, Merger or Sale.
3.3.1 If any recapitalization, reclassification or capital
reorganization of the capital stock of the Company (including any merger not
described in Section 3.3.2 below) shall be effected in such a way that holders
of Applicable Series Preferred shall be entitled to receive stock, securities,
or other assets or property (a "Restructuring"), then, as a condition of such
Restructuring, lawful and adequate provisions shall be made whereby the Holder
hereof shall thereafter have the right to purchase and receive (in lieu of the
shares of the Applicable Series Preferred of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby)
such shares of stock, securities or other assets or property as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
such Applicable Series Preferred equal to the number of shares of such stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby. In any Restructuring described above, appropriate
provision shall be made with respect to the rights and interests of the Holder
of this Warrant to the end that the provisions hereof (including, without
limitation, provisions for adjustments of the Stock Purchase Price and of the
number of shares purchasable and receivable upon the exercise of this Warrant)
shall thereafter be applicable, as nearly as may be, in relation to any shares
of stock, securities or assets thereafter deliverable upon the exercise hereof.
3.3.2 In the event of a consolidation or merger of the Company
with another corporation in which the holders of the Company's voting securities
before the transaction beneficially own less than 50% of the voting securities
of the surviving entity after the transaction, or the sale of all or
substantially all of its assets of the Company (a "Change of Control"), any
unexercised portion of this Warrant shall be deemed to have been automatically
converted pursuant to Section 1.3 hereof and thereafter the Holder shall
participate in the Change of Control on the same terms as other holders of the
Applicable Series Preferred; provided however, that if the Stock Purchase Price
in effect immediately prior to the Change of Control exceeds the value of the
stock, securities or other assets or property (determined in good faith by the
Board of Directors of the Company) issuable or payable with respect to one share
of Applicable Series Preferred immediately theretofore purchasable and
receivable upon exercise of the rights represented hereby, the Warrant shall
terminate and be of no further effect as of the Change of Control.
3.4 Notice of Adjustment. Upon any adjustment of the Stock Purchase
Price or any increase or decrease in the number of shares purchasable upon the
exercise of this Warrant, the Company shall give written notice thereof, by
certified mail, postage prepaid, or by
5.
<PAGE>
reputable overnight courier, addressed to the registered Holder of this Warrant
at the address of such Holder as shown on the books of the Company. The notice
shall be signed by an officer of the Company and shall state the Stock Purchase
Price resulting from such adjustment and the increase or decrease, if any, in
the number of shares purchasable at such price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
3.5 Other Notices. If at any time:
3.5.1 the Company shall declare any cash dividend upon its
Applicable Series Preferred;
3.5.2 the Company shall declare any dividend upon its Applicable
Series Preferred payable in stock or make any special dividend or other
distribution to the holders of its Applicable Series Preferred;
3.5.3 there shall be any Restructuring or Change of Control;
3.5.4 there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
3.5.5 there shall be an initial public offering of securities of
the Company;
then, in any one or more of said cases, the Company shall give, by
certified mail, postage prepaid, or by reputable overnight courier, addressed to
the Holder of this Warrant at the address of such Holder as shown on the books
of the Company, (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 or subscription rights or for determining rights to
vote in respect of any such Restructuring, Change of Control, dissolution,
liquidation or winding-up, and (b) in the case of any such Restructuring, Change
of Control, dissolution, liquidation, winding-up or public offering, at least
twenty (20) days prior written notice of the date when the same shall take
place; provided, however, that the Holder shall make a best efforts attempt to
respond to such notice as early as possible after the receipt thereof. Any
notice given in accordance with the foregoing clause (a) shall also specify, in
the case of any such dividend, distribution or subscription rights, the date on
which the holders of Applicable Series Preferred shall be entitled thereto. Any
notice given in accordance with the foregoing clause (b) shall also specify the
date on which the holders of Applicable Series Preferred shall be entitled to
exchange their Applicable Series Preferred for securities or other property
deliverable upon such Restructuring, Change of Control, dissolution,
liquidation, winding-up or public offering, as the case may be.
3.6 Certain Events. If any change in the outstanding Applicable
Series Preferred of the Company or any other event occurs as to which the other
provisions of this Section 3 are not strictly applicable or if strictly
applicable would not fairly protect the purchase rights of the Holder of the
Warrant in accordance with such provisions, the Board of Directors of the
Company shall make an adjustment in the number and class of shares available
under the
6.
<PAGE>
Warrant, the Stock Purchase Price or the application of such provisions, so as
to protect such purchase rights as aforesaid. The adjustment shall be such as
will give the Holder of the Warrant upon exercise for the same aggregate Stock
Purchase Price the total number, class and kind of shares as he would have owned
had the Warrant been exercised prior to the event and had he continued to hold
such shares until after the event requiring adjustment.
4. Issue Tax. The issuance of certificates for shares of Applicable
Series Preferred upon the exercise of the Warrant shall be made without charge
to the Holder of the Warrant for any issue tax in respect thereof; provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the then Holder of the Warrant being
exercised.
5. Closing of Books. The Company will at no time close its transfer
books against the transfer of any warrant or of any shares of Applicable Series
Preferred issued or issuable upon the exercise of any warrant in any manner
which interferes with the timely exercise of this Warrant.
6. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a stockholder of
the Company or any other matters or any rights whatsoever as a stockholder of
the Company. Except as provided herein, no dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby
or the shares purchasable hereunder until, and only to the extent that, this
Warrant shall have been exercised. No provision hereof in the absence of
affirmative action by the Holder to purchase shares of Applicable Series
Preferred, and no mere enumeration herein of the rights or privileges of the
Holder hereof, shall give rise to any liability of such Holder for the Stock
Purchase Price or as a stockholder of the Company, whether such liability is
asserted by the Company or by its creditors.
7. Warrants Transferable. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the Holder hereof (except
for transfer taxes), upon surrender of this Warrant properly endorsed and in
compliance with such provisions. Each taker and Holder of this Warrant, by
taking or holding the same, consents and agrees that this Warrant, when endorsed
in blank, shall be deemed negotiable, and that the transferee, when this Warrant
shall have been so endorsed, may be treated by the Company, at the Company's
option, and all other persons dealing with this Warrant as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented by this Warrant, or to the transfer hereof on the books of the
Company, any notice to the contrary notwithstanding; but until such transfer on
such books, the Company may treat the registered owner hereof as the owner for
all purposes. Upon any such transfer, all references in this Warrant to the
"Holder" shall be deemed to refer to the transferee of this Warrant.
7.
<PAGE>
8. Modification and Waiver. Any change, waiver, discharge or termination
agreed to in writing by a majority in interest of Holders of Warrants of the
Company of even date (determined by reference to the number of shares underlying
such Warrants) shall be binding on the Holder and the Holder's assigns.
9. Notices. Any notice, request or other document required or permitted
to be given or delivered to the Holder hereof or the Company shall be delivered
or shall be sent by certified mail, postage prepaid, to each such Holder at its
address as shown on the books of the Company or to the Company at the address
indicated therefor in the first paragraph of this Warrant or such other address
as either may from time to time provide to the other and shall be deemed to be
received upon delivery or four (4) business days after deposit in the U.S. mail.
10. Descriptive Headings and Governing Law. The description headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Colorado.
11. Lost Warrants. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
12. Fractional Shares. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share,
pay the Holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Stock Purchase Price.
13. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Applicable Series Preferred issuable upon the exercise
of this Warrant shall survive the exercise and termination of this Warrant. All
of the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof.
14. Rights of Applicable Series Preferred. Upon the exercise of this
Warrant into shares of Applicable Series Preferred, the Company shall grant, and
ensure that the Holder is given, identical rights with respect to such shares of
Applicable Series Preferred as those granted to the holders of the then
outstanding Applicable Series Preferred who hold like amounts of Applicable
Preferred Stock. For purposes of this Section, all shares of Applicable Series
Preferred owned by Holder shall be aggregated.
8.
<PAGE>
In Witness Whereof, the Company has caused this Warrant to be duly executed
by its President, thereunto duly authorized this 9th day of October, 1998.
Genomica Corporation,
a Delaware corporation
/s/ Thomas G. Marr
---------------------------------
Thomas G. Marr
President
9.
<PAGE>
Exhibit A
SUBSCRIPTION FORM
Date:______________, 19___
Genomica Corporation
4001 Discovery Drive
Suite 130
Boulder, CO 80303
Attn: President
Ladies and Gentlemen:
[_] The undersigned hereby elects to exercise the warrant issued to it by
Genomica Corporation (the "Company") and dated ____________________, 1998,
Warrant No. WP-__ (the "Warrant") and to purchase thereunder __________
shares of the Applicable Series Preferred (as defined in the Warrant) of
the Company (the "Shares") at a purchase price of the Applicable Series
Preferred Price per Share, or an aggregate purchase price of
___________________________________ ($__________) (the "Purchase Price").
[_] The undersigned hereby elects to convert ___________________ percent (___%)
of the value of the Warrant pursuant to the provisions of Section 1.3 of
the Warrant.
Pursuant to the terms of the Warrant the undersigned has delivered the
Purchase Price herewith in full in cash or by certified check or wire transfer
or under the net exercise provision. The undersigned also makes the
representations set forth on the attached Exhibit B of the Warrant.
Very truly yours,
_________________________________
By:______________________________
Title:___________________________
<PAGE>
Exhibit B
INVESTMENT REPRESENTATIONS
THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO GENOMICA CORPORATION
ALONG WITH THE SUBSCRIPTION FORM BEFORE THE APPLICABLE SERIES PREFERRED ISSUABLE
UPON EXERCISE OF THE WARRANT DATED OCTOBER 9, 1998, WILL BE ISSUED.
_____________________, 19__
Genomica Corporation
4001 Discovery Drive
Suite 130
Boulder, Colorado 80303
Attn: President and Chief Executive Officer
Ladies and Gentlemen:
The undersigned, _______________________ ("Purchaser"), intends to acquire
up to __________________ shares of the Applicable Series Preferred (as defined
in the Warrant to purchase such Applicable Series Preferred held by the
Purchaser (the "Warrant")) of Genomica Corporation (the "Company") from the
Company pursuant to the exercise or conversion of the Warrant. The Applicable
Series Preferred will be issued to Purchaser in a transaction not involving a
public offering and pursuant to an exemption from registration under the
Securities Act of 1933, as amended (the "1933 Act") and applicable state
securities laws. Purchaser has been advised that the Applicable Series Preferred
has not been registered under the 1933 Act or state securities laws on the
ground that this transaction is exempt from registration, and that reliance by
the Company on such exemptions is predicated in part on Purchaser's
representations set forth in this letter. Accordingly, Purchaser represents,
warrants and agrees as follows:
1. Purchaser is acquiring the Applicable Series Preferred for its own
account and beneficial interest, to hold for investment and not for sale or with
a view to distribution of the Applicable Series Preferred or any part thereof.
Purchaser has no present intention of selling (in connection with a distribution
or otherwise), granting any participation in, or otherwise distributing the
same, and does not presently have reason to anticipate a change in such
intention.
2. Purchaser acknowledges that it has received all the information it has
requested from the Company and considers necessary or appropriate for deciding
whether to acquire the Applicable Series Preferred. Purchaser represents that
it has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Applicable Series
Preferred and to obtain any additional information necessary to verify the
accuracy of the information given the Purchaser. Purchaser further represents
that it has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risk of this investment.
<PAGE>
3. Purchaser is an "accredited investor" as such term is defined in Rule
501 under the 1933 Act.
4. Purchaser acknowledges that investment in the Applicable Series
Preferred involves a high degree of risk, and represents that it is able,
without materially impairing its financial condition, to hold the Applicable
Series Preferred for an indefinite period of time and to suffer a complete loss
of its investment.
5. Purchaser has been informed that under the 1933 Act, the Applicable
Series Preferred must be held indefinitely unless it is subsequently registered
under the 1933 Act or unless an exemption from such registration (such as Rule
144) is available with respect to any proposed transfer or disposition by
Purchaser of the Applicable Series Preferred. Purchaser further agrees that the
Company may refuse to permit Purchaser to sell, transfer or dispose of the
Applicable Series Preferred (except as permitted under Rule 144) unless there is
in effect a registration statement under the 1933 Act and any applicable state
securities laws covering such transfer, or unless, if reasonably required,
Purchaser furnishes an opinion of counsel reasonably satisfactory to counsel for
the Company, to the effect that such registration is not required. Purchaser
shall not make any sale, transfer or other disposition of the Applicable Series
Preferred in violation of the 1933 Act or the General Rules and Regulations
promulgated thereunder by the Securities and Exchange Commission or in violation
of any applicable state securities law.
6. Purchaser also understands and agrees that there will be placed on the
certificate(s) for the Applicable Series Preferred, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), or
any state securities laws. These shares have been acquired for
investment and may not be sold or otherwise transferred in the
absence of an effective registration statement for these shares
under the 1933 Act and applicable state securities laws, or, if
reasonably required, an opinion of counsel satisfactory to the
Company that registration is not required and that an applicable
exemption is available."
Purchaser has carefully read this letter and has discussed its requirements
and other applicable limitations upon Purchaser's resale of the Applicable
Series Preferred with Purchaser's counsel.
Very truly yours,
__________________________________
By:_______________________________
Title:____________________________
<PAGE>
Warrant Agreements - Series B Preferred Stock
---------------------------------------------
Supplemental Schedule
---------------------
The following investors executed Warrant Agreements to purchase Series B
Preferred Stock:
Investor Number of Shares
- -------- ----------------
Invesco Global Health Sciences Fund 75,520
Falcon Technology Partners, L.P. 75,520
ARCH Ventures Fund III, L.P. 49,479
Boulder Ventures, L.P. 5,208
The Caruthers Family L.L.C 2,604
<PAGE>
Exhibit 10.15
February 12, 1999
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
WARRANT TO PURCHASE UP TO
[ ] SHARES OF COMMON STOCK OF
GENOMICA CORPORATION
(Void after February 11, 2004)
This Certifies that [ ] (the "Holder"), for value received, is
entitled to purchase from Genomica Corporation, a Delaware corporation (the
"Company"), having a place of business at 4001 Discovery Drive, Suite 130,
Boulder, Colorado 80303, up to a maximum of [ ]shares of fully paid and
nonassessable shares of the Company's Common Stock (the "Common Stock") at a
price of seventy-two cents ($0.72) per share (the "Stock Purchase Price"), at
any time or from time to time prior to the earlier of (i) up to and including
5:00 p.m. (Mountain Time) on February 11, 2004, (ii) upon the closing of the
Company's first firm commitment underwritten public offering of its Common Stock
registered under the Securities Act of 1933, as amended, or (iii) the closing of
an Acquisition or Asset Transfer (as such terms are defined below) (such earlier
date being referred to herein as the "Expiration Date"), upon surrender to the
Company at its principal office (or at such other location as the Company may
advise the Holder in writing) of this Warrant properly endorsed with the
Subscription Form (attached hereto as Exhibit A) and the Investment
---------
Representations Letter
(attached hereto as Exhibit B) duly filled in and signed and, if applicable,
---------
upon payment in cash or by check of the aggregate Stock Purchase Price for the
number of shares for which this Warrant is being exercised determined in
accordance with the provisions hereof. The Stock Purchase Price and the number
of shares purchasable hereunder are subject to adjustment as provided in Section
3 of this Warrant. An "Acquisition" shall mean (A) any consolidation or merger
of the Company with or into any other corporation or other entity or person, or
any other corporate reorganization, in which the stockholders of the Company
immediately prior to such consolidation, merger or reorganization, hold less
than 50% of the outstanding voting power of the surviving entity (or its parent)
following the consolidation, merger or reorganization or (B) any transaction (or
series of related transactions involving a person or entity, or a group of
affiliated persons or entities) in which in excess of fifty percent (50%) of the
Company's outstanding voting power is transferred. An "Asset Transfer" shall
mean a sale, lease or other disposition of all or substantially all of the
assets of the Company.
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 General. This Warrant is exercisable at the option of the Holder
of record hereof, at any time or from time to time, commencing on the date
hereof up to the Expiration Date for all or any part of the shares of Common
Stock (but not for a fraction of a share) which may be purchased hereunder.
1.
<PAGE>
1.2 Issuance of Certificates. The Company agrees that the shares of
Common Stock purchased under this Warrant shall be and are deemed to be issued
to the Holder hereof as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered, properly
endorsed, the completed, executed Subscription Form (a copy of which is attached
hereto as Exhibit A) and Investment Representations Letter (a copy of which is
attached hereto as Exhibit B) delivered and payment (if any) made for such
shares. Certificates for the shares of Common Stock so purchased, together with
any other securities or property to which the Holder hereof is entitled upon
such exercise, shall be delivered to the Holder hereof by the Company at the
Company's expense promptly after the rights represented by this Warrant have
been so exercised. Each stock certificate so delivered shall be in such
denominations of Common Stock as may be requested by the Holder hereof and shall
be registered in the name of such Holder. In case of a purchase of less than
all the shares which may be purchased under this Warrant, the Company shall
cancel this Warrant and execute and deliver a new Warrant or Warrants of like
tenor for the balance of the shares purchasable under the Warrant surrendered
upon such purchase to the Holder hereof within a reasonable time.
1.3 Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Common Stock is
greater than the Stock Purchase Price (at the date of calculation as set forth
below), in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with the properly endorsed Form of Subscription
and notice of such election in which event the Company shall issue to the Holder
a number of shares of Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled (at the
date of such calculation)
A = the fair market value of one share of the Company's Common
Stock (at the date of such calculation)
B = Stock Purchase Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, the fair market value of one share of
Common Stock shall be determined by the Company's Board of Directors in good
faith; provided, however, that in the event the Company makes an initial public
offering of its Common Stock the fair market value per share shall be: (i) if
the Warrant is being converted in connection with and contingent upon a public
offering of the Company's securities, and if the Company's registration
statement relating to such public offering has been declared effective by the
U.S. Securities and Exchange Commission, then the fair market value of the
Common Stock shall be the initial "Price to Public" specified in the final
prospectus; or (ii) if the Warrant is not being converted in
2.
<PAGE>
connection with and contingent upon a public offering of the Company's
securities, then as follows: (x) if traded on a securities exchange, the Nasdaq
National Market or the Nasdaq SmallCap Market, the fair market value of the
Common Stock shall be deemed to be the average of the closing or last reported
sale prices of the Common Stock on such exchange or market over the 30-day
period ending five business days prior to the date of calculation or (y) if
otherwise traded in an over-the-counter market, the fair market value of the
Common Stock shall be deemed to be the median of the average of the reported
closing bid and ask prices of the Common Stock over the 30-day period ending
five business days prior to the date of calculation.
2. Shares to be Fully Paid; Reservation of Shares. The Company covenants and
agrees that all shares of Common Stock that may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and non-assessable and free from all preemptive
rights of any stockholder and free of all taxes, liens and charges with respect
to the issue thereof. The Company further covenants and agrees that, during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved, for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant,
a sufficient number of shares of authorized but unissued Common Stock, or other
securities and property, when and as required to provide for the exercise of the
rights represented by this Warrant. The Company will take all such action as
may be necessary to assure that such shares of Common Stock may be issued as
provided herein without violation of any applicable law or regulation, or of any
requirements of any domestic securities exchange upon which the Common Stock may
be listed; provided, however, that the Company shall not be required to effect a
registration under federal or state securities laws with respect to such
exercise.
3. Adjustment of Stock Purchase Price and Number of Shares. The Stock
Purchase Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 3. Upon each adjustment of the Stock
Purchase Price, the Holder of this Warrant shall thereafter be entitled to
purchase, at the Stock Purchase Price resulting from such adjustment, the number
of shares obtained by multiplying the Stock Purchase Price in effect immediately
prior to such adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment, and dividing the product thereof by the
Stock Purchase Price resulting from such adjustment.
3.1 Subdivision or Combination of Stock. In case the Company shall at any
time subdivide its outstanding shares of Common Stock into a greater number of
shares, the Stock Purchase Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, in case the outstanding shares
of Common Stock of the Company shall be combined into a smaller number of
shares, the Stock Purchase Price in effect immediately prior to such combination
shall be proportionately increased.
3.2 Dividends in Common Stock, Other Stock, Property, Reclassification. If
at any time or from time to time the holders of Common Stock (or any shares of
stock or other securities at the time receivable upon the exercise of this
Warrant) shall have received or become entitled to receive, without payment
therefor,
3.
<PAGE>
3.2.1 Common Stock or any shares of stock or other securities which
are at any time directly or indirectly convertible into or exchangeable for
Common Stock, or any rights or options to subscribe for, purchase or otherwise
acquire any of the foregoing by way of dividend or other distribution;
3.2.2 Any cash paid or payable otherwise than as a cash dividend; or
3.2.3 Common Stock or additional stock or other securities or
property (including cash) by way of spin-off, split-up, reclassification,
combination of shares or similar corporate rearrangement (other than (i) shares
of Common Stock issued as a stock split, adjustments in respect of which shall
be covered by the terms of Section 3.1 above or (ii) an event for which
adjustment is otherwise made pursuant to Section 3.3 below);
then and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses 3.2.2 and 3.2.3 above) which such Holder
would hold on the date of such exercise had it been the Holder of record of such
Common Stock as of the date on which holders of Common Stock received or became
entitled to receive such shares or all other additional stock and other
securities and property.
3.3 Reorganization, Reclassification, Consolidation, Merger or Sale. If
at any time while this Warrant, or any portion thereof, is outstanding and
unexpired, there shall be any capital reorganization of the capital stock of the
Company, or any consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation not
involving an Asset Transfer or Acquisition and effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities, or other
assets or property, then lawful and adequate provisions shall be made to entitle
the Holder hereof to receive, upon exercise of this Warrant (in lieu of the
shares of the Common Stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby) such shares
of stock, securities or other assets or property as may be issued or payable
with respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby;
provided, however, that in the event the value of the stock, securities or other
assets or property (determined in good faith by the Board of Directors of the
Company) issuable or payable with respect to one share of the Common Stock of
the Company immediately theretofore purchasable and receivable upon the exercise
of the rights represented hereby is in excess of the Stock Purchase Price hereof
effective at the time of the reorganization, reclassification, consolidation,
merger or sale and the resale of securities received in such reorganization,
reclassification, consolidation, merger or sale, if any, is registered so that
such securities may be immediately resold, then this Warrant shall expire unless
exercised prior to such reorganization, reclassification, consolidation, merger
or sale. In any reorganization, reclassification, consolidation, merger or sale
described above in which the Warrant does not terminate appropriate provision
shall be made with respect to the rights and interests of the Holder of this
Warrant to the end that the provisions hereof (including, without limitation,
provisions for adjustments of the Stock Purchase Price and of the number of
shares purchasable and receivable upon the exercise of this Warrant) shall
thereafter be applicable, as
4.
<PAGE>
nearly as may be, in relation to any shares of stock, securities or assets of
the surviving corporation or its parent thereafter deliverable upon the exercise
hereof. The Company will not effect any such consolidation, merger or sale
unless, prior to the consummation thereof, the successor corporation (if other
than the Company) or such corporation's parent resulting from such consolidation
or the corporation purchasing such assets shall assume by written instrument,
executed and mailed or delivered to the registered Holder hereof at the last
address of such Holder appearing on the books of the Company, the obligation to
deliver to such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
purchase.
3.4 Notice of Adjustment. Upon any adjustment of the Stock Purchase Price
or any increase or decrease in the number of shares purchasable upon the
exercise of this Warrant, the Company shall give written notice thereof, by
certified mail, postage prepaid, or by reputable overnight courier, addressed to
the registered Holder of this Warrant at the address of such Holder as shown on
the books of the Company. The notice shall be signed by an officer of the
Company and shall state the Stock Purchase Price resulting from such adjustment
and the increase or decrease, if any, in the number of shares purchasable at
such price upon the exercise of this Warrant, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
3.5 Other Notices. If at any time:
3.5.1 the Company shall declare any cash dividend upon its Common
Stock;
3.5.2 the Company shall declare any dividend upon its Common Stock
payable in stock or make any special dividend or other distribution to the
holders of its Common Stock;
3.5.3 there shall be any capital reorganization or reclassification
of the capital stock of the Company; any Asset Transfer or Acquisition or any
other consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another corporation;
3.5.4 there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
3.5.5 there shall be an initial public offering of securities of the
Company;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, (a) at least ten (10) 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 or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up or public
offering, at least twenty (20) days prior written notice of the date when the
same shall take place; provided, however, that the Holder shall make reasonable
efforts attempt to respond to such notice as early as possible after the receipt
thereof. Any notice given in accordance with the foregoing clause (a) shall
also specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holder of Common Stock shall
5.
<PAGE>
be entitled thereto. Any notice given in accordance with the foregoing clause
(b) shall also specify the date on which the holder of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, as the case may be.
3.6 Certain Events. If any change in the outstanding Common Stock of the
Company or any other event occurs as to which the other provisions of this
Section 3 are not strictly applicable or if strictly applicable would not fairly
protect the purchase rights of the Holder of the Warrant in accordance with such
provisions, the Board of Directors of the Company shall make an adjustment in
the number and class of shares available under the Warrant, the Stock Purchase
Price or the application of such provisions, so as to protect such purchase
rights as aforesaid. The adjustment shall be such as will give the Holder of
the Warrant upon exercise for the same aggregate Stock Purchase Price the total
number, class and kind of shares as he would have owned had the Warrant been
exercised prior to the event and had he continued to hold such shares until
after the event requiring adjustment.
4. Issue Tax. The issuance of certificates for shares of Common Stock upon
the exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax in respect thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then Holder of the Warrant being exercised.
5. Closing of Books. The Company will at no time close its transfer books
against the transfer of any warrant or of any shares of Common Stock issued or
issuable upon the exercise of any warrant in any manner which interferes with
the timely exercise of this Warrant.
6. No Voting or Dividend Rights; Limitation of Liability. Nothing contained
in this Warrant shall be construed as conferring upon the Holder hereof the
right to vote or to consent or to receive notice as a stockholder of the Company
or any other matters or any rights whatsoever as a stockholder of the Company.
Except as provided herein, no dividends or interest shall be payable or accrued
in respect of this Warrant or the interest represented hereby or the shares
purchasable hereunder until, and only to the extent that, this Warrant shall
have been exercised. No provision hereof in the absence of affirmative action
by the Holder to purchase shares of Common Stock, and no mere enumeration herein
of the rights or privileges of the Holder hereof, shall give rise to any
liability of such Holder for the Stock Purchase Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by its creditors.
7. Warrants Transferable. Subject to compliance with the provisions of
applicable federal and state securities laws, this Warrant and all rights
hereunder are transferable, in whole or in part, without charge to the Holder
hereof (except for transfer taxes), upon surrender of this Warrant properly
endorsed and in compliance with such laws. Each taker and Holder of this
Warrant, by taking or holding the same, consents and agrees that this Warrant,
when endorsed in blank, shall be deemed negotiable, and that the transferee,
when this Warrant shall have been so endorsed, may be treated by the Company, at
the Company's option, and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant, or to the transfer hereof on the books of
the
6.
<PAGE>
Company, any notice to the contrary notwithstanding; but until such transfer on
such books, the Company may treat the registered owner hereof as the owner for
all purposes. Upon any such transfer, all references in this Warrant to the
"Holder" shall be deemed to refer to the transferee of this Warrant.
8. Modification and Waiver. Any change, waiver, discharge or termination
agreed to in writing by a majority in interest of Holders of Warrants of the
Company of even date (determined by reference to the number of shares underlying
such Warrants) shall be binding on the Holder and the Holder's assigns.
9. Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder hereof or the Company shall be delivered or
shall be sent by certified mail, postage prepaid, to each such Holder at its
address as shown on the books of the Company or to the Company at the address
indicated therefor in the first paragraph of this Warrant or such other address
as either may from time to time provide to the other and shall be deemed to be
received upon delivery or four (4) business days after deposit in the U.S. mail.
10. Descriptive Headings and Governing Law. The description headings of the
several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Colorado.
11. Lost Warrants. The Company represents and warrants to the Holder hereof
that upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction, or mutilation of this Warrant and, in the case of any
such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
12. Fractional Shares. No fractional shares shall be issued upon exercise of
this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the Holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Stock Purchase Price.
13. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Common Stock issuable upon the exercise of this Warrant
shall survive the exercise and termination of this Warrant. All of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof.
14. Rights of Common Stock. Upon the exercise of this Warrant into shares of
Common Stock, the Company shall grant, and ensure that the Holder is given,
identical rights with respect to such shares of Common Stock as those granted to
the holders of the then outstanding Common Stock who hold like amounts of Common
Stock. For purposes of this Section, all shares of Common Stock owned by Holder
shall be aggregated.
7.
<PAGE>
15. Registration Rights. Upon the exercise of this Warrant into shares of
Common Stock, the Holder shall be entitled to those piggyback registration
rights set forth in Section 3.2 of that certain Investors' Rights Agreement, by
and among the Company and the parties named therein, dated as of February 12,
1999 (the "Investors' Rights Agreement"), and the shares of Common Stock issued
upon exercise of this Warrant shall be deemed to be Registrable Securities (as
such term is defined in Section 1.2 of the Investors' Rights Agreement) for the
purposes of Section 3.2 thereunder.
8.
<PAGE>
In Witness Whereof, the Company has caused this Warrant as of the date
first set forth above.
Genomica Corporation,
a Delaware corporation
_________________________________
Thomas G. Marr
President
9.
<PAGE>
Exhibit A
SUBSCRIPTION FORM
Date:______________, 19___
Genomica Corporation
4001 Discovery Drive
Suite 130
Boulder, CO 80303
Attn: President
Ladies and Gentlemen:
[_] The undersigned hereby elects to exercise the warrant issued to it by
Genomica Corporation (the "Company") and dated February 12, 1999, (the
"Warrant") and to purchase thereunder ______________________________ shares
of the Common Stock of the Company (the "Shares") at a purchase price of
seventy-two cents ($0.72) per Share, or an aggregate purchase price of
___________________________________ ($__________) (the "Purchase Price").
[_] The undersigned hereby elects to convert ___________________ percent (___%)
of the value of the Warrant pursuant to the provisions of Section 1.3 of
the Warrant.
Pursuant to the terms of the Warrant the undersigned has delivered the
Purchase Price herewith in full in cash or by certified check or wire transfer
or under the net exercise provision. The undersigned also makes the
representations set forth on the attached Exhibit B of the Warrant.
Very truly yours,
____________________________________
By:_________________________________
Title:______________________________
<PAGE>
Exhibit B
INVESTMENT REPRESENTATIONS
THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO GENOMICA CORPORATION
ALONG WITH THE SUBSCRIPTION FORM BEFORE THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THE WARRANT DATED FEBRUARY 12, 1999, WILL BE ISSUED.
_____________________, 19__
Genomica Corporation
4001 Discovery Drive
Suite 130
Boulder, Colorado 80303
Attn: President
Ladies and Gentlemen:
The undersigned, [_________________________] ("Purchaser"), intends to
acquire up to __________________________ shares of the Common Stock of Genomica
Corporation (the "Company") pursuant to the exercise or conversion of the
warrant to purchase such Common Stock held by the Purchaser (the "Warrant").
The Common Stock will be issued to Purchaser in a transaction not involving a
public offering and pursuant to an exemption from registration under the
Securities Act of 1933, as amended (the "1933 Act") and applicable state
securities laws. Purchaser has been advised that the Common Stock has not been
registered under the 1933 Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on Purchaser's representations set forth
in this letter. Accordingly, Purchaser represents, warrants and agrees as
follows:
1. Purchaser is acquiring the Common Stock for its own account and
beneficial interest, to hold for investment and not for sale or with a view
to distribution of the Common Stock or any part thereof. Purchaser has no
present intention of selling (in connection with a distribution or
otherwise), granting any participation in, or otherwise distributing the
same, and does not presently have reason to anticipate a change in such
intention.
2. Purchaser acknowledges that it has received all the information it has
requested from the Company and considers necessary or appropriate for
deciding whether to acquire the Common Stock. Purchaser represents that it
has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Common
Stock and to obtain any additional information necessary to verify the
accuracy of the information given the Purchaser. Purchaser further
represents that it has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risk of
this investment.
3. Purchaser is an "accredited investor" as such term is defined in Rule
501 under the 1933 Act.
2.
<PAGE>
4. Purchaser acknowledges that investment in the Common Stock involves a
high degree of risk, and represents that it is able, without materially
impairing its financial condition, to hold the Common Stock for an
indefinite period of time and to suffer a complete loss of its investment.
5. Purchaser has been informed that under the 1933 Act, the Common Stock
must be held indefinitely unless it is subsequently registered under the
1933 Act or unless an exemption from such registration (such as Rule 144)
is available with respect to any proposed transfer or disposition by
Purchaser of the Common Stock. Purchaser further agrees that the Company
may refuse to permit Purchaser to sell, transfer or dispose of the Common
Stock (except as permitted under Rule 144) unless there is in effect a
registration statement under the 1933 Act and any applicable state
securities laws covering such transfer, or unless, if reasonably required,
Purchaser furnishes an opinion of counsel reasonably satisfactory to
counsel for the Company, to the effect that such registration is not
required. Purchaser shall not make any sale, transfer or other disposition
of the Common Stock in violation of the 1933 Act or the General Rules and
Regulations promulgated thereunder by the Securities and Exchange
Commission or in violation of any applicable state securities law.
6. Purchaser also understands and agrees that there will be placed on the
certificate(s) for the Common Stock, or any substitutions therefor, a
legend stating in substance:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "1933 Act"), or any state
securities laws. These shares have been acquired for investment and may not
be sold or otherwise transferred in the absence of an effective
registration statement for these shares under the 1933 Act and applicable
state securities laws, or, if reasonably required, an opinion of counsel
satisfactory to the Company that registration is not required and that an
applicable exemption is available."
Purchaser has carefully read this letter and has discussed its requirements
and other applicable limitations upon Purchaser's resale of the Common Stock
with Purchaser's counsel.
Very truly yours,
__________________________________
By:_______________________________
Title:____________________________
3.
<PAGE>
Warrant Agreements Common Stock
-------------------------------
Supplemental Schedule
---------------------
The following investor executed Warrant Agreements to purchase Common Stock:
Investor Number of Shares Date
- -------- ---------------- -----------------
Punk, Ziegel & Company 54,166 December 16, 1998
Punk, Ziegel & Company 604,166 February 12, 1999
<PAGE>
Exhibit 10.16
INDEMNITY AGREEMENT
This Agreement is made and entered into this ____ day of __________, 2000
by and between Genomica Corporation, a Delaware corporation (the "Corporation"),
and _____________ ("Agent").
Recitals
Whereas, Agent performs a valuable service to the Corporation in the
capacity as [Executive Officer/Director] of the Corporation;
Whereas, the stockholders of the Corporation have adopted bylaws (the
"Bylaws") providing for the indemnification of the directors, officers,
employees and other agents of the Corporation, including persons serving at the
request of the Corporation in such capacities with other corporations or
enterprises, as authorized by the Delaware General Corporation Law, as amended
(the "Code");
Whereas, the Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Corporation and its agents, officers, employees and other
agents with respect to indemnification of such persons; and
Whereas, in order to induce Agent to continue to serve as
[Officer/Director] of the Corporation, the Corporation has determined and agreed
to enter into this Agreement with Agent.
Now, Therefore, in consideration of Agent's continued service as
[Officer/Director] after the date hereof, the parties hereto agree as follows:
Agreement
1. Services to the Corporation. Agent will serve, at the will of the
Corporation or under separate contract, if any such contract exists, as
[Officer/Director] of the Corporation or as a director, officer or other
fiduciary of an affiliate of the Corporation faithfully and to the best of
Agent's ability so long as Agent is duly elected and qualified in accordance
with the provisions of the Bylaws or other applicable charter documents of the
Corporation or such affiliate; provided, however, that Agent may at any time and
for any reason resign from such position (subject to any contractual obligation
that Agent may have assumed apart from this Agreement) and that the Corporation
or any affiliate shall have no obligation under this Agreement to continue Agent
in any such position.
2. Indemnity of Agent. The Corporation hereby agrees to hold harmless and
indemnify Agent to the fullest extent authorized or permitted by the provisions
of the Bylaws and the Code, as the same may be amended from time to time (but,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than the Bylaws or the Code permitted prior to
adoption of such amendment).
1.
<PAGE>
3. Additional Indemnity. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Agent:
(a) against any and all expenses (including attorneys' fees), witness
fees, damages, judgments, fines and amounts paid in settlement and any other
amounts that Agent becomes legally obligated to pay by reason of any claim or
claims made against or by Agent in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative (including an action by or in the right of the
Corporation) to which Agent is, was or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that Agent is, was or at
any time becomes a director, officer, employee or other agent of Corporation, or
is or was serving or at any time serves at the request of the Corporation as a
director, officer, employee or other 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 Agent by
the Corporation under the non-exclusivity provisions of the Code and Section 43
of the Bylaws.
4. Limitations on Additional Indemnity. No indemnity pursuant to Section
3 hereof shall be paid by the Corporation:
(a) on account of any claim against Agent for an accounting of
profits made from the purchase or sale by Agent of securities of the 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;
(c) on account of Agent's conduct that was knowingly fraudulent or
deliberately dishonest or that constituted willful misconduct;
(d) on account of Agent's conduct that constituted a breach of
Agent's duty of loyalty to the Corporation or resulted in any personal profit or
advantage to which Agent was not legally entitled;
(e) for which payment actually is made to Agent under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
bylaw or agreement, except in respect of any excess beyond payment under such
insurance, clause, bylaw or agreement;
(f) if indemnification is not lawful (and, in this respect, both the
Corporation and Agent have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the
federal securities laws is against public policy and therefore is unenforceable
and that claims for indemnification should be submitted to appropriate courts
for adjudication); or
(g) in connection with any proceeding (or part thereof) initiated by
Agent, or any proceeding by Agent against the Corporation or its directors,
officers, employees or other agents, unless (i) such indemnification expressly
is required to be made by law, (ii) the proceeding was authorized by the Board
of Directors of the Corporation, (iii) such indemnification is provided
<PAGE>
by the Corporation, in its sole discretion, pursuant to the powers vested in the
Corporation under the Code, or (iv) the proceeding is initiated pursuant to
Section 9 hereof.
5. Continuation of Indemnity. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as Agent
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative, by reason of the fact that Agent was serving in
the capacity referred to herein.
6. Partial Indemnification. Agent shall be entitled under this Agreement
to indemnification by the Corporation for a portion of the expenses (including
attorneys' fees), witness fees, damages, judgments, fines and amounts paid in
settlement and any other amounts that Agent becomes legally obligated to pay in
connection with any action, suit or proceeding referred to in Section 3 hereof
even if not entitled hereunder to indemnification for the total amount thereof,
and the Corporation shall indemnify Agent for the portion thereof to which Agent
is entitled.
7. Notification and Defense of Claim. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the
Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Agent otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Agent notifies
the Corporation of the commencement thereof:
(a) the Corporation will be entitled to participate therein at its
own expense;
(b) except as otherwise provided below, the Corporation may, at its
option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Agent. After notice from the Corporation to Agent of
its election to assume the defense thereof, the Corporation will not be liable
to Agent under this Agreement for any legal or other expenses subsequently
incurred by Agent in connection with the defense thereof except for reasonable
costs of investigation or otherwise as provided below. Agent shall have the
right to employ separate counsel in such action, suit or proceeding but the fees
and expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of Agent; provided,
however, that the fees and expenses of Agent's separate counsel shall be borne
by the Corporation if (i) the employment of counsel by Agent has been authorized
by the Corporation, (ii) Agent reasonably shall have concluded that there may be
a conflict of interest between the Corporation and Agent in the conduct of the
defense of such action or (iii) the Corporation in fact shall not have employed
counsel to assume the defense of such action. The Corporation shall not be
entitled to assume the defense of any action, suit or proceeding brought by or
on behalf of the Corporation or as to which Agent shall have made the conclusion
provided for in clause (ii) above; and
<PAGE>
(c) the Corporation shall not be liable to indemnify Agent under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent, which shall not be unreasonably withheld. The
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 or
limitation on Agent without Agent's written consent, which may be given or
withheld in Agent's sole discretion.
8. Expenses. Promptly following request therefor, the Corporation shall
advance, prior to the final disposition of any proceeding, all expenses incurred
by Agent in connection with such proceeding upon receipt of an undertaking by or
on behalf of Agent to repay such amounts if it shall be determined ultimately
that Agent is not entitled to be indemnified under the provisions of this
Agreement, the Bylaws, the Code or otherwise.
9. Enforcement. Any right to indemnification or advances granted by this
Agreement to Agent shall be enforceable by or on behalf of Agent 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
90 days of request therefor. Agent, in such enforcement action, if successful in
whole or in part, also shall be entitled to be paid the expense of prosecuting
Agent's claim. It shall be a defense to any action for which a claim for
indemnification is made under Section 3 hereof (other than an action brought to
enforce a claim for expenses pursuant to Section 8 hereof, provided that the
required undertaking has been tendered to the Corporation) that Agent is not
entitled to indemnification because of the limitations set forth in Section 4
hereof. Neither the failure of the Corporation (including its Board of Directors
or its stockholders) to have made a determination prior to the commencement of
such enforcement action that indemnification of Agent is proper in the
circumstances, nor an actual determination by the Corporation (including its
Board of Directors or its stockholders) that such indemnification is improper
shall be a defense to the action or create a presumption that Agent is not
entitled to indemnification under this Agreement or otherwise.
10. Subrogation. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Agent, who shall execute all documents required and shall
do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
11. Non-Exclusivity of Rights. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right Agent may have or hereafter
acquire under any statute, provision of the Corporation's Certificate of
Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in Agent's official capacity and as to action in
another capacity while holding office.
<PAGE>
12. Survival of Rights.
(a) The rights conferred on Agent by this Agreement shall continue
after Agent has ceased to be a director, officer, employee or other agent of the
Corporation or to serve at the request of the Corporation as a director,
officer, employee or other agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise and shall inure to the
benefit of Agent's heirs, executors and administrators.
(b) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such succession
had taken place.
13. Separability. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid for any reason, such invalidity contained
herein or unenforceability shall not affect the validity or enforceability of
the other provisions hereof. Furthermore, if this Agreement shall be invalidated
in its entirety on any ground, then the Corporation nevertheless shall indemnify
Agent to the fullest extent provided by the Bylaws, the Code or any other
applicable law.
14. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
15. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless signed in writing by
both parties hereto.
16. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed for all purposes to be an original
but all of which together shall constitute this Agreement.
17. Headings. The headings of the sections of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
<PAGE>
18. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:
(a) If to Agent, at the address indicated on the signature page
hereof.
(b) If to the Corporation, to
Genomica Corporation
4001 Discovery Drive
Suite 130
Boulder, Colorado 80303
Attn: Chief Executive Officer
or to such other address as may have been furnished to Agent by the Corporation.
[The rest of this page is intentionally left blank.]
<PAGE>
In Witness Whereof, the parties hereto have executed this Agreement on and
as of the day and year first above written.
Genomica Corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
AGENT
____________________________________
(Signature)
Agent Print Name and Address:
____________________________________
____________________________________
<PAGE>
EXHIBIT 10.17
LICENSE AGREEMENT
-----------------
This Agreement is made and entered into this Sixth day of January, 1996
(the "Effective Date") by and between Cold Spring Harbor Laboratory, a New York
corporation having its principal office at 1 Bungtown Road, Cold Spring Harbor,
New York 11724 (hereinafter referred to as "CSHL"), and Genomica Corporation, a
Delaware corporation having its principal office at Cold Spring Harbor, New York
(hereinafter referred to as "Licensee").
WITNESSETH
----------
WHEREAS, CSHL is the owner of certain Patent Rights, Copyrights and
Technical Information (as defined below) pertaining to GT (as defined in section
1.2) and also known as Genome Topographer.
WHEREAS, GT was developed by Dr. Thomas Marr at CSHL under work supported,
in part, by grants from the Department of Energy DE-FG02-9lER61190 and the
National Institutes of Health IROI HG0020301A1; and
WHEREAS, Licensee desires to obtain licenses from CSHL so that it may
commercialize the GT and make it commercially available;
WHEREAS, CSHL desires to have the Patent Rights, Copyrights and Technical
Information utilized in the public interest and is willing to grant an exclusive
license thereunder; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
<PAGE>
ARTICLE 1 - DEFINITIONS
-----------------------
For the purpose of this Agreement, the following words and phrases shall
have the following meanings:
1.1 "Affiliate" shall mean any corporation, company, partnership, joint
venture and/or firm which controls, is controlled by or is under common control
with Licensee. For purposes of this Section 1.1, "control" shall mean (a) in the
case of corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the stock or shares entitled to vote for the election of
directors, and (b) in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest with the power
to direct the management and policies of such on-corporate entities.
1.2 "GT" shall mean a general purpose computing system useful for studying
complex genetic diseases.
1.3 "Chang/Marr Algorithm" shall mean that portion of the GT which
incorporates either in software or hardware form an algorithm developed at CSHL
and described in "Approximate String Matching and Local Similarity" by William
I. Chang and Thomas G. Marr in Proc. Symp. Combinatorial Pattern Matching, 1994
------------------------------------------
Springer-Verlag Lecture Notes in Computer Science 807:259-273 (June, 1994) and
described in U.S. Patent Application Serial No. 08/455,654 filed May 31, 1995.
1.4 "Licensed Process" shall mean any process which is Covered in whole or
in part by a Valid Claim contained in the Patent Rights in the country in which
such process is used or which incorporates Licensed Copyrights or Technical
Information in its manufacture, use or sale;
1.5 "Licensed Product" shall mean any product or part thereof, including
without limitation, software systems or apparatus which:
(a) is Covered in whole or in part by a Valid Claim contained in the
Patent Rights in the country in which such product or part thereof is
made, used or sold; or
-2-
<PAGE>
(b) is manufactured using a Licensed Process in the country in which such
product or part thereof is manufactured; or
(c) which incorporates Licensed Copyrights or Technical Information in its
manufacture, use or sale.
1.6 "Valid Claim" shall mean an issued claim of an unexpired patent, or a
claim of a pending patent application, which shall not have been withdrawn,
cancelled or disclaimed, nor held invalid or unenforceable by a court of
competent jurisdiction in an unappealed or unappealable decision.
1.7 "Covered" shall mean, with respect to a Valid Claim, that but for the
licenses granted herein, the manufacture, use or sale of the Licensed Product or
Licensed Process would be deemed to constitute an infringement of the Valid
Claim, whether the Valid Claim was in an issued patent or not.
1.8 Subject to the provisions of Section 4.3 with respect to "portions" of
a Licensed Product, "Net Sales Price" with respect to Licensed Products shall
mean the gross billing price for a Licensed Product sold by Licensee or its
Affiliates or sub-licensees thereof less the sum of the following:
(a) rebates or discounts allowed;
(b) customs duties or charges;
(c) excises, sales taxes, tariff duties and/or other taxes imposed upon
and with reference to such sales;
(d) outbound transportation charges, including freight, postage, insurance
and additional special packaging charges, prepaid or allowed; and
(e) amounts allowed or credited for rejections, recalls or returns.
No deductions shall be made for commissions paid to individuals, whether
they be with independent sales agencies or regularly employed by Licensee and on
its payroll, or for cost of collections. Licensed Products shall be considered
"sold" when billed out or invoiced. Transfer between Licensee and any of its
Affiliates for resale shall not be considered a sale, and in such
-3-
<PAGE>
case, the Net Sales Price shall be based on the gross billing price for the
Licensed Product as sold by the Affiliate, less those deductions set forth in
clauses (a) through (e) above.
Subject to the provisions of Section 4.3 with respect to "portions" of a
Licensed Process, "Net Sales Price" with respect to a Licensed Process shall
mean the gross price charged by Licensee or its sublicensees to a customer for
the right to practice the Licensed Process.
l.9 "Patent Rights" shall mean U.S. Patent Application Serial No.
08/455,654 filed May 31, 1995, and any United States and foreign patents issued
from said U.S. application and from divisionals and continuations of said
application; and any reissues or reexaminations of said application.
1.10 "Technical Information" shall mean any information, including,
designs, formulas, process information, or algorithms pertaining to GT
technology or software (including object code and source code), or inventions
claimed in the Patent Rights or included in the Licensed Copyrights which
information is now, or during a period of five (5) years from the Effective Date
hereof, becomes owned or controlled by CSHL with a right to grant the license
granted herein and which has been or becomes developed by CSHL employees in Dr.
Marr's facilities at CSHL, during said five (5) year period. Notwithstanding the
preceding sentence, research data generated at CSHL shall be excluded from the
definition of Technical Information.
1.11 "Copyrights" shall mean all elements of protection under national and
international copyright law including, without limitation, the right to make
enhancements, adaptations, and translations of copyrighted material.
1.12 "Licensed Copyrights" shall mean all registered copyrights pertaining
to GT, which was developed by or for Dr. Thomas Marr at his facilities at CSHL
and which is now, or becomes, owned or controlled by CSHL within a period of
five (5) years from the Effective Date with the right to grant the license set
forth herein with respect to any of the Technical Information.
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ARTICLE 2 - GRANT
-----------------
2.1 Subject to CSHL's rights in Section 2.3 and the government's rights in
Section 4.7, CSHL hereby grants to Licensee the worldwide, exclusive right and
license under the Patent Rights, Licensed Copyrights and Technical Information,
including the right to sublicense any or all of such rights, to make, have made,
use, have used, sell, have sold, offer to sell or import Licensed Products and
to practice and otherwise use the Licensed Processes until the later of the
expiration of the last to expire patent included in the Patent Rights or
copyright included in the Licensed Copyrights, unless this Agreement shall be
sooner terminated according to the terms hereof.
2.2 As soon as reasonably possible following the date of execution of this
Agreement, but in no event later than three (3) months after such date, upon
request by Licensee, CSHL shall disclose to Licensee all Technical Information
presently in its possession or control.
2.3 The parties recognize that CSHL is a basic research and educational
institute. CSHL therefore retains and reserves the right to publish any work
developed at CSHL. CSHL agrees to provide a draft disclosure of Technical
Information at least thirty (30) days in advance of submission for publication.
If Licensee believes that patentable subject matter is contained in the
submission, CSHL shall delay the submission up to an additional thirty (30) days
to permit the filing of a patent application pursuant to Article 6. CSHL further
reserves the right to practice under the Patent Rights, Licensed Copyrights and
Technical Information for its own noncommercial research purposes, provided that
the researcher is free to publish the results of the research. CSHL further
reserves the right to sublicense Dr. Marr to practice under the Patent Rights,
Licensed Copyrights and Technical Information under the same conditions for his
own noncommercial purposes. The Licensee grants to CSHL for research purposes a
royalty-free license to use Licensee developed products which incorporate the
Licensed Products (the "License Back"). The License Back includes software
updates. CSHL agrees to: (i) publish data developed through the use of GT in the
Licensee maintained GT data base on timeframes consistent with the publication
of the data in other public databases; (ii) work with the Licensee to
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actively promote the use of the developed product within CSHL; and (iii) pay
standard Licensee rates for services such as telephone and installation support.
2.4 Licensee agrees to forward to CSHL, in advance, a copy of its
standard license agreements for Licensed Products, and to forward a copy of any
and all non-standard sublicense agreements at least five (5) working days prior
to the effective date thereof.
ARTICLE 3 - DUE DILIGENCE
-------------------------
3.1 Licensee shall use its best efforts to develop and to bring to
market one or more Licensed Products and or Licensed Process for the field of
biological applications of the GT.
3.2 As partial evidence of such efforts, the Licensee shall:
3.2.1. Fund sponsored research at CSHL in the amount of one hundred and
seventy thousand ($170,000.00) dollars per year, payable quarterly, for each of
the next two years. The first payment in the amount of forty-two thousand and
five hundred dollars ($42,500.00) shall be due on 1 April, 1996, and subsequent
payments in the same amount shall be due each 1 July, 1 October and 1 January
thereafter subject to the terms and conditions appended hereto as APPENDIX A.
This amount includes CSHL customary indirect costs.
3.2.2. On or before December 1, 1996 release at least one version of the
Licensed Product or Licensed Process.
3.2.3. On or before December 1, 1996, hire and retain sufficient
development personnel to effectively develop the Licensed Product and/or
Licensed Process and a support organization to sell, market and service the
Licensed Product and/or Licensed Process.
3.2.4. Spend at least two million ($2,000,000) dollars over a period of
three (3) years from the Effective Date towards development and
commercialization of the Licensed Product and Licensed Process. Sponsored
research funded at CSHL shall be credited against this amount.
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3.2.5. Enter into an exclusive consulting contract with Dr. Marr in
accordance with the terms and conditions set forth in the Consultant Agreement
appended hereto as APPENDIX B.
3.3 Upon written notification by CSHL of a field or fields other than
biological applications of the GT, Licensee shall present a business plan to
CSHL to develop and commercialize such field(s) and enter into good faith
negotiations with CSHL to exploit such field(s). As a minimum, Licensee shall
comply with the due diligence requirements of the aforementioned DOE and NIH
grants in order to maintain the exclusive licenses granted herein. In the event
the parties are unable to reach an agreement with respect to exploiting such
fields within one year from any particular notification, then at CSHL's option
the matter shall be submitted to mediation and/or arbitration as a dispute under
Article 13.
ARTICLE 4 - ROYALTIES AND FEES
------------------------------
4.1 Licensee shall pay to CSHL a license fee of 679,679 shares of
Licensee common stock upon execution of this Agreement, as outlined in the
Initial Capitalization Schedule of APPENDIX C attached hereto and subject only
to the terms of the Common Stock Acquisition Agreement attached hereto as
APPENDIX D. Licensee shall set aside a pool of additional shares for
distribution by CSHL and Licensee to future employees at Dr. Marr's laboratory
involved in the generation of improvements to the GT technology or software as
compensation for their potential contributions, in accordance with NIH
regulations.
4.2 Licensee shall also pay: (i) the sum of $__________ as reimbursement
to CSHL for the patent and copyright expenses incurred up to the Effective Date
and relating to the Patent Rights and the GT, and (ii) the sum of thirty-three
thousand ($33,000) dollars to CSHL for renovation of space at CSHL for
accommodating Licensee personnel at CSHL.
4.3 On all manufacture, use or sales of Licensed Products by Licensee or
its Affiliates or its sub-licensees or customers or sub-licensees of Licensee or
its Affiliates and all use of a Licensed Process by a customer of Licensee or
its Affiliates during the term of the license granted
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in Section 2.1 above, for intended use in the field of biological applications,
including, without limitation, gene based drug research and development,
Licensee shall pay to CSHL earned royalties at the rate of 2% of the Net Sales
Price of that portion of the Net Sales Price of the Licensed Product or Licensed
Process which is attributable to the Chang/Marr Algorithm, taking into account
the added value of the Chang/Marr Algorithm to the Licensed Product or Licensed
Process, prevailing industry standards with respect to software licenses, profit
potential, market potential and additional research and development required. In
the event the parties are unable to agree on "that portion" prior to first sale
of a Licensed Product or Licensed Process, the matter shall be resolved as a
dispute under Article 13. For intended use outside of the preceding field of
biological applications, the earned royalty rate shall be 10% of the Net Sales
Price of "that portion" (as computed above) of the Licensed Product or Licensed
Process which relates to, or incorporates, the Chang/Marr Algorithm.
4.4 In no event shall more than one royalty pursuant to the terms of
Section 4.3 be due CSHL in respect of any Licensed Product or Licensed Process
despite the fact that such Licensed Product, or its method of manufacture or
use, is or shall be Covered by more than one Valid Claim contained in the Patent
Rights.
4.5 Notwithstanding the foregoing Sections 4.3 and 4.4, in the event
Licensee sub-licenses any of the rights granted herein, CSHL shall be paid 10%
of any compensation or consideration attributable to the Chang/Marr Algorithm
(hereinafter "Income") and paid to Licensee for such rights, in addition to the
royalty specified in Article 4.3 as applied to the Net Selling Price of Licensed
Products or Licensed Process sold by the sublicensee.
4.6 Royalty and other payments hereunder shall be paid in United States
dollars to CSHL at its principal office, or at such other place as CSHL may
reasonably designate consistent with the laws and regulations controlling in any
foreign country. CSHL shall reimburse Licensee for any payments lawfully made by
Licensee to any foreign country for fees otherwise due such country directly
from CSHL. If any currency conversion shall be required in connection with the
payment of royalties and other payments hereunder, such conversion shall be made
by using the
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exchange rate prevailing at the Chase Manhattan Bank, N.A. (hereinafter "Chase
Manhattan Bank") in New York, New York, on the last business day of the royalty
reporting period to which such royalty or other payments relate. If by law,
regulation, or fiscal policy of a particular country, conversion into or
transfer to United States dollars is restricted or forbidden, Licensee shall
give CSHL prompt notice in writing and shall pay the royalty and other amounts
due through such lawful means or methods as CSHL may reasonably designate.
Failing the designation by CSHL of such lawful means or methods within fifteen
(15) days after such notice is given to CSHL, Licensee shall deposit the royalty
payment due in local currency to the credit of CSHL in a recognized banking
institution designated by CSHL or, if none is designated by CSHL within the
period of fifteen (15) days as described above, in a recognized banking
institution selected by Licensee and identified in a notice in writing given to
CSHL by Licensee. When in any country the law or regulations prohibit both the
transmittal and deposit of royalties on sales in such country, royalty payments
shall be suspended for as long as such prohibition is in effect, and as soon as
such prohibition ceases to be in effect, all royalties which License would have
been under obligation to transmit or deposit, but for the prohibition, shall be
deposited or transmitted promptly to the extent allowable.
4.7 Licensee understands that the Patent Rights and Licensed Copyrights
were developed with support provided in part by funds of United States federal
agencies and, therefore, Licensee agrees that the rights granted Licensee
hereunder are subject to applicable limitations and United States governmental
rights established by United States law, including 35 U.S.C. Sections 200-212
and the regulations promulgated thereunder in 37 C.F.R. Part 401.
4.8 Licensee shall not owe CSHL the royalties set forth in Section 4.3
above on sales of Licensed Products to the United States government when the
government reduces the Net Sales Price paid by it for such Licensed Products by
the amount of the royalty due CSHL hereunder on the basis of its royalty-free
license for government use of the Patent Rights or Licensed Copyrights for which
the royalty, in the absence of such license, would be due hereunder.
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ARTICLE 5 - REPORTS AND RECORD
------------------------------
5.1 Licensee shall keep full, true and accurate books of account and other
records containing all particulars that may be necessary for the purpose of
showing the amounts payable to CSHL hereunder. Said books of account shall be
kept at Licensee's principal place of business. Said books and other records
shall be available during normal business hours, upon two (2) business days'
prior written notice by CSHL, for two (2) years following the end of the
calendar year to which they pertain, to the inspection of CSHL or its agents
(not to exceed once during each calendar year) for the sole purpose of verifying
Licensee's royalty statements or compliance in other respects with this
Agreement. Such inspection shall be at the sole cost and expenses of CSHL;
provided, however, should such inspection lead to the discovery of a greater
than ten percent (10%) discrepancy in reporting of royalties or other payments
due hereunder, Licensee shall pay the full cost and expense of such inspection.
5.2 Commencing with the calendar quarter in which the first commercial
sales of any Licensed Product occurs, or the calendar quarter in which
sublicense income is first received by Licensee, whichever occurs sooner,
Licensee shall submit to CSHL, within sixty (60) days after March 31, June 30,
September 30 and December 31 of each year, true and accurate reports, giving the
following particulars of the business conducted by Licensee, its Affiliates and
its sublicensees during the preceding three-month, period under this Agreement,
as such particulars shall be pertinent to an accounting of royalties or other
payments due hereunder:
(a) number of Licensed Products sold by Licensee and its Affiliates in
each country;
(b) total billings for Licensed Products sold by Licensee, its
sublicensees and its Affiliates in each country;
(c) amount of Income received from sublicensees;
(d) applicable deductions from Net Sales Price as provided in Section 1.8;
and
(e) total royalties and/or portion of sublicense Income due to CSHL
hereunder.
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5.3 With each such report submitted, Licensee shall pay to CSHL the
royalties and/or portion of sublicense Income due and payable under this
Agreement. If no royalties and/or portion of sublicense Income shall be due,
Licensee shall so report.
5.4 The royalty and other payments set forth in this Agreement and any
amounts due under Article 6 shall, if overdue, bear interest until paid at a per
annum rate two percent (2%) above the prime rate in effect at Chase Manhattan
Bank on the due date. The payment of such interest shall not foreclose CSHL from
exercising any other rights it may have as a consequence of the lateness of any
payment.
ARTICLE 6 - PATENT PROSECUTION
------------------------------
6.1 Except as provided in this Article 6, CSHL shall be responsible, at
its sole discretion, for the preparation, filing, prosecution and maintenance of
all patent applications and patents included in the Patent Rights in the United
States and to the extent warranted in any foreign countries. CSHL shall consult
regularly with Licensee and shall provide copies to Licensee of all filings,
office actions and proposed responses and shall endeavor to provide Licensee
with a meaningful opportunity to participate in decisions regarding the filing,
prosecution and maintenance of those patent applications. Licensee shall
reimburse CSHL for all reasonable costs incurred by CSHL subsequent to the
Effective Date of this Agreement for the preparation, filing, prosecution and
maintenance of all Patent Rights.
6.2 CSHL shall not abandon the prosecution of any patent applications
included in the Patent Rights nor shall it fail to make any payment or fail to
take any other action necessary to maintain a patent included in the Patent
Rights unless it has notified Licensee at least thirty (30) days prior thereto,
whereupon Licensee shall have the option to prosecute and maintain such patent
or patent application at its own expense.
6.3 For the first five (5) years after the Effective Date, CSHL shall
provide Licensee with copies of any invention disclosures by CSHL employees who
are then employed in Dr.
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Marr's facilities at CSHL, to the extent submitted prior to publication to the
Administrative Director or Assistant Administrative Director of CSHL and solely
relating to the Licensed Product or Licensed Process. Licensee shall have a
period of not more than sixty (60) days from the date of receipt of said copies
in which to inform CSHL of its decision to have such a disclosure filed as a
U.S. and/or foreign patent application; in which event, CSHL shall, with due
diligence, file such a patent application at Licensee's expense, whereupon it
shall become a Patent Right hereunder subject to all provisions in this
Agreement referring to "Patent Right(s)."
ARTICLE 7 - INFRINGEMENT
------------------------
7.1 Each Party shall inform the other Party promptly in writing of any
alleged infringement of the Patent Rights or Licensed Copyrights by a third
party, of which such Party shall have knowledge, and of any available evidence
thereof.
7.2 During the term of this Agreement, CSHL shall have the right, but
shall not be obligated, to prosecute at its own expense any infringements of the
Patent Rights and, in furtherance of such rights, Licensee hereby agrees that
CSHL may join Licensee as a party plaintiff in any such suit, without expense to
Licensee. CSHL shall hold harmless and indemnify Licensee from and against any
order for costs arising without fault of Licensee that may be made against CSHL
or Licensee in such proceedings. The total cost of any infringement action
commenced or defended solely by CSHL shall be borne by CSHL. Any recovery or
damages for past infringement derived from such action shall first be used to
reimburse CSHL for all legal expenses connected with such action. Any recovery
or damages still remaining shall be applied toward (i) reimbursement of CSHL for
the amount of royalties not received by CSHL as a result of such infringement,
and (ii) compensation of Licensee for its lost profits or a reasonable royalty
on the sales of the infringer, whichever measure of damages the court shall have
applied; provided, however, that if such remaining amount of recovery or damages
is insufficient to compensate CSHL fully for such royalties and to compensate
Licensee fully for such lost profits or reasonable royalty, then such amount of
recovery or damages still remaining shall be
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apportioned pro rata between CSHL and Licensee in proportion to (a) the amount
of royalties not received by CSHL as a result of such infringement, as compared
with (b) Licensee's lost profits or a reasonable royalty on the sales of the
infringer, whichever measure of damages the court shall have applied. Any
recovery or damages still remaining after the above-mentioned applications shall
be divided as follows: 50% to CSHL and the remaining 50% to Licensee.
7.3 If within six (6) months after having been notified of any alleged
infringement CSHL shall have been unsuccessful in causing the alleged infringer
to desist or shall not have brought and shall not be diligently prosecuting an
infringement action, or if CSHL shall notify Licensee at any time prior thereto
of its intention not to bring suit against any alleged infringer, then, in those
events only, Licensee shall have the right, but shall not be obligated, to
prosecute at its own expense any such infringement of the Patent Rights and, in
furtherance of such rights, CSHL hereby agrees that Licensee may join CSHL as a
party plaintiff in any such suit, without expense to CSHL. No settlement,
consent judgment or other voluntary final disposition of the suit may be entered
into without the consent of CSHL, which consent shall not unreasonably be
withheld. Licensee shall hold harmless and indemnify CSHL from and against any
order for costs arising without fault of CSHL that may be made against Licensee
or CSHL in such proceedings. The total cost of any infringement action commenced
or defended by Licensee shall be borne by Licensee. Any recovery or damages for
past infringement derived from such action shall first be used to reimburse
Licensee for all legal expenses connected with such action. Any recovery or
damages still remaining shall be applied toward (i) reimbursement of CSHL for
the amount of royalties not received by CSHL as a result of such infringement,
and (ii) compensation of Licensee for its lost profits or a reasonable royalty
on the sales of the infringer, whichever measure of damages the court shall have
applied; provided, however, that if such remaining amount of recovery or damages
is insufficient to compensate CSHL fully for such royalties and to compensate
Licensee fully for such lost profits or reasonable royalty, then such amount of
recovery or damages still remaining shall be apportioned pro rata between CSHL
and Licensee in proportion to (a) the amount of royalties not received by CSHL
as a result of such infringement,
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as compared with (b) Licensee's lost profits or a reasonable royalty on the
sales of the infringer, whichever measure of damages the court shall have
applied. Any recovery or damages still remaining after the above-mentioned
applications shall be divided as follows: 50% to CSHL and the remaining 50% to
Licensee.
ARTICLE 8 - PRODUCT LIABILITY AND WARRANTY
------------------------------------------
8.1 Except to the extent resulting from the gross negligence or
intentional misconduct or material breach of this Agreement by CSHL, which
breach remains uncured beyond a ninety (90) day period from the date of receipt
of notice of breach, Licensee shall at all times during the term of this
Agreement and thereafter, indemnify, defend and hold CSHL, its trustees,
officers, employees and affiliates, harmless from and against all actions,
suits, claims, demands, judgments, liabilities and expenses, including legal
expenses and reasonable attorneys' fees, arising out of the development,
manufacture, sale, distribution or use of Licensed Products or Licensed
Processes or the presence of Licensees employees, sublicensees or agents in or
on the premises of CSHL, including, without limitation, any claim arising out of
the death of or injury to any person or persons or out of any damage to
property, or arising out of the exercise of rights granted hereunder by
Licensee, its Affiliates or its sublicensees. CSHL shall promptly notify
Licensee in writing of any such action, suit, claim or demand. Licensee shall
manage and control, at its sole expense, the defense of any such action, suit,
claim or demand. CSHL shall not agree to any settlement without Licensee's
consent.
8.2 Licensee shall promptly obtain and carry in full force and effect
product liability insurance against any claims, judgments, liabilities and
expenses for which it is obligated to indemnify CSHL under Section 8.1 above, in
such amounts and with such deductibles and other limits as are customary in the
software industry to protect against this eventuality.
A copy of a policy for such insurance shall be provided to CSHL within
thirty (30) days of the Effective Date.
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8.3 CSHL represents and warrants that it is the sole owner of the Patent
Rights, and Licensed Copyrights, subject to any rights of the United States
government, and that it has the authority to grant the licenses granted
hereunder, and that it has not knowingly taken any actions that would adversely
affect the validity of the Patent Rights. CSHL warrants that as of the date of
execution of this Agreement, it has not received actual notice of any patents or
patent applications or copyrights owned by third parties which would prevent
Licensee from making, using or selling Licensed Products or practicing or
otherwise using the Licensed Processes. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH
IN THIS AGREEMENT, CSHL MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF
ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY OF THE LICENSED PRODUCT OR LICENSED PROCESS, FITNESS FOR A
PARTICULAR PURPOSE OF THE LICENSED PRODUCT OR LICENSED PROCESS, OR VALIDITY OR
ENFORCEMENT OF PATENT RIGHTS OR LICENSED COPYRIGHTS. NOTHING IN THIS AGREEMENT
SHALL BE CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BY CSHL THAT THE
PRACTICE BY LICENSEE OF THE LICENSES GRANTED HEREUNDER SHALL NOT INFRINGE THE
INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY.
ARTICLE 9 - COLLABORATION
-------------------------
9.1 CSHL and Licensee desire to establish a broad collaboration with
respect to further developments emanating from Dr. Marr's facilities at CSHL.
9.2 In furtherance of the spirit of collaboration of the Parties, CSHL
agrees to provide up to eight (8) employees of Licensee with access, during a
period of two (2) years after the date of execution of this Agreement and during
normal business hours, to CSHL's laboratories for the sole purpose of conducting
computer software development and research on GT under the direction of Dr.
Marr.
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These employees shall be in addition to any employees funded by Licensee
sponsored research at CSHL. Licensee shall be responsible for any salaries,
expenses and additional capital equipment required by these employees and for
rent for the facilities and services used by such Licensee's employees, in
accordance with the Lease Agreement appended hereto as APPENDIX E.
ARTICLE 10 - EXPORT CONTROLS
----------------------------
It is understood that CSHL and Licensee are subject to United States laws
and regulations controlling the export of technical data, computer software,
laboratory prototypes and other commodities (including the Arms Export Control
Act, as amended, and the Export Administration Act of 1979), and that its
obligations hereunder are contingent on compliance with applicable united States
export laws and regulations. The transfer of certain technical data and
commodities may require a license from the applicable agency of the United
States Government and/or written assurances by Licensee that Licensee shall not
export data or commodities to certain foreign countries without prior approval
of such agency. CSHL neither represents that a license shall not be required nor
that, if required, it shall be issued.
ARTICLE 11 - CONFIDENTIALITY AND NON-USE OF NAMES
-------------------------------------------------
11.1 Licensee shall maintain the Proprietary Technical Information in
confidence, and shall not disclose, divulge or otherwise communicate such
Information to others, or use it for any purpose, except pursuant to, and in
order to carry out, the terms and objectives of this Agreement, and hereby
agrees to exercise every reasonable precaution to prevent and restrain the
unauthorized disclosure (except to the extent necessary incident to the use or
sale of Licensed Products or Licensed Processes) of such Information by any of
its directors, officers, employees, consultants, subcontractors, sublicensees or
agents.
11.2 The provisions of Section 11.1 shall not apply to any Information
disclosed hereunder which:
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(a) was known or used by Licensee prior to its date of disclosure to
Licensee, as evidenced by the prior written records of Licensee; or
(b) either before or after the date of the disclosure to Licensee is
lawfully disclosed to Licensee by sources other than CSHL who are
rightfully in possession of the Information; or
(c) either before or after the date of the disclosure to Licensee is or
was published or generally known to the public through no fault or
omission on the part of Licensee provided, however, that the sale of
Licensed Products or use of Licensed Processes in the ordinary course
shall not constitute fault or omission;
(d) is independently developed by or for the Licensee without reference to
or reliance upon the Information; or
(e) is required to be disclosed by Licensee to comply with applicable
laws, to defend or prosecute litigation or to comply with governmental
regulations, or to be used in patent applications to be filed under
this Agreement, provided that the Licensee provides prior written
-------- ----
notice of such disclosure to CSHL and takes reasonable and lawful
actions to avoid and/or minimize the degree of such disclosure.
11.3 Neither Party shall use the names or trademarks of the other Party,
nor any adaptation thereof, nor the names of any of its employees, in any
advertising, promotional or sales literature without prior written consent
obtained from such other Party, or said employee, in each case, except that
Licensee may state that it is licensed by CSHL under one or more of the patents
and/or applications included in the Patent Rights and Licensed Copyrights.
11.4 A Party shall not disclose, divulge or otherwise communicate the
existence or terms of this Agreement to others except to the extent such
existence or terms (i) become published or generally known to the public through
no fault or omission of such Party; (ii) are required to be disclosed to comply
with applicable laws, to defend or prosecute litigation or to comply with
governmental regulations, or (iii) are required to be disclosed to potential
investors in Licensee, existing shareholders of Licensee, or otherwise as
necessary to conduct the business of Licensee, provided that in the case of
-------- ----
(ii), or (iii) such Party provides prior written notice of such disclosure to
the other Party and takes reasonable and lawful actions to avoid and/or minimize
the degree of such disclosure; including, where possible, disclosing the
information under an agreement of confidentiality for the benefit of the other
Party.
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ARTICLE 12 - ASSIGNMENT
-----------------------
This Agreement is not assignable by Licensee or CSHL by operation of law or
otherwise, except that it is assignable by Licensee in connection with a merger
or consolidation of Licensee with or into another business entity or sale of all
or substantially all of Licensee's business or assets or stock to a business
entity or business person that assumes Licensee's obligations hereunder in
writing.
ARTICLE 13 - DISPUTE RESOLUTION
-------------------------------
13.1 Except for the right of either Party to apply to a court of competent
jurisdiction for a temporary restraining order, a preliminary injunction, or
other equitable relief to preserve the status quo or prevent irreparable harm
and except for any dispute involving Section 14.2, any and all claims, disputes
or controversies arising under, out of, or in connection with this Agreement,
including, without limitation, any dispute relating to "compensation" or
"consideration" attributable to the Chang/Marr Algorithm in Section 4.5 or
patent validity or infringement, which the Parties shall be unable to resolve
within sixty (60) days, shall be mediated in good faith. The Party raising such
dispute shall promptly advise the other Party of such claim, dispute or
controversy in a writing which describes in reasonable detail the nature of such
dispute. By not later than five (5) business days after the recipient has
received such notice of dispute, each Party shall have selected for itself a
representative who shall have the authority to bind such Party, and shall
additionally have advised the other Party in writing of the name and title of
such representative. Such representatives shall schedule a date for a mediation
hearing with a mediator jointly selected by such representatives in New York,
New York on a date not later than ten (10) business days after the date of such
notice of dispute, or if no dates are available in such period, then the first
available date thereafter. The parties shall thereupon enter into good faith
mediation and shall share the costs equally. If the representatives of the
parties have not been able to jointly select a mediator or to resolve the
dispute within fifteen (15) business days after the earlier of attempting to
jointly select a mediator or the occurrence of such mediation hearing, the
parties
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shall submit the matter to arbitration, in good faith in New York, New York, in
accordance with the rules and practices of the American Arbitration Association.
The decision of the arbitrator(s) shall be binding on the parties and
enforceable in any court of competent jurisdiction.
13.2 Notwithstanding the foregoing, nothing in this Article 13 shall be
construed to waive any rights or timely performance of any obligations existing
under this Agreement.
ARTICLE 14 - TERMINATION
------------------------
14.1 If Licensee shall cease to carry on its business or at any time
commit any act of bankruptcy, or become bankrupt, or have a receivership order
made against it, or make or execute any bill of sale, deed of trust, or
assignment for the benefit of creditors, this Agreement shall terminate upon
notice by CSHL.
14.2 Should Licensee fail to make any payment whatsoever due and payable
to CSHL hereunder, CSHL shall have the right to terminate this Agreement
effective on thirty (30) days' notice, unless Licensee shall make all such
payments to CSHL within said thirty (30) day period. Upon the expiration of the
thirty (30) days period, if Licensee shall not have made all such payments to
CSHL, CSHL may, immediately upon notice to Licensee, terminate this Agreement
and the rights, privileges and license granted hereunder.
14.3 Upon any material breach or default of this Agreement by Licensee,
other than those occurrences set out in Section 14.1 and 14.2 above, which shall
always take precedence in that order over any material breach or default
referred to in this Section 14.3, CSHL shall have the right to terminate this
Agreement and the rights, privileges and license granted hereunder effective on
ninety (90) days' notice to Licensee. Such termination shall become
automatically effective unless Licensee shall have cured any such material
breach or default prior to the expiration of the ninety (90) day period. Upon
any termination under Sections 14.1, 14.2, or 14.3, Licensee shall promptly
return all Proprietary Technical Information theretofore supplied to it by CSHL
and any copies made by or for it, its Affiliates or sublicensees.
-19-
<PAGE>
14.4 Licensee shall have the right to terminate this Agreement at any time
on six (6) months' notice to CSHL, and upon payment of all amounts due CSHL
through the effective date of termination.
14.5 Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination. Licensee and any sublicensee
thereof may, however, after the effective date of such termination, sell all
Licensed Products, and complete Licensed Products in the process of manufacture
at the time of such termination and sell the same, provided that Licensee shall
pay to CSHL the royalties thereon as required by Section 4.3 of this Agreement
and shall submit the reports required by Article 5 hereof on the sale of
Licensed Products.
14.6 Upon termination of this Agreement for any reason, CSHL shall
recognize the sublicenses granted by the Licensee under the rights licensed
hereunder, provided that CSHL (i) thereafter shall have the right to receive any
payments or other consideration payable to Licensee thereunder, (ii) thereafter
shall have the right to terminate the sublicense upon thirty (30) days' notice
of a material breach by the sublicensee which is not cured prior to expiration
of such thirty (30) day period, and (iii) shall not assume, and shall not be
responsible to any sublicensees for, any representations, warranties or
obligations of Licensee to any sublicensees other than as set forth herein.
14.7 The provisions of Article II shall survive any expiration or
termination of this Agreement.
ARTICLE 15 - PAYMENTS, NOTICES
------------------------------
AND OTHER COMMUNICATIONS
------------------------
Any payment, notice or other communication pursuant to this Agreement shall
be sufficiently made or given by the sending Party (i) upon personal delivery to
the receiving Party, or (ii) two (2) days after deposit with the United States
Postal Service, registered or certified first class mail, postage prepaid,
return receipt requested, addressed to the receiving Party at its
-20-
<PAGE>
address set forth below, or at such other address of which the receiving Party
shall have notified the sending Party in a notice given in accordance with this
Article 15.
In the case of CSHL:
Mr. John Maroney
------------------------------------------
Assistant Administrative Director
------------------------------------------
Box 100. 1 Bungtown Road
------------------------------------------
Cold Spring Harbor, New York 11724
------------------------------------------
In the case of Licensee:
Mr. James L. Rathmann
------------------------------------------
President, Genomica Corporation
------------------------------------------
600 Dorset Road
------------------------------------------
Devon, Pennsylvania 19333
------------------------------------------
ARTICLE 16 - MISCELLANEOUS PROVISIONS
-------------------------------------
16.1 This Agreement shall be construed, governed, interpreted and
applied in accordance with the laws of the State of New York, U.S.A., without
giving effect to its conflict of laws provisions, except that questions
affecting the constructions and effect of any patent shall be determined by the
law of the country in which the patent was granted.
16.2 The parties hereto acknowledge that this Agreement (including the
Appendices hereto) sets forth the entire Agreement and understanding of the
parties hereto as to the subject matter hereof, and shall not be subject to any
change or modification except by the execution of a written instrument
subscribed to by the parties hereto.
-21-
<PAGE>
16.3 The provisions of this Agreement are severable, and in the event
that any provisions of this Agreement shall be determined to be invalid or
unenforceable under any controlling body of the law, such invalidity or
unenforceability shall not in any way affect the validity of enforceability of
the remaining provisions hereof.
16.4 Licensee agrees to mark the Licensed Products sold by it with any
notice of patent rights reasonably necessary or desirable under applicable law
to enable the Patent Rights to be enforced to the maximum degree in the country
where such Licensed Products are sold.
In the event any Technical Information bears a Copyright Notice,
Licensee shall not remove such notice and it shall be retained or reproduced in
its exact form on all authorized copies and versions of Licensed Product(s) or
the Licensed Process, both in machine and human readable language.
16.5 The failure of either party to assert a right hereunder or to insist
upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party.
-22-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement the day
and year set forth below.
COLD SPRING HARBOR LABORATORY
By: /s/ John Maroney
--------------------------------------
Name: John Maroney
------------------------------------
Title: Assistant Administrative Director
-----------------------------------
Date: 3/25/96
------------------------------------
GENOMICA CORPORATION
By: /s/ James L. Rathmann
--------------------------------------
Name: James L. Rathmann
------------------------------------
Title: President
-----------------------------------
Date: 3
------------------------------------
-23-
<PAGE>
EXHIBIT 10.18
GEMSTONE SYSTEMS, INC. DOMESTIC SOFTWARE LICENSE AGREEMENT
This Agreement is made by and between GemsStone Systems, Inc. ("GEMSTONE"), an
Oregon corporation, and the Licensee, each being identified and having a place
of business as given on the face of this Agreement.
1. DEFINITIONS
- ----------------
As used herein, the terms set forth below shall have the following respective
meanings:
1.1 "GEMSTONE" shall mean GemStone Systems, Inc., and shall not mean any
subsidiary, affiliate, or other person or entity associated with GemStone
Systems, Inc.
1.2 "Licensee" shall mean the entity identified on the face page of this
Agreement, and shall not mean any subsidiary, affiliate, or other person or
entity associated the Licensee, including, without limitation, any governmental
authority.
1.3 "Software Products" shall mean the products identified in the Product
Description on the face page of this Agreement in the form delivered, for which
the terms of payment set out in Section 8.0 PAYMENT below have been met, and all
updates of the same provided to Licensee under the terms of this Agreement.
1.4 "Documentation" shall mean manuals identified in the Product Description on
the face page of this Agreement.
1.5 "Server Computer System" shall mean a computer system that executes control
processes within a GemStone environment and contains one or more extents of a
single Logical GemStone Database. Server Computer Systems may be at the same
site or at geographically distributed sites from other Server Computer Systems
or Client Computer Systems.
1.6 "Client Computer System" shall mean a computer system that can execute
Software Products that access a single Logical GemStone Database. Client
Computer Systems may be at the same site or at geographically distributed sites
from Server Computer Systems or other Client Computer Systems.
1.7 "Logical GemStone Database" shall mean a domain of information controlled
by a common schema and common control processes within a GemStone environment.
A Logical GemStone Data can span multiple Server Computer Systems.
1.8 "Named Developer" shall mean an individual who is authorized by Licensee to
develop and/or run applications using Software Products that access a single
Logical GemStone Database.
1.9 "Named User" shall mean an individual who is authorized by Licensee to run
applications using Software Products that access a single Logical GemStone
Database; a Named Developer, or an unattended hardware device that could supply
information to or obtain information from the Logical GemStone Database.
1.10 "Concurrent User" shall mean an individual who is connected to a
Licensee's single Logical GemStone Database; an individual connected to the
Logical GemStone Database through a multiplexed front end, such as a transaction
processing monitor, or an unattended hardware device that is connected to the
Logical GemStone Database.
2. LICENSE GRANT
- ------------------
2.1 GEMSTONE hereby grants to Licensee, and Licensee hereby accepts from
GEMSTONE, a non-exclusive license, without right to sublicense, to use the
Software Products and Documentation; provided, however, that such use of the
Software Products shall be limited to use by Licensee accessing a single Logical
GemStone Database on Server Computer Systems or on Client Computer Systems
connected to Server Computer Systems. Access to or use of a form or release of
Software Products other than as delivered is not granted by this license.
GEMSTONE reserves all rights not expressly granted by this Agreement.
2.2 Licensee's use of Software Products is limited to use by the number of
Named Developers, Named Users, or Concurrent Users so indicated on the Product
Description page of this Agreement plus any subsequent Named Developers, Named
Users, or Concurrent Users indicated in any authorized amendment to this
Agreement. Users indicated in any authorized amendment to this Agreement.
Licensee shall have in place with its Named Developers, Named Users, Concurrent
Users, employees, agents and others appropriate agreements to satisfy Licensee's
obligations under this Agreement, including, but not limited to obligations
undertaken in Section 7.
2.3 Software Products may be removed from one Server Computer System and
transferred to another Server Computer System or from one Client Computer System
and transferred to another Client Computer System after notification to
GEMSTONE. An associated transfer fee will be assessed. Use of Software
Products may be transferred from one Named Developer to another Named Developer,
or from one Named User to another Named User, or from one Concurrent User to
another Concurrent User without charge.
3. OWNERSHIP
- --------------
3.1 Title to and ownership of Software Products, including all copies thereof,
and all rights therein including trade secrets, patents and copyrights, shall
remain with GEMSTONE. No title or ownership of Software Products or any part
thereof, is transferred to Licensee.
4. PROPRIETARY NOTICES
- ------------------------
4.1 Licensee shall not remove or alter GEMSTONE's ownership, trademark,
copyright, or other proprietary notice on Software Products or Documentation.
4.2 Where applicable, the Software Products and Documentation shall be marked
with appropriate Restricted Rights legends under the Federal Acquisition
Regulations (FAR) or other similar regulations. The Software Products are
provided only with restricted rights as set out in this Agreement.
5. USE RESTRICTIONS
- ---------------------
5.1 Licensee shall not modify, adapt, translate, reverse engineer, decompile,
or disassemble Software Products. Licensee agrees not to develop derivative
works which are intended to be functionally equivalent substitutes for the
Software Products or any part thereof. Licensee shall not modify, adapt,
translate, or create derivative works based on the Documentation without prior
written permission from GEMSTONE.
6. COPY RESTRICTIONS
- ----------------------
6.1 Licensee shall not copy Software Products or Documentation except as
required for use of the Software Products as provided in this Agreement, and for
archival storage to assure against loss. Licensee must reproduce and include
the
<PAGE>
GEMSTONE copyright notice and other proprietary notices on each archival copy.
7. CONFIDENTIALITY
- --------------------
7.1 Licensee understands and acknowledges that GEMSTONE has proprietary trade
secrets and confidential information in Software Products, and therefore will
hold the Software Products in confidence.
7.2 Notwithstanding anything in this Agreement, Licensee shall have no
obligation to hold any information in confidence to the extent that Licenses can
show by documentary evidence that such information: (a) is already known to
Licensee at the time it is obtained by Licensee from GEMSTONE, free from any
obligation to hold such information in confidence; (b) is or becomes publicly
known through no wrongful act of Licensee; (c)is rightfully received from a
third party without restriction and without breach of any obligation to
GEMSTONE or its suppliers; or (d) is independently developed by Licensee without
use of any confidential information of GEMSTONE or its suppliers.
7.3 Information regarding performance of the Software Products received from
GEMSTONE or developed by Licensee shall be maintained by Licensee as GEMSTONE
confidential information and Licensee shall not disclose such information to any
outside entity, including, but not limited to, industry analysts, trade press,
GEMSTONE's competitors, or other business entities without GEMSTONE's prior
written consent.
7.4 Licensee's obligations under this Section 7 shall survive termination of
this Agreement.
8. PAYMENT
- ------------
8.1 Full payment is due within 30 days from the date of mailing an invoice for
the Software Products or Documentation to Licensee. All amounts are payable in
U.S. Dollars by check or money order payable to GemStone Systems, Inc. All
Taxes, if any, are to be paid by Licensee, except for taxes on the income or
revenue of GEMSTONE.
9. TERM AND TERMINATION
- -------------------------
9.1 The term of this Agreement shall commence on the effective date of this
Agreement and shall continue until terminated pursuant to this Section 9.
9.2 Either party may, by written notice, terminate this Agreement if the other
party fails to remedy any default under this Agreement within thirty (30) days
of receipt of written notice specifying such default.
9.3 Upon termination of this Agreement for any reason, all licenses granted
hereunder shall terminate, Licensee shall immediately cease use of and shall
return to GEMSTONE all copies of the Software Products and Documentation.
10. SHIPMENT
- -------------
10.1 GEMSTONE shall ship Software Products or Documentation ordered by Licensee
as soon as practical after acceptance of Licensee's order. All shipments of
Software Products and Documentation shall be F.O.B. Beaverton, OR, and the risk
of loss shall pass to Licensee upon delivery to the carrier. When an order is
not accompanied by shipping instructions, GEMSTONE shall select the carrier. In
no case shall GEMSTONE assume any liability in connection with the shipment nor
shall the carrier be construed as an agent for GEMSTONE. GEMSTONE shall not be
liable for any damages or penalties for delivery delays due to causes beyond its
reasonable control. All shipping, handling, and insurance charges, if any are to
be paid by Licensee.
10.2 Each order paced by Licensee for Software Products or Documentation shall
be deemed to incorporate all of the terms and conditions of this Agreement. Any
terms and conditions of such order which are in addition to or inconsistent with
the terms of this Agreement shall be deemed stricken from such order.
11. SUPPORT
- ------------
11.1 GEMSTONE will deliver to Licensee any updates to the Software Products and
Documentation released for general availability during the 90 days following the
effective date of this Agreement, provided full payment of all license fees due
under this Agreement has been received by GEMSTONE. GEMSTONE will, for the 90
days following the effective date of this Agreement, as is reasonable, assist
Licensee by receiving telephone calls from Licensee at telephone number (503)
629-8383 (or such other telephone number as may be established for this purpose
from time to time by GEMSTONE) and communicating data to Licensee via electronic
mail to answer a reasonable number of questions about Software Products and
Documentation. GEMSTONE shall not be obligated to assist Licensee other than as
specified herein. After the initial 90 day period, continued updates and support
will be the subject of a separate Software Maintenance Agreement.
12. WARRANTY; LIMITATION OF LIABILITY
- --------------------------------------
12.1 GEMSTONE warrants that Software Products will perform substantially in
accordance with the Documentation for a period of ninety (90) days after the
date the Software Products have been shipped to Licensee (hereinafter "Warranty
Period").
12.2 During the Warranty Period, GEMSTONE shall attempt, without charge, to
diagnose, verify and correct errors or defects in the Software Products that are
identified in writing by notice to GEMSTONE, and any corrections for errors or
defects may, at GEMSTONE's election, be installed directly and/or incorporated
in subsequent updates to be delivered to Licensee from GEMSTONE.
12.3 Any modifications or other alterations of a Software Product by Licensee
without the approval of GEMSTONE shall, without limiting GEMSTONE's other
remedies, void GEMSTONE's warranty and software maintenance obligations unless
and until the Software Product is returned to its unaltered state.
12.4 GEMSTONE shall have no responsibility for delivering to Licensee any
subsequent versions of the Software products or Documentation that it may
develop in the future.
12.5 GEMSTONE's liability to the Licensee for all damages, costs, claims, or
demands incurred or suffered by or awarded against GEMSTONE arising directly or
indirectly out of the performance or any breach of this license shall in no
event exceed the total amount paid to GEMSTONE under this License.
12.6 THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES AND CONDITIONS, EXPRESSED
OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS MAY BE OTHERWISE PROVIDED IN THIS
AGREEMENT, GEMSTONE SHALL NOT BE RESPONSIBLE TO LICENSEE OR TO ANY THIRD PARTY
FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
<PAGE>
WHETHER IN CONTRACT OR TORT, DUE TO ANY FORESEEN OR UNFORESEEN CAUSE FROM
LICENSEE'S OR ANY THIRD PARTY'S USE OR THE PERFORMANCE OF THE SOFTWARE PRODUCTS
UNDER THIS AGREEMENT.
13. INDEMNITY BY GEMSTONE
- ---------------------------
13.1 GEMSTONE agrees to indemnify Licensee, as limited by this paragraph, with
respect to any suit, claim or proceeding brought against Licensee alleging that
Licensee's use of the Software Products constitutes an infringement of any valid
United States patent or copyright. GEMSTONE agrees to defend Licensee against
any such claims and to pay litigation costs, reasonable attorney's fees, and
damages awarded by a court of competent jurisdiction: if, and only if, Licensee
promptly gives notice to GEMSTONE of any such suit, claim or proceeding and
cooperates with GEMSTONE in the defense or settlement of such suit, claim or
proceeding; and provided that GEMSTONE shall have sole control thereof.
13.2 If a claim or allegation is made, or in either party's judgment is likely
to arise, Licensee agrees that GEMSTONE may, at GEMSTONE's option:
(i) procure for Licensee the right to continue using the portion of the
Software Product enjoined from use;
(ii) replace or modify the Software Product so that Licensee's use is not
subject to any such injunction; or
(iii) accept return of the Software Product to GEMSTONE, and in the event of
such return, GEMSTONE shall refund the license fee paid for the Software
Product.
GEMSTONE shall have no further liability or obligations arising from patents of
copyrights under this Agreement.
13.3 This indemnity of section 13 shall not apply to claims arising from any
Software Product that has been modified or altered other than by GEMSTONE.
14. INDEMNITY BY LICENSEE
- ---------------------------
14.1 Because GEMSTONE has no knowledge of, or control over, the applications of
the Software Products made by Licensee, and is therefore unable to assess any
risks of personal injury or damage arising from the applications made by
Licensee, Licensee assumes all risks, and agrees to indemnify GEMSTONE, and hold
GEMSTONE harmless, with respect to any suit, claim or proceeding brought against
GEMSTONE alleging that use by, or under authority of, Licensee, of the Software
Products caused personal injury or property damage.
15. GENERAL
- -------------
15.1 This agreement may be amended only by a written instrument stating an
intention to modify this Agreement and signed by a duly authorized
representative of the party to be bound.
15.2 Failure by either party at any time to require performance by the other
party or to claim a breach of any term or condition of this Agreement shall not
be construed as affecting any subsequent breach or the right to require
performance with respect thereto or to claim a breach with respect thereto.
15.3 This Agreement may not be assigned by either party without the prior
written permission of the other party, which permission shall not be
unreasonably withheld.
15.4 If any provision in this Agreement may be held to be invalid or
unenforceable in any jurisdiction in which this Agreement is being performed,
the meaning of such provision shall be construed so as to render it enforceable
to the extent feasible. If no feasible interpretation would save such provision,
it shall be severed from this Agreement and the remainder shall remain in full
force and effect. However, in the event such provision is considered an
essential element of this Agreement, the parties shall promptly negotiate
alternative, reasonable equivalent, enforceable terms.
15.5 The rights and obligations of the parties and all interpretations and
performance of this Agreement shall be governed in all respects by the laws of
the State of Oregon.
15.6 Notices shall be transmitted in writing by certified U.S. Mail, postage
prepaid, return receipt requested, addressed to the parties at an address
specified on the face page of this Agreement or to such other address as is
provided by notice.
15.7 Any notice given pursuant to Paragraph 15.6 shall be effective four (4)
days after the day it is mailed or upon receipt as evidenced by the U.S. Postal
Service return receipt card, whichever is earlier.
15.8 Section heading are inserted for convenience only and shall not be used in
any way to construe the terms of this Agreement.
The terms and conditions appearing on the face page and in the Software License
Agreement set forth the entire agreement between the parties. By executing this
Agreement, I acknowledge that I have read and understand all these terms and
conditions, and that I have the authority to enter into this Agreement on behalf
of the Licensee. This Agreement shall be effective as of the last date given
below.
LICENSEE:
/s/ D. M. Fisher 3/28/96
- -------------------------------------
Authorized Signature/Date
Donal M. Fisher
- -------------------------------------
Print Name
V.P. Sales & Marketing
- -------------------------------------
Title
GEMSTONE:
_____________________________________
Authorized Signature/Date
_____________________________________
Print Name
_____________________________________
Title
<PAGE>
SOFTWARE MAINTENANCE AGREEMENT
DEFINITIONS: As used herein, the terms set forth below shall have the following
respective meanings: "Designated Contact Person" shall mean the Primary Contact
or Alternate contact identified on the face page of this Agreement, either of
which may be changed upon written notice from licensee, who shall be responsible
for Service Request on behalf of all users at Licensee's site. "Software Update"
shall mean any change to Software Products or documentation, by GEMSTONE, for
the purpose or providing enhancements, improving performance, or improving
functionality; and that is formally released by GEMSTONE for external use.
"Service Request" shall mean communication from a Designated contact person to
GEMSTONE via telephone call, facsimile transmission, electronic mail for the
purpose of obtaining answers to questions about Software Products or
Documentation, or submitting problem reports about Software Products or
Documentation.
UPDATES: GEMSTONE will promptly deliver to Licensee any Software Update issued
during the term of this Agreement, whereupon such Software Update shall be
regarded as the Software Product which it supersedes and shall there upon be
subject to all of the terms and conditions of this Software License Agreement
relating to such Software Product. Upon issue of any Software Update, it shall
become the currently supported version. Support for the version of the Software
Product it superseded will continue, but support for all previous versions will
be discontinued.
SUPPORT: GEMSTONE will, as is reasonable, assist Licensee by receiving Service
Request from Licensee during normal GEMSTONE Business hours (9:00 a.m. - 6:00
p.m. Pacific time excluding weekends and holidays), and at phone numbers and
addresses to be made known to Licensee on the effective date of this Agreement.
In the case that Service Requests are questions posed by Licensee, GEMSTONE's
response shall be made within a reasonable time and shall include the answers,
if known. In the case that Service Requests are problem reports submitted by
Licensee, Licensee shall submit sufficient documentation of each problem
referenced therein to enable GEMSTONE to reproduce and verify same. GEMSTONE's
response to each problem shall be made within a reasonable time after it
verifies same, and may include (I) instructions for fixing or avoiding the
problem if known or readily ascertainable, or (II) a Software Update which is
free of such problem. GEMSTONE shall not be obligated to assist Licensee beyond
the assistance specified herein. Additional services such as complete
installation, onsite support, support outside of normal business hours, or
consulting are available at GEMSTONE's standard time and expense rates.
TERM: The term of this Agreement shall commence on the effective date of this
Agreement and shall end one (1) year thereafter unless earlier terminated as
provided herein below. GEMSTONE shall have the right to terminate this Agreement
upon written notice to Licensee if Licensee is in Breach of any terms or
conditions of this Agreement, does not pay for renewal within 30 days after the
beginning of any renewal term, has any act of dissolution or bankruptcy made or
filed by or against it, makes any assignment of its assets for the benefit of
creditors, or has any substantial attachment or execution of judgment made
against it.
RENEWAL: This agreement will be automatically renewed for an additional term at
the end of the current term unless (I) Licensee requests cancellation at least
30 days prior to the end of the current term, (II) GEMSTONE submits a different
Agreement to Licensee at least 30 days prior to the end of the current term,
(III) GEMSTONE has terminated this Agreement as specified above. The effective
date of the renewal Agreement shall be on the anniversary of the effective date
of this Agreement. Should Licensee decide to terminate this Agreement, renewal
at a later date may be purchased for the then current maintenance agreement
price plus a renewal fee equal to a one year's maintenance agreement price.
Signed: /s/ D.M. Fisher
--------------------
Date: 3/28/96
----------------------
Software License Agreement GemStone Systems, Inc.
<PAGE>
SOFTWARE MAINTENANCE AGREEMENT
DEFINITIONS: As used herein, the terms set forth below shall have the
following respective meanings: "Designated Contact Person" shall mean the
Primary Contact or Alternate contact identified on the face page of this
Agreement, either of which may be changed upon written notice from licensee, who
shall be responsible for Service Request on behalf of all users at Licensee's
site. "Software Update" shall mean any change to Software Products or
documentation, by GEMSTONE, for the purpose or providing enhancements, improving
performance, or improving functionality; and that is formally released by
GEMSTONE for external use. "Service Request" shall mean communication from a
Designated contact person to GEMSTONE via telephone call, facsimile
transmission, electronic mail for the purpose of obtaining answers to questions
about Software Products or Documentation, or submitting problem reports about
Software Products or Documentation.
UPDATES: GEMSTONE will promptly deliver to Licensee any Software Update issued
during the term of this Agreement, whereupon such Software Update shall be
regarded as the Software Product which it supersedes and shall there upon be
subject to all of the terms and conditions of this Software License Agreement
relating to such Software Product. Upon issue of any Software Update, it shall
become the currently supported version. Support for the version of the Software
Product it superseded will continue, but support for all previous versions will
be discontinued.
SUPPORT: GEMSTONE will, as is reasonable, assist Licensee by receiving Service
Request from Licensee during normal GEMSTONE Business hours (9:00 a.m. - 6:00
p.m. Pacific time excluding weekends and holidays), and at phone numbers and
addresses to be made known to Licensee on the effective date of this Agreement.
In the case that Service Requests are questions posed by Licensee, GEMSTONE's
response shall be made within a reasonable time and shall include the answers,
if known. In the case that Service Requests are problem reports submitted by
Licensee, Licensee shall submit sufficient documentation of each problem
referenced therein to enable GEMSTONE to reproduce and verify same. GEMSTONE's
response to each problem shall be made within a reasonable time after it
verifies same, and may include (I) instructions for fixing or avoiding the
problem if known or readily ascertainable, or (II) a Software Update which is
free of such problem. GEMSTONE shall not be obligated to assist Licensee beyond
the assistance specified herein. Additional services such as complete
installation, onsite support, support outside of normal business hours, or
consulting are available at GEMSTONE's standard time and expense rates.
TERM: The term of this Agreement shall commence on the effective date of
this Agreement and shall end one (1) year thereafter unless earlier terminated
as provided herein below. GEMSTONE shall have the right to terminate this
Agreement upon written notice to Licensee if Licensee is in Breach of any terms
or conditions of this Agreement, does not pay for renewal within 30 days after
the beginning of any renewal term, has any act of dissolution or bankruptcy made
or filed by or against it, makes any assignment of its assets for the benefit of
creditors, or has any substantial attachment or execution of judgment made
against it.
RENEWAL: This agreement will be automatically renewed for an additional term at
the end of the current term unless (I) Licensee requests cancellation at least
30 days prior to the end of the current term, (II) GEMSTONE submits a different
Agreement to Licensee at least 30 days prior to the end of the current term,
(III) GEMSTONE has terminated this Agreement as specified above. The effective
date of the renewal Agreement shall be on the anniversary of the effective date
of this Agreement. Should Licensee decide to terminate this Agreement, renewal
at a later date may be purchased for the then current maintenance agreement
price plus a renewal fee equal to a one year's maintenance agreement price.
Signed: /s/ D.M. Fisher /s/ Dan J. Ware
-----------------
Date: 6/28/96 7/16/96
-------------------
Software License Agreement GemStone Systems, Inc.
<PAGE>
GEMSTONE SYSTEMS, INC. VALUE-ADDED REMARKETER AGREEMENT
This Agreement is made by and between GemStone Systems, Inc ("GEMSTONE"), an
Oregon corporation, and the Licensee, each being identified and having a place
of business as given on the face page of this Agreement.
BACKGROUND
- ----------
This Agreement is made with reference to the following facts:
Licensee has entered into a GemStone Systems, Inc. Domestic Software
License Agreement ("SLA"), to which this Agreement is attached, relating to
the license of certain Software Products and Documentation identified on
the face page of such agreement;
The parties desire to add to the terms of the SLA in order that GEMSTONE
may grant to Licensee a license to distribute the Software Products and
Documentation upon the terms and conditions of this Agreement;
Now, therefore, the parties hereby agree as follows:
1. DEFINITIONS
- ----------------
1.1 The definitions established in Section 1 of the SLA shall also apply to
this Agreement.
1.2 "Customer" means any end user to whom licensee sublicenses Documentation or
an executable copy of the Software Products.
1.3 "Territory" means the countries and areas identified on Exhibit B.
1.4 "Sublicense Agreement" means a contact between Licensee and a Customer
whereby the Customer is granted the right to use all or a part of the Software
Products and Documentation, and which contains the terms specified in Exhibit A.
Licensee may only sublicense the Software Products and Documentation to
Customers located in, and solely for use in, the Territory and may not
sublicense directly or indirectly to Customers in, or for use in, any other
countries.
2. SUBLICENSE GRANT
- ---------------------
2.1 Notwithstanding the provisions of Section 2.1 of the SLA, GEMSTONE grants
license a non-exclusive, nontransferable, license to sublicense Customers
located in the Territory to use the Documentation and an executable version of
the Software Products, provided that:
(i) the Software Products and Documentation are part of a software
product to be licensed by Licensee to a Customer;
(ii) the Software Products and Documentation are sublicensed for use only
in the Territory;
(iii) Licensee has its Customer execute a Sublicense Agreement containing a
clear statement of the terms specified in Exhibit A in a manner enforceable
in the Territory; and
(iv) Licensee shall affix on and encode in each copy of a Software Product
sublicensed by Licensee a unique serial number provided by GEMSTONE.
3. TERM
- ---------
This Agreement shall commence immediately and shall continue for a period of 2
years, unless sooner terminated as provided hereunder.
4. FEES, PAYMENT REPORTS
- --------------------------
4.1 Within thirty (30) days after the end of each calendar quarter, Licensee
shall remit payment of the appropriate Sublicense Fees as set forth in Exhibit
C.
(i) The Sublicense Fees set forth in Exhibit C may be changed by GEMSTONE
at any time. If a change to a price, discount, payment or credit term
results in an increase in cost to the Licensee, such change shall become
effective only upon thirty (30) days prior written notice by GEMSTONE.
4.2 Within thirty (30) days after the end of each calendar quarter, Licensee
shall also deliver to GEMSTONE a written Activity Report signed by an officer of
Licensee covering the calendar quarter. The Activity Report shall contain the
following information;
(i) the amount of the royalties or fees payable by Licensee to GEMSTONE
for licenses or sublicense of the Software Products and Documentation
during the preceding calendar quarter;
(ii) the manner in which the amount of the royalties or fees payable to
GEMSTONE was calculated by Licensee;
(iii) a description of the software products licensed by Licensee to
Customers hereunder;
(iv) the date on which the Software Products were shipped to each end
user;
(v) the brands and models of the Server Computer Systems on which the
Software Products were installed; and
(vi) the unique serial number provided by GEMSTONE which was affixed to
and encoded into each Software Product.
4.3 Licensee shall maintain accurate records relating to the copying,
distribution, sublicensing, and servicing of the Software Products and
Documentation so as to establish the payments due to GEMSTONE hereunder, to
identify all Sublicensees, and to otherwise verify Licensee's compliance with
the terms of this Agreement. Such books, records and Sublicense Agreements
shall be available at their place of keeping for inspection or copying by
GEMSTONE or an independent auditor chosen and paid by GEMSTONE during normal
business hours. Licensee shall retain all Sublicense Agreements and records
pertaining to payments due to GEMSTONE for a period of three (3) years after
termination. In the event an audit reveals that Licensee has not paid all of
the Sublicense Fees due hereunder, Licensee shall pay within 10 days the
discrepancy plus interest, calculated at a monthly rate of 1% per month (or, the
maximum rate allowed by law, if less) from the date the Sublicense Fee was due
until it is paid. If the discrepancy exceeds more than 5% of the Sublicense
Fees due for the period under audit, Licensee shall also reimburse the cost of
such inspection, including reasonable auditor's fees.
4.4 All sales, use, personal property, withholding and other taxes relating to
this Agreement shall be paid by Licensee unless Licensee provides GEMSTONE with
valid tax exemption certificates. Licensee shall not be reasonable for taxes
based on GEMSTONE's net income.
4.5 Any Payment or part of a payment that is not paid when due shall bear
interest at the rate of 1.5% per month, or at the highest contract rate allowed
by law, whichever is less, from its due date until paid.
<PAGE>
5. LICENSEE OBLIGATIONS
- -- --------------------
5.1 Licensee shall evaluate and test the Software Products and Documentation to
determine its suitability for use in the creation of products.
5.2 Licensee agrees to train within sixty (60) days of the effective date of
this Agreement and maintain a sufficient number (minimum of one (1) each) of
capable technical and sales personnel to carry out the obligations and
responsibilities of Licensee under this Agreement.
5.3 Licensee shall provide all technical, service, warranty, return, telephone
and other training, service and support to its Customers relating to the
Software Products.
6. SUPPORT
- -- -------
6.1 Subject to the availability of its personnel, GEMSTONE will provide
reasonable technical assistance to Licensee, upon request, at GEMSTONE's then-
current rates, terms, and conditions.
7. OWNERSHIP AND NOTICES
- -- ---------------------
7.1 Licensee shall insure that any copyright notice or other proprietary rights
notice placed in or on or displayed by the Software products or Documentation by
GEMSTONE, whether in machine language or human readable form continue to appear
or exist in all copies of the Software Products and Documentation that Licensee
delivers to its Customers.
8. INDEMNITY BY LICENSEE
- -- ---------------------
8.1 Licensee shall indemnify GEMSTONE from all claims, losses, and damages
which may arise from its marketing, installation, or support of the Software
Products and Documentation, including claims based on representations,
warranties, or misrepresentations made by Licensee, inadequate installation,
support or assistance by licensee, or any other act or failure to act on the
part of Licensee. Licenser shall have the right to participate in the defense
of any such claim at its own expense.
9. TERMINATION
- -- -----------
9.1 In addition to the provisions of Section 9 of the SLA, GEMSTONE may
terminate this Agreement prior to its expiration upon the failure of Licensee to
pay any sum due hereunder within fifteen (15) days of the date due.
9.2 Licensee may terminate this Agreement at any time after all payments
accrued hereunder prior to the effective date of termination have been made by
giving ninety (90) days written notice to GEMSTONE.
9.3 In addition to its obligations under Section 9.3 of the SLA, upon
expiration or termination of this Agreement, Licensee agrees to cease
sublicensing the Software Products and Documentation. Notwithstanding the
foregoing, and notwithstanding termination of this Agreement, Licensee shall
retain the right to continue to support authorized Customer copies of Software
products that have been sublicensed hereunder prior to the effective date of
termination, subject to continued payment of applicable royalties to GEMSTONE.
10. GENERAL
- --- -------
10.1 This Agreement may not be assigned by either party without the prior
written approval of the other party, which approval shall not be unreasonably
withheld.
10.2 Each party is acting as an independent contractor and not as an agent,
partner, or joint venturer with the other party for any purpose. Except as
provided in this Agreement, neither party shall have any right, power, or
authority to act or to create any obligation, express or implied, on behalf of
the other.
10.3 Neither GEMSTONE nor Licensee shall be reasonable for delays or failure of
performance resulting from acts beyond the reasonable control of such party.
Such acts shall include, but not be limited to, acts of god, strikes, walkouts,
riots, acts of war, epidemics, failure of suppliers to perform, governmental
regulations, power failure or failures, earthquakes, or other disasters.
10.4 The parties have read this Agreement and agree to be bound by its terms,
and further agree that this Agreement, together with the SLA of which it is a
part, constitute the complete and exclusive statement of the agreement between
them which supersedes all proposals, oral or written, and all other
communications between them relating to the license and use of the Software
Products and Documentation.
In witness whereof, the parties have caused this Agreement to be executed by
their duly authorized representatives.
LICENSEE:
/s/ D.M. Fisher
- ------------------------------------------
Authorized Signature/Date
Donald Fisher
- ------------------------------------------
Print Name
V.P. Sales & Marketing
- ------------------------------------------
Title
GEMSTONE:
/s/ Dan J. Ware
- ------------------------------------------
Authorized Signature/Date
Dan J. Ware
- ------------------------------------------
Print Name
Sr. V.P. W.W. Operations
- ------------------------------------------
Title
<PAGE>
Addendum to GemStone Systems, Inc. Value Added Reseller Agreement
-----------------------------------------------------------------
This addendum is hereby made part of and incorporated into the GemStone Systems,
Inc. Value Added Reseller ("Agreement") entered into by and between GemStone
Systems, Inc. ("GemStone") and Genomica ("Licensee") on April 8, 1996. In the
event that this Addendum is inconsistent or conflicting with Agreement, the
provisions of the Addendum will prevail.
The parties agree to make the following changes to the Agreement.
Paragraph 2 - SUBLICENSE GRANT
- ------------------------------
Delete the following:
(iv) Licensee shall affix on and encode in each copy of a Software Product
sublicensed by Licensee a unique serial number provided by GEMSTONE
Paragraph 4 - FEES, PAYMENT REPORTS
- -----------------------------------
Section 4.1, (i) shall read as follows:
(i) The Sublicense Fees set forth in Exhibit C may be changed by GEMSTONE
at any time. If a change to a price, discount, payment or credit term
results in an increase in cost to the Licensee, such change shall become
effective only upon ninety (90) days prior written notice by GEMSTONE.
Section 4.2, (v) shall read as follows:
(v) the platform and operating systems of the Server Computer Systems on
which the Software Products were installed; and
Add the following section (vi):
(v) GEMSTONE acknowledges that the information provided by Licensee under
section 4.2 and 4.3 is confidential to Licensee and will treat it as such
provided however, such information is marked confidential with a
appropriate legend or stamp.
Paragraph 6 - SUPPORT
- ----------------------
Add the following sentence:
GemStone anticipates providing such service in accordance with its standard
response and escalation procedures.
Paragraph 8 - INDEMNITY BY LICENSEE
- -----------------------------------
Add the following sentence to the end of the paragraph:
The foregoing indemnity obligation of Licensee shall not apply with respect
to any claims that the Software Products infringe upon any patent or
copyright, and such claims shall be subject to GEMSTONE's indemnity
obligations under the SLA, except to the extent that such claims relate to
any modification or alteration of a Software Product by a party other than
GEMSTONE or the use of a Software Product with any materials not provided
by GEMSTONE.
<PAGE>
Paragraph 9 - TERMINATION
- -------------------------
Section 9.1 shall read as follows:
In addition to the provisions of section 9 of the SLA. GEMSTONE may
terminate this Agreement prior to its expiration upon the failure of
Licensee to pay any sum due hereunder within thirty (30) days of the date
due.
IN WITNESS WHEREOF, the undersigned have read and agreed to the terms of this
Agreement.
GEMSTONE SYSTEMS, INC. Genomica
By: /s/ Dan J. Ware By: /s/ D. M. Fisher
-------------------------------- --------------------------------
Name: Dan J. Ware Name: Donald M. Fisher
------------------------------ ------------------------------
Title: Sr. V.P. W.W. Operation Title: V.P. Sales & Marketing
----------------------------- -----------------------------
Date: 5/1/96 Date: 4/8/96
------------------------------ ------------------------------
03/27/96; 12:18 PM
<PAGE>
EXHIBIT A
Terms Required in Sublicense Agreement
The parties agree that each Sublicense Agreement between licensee and its
Customers for the Software Products and Documentation shall require that the
Customer agree to the following:
Title to the Software Products does not pass to the Customer.
Customer only obtains a non-exclusive license, without right to sublicense, to
use the Software Products in the Territory to access a single Logical GemStone
Database on Server Computer Systems.
Customer shall not transfer or license the use of all or any portion of the
Software Products and Documentation to any third party or entity.
The Software Products constitutes highly valuable property of GEMSTONE and
contains trade secrets and confidential information owned by GEMSTONE. Customer
shall observe complete confidentiality with respect to the Software Products and
documentation, and all performance data and shall not disclose all or any
portion thereof to any third party or entity, except to its employees as
required in the course of their employment.
Customer shall not decompile, disassemble or otherwise reverse engineer the
Software Products.
The obligations set forth above shall survive any expiration of the term of the
Sublicense Agreement.
GEMSTONE has made no representations to the Customer and GEMSTONE warrants only
that the Software Products will perform substantially in accordance with the
documentation for a period of ninety (90) days.
GEMSTONE's liability to Customer for any claim shall be limited to direct
damages and shall not exceed the total amount paid to GEMSTONE for the license
of the Software Products.
<PAGE>
EXHIBIT B
Territory
The geographic scope of the licenses conveyed herein by GEMSTONE to VAR for
Genomica's product called Genome topographer shall be World Wide distribution.
<PAGE>
EXHIBIT C
Sublicense Fees
1. Licenses Product: Genome Topographer (GT)
-----------------------
Fee: Licensee will remit to GemStone a royalty equal to 14% of gross sales
received in connection with the sale and distribution of concurrent users
for the above product. Amounts subject to the royalty include product
licenses and maintenance fees and as such will allow Licensee to updates its
VAR product and distribute to its Customers.
Number of Users: The above product is sold on a per user bases.
Term of Licensee Product: One year. Subsequent renewals fees will be
remitted at the above percentage on an annual basis. Should customer elect
to cease using GT during the annual term, no fees paid will be refunded to
Licensee.
2. Evaluation Licenses:
GEMSTONE acknowledges the need for Genomica to conduct evaluations of the GT
with its prospects. Therefore, GEMSTONE will grant at Genomica's request a
thirty (30) day temporary keyfile in order to access the GEMSTONE Software at no
charge to accommodate the Genomica evaluation cycle.
<PAGE>
EXHIBIT D
Approved Configurations
1. Licensee Product:
----------------
Name of Product(s): Genome Topographer (GT)
Brief Description and function: The Genome Topographer supports computer aided
gene analysis.
2. Approved Configuration
----------------------
Platform/Operating systems: Any GemStone supported platform
Language Interfaces: GemStone Smalltalk Interface for Visual Works, GemStone C
Interface
<PAGE>
Exhibit 10.19
GENOMICA CORPORATION
AMENDED AND RESTATED
1996 STOCK OPTION PLAN
Date Amended and Restated: April 15, 1998
<PAGE>
GENOMICA CORPORATION
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
1. Purpose of the Plan
The purpose of the Plan is to assist the Company in attracting and
retaining valued employees, non-employee directors and independent contractors
by offering them a greater stake in the Company's success and a closer identity
with it, and to encourage ownership of the Company's stock by such employees,
non-employee directors and independent contractors.
2. Definitions
2.1 "Award" means an award of Options under the Plan.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Common Stock" means the common stock of the Company, par value
$0.001 per share, or such other class or kind of shares or other securities
resulting from the application of Section 7.
2.5 "Company" means Genomica Corporation, a Delaware corporation, or any
successor corporation.
2.6 "Committee" means the committee designated by the Board to administer
the Plan under Section 4.
2.7 "Director" means a member of the Board who is not an Employee.
2.8 "Employee" means an officer or other key employee of the Company
including a director who is such an employee. Neither service as a director nor
payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
2.9 "Fair Market Value" means, on any given date, the fair market value
per share as determined exclusively by the Board in its reasonable judgment.
2.10 "Holder" means an Employee, Director or Independent Contractor to
whom an Award is made.
2.11 "Incentive Stock Option" means an Option intended to meet the
requirements of an incentive stock option as defined in section 422 of the Code
and designated as an Incentive Stock Option.
1.
<PAGE>
2.12 "Independent Contractor" means an individual other than an Employee
who performs services for the Company and includes services as a member of the
Scientific Advisory Board of the Company.
2.13 "Non-Qualified Stock Option" means an Option not intended to be an
Incentive Stock Option, and designated as a Non-Qualified Stock Option.
2.14 "Option" means any stock option granted from time to time under
Section 6 of the Plan.
2.15 "Option Agreement" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
Option Agreement shall include documents titled "Stock Option Agreement", as
well as "Stock Option Grant Notice". Each Option Agreement shall be subject to
the terms and conditions of the Plan.
2.16 "Option Share" means any share of Common Stock purchased upon the
exercise of an Option.
2.17 "Plan" means the Genomica Corporation Amended and Restated 1996
Option Plan herein set forth, as amended from time to time.
2.18 "Prime Rate" means the prime rate of interest as announced or
published by a majority of he following New York City banks: The Chase Manhattan
Bank, N.A., Chemical Bank and Bankers Trust Company; but if there be no such
majority, then the "Prime Rate" shall be the average of the prime rates as
announced or published by such banks.
2.19 "Securities Act" means the Securities Act of 1933, as amended.
2.20 "Ten Percent Stockholder" means a person who on any given date owns,
either directly or indirectly (taking into account the attribution rules
contained in section 424(d) of the Code), stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any
subsidiary of which the Company has a 50% or greater, direct or indirect
ownership.
3. Eligibility
Any Employee, Director or Independent Contractor is eligible to receive an
Award.
4. Administration and Implementation of Plan
4.1 The Plan shall be administered by the Committee, which shall have
full power to interpret and administer the Plan and full authority to act in
selecting the Employees, Directors and Independent Contractors to whom Awards
will be granted, in determining the type and amount of Awards to be granted to
each such Employee, Director or Independent Contractor, the terms and conditions
of Awards granted under the Plan and the terms of agreements which will be
entered into with Holders. If the Board does not delegate administration of the
Plan to the
2.
<PAGE>
Committee or abolishes the Committee, then the Board may administer the Plan
and, in such case, all references in this Plan to the Committee shall thereafter
be to the Board.
4.2 The Committee shall have the power to adopt regulations for carrying
out the Plan and to make changes in such regulations as it shall, from time to
time, deem advisable. The Committee shall have the power unilaterally and
without approval of a Holder to amend an existing Award in order to carry out
the purposes of the Plan so long as such an amendment does not take away any
benefit granted to a Holder by the Award and as long as the amended Award
comports with the terms of the Plan. Any interpretation by the Committee of the
terms and provisions of the Plan and the administration thereof, and all action
taken by the Committee, shall be final and binding on all Holders.
5. Shares of Stock Subject to the Plan
5.1 Subject to adjustment as provided in Section 7, the total number of
shares of Common Stock available for Awards under the Plan shall be 2,000,000
shares.
5.2 Any shares issued by the Company through the assumption or
substitution of outstanding grants from an acquired company shall not reduce the
shares available for Awards under the Plan. Any shares issued hereunder may
consist, in whole or in part, of authorized and unissued shares or treasury
shares. If any shares subject to any Award granted hereunder are forfeited or
such Award otherwise terminates without the issuance of such shares or the
payment of other consideration in lieu of such shares, the shares subject to
such Award, to the extent of any such forfeiture or termination, shall again be
available for Awards under the Plan.
6. Options
Options give an Employee, a Director or an Independent Contractor the right
to purchase a specified number of shares of Common Stock from the Company for a
specified time period at a fixed price. The grant of Options shall be subject to
the following terms and conditions:
6.1 Option Grants. Options shall be granted to an Employee, Director or
Independent Contractor at the time and in the amount determined by the
Committee. Options shall be evidenced by Option Agreements. Such Option
Agreements shall conform to the requirements of the Plan, and may contain such
other provisions as the Committee shall deem advisable.
6.2 Option Price. The price per share at which Common Stock may be
purchased upon exercise of an Option shall be determined by the Committee, but
shall be not less than the Fair Market Value of a share of Common Stock on the
date of grant. In the case of any Incentive Stock Option granted to a Ten
Percent Stockholder, the option price per share shall not be less than 110% of
the Fair Market Value of a share of Common Stock on the date of grant.
6.3 Term of Options. The Option Agreement shall specify when an Option
may be exercisable and the terms and conditions applicable thereto. The term of
an Option shall in no
3.
<PAGE>
event be greater than ten years (five years in the case of an Incentive Stock
Option granted to a Ten Percent Stockholder).
6.3.1 Vesting. The total number of shares of stock subject to an
Option may, but need not, be allotted in periodic installments (which may, but
need not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period, and
may be exercised with respect to some or all of the shares allotted to such
period and/or any prior period as to which the Option became vested but was not
fully exercised. The Option may be subject to such other terms and conditions on
the time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6.3.1 are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
6.3.2 Early Exercise. Options granted under the Plan may contain a
provision in the Option Agreement allowing a Holder to exercise an Option prior
to the date on which the Option is vested. Any Option Shares purchased through
such an early exercise will be subject to the repurchase right described in
Section 6.12 for a period of time which is at least until the underlying Options
would have become vested.
6.4 Incentive Stock Options. Each provision of the Plan and each Option
Agreement relating to an Incentive Stock Option shall be construed so that each
Incentive Stock Option shall be an "incentive stock option" as defined in
section 422 of the Code, and any provisions of such Option Agreement that cannot
be so construed shall be disregarded. In no event may a Holder be granted an
Incentive Stock Option which does not comply with such grant and limitations
under section 422(d) of the Code.
6.5 Restrictions on Transferability. Except as provided below, Awards may
not be pledged, assigned or transferred for any reason during the Holder's
lifetime, and any attempt to do so shall be void and the relevant Award shall be
forfeited. The Committee may grant Awards (except Incentive Stock Options) that
are transferable by the Holder during his lifetime, but such Awards shall be
transferable only to the extent specifically provided in the agreement entered
into with the Holder. A transferee of the Holder shall, in all cases, be subject
to the provisions of the agreement between the Company and the Holder. No
Incentive Stock Option shall be transferable otherwise than by will or the laws
of descent and distribution and, during the lifetime of the Holder, shall be
exercisable only by the Holder. Upon the death of a Holder, the person to whom
such Holder's rights have passed by will or by the laws of descent and
distribution may exercise an Incentive Stock Option only in accordance with this
Section 6.
6.6 Payment of Option Price. Stock Options may provide that full payment
for Option Shares purchased upon the exercise of an Option be made in cash, or,
subject to the approval of the Board: (i) by surrendering shares of the
Company's Common Stock that have been owned by the Optionee for at least six
months and that have an aggregate Fair Market Value equal to the Option Price,
(ii) by delivering a promissory note of the Optionee (such note to be with full
recourse against the Optionee and to contain such other terms as required by the
Board),
4.
<PAGE>
(iii) delivery of an irrevocable undertaking by a broker to deliver promptly to
the Company sufficient funds to pay the Option Price or delivery of irrevocable
instructions to a broker to deliver promptly to the Company cash or a check
sufficient to pay the Option Price, (iv) payment of such other lawful
consideration as the Board may determine, or (v) any combination of the
foregoing.
6.7 Termination by Death. If a Holder's service with the Company as an
Employee, Director or Independent Contractor terminates by reason of such
Holder's death, any Option granted to such Holder may thereafter be exercised
(to the extent such Option was exercisable at the time of death or on such
accelerated basis as the Committee may determine at or after grant) by, where
appropriate, the Holder's transferee or by the Holder's legal representative,
for a period of twelve (12) months from the date of death or until the
expiration of the stated term of the Option, whichever period is shorter.
6.8 Termination by Reason of Disability. If a Holder's service with the
Company as an Employee, Director or Independent Contractor terminates by reason
of disability (as defined in section 22(e)(3) of the Code), any unexercised
Option granted to the Holder may thereafter be exercised by the Holder (or,
where appropriate, the Holder's transferee or legal representative), to the
extent it was exercisable at the time of termination or on such accelerated
basis as the Committee may determine at or after grant, for a period of twelve
(12) months from the date of such termination or until the expiration of the
stated term of the Option, whichever period is shorter.
6.9 Other Termination. If a Holder's service with the Company as an
Employee, Director or Independent Contractor terminates for any reason other
than death or disability, all unexercised Options, to the extent they were
exercisable at the time of termination, may be exercised within three (3) months
following the Holder's termination and any unexercised Options shall then
terminate at the end of such three-month period. All Options that are
unexercisable at the time of the Holder's termination shall immediately
terminate on the date of the Holder's termination.
6.10 Right of First Refusal of Company. In the event that any Holder of
Option Shares receives a bona fide offer from a third party to purchase a
complete or partial interest in such Option Shares, the Holder may not transfer
the Option Shares (i) unless otherwise permitted by the provisions of the Plan
and the Option Agreement, and (ii) without first offering to sell such Option
Shares to the Company or its designee pursuant to this Section 6.10. The Holder
shall deliver a written notice (a "Sale Notice") to the Company describing in
reasonable detail the Option Shares, the name of the offeror, the purchase price
offered and all other material terms of the proposed transfer. The Sale Notice
shall be delivered to and received by the Company at least sixty (60) days prior
to any such proposed sale. The Sale Notice shall constitute an irrevocable offer
by such Holder to sell the Option Shares described therein to the Company or its
designee in accordance with this Section 6.10. Upon receipt of the Sale Notice,
the Company or its designee shall have the right and option to purchase the
Option Shares on the terms of the proposed transfer set forth in the Sale
Notice, except for such terms as are otherwise specified or permitted by this
Section 6.10. Within 30 days after receipt of the Sale Notice, the Company
5.
<PAGE>
shall notify such Holder whether or not it or its designee wishes to purchase
the Option Shares. If the Company or its designee elects to purchase the Option
Shares, the closing of the purchase and sale of the Option Shares shall be held
at the place and on the date established by the Company in its notice to the
Holder in response to the Sale Notice, which date shall be not more than 30 days
from the date of the Company's notice, unless the terms of the proposed transfer
provide for a later closing date. If neither the Company nor its designee elect
to purchase the Option Shares, the Holder may, subject to the other provisions
of the Plan and the Agreement, transfer the Option Shares to the offeror
specified in the Sale Notice at a price no less than the price specified in the
Sale Notice and on other terms no more favorable to the offeror than specified
in the Sale Notice during the 90-day period immediately following the last date
on which the Company could have elected to purchase the Option Shares. Any such
Option Shares not so transferred within such 90-day period will be subject again
to all of the provisions of this Section 6.10 upon subsequent transfer.
Anything to the contrary contained in this Section 6.10 notwithstanding,
the transfer of any or all of the Option Shares during the Holder's lifetime or
on the Holder's death by will or intestacy to Holder's immediate family or to a
trust for the benefit of Holder or Holder's immediate family shall be exempt
from the provisions of this Section 6.10; provided that, as a condition to
receiving the Option Shares, the transferee or other recipient shall agree in
writing to receive and hold Option Shares so transferred subject to the
provisions of the Plan, and to transfer such Option Shares no further except in
accordance with the terms of the Plan. As used herein, "immediate family" shall
mean spouse, lineal descendant or antecedent, father, mother, brother or sister.
The Company's right of first refusal set forth in this Section 6.10 shall
terminate upon the closing of the Company's first firm commitment underwritten
public offering of its Common Stock registered under the Securities Act.
6.11 Approved Sale of the Company.
The Company retains the right to include in the Option Agreement for any
Option granted under this Plan provision consistent with the following
describing a Holder's obligations when there is an Approved Sale, as defined
below.
If the Board and holders of a majority of the Common Stock (voting as a
single class) then outstanding approve the sale of the Company (whether by
merger, consolidation, sale of all or substantially all of the assets or
outstanding shares of capital stock (an "Approved Sale")), each Holder shall
consent to, vote for and raise no objections with respect to the Approved Sale,
and if the Approved Sale is structured as a sale of stock, shall agree to sell
all shares of capital stock held by such Holder on the terms and conditions
approved by the Board and the holders of a majority of the Common Stock then
outstanding. Each Holder shall take all action which is necessary or in the
judgment of the Company advisable to facilitate or consummate an Approved Sale.
The obligations of a Holder with respect to an Approved Sale of the Company are
subject to the satisfaction of the following: upon the consummation of the
Approved Sale, either all of the holders of Common Stock will receive the same
form and amount of consideration per share
6.
<PAGE>
of Common Stock, or if any such holder of Common Stock is given an option as to
the form and amount of consideration to be received, such Holder will be given
the same option. Each Holder hereby appoints the Company as its or his true and
lawful proxy and attorney-in-fact, with full power of substitution and
resubstitution, to vote its or his shares of capital stock of the Company that
are entitled to vote to effectuate the provisions and intentions of this Section
6.11. The proxies and powers of attorney granted under this Section 6.11 are
hereby declared to be coupled with an interest and shall be irrevocable.
6.12 Repurchase Right of Company.
6.12.1 Upon the termination of an Optionee's service as an Employee,
Director or Independent Contractor, whether such termination was voluntary or
involuntary, with or without cause, or resulted from such Optionee's death or
disability ("Termination of Service"), the Company will have the right to
purchase all or any portion of the Restricted Shares (as defined below) by the
delivery of written notice to the Optionee (or if the Termination of Service
resulted from Optionee's death, to the Optionee's estate or personal
representative) within 30 days after Termination of Service; provided, that if
the Optionee (or the Optionee's estate) has the right to exercise an Option for
a period of time after the Termination of Service under the provisions of this
Plan or the Optionee's Option Agreement, the Company shall have until 30 days
after the termination of such period within which to exercise its repurchase
right. The term "Restricted Shares" shall mean all Shares acquired by an
Optionee upon early exercise of an Option as provided in such Optionee's Option
Agreement and all shares of Common Stock or other securities of the Company
issued with respect to such Shares by stock splits, stock dividends,
recapitalizations, share exchanges, mergers or other reorganizations; provided,
however, that the term "Restricted Shares" shall not include any Shares with
respect to which an Optionee's Option has become exercisable (vested) pursuant
to such Optionee's Option Agreement as of the date of the Termination of
Service.
6.12.2 The purchase price for the Restricted Shares for which the
Company's repurchase right is exercised ("Repurchased Shares") shall be the
Option Price (as defined in the Optionee's Option Agreement).
6.12.3 If the Company exercises its repurchase right, the closing of
the purchase and sale will take place on a date designated by the Company which
must be within 30 days after delivery of the Company's notice of exercise. At
the closing, the Company will deliver its check to the Optionee in the amount of
the purchase price for the Repurchased Shares and the Optionee will deliver to
the Company a certificate or certificates for the Repurchased Shares, together
with an executed stock assignment assigning such shares to the Company.
6.12.4 Until a Termination of Service and thereafter until the
Company either purchases the Repurchased Shares pursuant to its repurchase right
or does not exercise its repurchase right within the time provided, the Optionee
will not sell, give, pledge, grant a security interest in, or otherwise transfer
or encumber all or any part of the Restricted Shares.
7.
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6.12.5 The Company may retain all certificates or instruments
representing the Restricted Shares pursuant to the terms of this Section. Upon
exercise of the Company's repurchase right under the terms of this Section, the
Company will have authority to remit payment to the Optionee for the Repurchased
Shares, to transfer the Repurchased Shares to the Company (including, without
limitation, the execution on the Optionee's behalf of appropriate stock
assignments), and to execute all documents and take any and all other action
necessary or desirable to effect the foregoing. Each Optionee irrevocably
designates and appoints the Company as agent and attorney-in-fact for such
purpose. If the Company does not exercise its repurchase right in full within
the period provided after a Termination of Service, upon request of Optionee,
the Company will promptly deliver to the Optionee the certificate or other
instruments evidencing the Restricted Shares that were not purchased pursuant to
the Company's repurchase right, without any legend regarding its repurchase
right.
7. Adjustments Upon Changes In Capitalization
7.1 If any change is made in the stock subject to the Plan, or subject to
any Option (through merger, consolidation, reorganization, recapitalization,
stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the type(s) and maximum
number of securities subject to the Plan pursuant to Section 5.1, and the
outstanding Options will be appropriately adjusted in the type(s) and number of
securities and price per share of stock subject to such outstanding Options.
Such adjustments shall be made by the Committee, the determination of which
shall be final, binding and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a "transaction not involving
the receipt of consideration by the Company.")
7.2 In the event of: a Change of Control (as defined below): (i) any
surviving corporation shall assume any Options outstanding under the Plan or
shall substitute similar Options for those outstanding under the Plan, or (ii)
such Options shall continue in full force and effect. In the event any surviving
corporation refuses to assume or continue such Options, or to substitute similar
options for those outstanding under the Plan, then, with respect to Options held
by persons then performing services as Employees, the time during which such
Options may be exercised shall be accelerated and the Options terminated if not
exercised prior to such event.
7.3 In the event of a Change of Control in which the surviving
corporation assumes the Options, or the Options continue in force, with respect
to each Option held by a person then performing services as Employees, unless
the Board specifically determines otherwise, immediately prior to the closing of
any such transaction the vesting of a portion of such options shall accelerate.
With regard to employees who have been employed for one year or longer, 50% of
the unvested portion of each such Option shall immediately vest, such that such
portion is exercisable prior to the Change of Control. With regard to employees
who have been employed less than one year, 25% of the unvested portion of each
such Option shall immediately vest, such that such portion is exercisable prior
to the Change of Control. In each of the two accelerated vesting situations
described in this Section 7.3, the acceleration shall occur on an
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option by option basis. (For example, if an employee who has been employed for
longer than one year has four outstanding options, 50% of the unvested portion
of each individual option, not 50% of the unvested portions of the options in
the aggregate, shall vest.) The remaining unvested portion of each such Option
shall continue to vest at the rate and for the balance of the term set forth in
each Option Agreement or as determined by the Board Unless specifically provided
otherwise, Options held by persons then performing services as Directors or
Consultants shall be unaffected by a Change of Control.
"Change of Control" is defined as (1) a dissolution, liquidation, or sale
of all or substantially all of the assets of the Company; or (2) a merger,
consolidation, combination or other transaction in which the stockholders of the
Company prior to the transaction own less than a majority of the voting
securities of the surviving entity after the transaction.
8. Effective Date, Termination and Amendment
The Plan shall become effective on May 28, 1996, subject to stockholder
approval. The Plan shall remain in full force and effect until the earlier of 10
years from the date of its adoption by the Board, or the date it is terminated
by the Board. The Board shall have the power to amend, suspend or terminate the
Plan at any time.
Termination of the Plan pursuant to this Section 8 shall not affect Awards
outstanding under the Plan at the time of termination.
9. Market Standstill
The Company (or a representative of the underwriters) may, in connection
with the first underwritten registration of the offering of any securities of
the Company under the Securities Act, require that Holder not sell or otherwise
transfer or dispose of any shares of Common Stock or other securities of the
Company during such period (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed
under the Securities Act as may be requested by the Company or the
representative of the underwriters, provided that all executive officers and
directors of the Company have similarly agreed. Furthermore, the Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such period.
10. General Provisions
10.1 Nothing contained in the Plan, or any Award granted pursuant to the
Plan, shall confer upon any Employee any right with respect to continuance of
employment by the Company, nor interfere in any way with the right of the
Company to terminate the employment of any Employee at any time.
10.2 Holders shall be responsible to make appropriate provision for all
taxes required to be withheld in connection with any Award, the exercise thereof
and the transfer of shares of Common Stock pursuant to this Plan. Such
responsibility shall extend to all applicable federal, state, local or foreign
withholding taxes. In the case of the payment of Awards in the form of
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Common Stock, or the exercise of Options, the Company shall, at the election of
the Holder, have the right to retain the number of shares of Common Stock whose
aggregate Fair Market Value equals the amount to be withheld in satisfaction of
the applicable withholding taxes. Agreements evidencing such Awards shall
contain appropriate provisions to effect withholding in this manner.
10.3 To the extent that federal laws do not otherwise control, the Plan
and all determinations made and actions taken pursuant hereto shall be governed
by and construed according to the laws of Colorado without regard to its choice
of law provisions.
10.4 The Committee may amend any outstanding Awards to the extent it deems
appropriate. Such amendment may be made by the Committee without the consent of
the Holder, except in the case of amendments adverse to the Holder, in which
case the Holder's consent is required to effect any such amendment.
10.
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Exhibit 10.20
GENOMICA CORPORATION
2000 Equity Incentive Plan
Adopted as Amended and Restated 1996 Stock Option Plan May 28, 1996
Amended and Restated by Board as 2000 Equity Incentive Plan March __, 2000
Amended and Restated Plan Approved By Stockholders March __, 2000
Termination Date: March __, 2010
1. Purposes.
(a) Eligible Stock Award Recipients. The persons eligible to receive Stock
Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.
(b) Available Stock Awards. The purpose of the Plan is to provide a means
by which eligible recipients of Stock Awards may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of the
following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock .
(c) General Purpose. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. Definitions.
(a) "Affiliate" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause," with respect to any Participant, means (except as otherwise
provided in the applicable Stock Award Agreement or an applicable written
employment contract executed by an authorized officer of the Company and such
Participant) such Participant's (i) conviction of any felony or any crime
involving moral turpitude or dishonesty, (ii) participation in a fraud or act of
dishonesty against the Company, (iii) conduct that, based upon a good faith and
reasonable factual investigation and determination by the Company, demonstrates
such Participant's gross unfitness to serve, (iv) failure, based upon a good
faith and reasonable factual determination by the Company, to meet the minimum
performance requirements of his or her position as established by the Company,
or (v) intentional, material violation of any contract between the Company and
such Participant or any statutory duty of such Participant to the Company that
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such Participant does not correct within thirty (30) days after written notice
to such Participant thereof. A Participant's physical or mental disability shall
not constitute "Cause."
(d) "Change in Control" means (i) a sale, lease or other disposition of
all or substantially all of the assets of the Company; (ii) a merger or
consolidation in which the Company is not the surviving corporation and in which
beneficial ownership of securities of the Company representing at least fifty
percent (50%) of the combined voting power entitled to vote in the election of
the members of the Board has changed; (iii) a reverse merger in which the
Company is the surviving corporation but the shares of the Company's Common
Stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, and in which beneficial ownership of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of the member of the Board has changed; (iv) an
acquisition by any entity (other than (A) a controlled affiliate of the Company,
(B) any employee benefit plan, or related trust, sponsored or maintained by the
Company or subsidiary of the Company or other entity controlled by the Company,
or (C) any company owned directly or indirectly by stockholders of the Company
in substantially the same proportions as their ownership of Common Stock
interest of the Company, immediately prior to the occurrence with respect to
which the evaluation of the Change in Control is being made) of the beneficial
ownership, directly or indirectly, of securities of the Company representing at
least fifty percent (50%) of the combined voting power of the Company's then
outstanding securities; or (v) any event which causes the individuals who, as of
the date of adoption of the Plan, are members of the Company's Board (the
"Incumbent Board") to cease for any reason to constitute at least fifty percent
(50%) of the Board. (If the election, or nomination for election by the
Company's stockholders of any new Director is approved by a vote of at least
fifty percent (50%) of the Incumbent Board, such new Director shall be
considered to be a member of the Incumbent Board in the future.)
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).
(g) "Common Stock" means the common stock of the Company.
(h) "Company" means Genomica Corporation, a Delaware corporation.
(i) "Consultant" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors who are not compensated by the Company for their services as Directors
or Directors who are merely paid a director's fee by the Company for their
services as Directors.
(j) "Continuous Service" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of
2.
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a change in the capacity in which the Participant renders service to the Company
or an Affiliate as an Employee, Consultant or Director or a change in the entity
for which the Participant renders such service, provided that there is no
interruption or termination of the Participant's Continuous Service. For
example, a change in status from an Employee of the Company to a Consultant of
an Affiliate or a Director will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.
(k) "Covered Employee" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.
(l) "Director" means a member of the Board of Directors of the Company.
(m) "Disability" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(n) "Employee" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(p) "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(q) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(r) "Non-Employee Director" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to
3.
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the Securities Act ("Regulation S-K")), does not possess an interest in any
other transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(s) "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
(t) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(u) "Option" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
(v) "Option Agreement" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(w) "Optionholder" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.
(x) "Outside Director" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(y) "Participant" means a person to whom a Stock Award is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding Stock
Award.
(z) "Plan" means this Evoke Incorporated 2000 Equity Incentive Plan.
(aa) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(bb) "Securities Act" means the Securities Act of 1933, as amended.
(cc) "Stock Award" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.
(dd) "Stock Award Agreement" means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
4.
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(ee) "Ten Percent Stockholder" means a person who owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates.
3. Administration.
(a) Administration by Board. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) Powers of Board. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.
(ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(iii) To amend the Plan or a Stock Award as provided in Section 12.
(iv) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) Delegation to Committee.
(i) General. The Board may delegate administration of the Plan to a
Committee or Committees of one (1) or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
(ii) Committee Composition when Common Stock is Publicly Traded. At
such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more Non-
Employee Directors, in accordance with Rule 16b-3.
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Within the scope of such authority, the Board or the Committee may (1) delegate
to a committee of one or more members of the Board who are not Outside Directors
the authority to grant Stock Awards to eligible persons who are either (a) not
then Covered Employees and are not expected to be Covered Employees at the time
of recognition of income resulting from such Stock Award or (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code;
and/or (2) delegate to a committee of one or more members of the Board who are
not Non-Employee Directors the authority to grant Stock Awards to eligible
persons who are not then subject to Section 16 of the Exchange Act.
(d) Effect of Board's Decision. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.
4. Shares Subject to the Plan.
(a) Share Reserve. Subject to the provisions of Section 11 relating to
adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate five million
(5,000,000) shares of Common Stock.
(b) Reversion of Shares to the Share Reserve. If any Stock Award shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the shares of Common Stock not acquired under such Stock
Award shall revert to and again become available for issuance under the Plan.
(c) Source of Shares. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.
5. Eligibility.
(a) Eligibility for Specific Stock Awards. Incentive Stock Options may be
granted only to Employees. Stock Awards other than Incentive Stock Options may
be granted to Employees, Directors and Consultants.
(b) Ten Percent Stockholders. A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c) Section 162(m) Limitation. Subject to the provisions of Section 11
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options covering more than two million five
hundred thousand (2,500,000) shares of Common Stock during any calendar year.
6.
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(d) Consultants.
(i) A Consultant shall not be eligible for the grant of a Stock Award
if, at the time of grant, a Form S-8 Registration Statement under the Securities
Act ("Form S-8") is not available to register either the offer or the sale of
the Company's securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
grant (A) shall be registered in another manner under the Securities Act (e.g.,
on a Form S-3 Registration Statement) or (B) does not require registration under
the Securities Act in order to comply with the requirements of the Securities
Act, if applicable, and (ii) that such grant complies with the securities laws
of all other relevant jurisdictions.
(ii) Form S-8 generally is available to consultants and advisors only
if (i) they are natural persons; (ii) they provide bona fide services to the
issuer, its parents, its majority-owned subsidiaries or majority-owned
subsidiaries of the issuer's parent; and (iii) the services are not in
connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer's securities.
6. Option Provisions.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:
(a) Term. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
(b) Exercise Price of an Incentive Stock Option. Subject to the provisions
of subsection 5(b) regarding Ten Percent Stockholders, the exercise price of
each Incentive Stock Option shall be not less than one hundred percent (100%) of
the Fair Market Value of the Common Stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may
be granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.
(c) Exercise Price of a Nonstatutory Stock Option. The exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the Common Stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an
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assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.
(d) Consideration. The purchase price of Common Stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board. Unless otherwise specifically
provided in the Option, the purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes). At any time that the Company is
incorporated in Delaware, payment of the Common Stock's "par value," as defined
in the Delaware General Corporation Law, shall not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(e) Transferability of an Incentive Stock Option. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.
(f) Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock
Option shall be transferable to the extent provided in the Option Agreement. If
the Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of
the Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.
(g) Vesting Generally. The total number of shares of Common Stock subject
to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.
8.
<PAGE>
(h) Termination of Continuous Service. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date one (1) month following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified in the Option Agreement, the Option
shall terminate.
(i) Extension of Termination Date. An Optionholder's Option Agreement may
also provide that if the exercise of the Option following the termination of the
Optionholder's Continuous Service (other than upon the Optionholder's death or
Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of one (1) month after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.
(j) Disability of Optionholder. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement) or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.
(k) Death of Optionholder. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement) or (2) the expiration of the term of such Option as set
forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.
(l) Early Exercise. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
9.
<PAGE>
determines to be appropriate. The Company will not exercise its repurchase
option until at least six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless the Board otherwise specifically
provides in the Option.
(m) Re-Load Options.
(i) Without in any way limiting the authority of the Board to make
or not to make grants of Options hereunder, the Board shall have the authority
(but not an obligation) to include as part of any Option Agreement a provision
entitling the Optionholder to a further Option (a "Re-Load Option") in the event
the Optionholder exercises the Option evidenced by the Option Agreement, in
whole or in part, by surrendering other shares of Common Stock in accordance
with this Plan and the terms and conditions of the Option Agreement. Unless
otherwise specifically provided in the Option, the Optionholder shall not
surrender shares of Common Stock acquired, directly or indirectly from the
Company, unless such shares have been held for more than six (6) months (or such
longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes).
(ii) Any such Re-Load Option shall (1) provide for a number of shares
of Common Stock equal to the number of shares of Common Stock surrendered as
part or all of the exercise price of such Option; (2) have an expiration date
which is the same as the expiration date of the Option the exercise of which
gave rise to such Re-Load Option; and (3) have an exercise price which is equal
to one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option shall be subject to the same
exercise price and term provisions heretofore described for Options under the
Plan.
(iii) Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board may designate at the time of the grant
of the original Option; provided, however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollar ($100,000) annual limitation on the exercisability of Incentive Stock
Options described in subsection 9(d) and in Section 422(d) of the Code. There
shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option shall
be subject to the availability of sufficient shares of Common Stock under
subsection 4(a) and the "Section 162(m) Limitation" on the grants of Options
under subsection 5(c) and shall be subject to such other terms and conditions as
the Board may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
7. Provisions of Stock Awards other than Options.
(a) Stock Bonus Awards. Each stock bonus agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate.
The terms and conditions of stock bonus agreements may change from time to time,
and the terms and conditions of separate stock bonus agreements need not be
identical, but each stock bonus agreement shall include (through incorporation
of provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:
10.
<PAGE>
(i) Consideration. A stock bonus may be awarded in consideration for
past services actually rendered to the Company or an Affiliate for its benefit.
(ii) Vesting. Shares of Common Stock awarded under the stock bonus
agreement may, but need not, be subject to a share repurchase option in favor of
the Company in accordance with a vesting schedule to be determined by the Board.
(iii) Termination of Participant's Continuous Service. In the event a
Participant's Continuous Service terminates, the Company may reacquire any or
all of the shares of Common Stock held by the Participant which have not vested
as of the date of termination under the terms of the stock bonus agreement.
(iv) Transferability. Rights to acquire shares of Common Stock under
the stock bonus agreement shall be transferable by the Participant only upon
such terms and conditions as are set forth in the stock bonus agreement, as the
Board shall determine in its discretion, so long as Common Stock awarded under
the stock bonus agreement remains subject to the terms of the stock bonus
agreement.
(b) Restricted Stock Awards. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:
(i) Purchase Price. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. The purchase price shall
not be less than eighty-five percent (85%) of the Common Stock's Fair Market
Value on the date such award is made or at the time the purchase is consummated.
(ii) Consideration. The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement shall be paid either: (i) in
cash at the time of purchase; (ii) at the discretion of the Board, according to
a deferred payment or other similar arrangement with the Participant; or (iii)
in any other form of legal consideration that may be acceptable to the Board in
its discretion; provided, however, that at any time that the Company is
incorporated in Delaware, then payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by deferred
payment.
(iii) Vesting. Shares of Common Stock acquired under the restricted
stock purchase agreement may, but need not, be subject to a share repurchase
option in favor of the Company in accordance with a vesting schedule to be
determined by the Board.
(iv) Termination of Participant's Continuous Service. In the event a
Participant's Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.
11.
<PAGE>
(v) Transferability. Rights to acquire shares of Common Stock under
the restricted stock purchase agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the restricted stock
purchase agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the restricted stock purchase agreement remains
subject to the terms of the restricted stock purchase agreement.
8. Covenants of the Company.
(a) Availability of Shares. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.
(b) Securities Law Compliance. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.
9. Use of Proceeds from Stock.
Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. Miscellaneous.
(a) Acceleration of Exercisability and Vesting. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.
(b) Stockholder Rights. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) No Employment or other Service Rights. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate,
12.
<PAGE>
and any applicable provisions of the corporate law of the state in which the
Company or the Affiliate is incorporated, as the case may be.
(d) Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(e) Investment Assurances. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.
(f) Withholding Obligations. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award, provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of Common Stock.
(g) Cancellation and Re-Grant of Options.
(i) Authority to Reprice. The Board shall have the authority to
effect, at any time and from time to time, (1) the repricing of any outstanding
Options under the Plan and/or (2) with the consent of any adversely affected
holders of Options, the cancellation of any outstanding Options under the Plan
and the grant in substitution therefor of new Options under
13.
<PAGE>
the Plan covering the same or different numbers of shares of Common Stock. The
exercise price per share of Common Stock shall be not less than that specified
under the Plan for newly granted Stock Awards. Notwithstanding the foregoing,
the Board may grant an Option with an exercise price lower than that set forth
above if such Option is granted as part of a transaction to which Section 424(a)
of the Code applies.
(ii) Effect of Repricing under Section 162(m) of the Code. Shares of
Common Stock subject to an Option which is amended or canceled in order to set a
lower exercise price per share of Common Stock shall continue to be counted
against the maximum award of Options permitted to be granted pursuant to
subsection 5(c). The repricing of an Option under this subsection 10(g)
resulting in a reduction of the exercise price shall be deemed to be a
cancellation of the original Option and the grant of a substitute Option; in the
event of such repricing, both the original and the substituted Options shall be
counted against the maximum awards of Options permitted to be granted pursuant
to subsection 5(c). The provisions of this subsection 10(g)(ii) shall be
applicable only to the extent required by Section 162(m) of the Code.
11. Adjustments upon Changes in Stock.
(a) Capitalization Adjustments. If any change is made in the Common Stock
subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction "without receipt of consideration"
by the Company.)
(b) Change in Control--Dissolution or Liquidation. In the event of a
dissolution or liquidation of the Company, then all outstanding Stock Awards
shall terminate immediately prior to such event.
(c) Change in Control--Asset Sale, Merger, Consolidation, Reverse Merger,
Securities Acquisition, Change in Incumbent Board. In the event of a Change in
Control:
(i) Any surviving corporation or acquiring corporation shall assume
all Stock Awards outstanding under the Plan or shall substitute similar Stock
Awards (including an award to acquire the same consideration paid to the
stockholders in the transaction described in this subsection 11(c) for those
outstanding under the Plan).
(ii) If the acquiring or surviving corporation does assume the Stock
Awards of a Participant or substitutes new Stock Awards for such Participant's
Stock Awards, then,
14.
<PAGE>
(1) If such Participant is an Employee and was in Continuous Service
at least one (1) month prior to the closing of the Change in Control
transaction, with respect to each Stock Award held by such Employee, immediately
prior to the closing of any such transaction the vesting of a portion of such
Stock Awards shall nevertheless accelerate as follows:
a. With regard to Employees who have been in Continuous Service
for eleven (11) months or longer as of the date which is one (1) month prior to
the closing of the Change in Control transaction (the "Service Measurement
Date"), 50% of the unvested portion of each such Stock Award shall immediately
vest, such that such portion is exercisable prior to the Change of Control; and
b. With regard to Employees who have been in Continuous Service
for less than eleven months as of the Service Measurement Date, 25% of the
unvested portion of each such Stock Award shall immediately vest, such that such
portion is exercisable prior to the Change of Control; and
c. In each of the accelerated vesting situations described in
clauses (a) and (b) of this Section 11.1(c)(ii)(1), the acceleration shall occur
on an award by award basis. (For example, if an Employee who has been in
Continuous Servcie for longer than eleven months as of the Service Measurement
Date has four outstanding Stock Awards, 50% of the unvested portion of each
individual Stock Award, not 50% of the unvested portions of the Stock Awards in
the aggregate, shall vest.)
d. The remaining unvested portion of each such assumed or
substituted Employee Stock Award shall continue to vest at the rate and for the
balance of the term set forth in the applicable Stock Award Agreement or as
otherwise determined by the Board.
(2) If such Participant is not an Employee, then unless specifically
provided otherwise in the applicable Stock Award Agreement, the vesting of
assumed or substituted Stock Awards held by such Participant shall be unaffected
by a Change of Control.
(iii) If the surviving corporation or acquiring corporation refuses to
assume or to substitute similar Stock Awards for those of a Participant, then,
with respect to any Stock Award that is not assumed or substituted for, and
which is held by a Participant whose Continuous Service was not terminated more
than one (1) month prior to the closing of such Change in Control transaction,
the vesting of such Stock Award (and, if applicable, the time at which such
Stock Award may be exercised) shall, except as otherwise provided in the
applicable Stock Award Agreement, be accelerated in full, and such Stock Award
shall terminate if not exercised (if applicable) at or prior to such event.
(iv) Any outstanding Options which are not assumed or substituted for
shall terminate if not exercised as of the closing of such Change in Control.
Except as provided in the applicable Stock Award Agreement, any other
outstanding Stock Awards which are not assumed or substituted for and which are
unvested as of the closing of such Change in Control shall terminate as of the
time of such closing.
15.
<PAGE>
12. Amendment of the Plan and Stock Awards.
(a) Amendment of Plan. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements. With respect to Stock
Awards issued prior to any such Plan amendment and still outstanding at any time
thereafter, except as provided in subsection 12(d) below, such amendments shall
apply to such Stock Awards.
(b) Stockholder Approval. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.
(c) Contemplated Amendments. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.
(d) No Impairment of Rights. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.
(e) Amendment of Stock Awards. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.
13. Termination or Suspension of the Plan.
(a) Plan Term. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) No Impairment of Rights. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the Plan
is in effect except with the written consent of the Participant.
14. Effective Date of Plan.
The Plan was effective as of May 28, 1996, and shall continue in its
amended and restated form as the 2000 Equity Incentive Plan, with such amendment
and restatement to be
16.
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effective as the date of its amendment and restatement as such by the Board as
set forth on the first page hereof, but no Stock Award shall be exercised (or,
in the case of a stock bonus or stock purchase award, shall be granted) with
respect to shares exceeding the number of shares reserved for issuance under the
plan prior to the effective date of such amendment and restatement unless and
until the Plan, as amended and restated, has been approved by the stockholders
of the Company, which approval shall be within twelve (12) months before or
after the date the amended and restated Plan is adopted by the Board. Stock
Awards outstanding prior to the effective date of the amendment and restatement
set forth on the first page shall be governed in full by the provisions of the
Plan as in effect prior to such amendment and restatement.
15. Choice of Law.
The law of the State of Colorado shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state's conflict of laws rules.
* * [THIS IS THE END OF THE DOCUMENT] * *
17.
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EXHIBIT 10.21
GENOMICA, INC.
STOCK OPTION GRANT NOTICE
(1996 Stock Option Plan)
[Standard ISO]
Genomica Corporation (the "Company"), pursuant to its Amended and Restated 1996
Stock Option Plan (the "Plan"), hereby grants to Optionee an option to purchase
the number of shares of the Company's common stock set forth below. This option
is subject to all of the terms and conditions as set forth herein and in
Attachments I, II, and III, which are incorporated herein in their entirety.
Optionee: ____________________________
Date of Grant: ____________________________
Vesting Commencement Date: ____________________________
Shares Subject to Option: ____________________________
Exercise Price Per Share: ____________________________
Expiration Date: ____________________________
____ Incentive Stock Option (as defined by (S) 422
of the Code)
____ Nonstatutory Stock Option
Vesting Schedule: [25%] vested on the one year anniversary of the
Vesting Commencement Date; 1/48 vests on each
monthly anniversary thereafter.
Payment: By cash or check.
Additional Terms/Acknowledgements: The undersigned Optionee acknowledges receipt
of, and understands and agrees to, this Grant Notice, the Stock Option Agreement
and the Plan. Optionee further acknowledges that as of the Date of Grant, this
Grant Notice, the Stock Option Agreement and the Plan set forth the entire
understanding between Optionee and the Company regarding the acquisition of
stock in the Company and supersede all prior oral and written agreements on that
subject with the exception of (i) options previously granted and delivered to
Optionee under the Plan, and (ii) the following agreements only:
Other Agreements: _______________________________________
_______________________________________
_______________________________________
<PAGE>
GENOMICA CORPORATION OPTIONEE:
By:___________________________________ ______________________________
Signature
Title:________________________________
Date:_________________________________ Date:_________________________
Attachment I: Stock Option Agreement
Attachment II: 1996 Stock Option Plan
Attachment III: Notice of Exercise
2.
<PAGE>
GENOMICA CORPORATION
STOCK OPTION AGREEMENT
Pursuant to the Grant Notice and this Stock Option Agreement, the Company
has granted you an option to purchase the number of shares of the Company's
common stock ("Common Stock") indicated in the Grant Notice at the exercise
price indicated in the Grant Notice.
Your option is granted in connection with and in furtherance of the
Company's compensatory benefit plan for the Company's employees (including
officers), directors or consultants, and is intended to comply with the
provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act"). Defined
terms not explicitly defined in this Stock Option Agreement but defined in the
Amended and Restated 1996 Stock Option Plan (the "Plan") shall have the same
definitions as in the Plan.
The details of your option are as follows:
1. Vesting. Subject to the limitations contained herein, your option will
vest as provided in the Grant Notice, provided that vesting will cease upon the
termination of your Continuous Service.
2. Method Of Payment. Payment of the exercise price by cash or check is
due in full upon exercise of all or any part of your option.
3. Whole Shares. Your option may only be exercised for whole shares.
4. Securities Law Compliance. In order for the option granted under this
agreement to be exercised, there must be an exemption from the Federal
Securities laws for the issuance of stock. In the event no such exemption is
available, you may be prohibited from exercising your option.
5. Term. The term of your option commences on the date of grant and
expires upon the earliest of:
(i) the Expiration Date indicated in the Grant Notice;
(ii) the day before the tenth (10th) anniversary of the Date of
Grant;
(iii) twelve (12) months after your death, if you die during, or
within three (3) months after the termination of your Continuous Service; or
(iv) twelve (12) months after the termination of your Continuous
Service due to disability; or
(v) three (3) months after the termination of your Continuous
Service for any other reason, provided that if: (a) during any part of such
three (3) month period the option is not exercisable solely because of the
condition set forth in paragraph 4 (Securities Law
1.
<PAGE>
Compliance), in which event the option shall not expire until the earlier of the
Expiration Date or until it shall have been exercisable for an aggregate period
of three (3) months after the termination of Continuous Service, and (b)
exercise of the option within three (3) months after termination of your
Continuous Service would result in liability under section 16(b) of the
Securities Exchange Act of 1934 (the "Exchange Act"), the option will expire on
the earliest of (i) the Expiration Date, (ii) the tenth (10th) day after the
last date upon which exercise would result in such liability or (iii) six (6)
months and ten (10) days after the termination of your Continuous Service.
The Company has provided for continued vesting or extended
exercisability of your option under certain circumstances for your benefit, but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option".
6. Exercise.
(a) You may exercise the vested portion of your option during its
term (and the unvested portion of your option if the Grant Notice so permits) by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require.
(b) By exercising your option you agree that:
(i) as a condition to any exercise of your option, the Company
may require you to enter into an arrangement providing for the payment by you to
the Company of any tax withholding obligation of the Company arising by reason
of (1) the exercise of your option; (2) the lapse of any substantial risk of
forfeiture as required by Section 83 of the Internal Revenue Code; or (3) the
disposition of shares acquired upon such exercise;
(ii) you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of an incentive stock option that occurs within two (2)
years after the date of your option grant or within one (1) year after such
shares of Common Stock are transferred upon exercise of your option; and
(iii) you will execute and deliver such other agreements as may
be reasonably requested by the Company and/or the underwriter(s) which are
consistent with the provisions of Section 9 below or which are necessary to give
further effect thereto.
7. Proprietary Information and Invention Agreement. You acknowledge that
by agreeing to enter into this Stock Option Agreement, you also agree to be
bound by the Company's Proprietary Information and Invention Agreement.
8. Transferability. Your option is not transferable, except by will or by
the laws of descent and distribution. Furthermore, during your lifetime, your
option may only be exercised by you. Upon your death, the person to whom your
rights have passed by will or by
2.
<PAGE>
the laws of descent and distribution may exercise your option, so long as they
comply with the Plan.
9. Market Standstill. In connection with the first underwritten
registration of the offering of any securities of the Company under the
Securities Act, you agree not to sell or otherwise transfer or dispose of any
shares of Common Stock or other securities of the Company during such period
(not to exceed one hundred eighty (180) days) following the effective date of
the registration statement of the Company filed under the Securities Act as may
be requested by the Company or the representative of the underwriters, provided
that all executive officers and directors of the Company have similarly agreed.
Furthermore, the Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such period.
10. Right of First Refusal. Before any shares of Common Stock (the
"Shares") issued upon exercise of an option to you or any transferee (either
being sometimes referred to herein as the "Holder") may be sold or otherwise
transferred (including transfer by gift or operation of law), the Company shall
have an assignable right of first refusal to purchase the Shares on the terms
and conditions set forth in this Section 10 (the "Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer the Shares; (ii) the name of
each proposed purchaser or other transferee (the "Proposed Transferee"); (iii)
the number of Shares to be transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which the Holder proposed to
transfer the Shares (the "Offered Price"); and the Holder shall offer to sell
the Shares at the Offered Price to the Company.
(b) Exercise of Right of First Refusal. At any time within thirty (30)
days after receipt of the Notice, the Company or its assignee may, by giving
written notice to the Holder, elect to purchase all (but not less than all) of
the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the Offered Price.
(c) Payment. Payment of the purchase price shall be made, at the
option of the Company or its assignee, either (i) in cash (by check) or (ii) in
the manner and at the time(s) set forth in the Notice.
(d) Holder's Right to Transfer. If all the Shares proposed in the
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee as provided in this Section 10, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided, that, such sale or other transfer
is consummated within one hundred twenty (120) days after the date of the Notice
and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws. If the Shares described in the
Notice are not transferred to the Proposed Transferee within such period, a new
Notice shall be given to the Company, and the Company shall again be offered the
Right of First Refusal, before any Shares held by the Holder may be sold or
otherwise transferred.
3.
<PAGE>
(e) Exception for Certain Family Transfers. Anything to the contrary
contained in this Section 10 notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to Optionee's immediate family or to a trust for the benefit of
Optionee or Optionee's immediate family shall be exempt from the provisions of
this Section 10; provided that, as a condition to receiving the Shares, the
transferee or other recipient shall agree in writing to receive and hold the
Shares so transferred subject to the provisions of the Plan, and to transfer
such Shares no further except in accordance with the terms of the Plan. As used
herein, "immediate family" shall mean spouse, lineal descendant or antecedent,
father, mother, brother or sister.
(f) Termination of Right of First Refusal. The Right of First Refusal
shall terminate as to any Shares upon the first sale of Common Stock of the
Company to the general public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission (other than a
registration statement solely covering an employee benefit plan or corporate
reorganization).
11. Option Not a Service Contract. Your option is not an employment
contract and nothing in your option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company. In addition,
nothing in your option shall obligate the Company, or any Affiliate of the
Company, or their respective stockholders, Board of Directors, officers or
employees to continue any relationship which you might have as a Director or
Consultant for the Company.
12. Notices. Any notices provided for in your option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after deposit in
the United States mail, postage prepaid, addressed to you at the last address
you provided to the Company.
13. Governing Plan Document. Your option is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of your option,
including without limitation the provisions of the Plan relating to option
provisions, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option and
those of the Plan, the provisions of the Plan shall control.
4.
<PAGE>
EXHIBIT 10.22
GENOMICA CORPORATION
STOCK OPTION GRANT NOTICE
2000 Equity Incentive Plan
Genomica Corporation (the "Company"), pursuant to its 2000 Equity Incentive Plan
(the "Plan"), hereby grants to Participant an option to purchase the number of
shares of the Company's Common Stock set forth below. This option is subject to
all of the terms and conditions as set forth herein and in the Stock Option
Agreement, the Plan and the Notice of Exercise, all of which are attached hereto
and incorporated herein in their entirety.
Participant: ------------------------------------------
Date of Grant: ------------------------------------------
Vesting Commencement Date: ------------------------------------------
Number of Shares Subject to Option: ------------------------------------------
Exercise Price (Per Share): ------------------------------------------
Total Exercise Price: ------------------------------------------
Expiration Date: ------------------------------------------
Type of Grant: [ ] Incentive Stock Option [ ] Nonstatutory Stock Option
Exercise Schedule: [ ] Same as Vesting Schedule [ ] Early Exercise Permitted
Vesting Schedule: 1/4th of the shares vest one year after the Vesting
Commencement Date.
1/48th of the shares vest monthly thereafter over the
next three years.
Payment: By one or a combination of the following items (described
in the Stock Option Agreement):
[ ] By cash or check
[ ] Pursuant to a Regulation T Program if the Shares
are publicly traded
[ ] By delivery of already-owned shares if the
Shares are publicly traded
[ ] By deferred payment
Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Grant Notice, the Stock Option
Agreement and the Plan. Optionholder further acknowledges that as of the Date
of Grant, this Grant Notice, the Stock Option Agreement and the Plan set forth
the entire understanding between Optionholder and the Company regarding the
acquisition of stock in the Company and supersede all prior oral and written
agreements on that subject with the exception of (i) options previously granted
and delivered to Optionholder under the Plan, and (ii) the following agreements
only:
Other Agreements: ---------------------------------------
---------------------------------------
GENOMICA CORPORATION Participant:
By:
------------------------------------ ------------------------------------
Signature Signature
Title: Date:
--------------------------------- -------------------------------
Date:
----------------------------------
Attachments: Stock Option Agreement
2000 Equity Incentive Plan
Notice of Exercise
<PAGE>
Attachment I
STOCK OPTION AGREEMENT
<PAGE>
Attachment II
2000 EQUITY INCENTIVE PLAN
<PAGE>
Attachment III
NOTICE OF EXERCISE
<PAGE>
GENOMICA CORPORATION
2000 Equity Incentive Plan
Stock Option Agreement
(Incentive and Nonstatutory Stock Options)
Pursuant to the Stock Option Grant Notice ("Grant Notice") and this Stock
Option Agreement, Genomica Corporation (the "Company") has granted you
("Participant") an option under its 2000 Equity Incentive Plan (the "Plan") to
purchase the number of shares of the Company's Common Stock indicated in the
Grant Notice at the exercise price indicated in the Grant Notice. Defined terms
not explicitly defined in this Stock Option Agreement but defined in the Plan
shall have the same definitions as in the Plan.
The details of your option are as follows:
1. Vesting. Subject to the limitations contained herein, your option will
vest as provided in the Grant Notice, provided that vesting will cease upon the
termination of your Continuous Service.
2. Number of Shares and Exercise Price. The number of shares subject to
your option and your exercise price per share referenced in the Grant Notice may
be adjusted from time to time for Capitalization Adjustments, as provided in the
Plan.
3. Exercise prior to Vesting ("Early Exercise"). If permitted in the Grant
Notice (i.e., the "Exercise Schedule" indicates that "Early Exercise" of your
option is permitted) and subject to the provisions of this option, you may elect
at any time that is both (i) during the period of your Continuous Service and
(ii) during the term of your option, to exercise all or part of your option,
including the nonvested portion of your option; provided, however, that:
(a) a partial exercise of your option shall be deemed to cover first
vested shares and then the earliest vesting installment of unvested shares;
(b) any shares so purchased from installments which have not vested as
of the date of exercise shall be subject to the purchase option in favor of the
Company as described in the Company's form of Early Exercise Stock Purchase
Agreement;
(c) you shall enter into the Company's form of Early Exercise Stock
Purchase Agreement with a vesting schedule that will result in the same vesting
as if no early exercise had occurred; and
(d) if your option is an incentive stock option, then, as provided in
the Plan, to the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which your option plus all other
incentive stock options you hold are exercisable for the first time by you
during any calendar year (under all plans of the Company and its Affiliates)
exceeds one hundred thousand dollars ($100,000), the options or portions thereof
that exceed such limit (according to the order in which they were granted) shall
be treated as nonstatutory stock options.
1
<PAGE>
4. Method of Payment. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of
the exercise price in cash or by check or in any other manner permitted by the
Grant Notice, which may include one or more of the following:
(a) In the Company's sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board which,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, by delivery of already-
owned shares of Common Stock that either have been held for the period required
to avoid a charge to the Company's reported earnings (generally six months) or
were not acquired, directly or indirectly from the Company, that are owned free
and clear of any liens, claims, encumbrances or security interests, and that are
valued at Fair Market Value on the date of exercise. "Delivery" for these
purposes, in the sole discretion of the Company at the time your option is
exercised, shall include delivery to the Company of your attestation of
ownership of such shares of Common Stock in a form approved by the Company.
Notwithstanding the foregoing, your option may not be exercised by tender to the
Company of Common Stock to the extent such tender would constitute a violation
of the provisions of any law, regulation or agreement restricting the redemption
of the Company's stock.
5. Whole Shares. Your option may only be exercised for whole shares.
6. Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, your option may not be exercised unless the shares issuable
upon exercise of your option are then registered under the Securities Act or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act. The exercise of your option must also comply with other
applicable laws and regulations governing the option, and the option may not be
exercised if the Company determines that the exercise would not be in material
compliance with such laws and regulations.
7. Term. The term of your option commences on the Date of Grant and
expires upon the earliest of the following:
(a) three (3) months after the termination of your Continuous Service
for any reason other than Disability or death, provided that if during any part
of such three (3) month period the option is not exercisable solely because of
the condition set forth in paragraph 6, the option shall not expire until the
earlier of the Expiration Date or until it shall have been
2
<PAGE>
exercisable for an aggregate period of three (3) months after the termination of
your Continuous Service;
(b) twelve (12) months after the termination of your Continuous
Service due to Disability;
(c) eighteen (18) months after your death if you die either during
your Continuous Service or within three (3) months after your Continuous Service
terminates ;
(d) the Expiration Date indicated in the Grant Notice; or
(e) the tenth (10th) anniversary of the Date of Grant.
If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an "incentive stock option," the
Code requires that at all times beginning on the date of grant of the option and
ending on the day three (3) months before the date of the option's exercise, you
must be an employee of the Company or an Affiliate, except in the event of your
death or your Disability. The Company has provided for extended exercisability
of your option under certain circumstances for your benefit, but cannot
guarantee that your option will necessarily be treated as an "incentive stock
option" if you provide services to the Company or an Affiliate as a Consultant
or Director or if you exercise your option more than three (3) months after the
date your employment with the Company or an Affiliate terminates.
8. Exercise.
(a) You may exercise the vested portion of your option (and the
unvested portion of your option if the Grant Notice so permits) during its term
by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.
(b) By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter an arrangement
providing for the payment by you to the Company of any tax withholding
obligation of the Company arising by reason of (1) the exercise of your option,
(2) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise, or (3) the disposition of shares acquired upon
such exercise.
(c) If your option is an incentive stock option, by exercising your
option you agree that you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of your option that occurs within two (2) years after the
date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.
(d) By exercising your option you agree that the Company (or a
representative of the underwriters) may, in connection with the first
underwritten registration of the offering of
3
<PAGE>
any securities of the Company under the Securities Act, require that you not
sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any shares of Common Stock or other securities of the
Company held by you, for a period of time specified by the underwriter(s) (not
to exceed one hundred eighty (180) days) following the effective date of the
registration statement of the Company filed under the Securities Act. You
further agree to execute and deliver such other agreements as may be reasonably
requested by the Company and/or the underwriter(s) which are consistent with the
foregoing or which are necessary to give further effect thereto. In order to
enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to your Common Stock until the end of such period.
(e) No Transfer. Your option is not transferable, except by will or by
the laws of descent and distribution, and is exercisable during your life only
by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option.
9. Option not a Service Contract. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective shareholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.
10. Withholding Obligations.
(a) At the time your option is exercised, in whole or in part, or at any
time thereafter as requested by the Company, you hereby authorize withholding
from payroll and any other amounts payable to you, and otherwise agree to make
adequate provision for (including by means of a "same day sale" pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or
an Affiliate, if any, which arise in connection with your option.
(b) Upon your request and subject to approval by the Company, in its sole
discretion, and compliance with any applicable conditions or restrictions of
law, the Company may withhold from fully vested shares of Common Stock otherwise
issuable to you upon the exercise of your option a number of whole shares having
a Fair Market Value, determined by the Company as of the date of exercise, not
in excess of the minimum amount of tax required to be withheld by law. If the
date of determination of any tax withholding obligation is deferred to a date
later than the date of exercise of your option, share withholding pursuant to
the preceding sentence shall not be permitted unless you make a proper and
timely election under Section 83(b) of the Code, covering the aggregate number
of shares of Common Stock acquired upon such exercise with respect to which such
determination is otherwise deferred, to accelerate the determination of such tax
withholding obligation to the date of exercise of your option.
4
<PAGE>
Notwithstanding the filing of such election, shares shall be withheld solely
from fully vested shares of Common Stock determined as of the date of exercise
of your option that are otherwise issuable to you upon such exercise. Any
adverse consequences to you arising in connection with such share withholding
procedure shall be your sole responsibility.
Your option is not exercisable unless the tax withholding obligations of the
Company and/or any Affiliate are satisfied. Accordingly, you may not be able to
exercise your option when desired even though your option is vested, and the
Company shall have no obligation to issue a certificate for such shares or
release such shares from any escrow provided for herein.
11. Notices. Any notices provided for in your option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after deposit in
the United States mail, postage prepaid, addressed to you at the last address
you provided to the Company.
12. Governing Plan Document. Your option is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of your option, and
is further subject to all interpretations, amendments, rules and regulations
which may from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of your option and those of the
Plan, the provisions of the Plan shall control.
5
<PAGE>
EXHIBIT 10.23
Lease
by and between
Boulder 38/TH/ LLC
and
Genomica Corporation
December 30, 1999
<PAGE>
<TABLE>
<S> <C>
ARTICLE I - REFERENCE DATA.................................................................................. 1
1.1 BASIC LEASE TERMS.................................................................................. 1
-----------------
1.2 EXHIBITS........................................................................................... 3
--------
ARTICLE II - PREMISES AND TERM.............................................................................. 3
2.1 PREMISES........................................................................................... 3
--------
2.2 APPURTENANT RIGHTS AND RESERVATIONS................................................................ 3
-----------------------------------
2.3 TERM............................................................................................... 3
----
ARTICLE III - DELIVERY OF PREMISES; CONSTRUCTION............................................................ 3
3.1 INITIAL CONSTRUCTION............................................................................... 3
--------------------
3.2 DELIVERY OF POSSESION AND COMMENCEMENT DATE........................................................ 4
-------------------------------------------
3.3 CONCLUSIVENESS OF LANDLORD'S PERFORMANCE........................................................... 4
----------------------------------------
3.4 GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION...................................................... 4
---------------------------------------------
ARTICLE IV - RENT........................................................................................... 5
4.1 BASE RENT.......................................................................................... 5
---------
4.2 ADDITIONAL RENT.................................................................................... 6
---------------
4.3 REAL PROPERTY TAXES................................................................................ 7
-------------------
4.4 CAM EXPENSES....................................................................................... 7
------------
4.5 PAYMENTS........................................................................................... 8
--------
ARTICLE V - LANDLORD'S COVENANTS............................................................................ 9
5.1 LANDLORD'S COVENANTS DURING THE TERM............................................................... 9
------------------------------------
5.2 INTERRUPTIONS...................................................................................... 10
-------------
ARTICLE VI - TENANT'S COVENANTS............................................................................. 10
6.1 TENANT'S COVENANTS DURING THE TERM................................................................. 10
----------------------------------
ARTICLE VII - CASUALTY AND TAKING........................................................................... 16
7.1 CASUALTY AND TAKING................................................................................ 16
-------------------
7.2 RESERVATION OF AWARD............................................................................... 16
------------------------
ARTICLE VIII - RIGHTS OF MORTGAGEE.......................................................................... 16
8.1 SUBORDINATION...................................................................................... 16
-------------
8.2 SUCCESSOR LANDLORD................................................................................. 17
------------------
8.3 NO PREPAYMENT OR MODIFICATION, ETC................................................................. 18
----------------------------------
ARTICLE IX - DEFAULT........................................................................................ 18
9.1 EVENTS OF DEFAULT.................................................................................. 18
-----------------
9.2 TENANT'S OBLIGATIONS AFTER TERMINATION............................................................. 19
--------------------------------------
ARTICLE X - RIGHT OF RENEWAL; RIGHT OF FIRST NEGOTIATION.................................................... 20
10.1 RENEWAL OPTIONS................................................................................... 20
---------------
10.2 RIGHT OF FIRST NEGOTIATION........................................................................ 21
--------------------------
ARTICLE XI - MISCELLANEOUS.................................................................................. 21
11.1 NOTICES FROM ONE PARTY TO THE OTHER............................................................... 21
-----------------------------------
11.2 BIND AND INURE.................................................................................... 22
--------------
11.3 NO SURRENDER...................................................................................... 22
------------
11.4 NO WAIVER, ETC.................................................................................... 22
--------------
11.5 NO ACCORD AND SATISFACTION........................................................................ 22
--------------------------
11.6 CUMULATIVE REMEDIES............................................................................... 23
-------------------
11.7 LANDLORD'S RIGHT TO CURE.......................................................................... 23
------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
11.8 ESTOPPEL CERTIFICATE........................................................................... 23
--------------------
11.9 WAIVER OF JURY TRIAL........................................................................... 24
--------------------
11.10 ACTS OF GOD.................................................................................... 24
-----------
11.11 BROKERAGE...................................................................................... 24
---------
11.12 SUBMISSION NOT AN OFFER........................................................................ 24
-----------------------
11.13 APPLICABLE LAW AND CONSTRUCTION................................................................ 25
-------------------------------
11.14 SECURITY DEPOSIT............................................................................... 25
----------------
11.15 SIGNS.......................................................................................... 26
-----
EXHIBIT A - PLAN OF PREMISES................................................................................ A-1
EXHIBIT B - WORK LETTER..................................................................................... B-1
EXHIBIT C - IRREVOCABLE LETTER OF CREDIT.................................................................... C-1
</TABLE>
<PAGE>
ARTICLE I
REFERENCE DATA
1.1 BASIC LEASE TERMS.
Each reference in this Lease to any of the following subjects shall be
construed to incorporate the data stated for that subject in this Section 1.1:
LANDLORD: Boulder 38/th/ LLC, a Delaware limited
liability company
LANDLORD'S NOTICE ADDRESS: c/o Great Point Investors LLC 265
Franklin Street, 18/th/ Floor Boston,
MA 02110
Attn: John H. Baxter
with a copy to:
Bancroft Capital Advisors, Inc.
1112 Ocean Drive, Suite 300
Manhattan Beach, CA
Attn: Douglas J. McDonald
TENANT: Genomica Corporation
TENANT'S NOTICE ADDRESS: 1745 38/th/ Street
Boulder, CO
Attn: Dan Hudspeth
PREMISES: 24,000 rentable square feet in the
building commonly known as 1745 38/th/
Street, Boulder, Colorado (the
"Building"), which Premises are shown
on the plan attached to this Lease as
Exhibit A, together with the right, in
---------
common with others, to use certain
parking areas and other improvements
related to the Building and the
property known as 1715-1785 38/th/
Street (the "Property")
RENTABLE FLOOR AREA OF PREMISES: 24,000 rentable square feet
COMMENCEMENT DATE: Substantial completion of Landlord's
Work (as provided for in Section 3.1)
<PAGE>
BASE RENT COMMENCEMENT DATE: One month after the Commencement Date
BUILDING RENTABLE AREA: 55,645 rentable square feet
TENANT'S PRO RATA SHARE: 43%
EXPIRATION DATE: Five years from the Rent Commencement
Date
TERM: Approximately five years and one month
commencing on the Commencement Date and
expiring on the Expiration Date
LEASE YEAR: The period of twelve full calendar
months beginning with the first full
calendar month of the Term, and each
subsequent period of twelve full
calendar months during the Term
ANNUAL BASE RENT: Lease Year 1 $366,000
Lease Year 2 $376,980
Lease Year 3 $388,290
Lease Year 4 $399,939
Lease Year 5 $411,937
SECURITY DEPOSIT: Irrevocable letter of credit in the
following amounts:
Lease Year 1 $350,000
Lease Year 2 $315,000
Lease Year 3 $270,000
Lease Year 4 $215,000
Lease Year 5 $170,000
If the Tenant does not spend all of the
Tenant Improvement Allowance, the
Security Deposit shall be reduced by
the amount not expended.
PERMITTED USES: General office purposes
TENANT IMPROVEMENT ALLOWANCE: $216,000 ($9.00/RSF)
PARKING SPACES: 80 unreserved spaces
(3 spaces per 1,000 RSF)
BROKERS: Dean Callan & Company, Frederick Ross
Company and The Staubach Company
<PAGE>
1.2 EXHIBITS.
The exhibits listed below in this section are incorporated in this Lease by
reference and are to be construed as part of this Lease:
EXHIBIT A Plan of Premises
EXHIBIT B Work Letter
EXHIBIT C Form of Letter of Credit
ARTICLE II
PREMISES AND TERM
2.1 PREMISES.
Landlord hereby leases to Tenant, and Tenant leases from Landlord the
Premises for the rents hereinafter reserved, and upon and subject to the terms
and conditions of this Lease.
2.2 APPURTENANT RIGHTS AND RESERVATIONS.
Tenant shall have, as appurtenant to the Premises, the nonexclusive right
to use and to permit its invitees to use in common with others the Common Areas
(as defined in Section 4.4) of the Building. Such rights shall always be
subject to reasonable rules and regulations from time to time established by
Landlord by written notice to Tenant in advance and to the right of Landlord to
reasonably designate and change from time to time any Common Areas provided
Tenant is given written notice before any such change.
2.3 TERM.
The Premises are leased for the Term unless the Term shall sooner terminate
pursuant to any of the terms of this Lease or pursuant to Law.
ARTICLE III
DELIVERY OF PREMISES; CONSTRUCTION
3.1 INITIAL CONSTRUCTION.
As indicated in the Work Letter Agreement attached hereto as Exhibit B (the
---------
"Work Letter"), Landlord shall complete the Landlord's Work (as defined in the
Work Letter) on the terms, conditions and provisions set forth in the Work
Letter. Except for Landlord's Work, Landlord is leasing the Premises to Tenant
"as is," without any representations or warranties of any kind (including,
without limitation, any express or implied warranties of merchantability,
fitness or
<PAGE>
habitability), subject to all recorded matters, laws, ordinances, and
governmental regulations and orders.
3.2 DELIVERY OF POSSESION AND COMMENCEMENT DATE.
For purposes of determining the Commencement Date only, the Premises shall be
considered as delivered upon the first to occur of:
(a) the date on which (i) Landlord or Landlord's architect gives notice of
Substantial Completion (as hereinafter defined) of Landlord's Work; provided
that Substantial Completion has occurred on said date, and (ii) Landlord has
delivered actual possession of the Premises to Tenant free of all tenants and
occupants; or
(b) if the date of Substantial Completion of Landlord's Work is delayed by
reason of Tenant Delays (as defined in the Work Letter), the date on which, in
Landlord's reasonable judgment, Landlord's Work would have been Substantially
Completed but for such Tenant Delays.
"Substantial Completion" of Landlord's Work shall mean (i) completion of
----------------------
Landlord's Work except for items which can be completed after Tenant's occupancy
without undue interference with Tenant's use of the Premises ("Punchlist Items")
and (ii) the issuance of a certificate of occupancy for the Premises with
respect to Landlord's Work. Landlord shall use reasonable efforts to complete
all Punchlist Items within thirty days or, if such completion is not feasible
for any reason, as soon as conditions permit, and Tenant shall afford Landlord
access to the Premises for such purpose pursuant to the terms of this Lease,
provided that Landlord does not unreasonably interfere with Tenant's use or
occupancy of the Premises.
The Commencement Date shall not, however, be earlier than March 15, 2000.
3.3 CONCLUSIVENESS OF LANDLORD'S PERFORMANCE.
Except for latent defects, and except to the extent Tenant shall have given
Landlord notice not later than 90 days after the Commencement Date of defects in
Landlord's Work, Tenant shall have no claim that Landlord has failed to perform
any of Landlord's Work.
3.4 GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION.
Tenant shall not make any installations, alterations, additions, or
improvements in or to the Premises, including, without limitation, any apertures
in the walls, partitions, ceilings or floors, without on each occasion obtaining
the prior written consent of Landlord, which shall not be unreasonably withheld
or delayed. Tenant shall reimburse Landlord for all costs incurred by Landlord
or any Superior Mortgagee (as defined below) in reviewing Tenant's proposed
installation, alterations, additions or improvements, and provided further that,
in order to protect the functional integrity of the Premises, all such
installations, alterations, additions or
<PAGE>
improvements shall be performed by contractors selected from a list of approved
contractors prepared by Landlord from time to time. Any such work so approved by
Landlord shall be performed only in accordance with plans and specifications
therefor approved by Landlord. Tenant shall procure at Tenant's sole expense all
necessary permits and licenses before undertaking any work on the Premises and
shall perform all such work in a good and workmanlike manner employing materials
of good quality and so as to conform with all applicable insurance requirements,
laws, ordinances, regulations and orders of governmental authorities. Tenant
shall employ for such work only contractors approved by Landlord, which approval
shall not be unreasonably withheld, and shall require all contractors employed
by Tenant to carry worker's compensation insurance in accordance with statutory
requirements and commercial general liability insurance covering such
contractors on or about the Premises with a combined single limit not less than
$3,000,000 and shall submit certificates evidencing such coverage to Landlord
prior to the commencement of such work. Tenant shall indemnify and hold harmless
Landlord from all injury, loss, claims or damage to any person or property
occasioned by or growing out of such work. Landlord may inspect the work of
Tenant at reasonable times and give notice of observed defects. Upon completion
of any such work, Tenant shall provide Landlord with "as built" plans, copies of
all construction contracts and proof of payment for all labor and materials.
Tenant covenants and agrees that with respect to the carpentry work on any and
all alterations, improvements and/or additions that are made to the Premises,
Tenant's construction managers, general contractors and subcontractors shall be
signatory to and in good standing under the Carpenters Union collective
bargaining agreement covering the geographical area where the work is performed,
and with respect to non-carpentry work, wherever possible, such work shall be
performed by contractors signatory to and in good standing under the collective
bargaining agreement of the local building trades union affiliated with the
AFL-CIO which covers that work. If the construction manager, general contractor
and/or subcontractor with responsibility for the carpentry work is not signatory
to and in good standing under the Carpenters Union's collective bargaining
agreement, then the Landlord shall have the right, upon 24 hours' written notice
to Tenant, to order Tenant to cease all work on the Premises, in which event all
work then in progress shall be halted and shall not be recommenced until and
unless Tenant's construction manager, general contractor and/or subcontractor
becomes subject to or covered by and in good standing under the Carpenters
Union's collective bargaining agreement.
ARTICLE IV
RENT
4.1 BASE RENT.
Beginning on the Base Rent Commencement Date, Tenant agrees to pay rent to
Landlord without notice or demand and without any offset or reduction whatever
(except as made in accordance with the express provisions of this Lease), equal
to the Base Rent in equal installments in advance on the first day of each
calendar month included in the Term. If the Base Rent Commencement Date occurs
on a day other than the first day of a calendar month, Tenant
<PAGE>
shall pay to Landlord, on the Commencement Date, Base Rent for the partial month
after the Commencement Date at the proportionate rate payable for such portion.
4.2 ADDITIONAL RENT.
All sums payable by Tenant under this Lease other than Base Rent shall be deemed
"Additional Rent;" the term "Rent" shall mean Base Rent and Additional Rent.
Landlord shall reasonably estimate in advance by written notice to Tenant at
least thirty days in advance and beginning on the Commencement Date Tenant shall
pay the following costs (the "Total Operating Costs"), to be paid with the Base
Rent throughout the Term in equal monthly installments based on Landlord's most
recent reasonable estimate: (i) all Real Property Taxes for which Tenant is
liable under Section 4.3 of the Lease, (ii) all utility costs (if not separately
metered) for which Tenant is liable under Section 6.1.1 of the Lease, and (iii)
all CAM Expenses for which Tenant is liable under Section 4.4 of the Lease.
Landlord may adjust its estimates of Total Operating Costs at any time based
upon Landlord's experience and reasonable anticipation of costs, upon at least
ten business days prior written notice specifying the reasons for any
adjustments. Such adjustments shall be effective as of the next Rent payment
date after notice to Tenant. Within 90 days after the end of each fiscal year
(which shall be January 1 through December 31 for this Lease) during the Term,
Landlord shall deliver to Tenant a statement (the "Statement") prepared in
accordance with generally accepted accounting principles setting forth, in
reasonable detail, the Total Operating Costs paid or incurred by Landlord during
the preceding fiscal year. Within thirty days after Tenant's receipt of such
Statement, there shall be an adjustment made in good faith between Landlord and
Tenant, with payment to or credit given by Landlord (as the case may be) in
order that Landlord shall have received the actual amount of Total Operating
Costs for such period. Tenant (and its accountants and representatives) shall
have the right, within thirty days of receipt of the Statement, to notify
Landlord that it would like to audit Landlord's books and records with respect
to the Total Operating Costs. Such audit is to be at Tenant's sole cost and
expense (except as provided in the following sentence) and is to performed and
completed within two months of the receipt of the Statement by Tenant. . If
such audit reveals that Total Operating Costs billed to Tenant exceed the actual
Total Operating Costs by more than ten percent, Landlord shall pay to Tenant the
reasonable costs of such audit and Landlord will refund to Tenant the amount of
any such overpayment.
In addition to its obligation to pay Base Rent and Total Operating
Expenses, Tenant is required hereunder to pay directly to suppliers, vendors,
carriers, contractors, etc. certain insurance premiums, utility costs, personal
property taxes, cleaning and other expenses (collectively "Additional
Expenses"). If Landlord pays for any Additional Expenses in accordance with the
terms of this Lease, Tenant's obligation to reimburse such costs shall be an
Additional Rent obligation. Unless this Lease provides otherwise, Tenant shall
pay all Additional Rent then due with the next monthly installment of Base Rent
due after Tenant received written notice of the amount of such Additional Rent.
<PAGE>
4.3 REAL PROPERTY TAXES.
Tenant shall pay its Pro Rata Share of all Real Property Taxes on the
Property attributable to any period included in the Term; provided, however, if
the Term includes only a portion of a fiscal tax period, the Real Property Taxes
for such period shall be prorated according to the fraction of the total days in
such period falling within the Term, and Tenant shall be responsible for paying
only such prorated amount. The term "Real Property Taxes" shall mean taxes,
assessments (special, betterment, or otherwise), levies, fees, rent taxes,
impositions, excises, charges, water and sewer rents and charges, and all other
government levies and charges, general and special, ordinary and extraordinary,
foreseen and unforeseen, which are imposed or levied upon or assessed against
the Premises or any Rent or other sums payable by any tenants or occupants
thereof. If at any time during the term the present system of ad valorem
taxation of real property shall be changed so that in lieu of the whole or any
part of the ad valorem tax on real property, or in lieu of increases therein,
there shall be assessed on Landlord a capital levy or other tax on the gross
rents received with respect to the Property or a federal, state, county,
municipal, or other local income, franchise, excise or similar tax, assessment,
levy, or charge (distinct from any now in effect) measured by or based, in whole
or in part, upon gross rents, then all of such taxes, assessments, levies, or
charges, to the extent so measured or based, shall be deemed to be a Real
Property Tax. Notwithstanding any other provision of this Lease, Real Property
Taxes shall not include, and Tenant shall have no obligation to pay, any taxes
on Landlord's net income. Landlord shall have the right, but not the
obligation, to dispute any Real Property Taxes attributable to any fiscal tax
period included wholly or partially within the Term. The cost of such review
and/or contest shall be included in the calculation of Total Operating Costs.
4.4 CAM EXPENSES.
"CAM Expenses" are all out-of-pocket costs and expenses paid or incurred by
Landlord in connection with the operation and maintenance of the Common Areas
(as defined below), the Property and the repair and maintenance of the heating,
ventilation, air conditioning, plumbing, electrical, utility, and safety
systems, including, but not limited to, the following: gardening and
landscaping; snow removal; utility, water and sewage services for the Common
Areas or provided to all tenants of the Property; maintenance of signs; worker's
compensation insurance; personal property taxes; rental or lease payments for
rented or leased personal property used in the operation or maintenance of the
Common Areas; fees for required licenses and permits; routine maintenance,
repair and replacement of roof membrane, flashings, gutters, downspouts, roof
drains, skylights and waterproofing; repair, maintenance and replacement of
paving (including sweeping, striping, repairing, resurfacing and repaving);
general maintenance; painting; lighting; cleaning; refuse removal; payroll of
maintenance personnel and management personnel not above the level of property
manager; security guards; a property management fee (not to exceed 5% of the net
income of the Property); and premiums for the insurance carried by Landlord
pursuant to Section 5.1.4 of this Lease. Notwithstanding any other provision of
this Lease, CAM Expenses shall not, however, include the following: leasing
commissions,
<PAGE>
advertising expenses, legal fees and other costs in leasing and procuring new
tenants for the Property; expenditures for capital improvements except (i)
capital expenditures which Landlord reasonably anticipates will have the effect
of reducing current and/or future CAM Expenses and (ii) capital expenditures
required by laws enacted or regulations promulgated after the date of this lease
(provided, however, only an amortized portion of any capital expenditures
permitted to be included in CAM Expenses shall be included in CAM Expenses for
the year in which the expenditures are incurred and subsequent years, on a
straight line basis, over an appropriate useful life, with an interest factor
reasonably determined by Landlord at the time of Landlord's having incurred said
expenditure); cost of repairs or replacements incurred by reason of fire or
other casualty or by the exercise of the right of eminent domain to the extent
to which Landlord is compensated therefor through proceeds of insurance or a
condemnation award; accounting and legal fees and other expenses incurred in
disputes with tenants; costs incurred in performing work or furnishing services
exclusively to or for the benefit of individual tenants or prospective tenants
and which are separately billed to such tenants, including, but not limited to
painting, redecorating and after hours HVAC; payments of principal, interest and
other charges under any Superior Mortgage or rent and other charges payable
under any Superior Lease; salaries, wages, benefits and other expenses of
administrative employees and other employees involved in the operation or
management of the Property above the level of property manager; compensation
paid to employees or other persons in connection with commercial concessions
operated by Landlord; and Landlord's general overhead not directly related to
the operation or maintenance of the Property.
As used in this Lease, "Common Areas" shall mean all areas within the
Property (and located on property adjacent to the Property of which the Property
has the beneficial use) which are not part of the rentable areas of the
Property, including, but not limited to, lobbies, loading docks, parking areas,
driveways, sidewalks, access roads, landscaping, and planted areas. Landlord,
from time to time, may change the size, location, nature, and use of any of the
Common Areas, convert Common Areas into leasable areas, construct additional
parking facilities (including parking structures), and increase or decrease
Common Area land or facilities. Tenant acknowledges that such activities may
result in inconvenience to Tenant.
4.5 PAYMENTS.
All payments of Rent shall be made to Landlord at Landlord's Notice
Address, or to such other person as Landlord may from time to time designate by
written notice to Tenant. If any installment of Rent is paid more than 5 days
after the due date thereof, at Landlord's election, it shall bear interest from
such due date at a rate equal to the average prime commercial rate from time to
time established by BankBoston plus 4% per annum, which interest shall be
immediately due and payable as further Additional Rent. Interest shall not,
however, be charged with respect to the first two times, if any, in each Lease
Year, that a Rent payment is more than 5 days late.
<PAGE>
ARTICLE V
LANDLORD'S COVENANTS
5.1 LANDLORD'S COVENANTS DURING THE TERM.
Landlord covenants during the Term:
5.1.1 Repairs and Maintenance. Except as provided in Article VII, Landlord
-----------------------
shall perform all maintenance, repairs and replacements necessary to keep in
good condition and working order, and in compliance with all applicable laws,
the foundation, columns, exterior walls, floors, roof and other structural
elements of the Building (collectively, "Structural Components"), and the
outdoor lighting, sprinkler system, Building electrical system, Building pipes
and plumbing system, all Common Areas, the HVAC system and all other mechanical
systems and equipment of the Building. Within a reasonable time after receiving
actual knowledge thereof, Tenant shall notify Landlord of any maintenance within
the Premises that Landlord is obligated to perform pursuant to this Section
5.1.1.
5.1.2 Quiet Enjoyment. That Landlord has the right to make this Lease and
---------------
that Tenant on paying the Rent and performing its obligations hereunder shall
peacefully and quietly have, hold and enjoy the Premises throughout the Term
without any manner of hindrance or molestation from Landlord or anyone claiming
under Landlord, subject however to all the terms and provisions hereof.
5.1.3 Insurance. During the Term, Landlord shall maintain in effect all
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risk insurance covering loss of or damage to the Building and other improvements
at the Property in the amount of its replacement value with such endorsements
and deductibles as Landlord shall reasonably determine from time to time.
Landlord shall have the right to obtain flood, earthquake, and such other
insurance as Landlord shall reasonably determine from time to time or shall be
required by any lender holding a security interest in the Premises. Landlord
shall not obtain insurance for Tenant's trade fixtures, equipment or building
improvements. During the Term, Landlord shall also maintain a rental income
insurance policy, with loss payable to Landlord, in an amount equal to one
year's Base Rent, plus estimated Real Property Taxes, Operating Costs, and
insurance premiums. Tenant shall not do or permit anything to be done which
shall invalidate any such insurance. Any policy obtained by Landlord shall not
be contributory, shall not provide primary insurance, and shall be excess over
any insurance maintained by Tenant. Landlord shall also maintain during the Term
a policy of general liability insurance with respect to the Premises naming
Tenant as an additional insured, with a cross-liability endorsement.
5.1.4 Tenant's Access. Tenant shall have access to the Premises at all
---------------
times (24 hours each day and seven days each week).
<PAGE>
5.2 INTERRUPTIONS.
Landlord shall not be liable to Tenant for any compensation or reduction of
Rent by reason of inconvenience or annoyance or for loss of business arising
from power losses or shortages or from the necessity of Landlord's entering the
Premises for any of the purposes in this Lease authorized, or for repairing the
Premises or any portion thereof unless such event is caused by Landlord's
negligence. In case Landlord is prevented or delayed from making any repairs,
alterations or improvements, or furnishing any service or performing any other
covenant or duty to be performed on Landlord's part, by reason of any cause
beyond Landlord's reasonable control, Landlord shall not be liable to Tenant
therefor, nor, except as expressly otherwise provided in Article VII, shall
Tenant be entitled to any abatement or reduction of rent by reason thereof, nor
shall the same give rise to a claim in Tenant's favor that such failure
constitutes actual or constructive, total or partial, eviction from the
Premises.
Landlord reserves the right to stop any service or utility system when
necessary by reason of accident or emergency acting in good faith, until
necessary repairs have been completed. Except in case of emergency repairs,
Landlord will give Tenant reasonable advance written notice of any contemplated
stoppage and will use reasonable efforts to avoid unnecessary inconvenience to
Tenant by reason thereof.
Landlord also reserves the right, by written notice to Tenant at least 10
days in advance, to institute such policies, programs and measures as may be
required to comply with applicable codes, rules, regulations or standards.
ARTICLE VI
TENANT'S COVENENTS
6.1 TENANT'S COVENANTS DURING THE TERM.
Tenant covenants during the Term and such further time as Tenant occupies
any part of the Premises:
6.1.1 Tenant's Payments. To pay when due (a) all Base Rent and Additional
-----------------
Rent, (b) all taxes which may be imposed on Tenant's personal property in the
Premises (including, without limitation, Tenant's fixtures and equipment)
regardless to whomever assessed, (c) all charges by public utilities for
telephone, electricity and other utility services (including service inspections
therefor) rendered to the Premises, and (d) as Additional Rent, all other
charges payable to Landlord pursuant to this Lease.
6.1.2 Repairs and Yielding Up. Except as otherwise provided in Article
-----------------------
VII, at Tenant's sole expense to keep the Premises in as good order, repair and
condition as exists on the Commencement Date or in such improved condition as it
may be put during the Lease Term, reasonable wear and damage by fire, casualty
and eminent domain excepted, and to make all
<PAGE>
necessary and customary repairs thereto in order to do so; and at the expiration
or termination of this Lease peaceably to yield up the Premises and all changes
and additions therein in good order, repair and condition, first removing all
goods and effects of Tenant and any items, the removal of which is required by
agreement or specified herein to be removed at Tenant's election and which
Tenant elects to remove, and repairing all damage caused by such removal and
restoring the Premises and leaving them clean and neat.
6.1.3 Cleaning. At its sole cost and expense enter into a service contract
--------
to provide for the cleaning of the Premises. Such cleaning contracts and the
vendors thereunder shall be subject to Landlord's reasonable approval.
6.l.4 Occupancy and Use. Continuously from the Commencement Date, to use
-----------------
and occupy the Premises only for the Permitted Uses; not to injure or deface the
Premises; and not to permit in the Premises any use thereof which is contrary to
law or ordinances, or creates a nuisance or to render necessary any alteration
or addition to the Building; not to dump, flush, or in any way introduce any
hazardous substances or any other toxic substances into the septic, sewage or
other waste disposal system serving the Premises, not to generate, store or
dispose of hazardous substances in or on the Premises or dispose of hazardous
substances from the Premises to any other location without the prior written
consent of Landlord, which shall not be unreasonably withheld, delayed or
conditioned, and then only in compliance with all applicable laws, ordinances
and regulations; to notify Landlord of any incident which would require the
filing of a notice under applicable federal, state, or local law; not to store
or dispose of hazardous substances on the Premises without first submitting to
Landlord a list of all such hazardous substances and all permits required
therefor and thereafter providing to Landlord on an annual basis Tenant's
certification that all such permits have been renewed with copies of such
renewed permits; and to comply with the orders and regulations of all
governmental authorities with respect to zoning, building, fire, health and
other codes, regulations, ordinances or laws, to the extent applicable to
Tenant's use of the Premises. "Hazardous substances" as used in this paragraph
shall mean "hazardous substances" as defined in the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S)9601
and regulations adopted pursuant to said Act, provided, however, "hazardous
substances" shall not include customary quantities of ordinary office and
cleaning products, fuel for any generators on the Premises.
6.1.5 Rules and Regulations/Security. To comply with any reasonable rules
------------------------------
and regulations hereafter made by Landlord, of which Tenant has been given
notice, for the care and use of the Premises and the Property. To provide, at
its sole cost and expense, any security system serving the Premises. Tenant
acknowledges that Landlord is not providing any security system or security
guards at the Property.
6.1.6 Safety Appliances. To keep the Premises equipped with all safety
-----------------
appliances required by law or ordinance or any other regulation of any public
authority because of any use made by Tenant and to procure all licenses and
permits so required because of such use and, if reasonably requested by
Landlord, to do any work so required because of such use, it being
<PAGE>
understood that the foregoing provisions shall not be construed to broaden in
any way Tenant's Permitted Uses.
6.1.7 Assignment and Subletting. Not without the prior written consent of
-------------------------
Landlord, which consent shall not be unreasonably withheld or delayed, to assign
this Lease, to make any sublease, or to permit occupancy of the Premises or any
part thereof by anyone other than Tenant, voluntarily or by operation of law; as
Additional Rent, to reimburse Landlord promptly for reasonable and customary
legal and other expenses (up to $1,500 per occurrence) incurred by Landlord or
any Superior Mortgagee in connection with any request by Tenant for consent to
assignment or subletting; no assignment or subletting shall affect the
continuing primary liability of Tenant (which, following assignment, shall be
joint and several with the assignee); no consent to any of the foregoing in a
specific instance shall operate as a waiver in any subsequent instance.
Landlord's consent to any proposed assignment or subletting is required both as
to the terms and conditions thereof, and as to the creditworthiness of the
proposed assignee or subtenant and the consistency of the proposed assignee's or
subtenant's business with the Permitted Uses of the Premises. In the event that
any assignee or subtenant pays to Tenant any consideration attributable to the
interest in this Lease or the Premises so assigned or subleased in excess of the
Rent then payable hereunder, or pro rata portion thereof on a square footage
basis for any portion of the Premises, after deducting Tenant's reasonable
attorneys' fees, brokerage commissions and other expenses relating to such
assignment or sublease, Tenant shall promptly pay 50% of said net excess to
Landlord as and when received by Tenant. If a Tenant requests Landlord's consent
to assign this Lease or sublet more than 1/3 of the Premises, or the assignment
or sublease term will begin three or fewer months before the end of the Lease
Term, Landlord shall have the option, exercisable by written notice to Tenant
given within 10 days after receipt of such request, to terminate this Lease as
of a date specified in such notice which shall be not less than 30 days after
the date of such notice.
Notwithstanding the foregoing, Tenant shall have the right, without Landlord's
consent, to assign this Lease to an affiliate of Tenant; provided, however,
Tenant shall provide Landlord fifteen (15) business days' prior written notice
to Landlord and shall provide evidence reasonably acceptable to Landlord that
the assignee shall have a net worth and creditworthiness at least equal to the
greater of (i) Tenant's net worth and creditworthiness on the date of this Lease
or (ii) Tenant's net worth and creditworthiness on the date of such notice.
6.l.8 Indemnity. To defend, with counsel approved by Landlord, all actions
---------
against Landlord, its officers, directors, members, employees, agents, advisors
and contractors and all others who could be liable for the obligations of any of
them, and any holders of mortgages secured by the Property ("Indemnified
Parties") with respect to, and to indemnify and save harmless, to the extent
permitted by law, all Indemnified Parties from and against, any and all
liabilities, losses damages, costs, expenses (including reasonable attorneys'
fees and expenses), causes of action, suits, claims, demands or judgments of any
nature (a) to which any Indemnified Party is subject because of its estate or
interest in the Property, or (b) arising from (i) injury to or death of any
person, or damage to or loss of property, on the Property, or connected with the
use, condition or occupancy of any thereof, (ii) a breach of Tenant's
obligations under this Lease, or (iii) any act, negligence or willful misconduct
of Tenant or its employees, agents, contractors,
<PAGE>
licensees, sublessees or invitees; except to the extent arising from the gross
negligence or willful misconduct of Landlord or any Indemnified Party.
6.1.9 Tenant's Liability Insurance.
----------------------------
a. Liability Insurance. To maintain in effect commercial general
-------------------
liability insurance insuring Tenant against liability for bodily injury,
property damage (including loss of use of property) and personal injury at the
Premises. Such insurance shall name Landlord, its property manager, any
mortgagee of which Tenant has received written notice, and Great Point Investors
LLC, as additional insureds. The initial amount of such insurance shall be One
Million Dollars ($1,000,000) per occurrence, Two Million Dollars ($2,000,000) in
the aggregate, and shall be subject to reasonable periodic increases specified
by Landlord based upon inflation, increased liability awards, recommendation of
Landlord's professional insurance advisers, and other relevant factors. The
liability insurance obtained by Tenant under this Section 6.1.8 shall (i) be
primary and (ii) insure Tenant's obligation to Landlord under Section 6.1.7
under a standard contractual liability endorsement. The amount and coverage of
such insurance shall not limit Tenant's liability nor relieve Tenant of any
other obligation under this Lease.
b. Worker's Compensation Insurance. To maintain in effect Worker's
-------------------------------
Compensation Insurance (including Employees' Liability Insurance) in the
statutory amount covering all employees of Tenant employed or performing
services at the Premises, in order to provide the statutory benefits required by
the laws of the state in which the Premises are located.
c. Automobile Liability Insurance. To maintain in effect
------------------------------
Automobile Liability Insurance, including but not limited to, passenger
liability, on all owned, nonowned, and hired vehicles used in connection with
the Premises, with a combined single limit per occurrence of not less than One
Million Dollars ($1,000,000) per vehicle for injuries or death of one or more
persons or loss or damage to property.
d. Personal Property Insurance. To maintain in effect Personal
---------------------------
Property Insurance covering Tenant's personal property and trade fixtures from
time to time in, on, or at the Premises, in an amount not less than 100% of the
full replacement cost, without deduction for depreciation, providing protection
against events protected under "All Risk Coverage," as well as against sprinkler
damage, vandalism, and malicious mischief. Any proceeds from the Personal
Property Insurance shall be used for the repair or replacement of the property
damaged or destroyed, unless this Lease is terminated under an applicable
provision herein.
e. Business Interruption Insurance. To maintain in effect Business
-------------------------------
Interruption Insurance, providing in the event of damage or destruction of the
Premises an amount sufficient to sustain Tenant for a period of not less than
one year for: (i) the net profit that would have been realized had Tenant's
business continued; and (ii) such fixed charges and expenses as must necessarily
continue during a total or partial suspension of business to the extent to which
they would have been incurred had no business interruption occurred, including,
but not limited to, interest on indebtedness of Tenant, salaries of executives,
foremen, and other employees under contract, charges under noncancelable
contracts, charges for advertising, legal
<PAGE>
or other professional services, taxes and rents that may still continue, trade
association dues, insurance premiums, and depreciation.
f. General Insurance Provisions.
----------------------------
(i) Any insurance which Tenant shall be required to maintain
under this Lease shall include a provision which requires the insurance carrier
to give Landlord not less than 30 days' written notice prior to any cancellation
or modification of such coverage.
(ii) Prior to the earlier of Tenant's entry into the Premises
or the Commencement Date, Tenant shall deliver to Landlord an insurance company
certificate that Tenant maintains the insurance required by Sections 6.1.8(a)-
(e) and not less than 30 days prior to the expiration or termination of any such
insurance, Tenant shall deliver to Landlord renewal certificates therefor.
Tenant shall provide Landlord with copies of the policies promptly upon request
from time to time. If Tenant shall fail to deliver any certificate or renewal
certificate to Landlord required under this Lease within the prescribed time
period or if any such policy shall be canceled or modified in a manner
materially adverse to Landlord during the Lease Term without Landlord's consent,
Landlord may, after notice and the expiration of the applicable grace period,
obtain such insurance, in which case Tenant shall reimburse Landlord, as
Additional Rent, for the cost of procuring such insurance within 10 days after
receipt of a statement of the cost of such insurance. Each time, if any, Tenant
exercises a renewal right pursuant to Article 10 of this Lease, Landlord shall
have the right to reasonably adjust or modify the terms of Tenant's insurance
requirements hereunder.
(iii) Tenant shall maintain all insurance required under this
Lease with companies having a "General Policy Rating" of A-X or better, as set
forth in the most current issue of the Best Key Rating Guide. Landlord and
Tenant, on behalf of themselves and their insurers, each hereby waive any and
all rights of recovery against the other, or against the officers, partners,
members, employees, agents, or representatives of the other, for loss of or
damage to its property or the property of others under its control, if such loss
or damage shall be covered by any insurance policy in force (whether or not
described in this Lease) at the time of such loss or damage. All property
insurance carried by either party shall contain a waiver of subrogation against
the other party to the extent such right shall have been waived by the insured
party prior to the occurrence of loss or injury.
6.1.10 Landlord's Right of Entry. To permit Landlord and Landlord's agents
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entry upon reasonable advance notice and without material interference with
Tenant's use of the Premises: to examine the Premises at reasonable times and,
if Landlord shall so elect, to make repairs or replacements as required or
permitted by this Lease; to remove, at Tenant's expense, any changes, additions,
signs, curtains, blinds, shades, awnings, aerials, flagpoles, or the like not
consented to in writing (to the extent required under this Lease); and to show
the Premises to prospective tenants during the 12 months preceding expiration of
the Term and to prospective purchasers and mortgagees at all reasonable times.
<PAGE>
6.1.11 Loading. Not to place Tenant's property (as described in Section
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6.1.12), upon the Premises so as to exceed the floor load capacities; Tenant's
business machines and mechanical equipment which cause vibration or noise that
may be transmitted to the Building structure shall be placed and maintained by
Tenant in settings of cork, rubber, spring, or other types of vibration
eliminators sufficient to eliminate such vibration or noise,
6.1.12 Landlord's Costs. In case Landlord shall be made party to any
----------------
litigation commenced by or against Tenant or by or against any parties in
possession of the Premises or any part thereof claiming under Tenant, except any
litigation arising out of a breach by Landlord of its obligations under this
Lease or the negligence or willful misconduct of Landlord or its agents,
employees or contractors (unless Landlord is the prevailing party in such
litigation), to pay, as Additional Rent, all reasonable costs including, without
implied imitation, reasonable counsel fees incurred by or imposed upon Landlord
in connection with such litigation and, as Additional Rent, also to pay all such
costs and fees incurred by Landlord in connection with the successful
enforcement by Landlord of any obligations of Tenant under this Lease.
6.l.l3 Tenant's Property. All the furnishings, fixtures, equipment,
-----------------
effects and property of every kind, nature and description of Tenant and of all
persons claiming by, through or under Tenant which, during the continuance of
this Lease or any occupancy of the Premises by Tenant or anyone claiming under
Tenant, may be on the Premises, shall be at the sole risk and hazard of Tenant,
and if the whole or any part thereof shall be destroyed or damaged by fire,
water or otherwise, or by the leakage or bursting of water pipes, steam pipes,
or other pipes, by theft, or from any other cause, no part of said loss or
damage is to be charged to or to be borne by Landlord, unless due to the gross
negligence of Landlord.
6.1.14 Labor or Materialmen's Liens. To pay promptly when due the entire
----------------------------
cost of any work done on the Premises by Tenant, its agents, employees, or
independent contractors; not to cause or permit any liens for labor or materials
performed or furnished in connection therewith to attach to the Premises; and to
discharge any such liens which may so attach within five business days after
receiving notice of such liens. Notwithstanding the foregoing, if Tenant is in
a dispute with another party with respect to work performed at the Premises,
Tenant may withhold payment provided that Tenant posts a bond reasonably
acceptable to Landlord pending the resolution of such dispute.
6.l.l5 Holdover. (A) (i) For the first two months or portion thereof that
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Tenant shall retain possession of the Premises, to pay Landlord 150% of the
total of the Base Rent and Additional Rent then applicable for each month or
portion thereof and (ii) thereafter, to pay Landlord 200% of the greater of the
total of the Base Rent and Additional Rent then applicable for each month or
portion thereof; and (B) also to pay all damages sustained by Landlord on
account thereof. The provisions of this Subsection 6.1.15 shall not operate as
a waiver by Landlord of the right of re-entry provided in this Lease.
<PAGE>
ARTICLE VII
CASUALTY AND TAKING
7.1 CASUALTY AND TAKING.
In case during the Term all or any substantial part of the Premises, are
damaged materially by fire or any other cause, or by action of public or other
authority in consequence thereof, or are taken by eminent domain, either
Landlord or Tenant shall have the right to terminate this Lease, by notice to
Tenant within 30 days after the occurrence of the event giving rise to the
election to terminate, which notice shall specify the effective date of
termination which shall be not less than 30 nor more than 60 days after the date
of notice of such termination. If Landlord does not terminate this Lease as
provided above, Landlord shall use due diligence to restore the Premises, or, in
case of a taking, what may remain thereof (excluding any items installed or paid
for by Tenant which Tenant may be required or permitted to remove) into proper
condition for use and occupation to the extent permitted by the net award of
insurance or damages available to Landlord, and a just proportion of the Base
Rent according to the nature and extent of the injury shall be abated until the
Premises or such remainder shall have been restored by Landlord to such
condition; and in case of a taking which permanently reduces the area of the
Premises, a just proportion of the Base Rent and shall be abated for the
remainder of the Term.
7.2 RESERVATION OF AWARD.
Landlord reserves to itself any and all rights to receive awards made for
damages to the Premises and the leasehold hereby created, accruing by reason of
exercise of eminent domain or by reason of anything lawfully done in pursuance
of public or other authority. Tenant hereby releases and assigns to Landlord all
Tenant's rights to such awards, and covenants to deliver such further
assignments and assurances thereof as Landlord may from time to time request.
and hereby irrevocably designates and appoints Landlord its attorney- in-fact to
execute and deliver in Tenant's name and behalf all such further assignments
thereof. It is agreed and understood, however, that Landlord does not reserve to
itself, and Tenant does not assign to Landlord, any damages payable for (i)
trade fixtures installed by Tenant or anybody claiming under Tenant, at its own
expense or (ii) relocation expenses recoverable by Tenant from such authority in
a separate action.
ARTICLE VIII
RIGHTS OF MORTGAGEE
8.1 SUBORDINATION.
This Lease and all rights of Tenant hereunder shall be subject and
subordinate in all respects to (a) all present and future ground leases,
operating leases, superior leases, overriding
<PAGE>
leases and underlying leases and grants of term of the Premises or any portion
thereof (collectively, including the applicable items set forth in Subdivision
(d) of this Section 8.1, the "Superior Lease") whether or not the Superior Lease
shall also cover other lands or buildings, (b) all mortgages and building loan
agreements, including leasehold mortgages, which may now or hereafter affect the
Premises or the Superior Lease (collectively, including the applicable items set
forth in Subdivisions (c) and (d) of this Section 8.1, the "Superior Mortgage"),
whether or not any Superior Mortgage shall also cover other lands or buildings
or leases, (c) each advance made or to be made under any Superior Mortgage, and
(d) all renewals, modifications, replacements, substitutions and extensions of
the Superior Lease and any Superior Mortgage. Any holder of a Superior Mortgagee
(a "Superior Mortgagee") may elect that this Lease shall have priority over such
Superior Mortgage and, upon notification thereof by such Superior Mortgagee to
Tenant, this Lease shall be deemed to have priority over such Superior Mortgage,
whether this Lease is dated prior to or subsequent to the date of such Superior
Mortgage. If, in connection with the obtaining, continuing or renewing of
financing for which the Premises or the interest of the lessee under the
Superior Lease represents collateral, in whole or in part, any bank, insurance
company, pension fund or other lending institution shall request reasonable
modifications of this Lease as a condition of its granting such financing,
Tenant will not unreasonably withhold its consent thereto, provided that such
modifications do not increase the Base Rent, materially and adversely increase
the obligations of Tenant hereunder or materially and adversely affect Tenant's
rights hereunder. Tenant agrees that it will take no steps to terminate this
Lease or abate Rent payable hereunder without giving each lessor under a
Superior Lease (a "Superior Lessor"), and any Superior Mortgagee requesting
same, written notice of any default by Landlord and the opportunity to cure such
default (without any obligation on the part of any such person to cure such
default) within 45 days thereafter or, if such Superior Lessor or Superior
Mortgagee commences such cure within 30 business days and diligently pursues
such cure, such longer period as may be reasonably necessary to effect such
cure. Landlord shall endeavor to obtain a subordination and non-disturbance
agreement, in recordable form, for each present and future Superior Mortgagee or
Superior Lessor.
8.2 SUCCESSOR LANDLORD.
For purposes of this Section 8.2, the term "Successor Landlord" shall mean
and include (i) any person, including but not limited to any Superior Lessor or
Superior Mortgagee, who, prior to the termination of this Lease, acquires or
succeeds to the interest of Landlord under this Lease through summary
proceedings, foreclosure action, assignment, deed in lieu of foreclosure or
otherwise, and (ii) the successors and assigns of any person referred to in
clause (i) of this sentence. Upon any Successor Landlord's so acquiring, or so
succeeding to, the interest of Landlord under this Lease, Tenant shall, at the
election and upon the request of the Successor Landlord, fully attorn to and
recognize such Successor Landlord as Tenant's landlord under this Lease upon the
then executory terms of this Lease, but only if such Successor Landlord is bound
by a Non-Disturbance Agreement and only in accordance with such Non-Disturbance
Agreement. No Successor Landlord shall be bound by any prepayment of rent or
additional rent for more than one month in advance or any amendment or
modification of this Lease made without the consent of the Superior Mortgagee or
Superior Lessor from which such Successor Landlord derives its interest in this
Lease or the Premises. Upon demand of any such Successor
<PAGE>
Landlord, Tenant agrees to execute instruments to evidence and confirm the
foregoing provisions of this Section reasonably satisfactory to any such
Successor Landlord.
8.3 NO PREPAYMENT OR MODIFICATION, ETC.
Tenant shall not pay Rent, or any other charge more than thirty days prior
to the due date thereof; no prepayment of the Rent (except one monthly
installment of Base Rent) or other charge, no assignment of this Lease and no
agreement to modify the Lease so as to reduce the Rent, change the Term, or
otherwise materially change the rights of Landlord under this Lease, or to
relieve Tenant of any obligations or liability under this Lease, shall be
enforceable against any Superior Mortgagees unless consented to in writing by
all Superior Mortgagees, if any.
ARTICLE IX
DEFAULT
9.1 EVENTS OF DEFAULT.
There shall be an "Event of Default" hereunder if:
(i) any default by Tenant continues after notice (describing such
default in reasonable detail), (a) in case of the payment of Rent or any
other monetary obligation to Landlord for more than 5 days (other than the
first two times in a Lease Year that such a payment is more than 5 days
late), (b) in case of the delivery of any document to Landlord for more
than 10 days or (c) in any other case for more than 30 days and such
additional time, if any, as is reasonably necessary to cure the default if
the default is of such a nature that it cannot reasonably be cured in 30
days and Tenant diligently commences and continues to cure such default and
completes such cure within 90 days; or
(ii) if Tenant becomes insolvent, fails to pay its debts as they fall
due, files a petition under any chapter of the U.S. Bankruptcy Code, 11
U.S.C, 101 et seq., as it may be amended (or any similar petition under any
insolvency law of any jurisdiction), or if such petition is filed against
Tenant and not dismissed within 60 days; or
(iii) if Tenant proposes any dissolution, liquidation, composition,
financial reorganization or recapitalization with creditors, makes an
assignment or trust mortgage for benefit of creditors, or if a receiver,
trustee, custodian or similar agent is appointed or takes possession with
respect to any property of Tenant and such appointment or taking is not
dismissed within 60 days; or if the leasehold hereby created is taken on
execution or other process of law in any action against Tenant.
<PAGE>
If there shall be an Event of Default hereunder, Landlord and the agents
and servants of Landlord may, in addition to and not in derogation of any
remedies for any preceding breach of covenant, immediately or at any time
thereafter while such Event of Default continues and without further notice, at
Landlord's election, do any one or more of the following:
(a) give Tenant written notice stating that the Lease is terminated,
effective upon the giving of such notice or upon a date stated in such notice,
as Landlord may elect, in which event the Lease shall be irrevocably
extinguished and terminated as stated in such notice without any further action;
or
(b) with process of law, in a lawful manner enter and repossess the
Premises and expel Tenant and those claiming through or under Tenant, and remove
its and their effects, without being guilty of trespass, in which event the
Lease shall be irrevocably extinguished and terminated at the time of such
entry; or
(c) pursue any other rights or remedies permitted by law.
Any such termination of the Lease shall be without prejudice to any
remedies which might otherwise be used for arrears of Rent or prior breach of
covenant, and in the event of such termination Tenant shall remain liable under
this Lease as hereinafter provided. Tenant hereby waives all statutory rights
(including, without limitation, rights of redemption, if any) to the extent such
rights may be lawfully waived, and Landlord, without notice to Tenant, may store
Tenant's effects and those of any person claiming through or under Tenant at the
reasonable expense and risk of Tenant and, if Landlord so elects, may sell such
effects at public auction or private sale and apply the net proceeds to the
payment of all sums due to Landlord from Tenant, if any, and pay over the
balance, if any, to Tenant.
9.2 TENANT'S OBLIGATIONS AFTER TERMINATION.
In the event that this Lease is terminated under any of the provisions
contained in Section 9.1 or shall be otherwise terminated for breach of any
obligation of Tenant, Tenant covenants to pay forthwith to Landlord, as
compensation, the excess of the total rent reserved for the residue of the Term
over the rental value of the Premises for said residue of the Term. In
calculating the rent reserved and the rental value, there shall be included, in
addition to the Base Rent and all Additional Rent, the value of all other
consideration agreed to be paid or performed by Tenant for said residue. Tenant
further covenants as an additional and cumulative obligation after any such
termination to pay punctually to Landlord all the sums and perform all the
obligations which Tenant covenants in this Lease to pay and to perform in the
same manner and to the same extent and at the same time as if this Lease had not
been terminated. In calculating the amounts to be paid by Tenant under the next
foregoing covenant, Tenant shall be credited with any amount paid to Landlord as
compensation as provided in the first sentence of this Section 9.2 and also with
the net proceeds of any rents obtained by Landlord by reletting the Premises,
after deducting all Landlord's reasonable expenses in connection with such
reletting, including,
<PAGE>
without implied limitation, all repossession costs, brokerage commissions, fees
for legal services and expenses of preparing the Premises for such reletting, it
being agreed by Tenant that Landlord may (i) relet the Premises or any part or
parts thereof for a term or terms which may at Landlord's option be equal to or
less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant such concessions and free rent as Landlord in
its reasonable judgment considers advisable or necessary to relet the same and
(ii) make such alterations, repairs and decorations in the Premises as Landlord
in its sole judgment considers advisable or necessary to relet the same, and no
action of Landlord in accordance with the foregoing or failure to relet or to
collect rent under reletting shall operate or be construed to release or reduce
Tenant's liability as aforesaid.
Nothing contained in this Lease shall, however, limit or prejudice the
right of Landlord to prove and obtain in proceedings for bankruptcy or
insolvency by reason of the termination of this Lease, an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which, the damages are to be proved, whether or not
the amount be greater, equal to, or less than the amount of the loss or damages
referred to above.
ARTICLE X
RIGHT OF RENEWAL; RIGHT OF FIRST NEGOTIATION
10.1 RENEWAL OPTIONS.
10.1.1 Provided Tenant is not in default under this Lease and that no
event or condition exists which with notice and the expiration of any grace
period would constitute an Event of Default under this Lease at the time the
option may be exercised and at the time the Renewal Period commences, Landlord
grants Tenant options (the "Renewal Options") to extend this Lease with respect
to all of the Premises for two additional consecutive periods of five years
(each a "Renewal Period"). The first Renewal Option shall be exercised by Tenant
delivering written notice to Landlord at least 9 months prior to the Expiration
Date of the initial Term; provided that Tenant has exercised the first Renewal
Option, the second Renewal Option may be exercised by Tenant delivering written
notice to Landlord at least 9 months prior to the Expiration Date of the Term of
the first Renewal Period.
10.1.2 The rate of annual Base Rent (the "Renewal Rental Rate") for the
first year of each Renewal Period shall be one hundred and three percent (103%)
of the Base Rent in effect for the last Lease Year of the initial Term or
preceding Renewal Period, as applicable, and shall increase by three percent
(3%) for each year thereafter.
10.1.3 Landlord and Tenant shall execute an amendment to this Lease
within 30 days after the determination of the Renewal Rental Rate, which
amendment shall set forth the extended Term and the Renewal Rental Rate. Except
for the change in the rate of Base Rent, the Renewal Period shall be subject to
all of the terms and conditions of this Lease.
<PAGE>
10.1.4 Neither any option granted to Tenant in this Lease or in any
collateral instrument to renew or extend the Term, nor the exercise of any such
option by Tenant, shall prevent Landlord from exercising any option or right
granted or reserved to Landlord in this Lease or in any collateral instrument or
that Landlord may otherwise have, to terminate this Lease or any renewal or
extension of the Term either during the original Term or during the renewed or
extended term. Any renewal or extension right granted to Tenant shall be
personal to Tenant and may not be exercised by any assignee, subtenant or legal
representative of Tenant. Any termination of this Lease shall serve to terminate
any such renewal or extension of the Term, whether or not Tenant shall have
exercised any option to renew or extend the Term. No option granted to Tenant to
renew or extend the Term shall be deemed to give Tenant any further option to
renew or extend.
10.2 RIGHT OF FIRST NEGOTIATION.
Provided Tenant is not in default under this Lease beyond any applicable grace
or cure period and that no event or condition exists which with notice and the
expiration of any grace period would constitute an Event of Default under this
Lease at the time the option may be exercised, Landlord shall provide Tenant
with a written notice (an "Availability Notice") of any space at the Property
that is vacated by the prior tenant and is available to re-lease during the Term
of this Lease. Tenant shall have a period (the "Negotiation Period") of 10
business days after receipt of the Availability Notice to negotiate with
Landlord to lease such space. If Landlord and Tenant do not come to agreement
during the Negotiation Period then Landlord shall be free to lease such space.
ARTICLE XI
MISCELLANEOUS
11.1 NOTICES FROM ONE PARTY TO THE OTHER.
All notices, requests and other communications required or permitted under
this Lease shall be in writing and shall be personally delivered or sent by
certified mail, return receipt requested, postage prepaid or by a national
overnight delivery service which maintains delivery records. Notices to Tenant
and Landlord shall be delivered to the address specified in Article I above. All
notices shall be effective upon delivery (or refusal to accept delivery). Either
party may change its notice address upon notice to the other party.
<PAGE>
11.2 BIND AND INURE.
The obligations of this Lease shall run with the land, and this Lease
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Landlord named herein and
each successive owner of the Property shall be liable only for the obligations
accruing during the period of its ownership. The obligations of Landlord shall
be binding upon the assets of Landlord which comprise the Property and the
proceeds of any insurance or action in the nature of eminent domain relating to
the Property, but not upon other assets of Landlord. No individual partner,
trustee, stockholder, officer, director, employee, member, beneficiary, agent or
advisor of Landlord shall be personally liable under this Lease and Tenant shall
look solely to Landlord's interest in the Property, and the proceeds of any
insurance or action in the nature of eminent domain relating to the Property
remedies upon an event of default hereunder, and the general assets of the
individual partners, trustees, stockholders, officers, employees, members or
beneficiaries of Landlord shall not be subject to levy, execution or other
enforcement procedure for the satisfaction of the remedies of Tenant.
11.3 NO SURRENDER.
The delivery of keys to any employee of Landlord or to Landlord's agent or
any employee thereof shall not operate as a termination of this Lease or a
surrender of the Premises.
11.4 NO WAIVER, ETC.
The failure of Landlord or of Tenant to seek redress for violation of, or
to insist upon the strict performance of any covenant or condition of this Lease
shall not be deemed a waiver of such violation nor prevent a subsequent act,
which would have originally constituted a violation, from having all the force
and effect of an original violation. The receipt by Landlord of Base Rent or
Additional Rent with knowledge of the breach of any covenant of this Lease shall
not be deemed a waiver of such breach by Landlord, unless such waiver is in
writing and signed by Landlord. No consent or waiver, express or implied, by
Landlord or Tenant to or of any breach of any agreement or duty shall be
construed as a waiver or consent to or of any other breach of the same or any
other agreement or duty.
11.5 NO ACCORD AND SATISFACTION.
No acceptance by Landlord of a lesser sum than the Rent then due shall be
deemed to be other than on account of the earliest installment of such Rent due,
nor shall any endorsement or statement on any check or any letter accompanying
any check or payment as Rent be deemed as accord and satisfaction, and Landlord
may accept such check or payment without prejudice to
<PAGE>
Landlord's right to recover the balance of such installment or pursue any other
remedy in this Lease provided.
11.6 CUMULATIVE REMEDIES.
The specific remedies to which Landlord may resort under the terms of this
Lease are cumulative and are not intended to be exclusive of any other remedies
or means of redress to which it may be lawfully entitled in case of any breach
or threatened breach by Tenant of any provisions of this Lease. In addition to
the other remedies provided in this Lease, Landlord shall be entitled to the
restraint by injunction of the violation or attempted or threatened violation of
any of the covenants, conditions or provisions of this Lease or to a decree
compelling specific performance of any such covenants, conditions or provisions.
11.7 LANDLORD'S RIGHT TO CURE.
If Tenant shall at any time default in the performance of any obligation
under this Lease, Landlord shall have the right, but shall not be obligated, to
enter upon the Premises and to perform such obligation, notwithstanding the fact
that no specific provision for such substituted performance by Landlord is made
in this Lease with respect to such default. Except in the case of an emergency
(for which no notice is required), Landlord shall give Tenant two business days'
prior written notice that it will be entering the Premises to perform such
obligation. In performing such obligation, Landlord may make any payment of
money or perform any other act. All sums so paid by Landlord (together with
interest at the rate of 4% per annum in excess of the then average prime
commercial rate of interest being charged by BankBoston) and all necessary
incidental costs and expenses in connection with the performance of any such act
by Landlord, shall be deemed to be Additional Rent under this Lease and shall be
payable to Landlord immediately on demand. Landlord may exercise the foregoing
rights without waiving any other of its rights or releasing Tenant from any of
its obligations under this Lease.
11.8 ESTOPPEL CERTIFICATE.
Tenant agrees, from time to time, upon not less than 10 days' prior
written request by Landlord, to execute, acknowledge and deliver to Landlord a
statement in writing certifying that this Lease is unmodified and in full force
and effect; that, to Tenant's knowledge, Tenant has no defenses, offsets or
counterclaims against its obligations to pay the Rent and to perform its other
covenants under this Lease; that to the extent true, there is no default or
Event of Default then existing and Tenant has not received a notice of any
alleged default by Tenant under the Lease; that the Lease has not been modified
or amended (or, if there have been modifications, that this Lease is in full
force and effect as modified and stating the modifications, and, if there are
any defenses, offsets, counterclaims, or defaults, setting them forth in
reasonable detail); the dates to which the Base Rent, Additional Rent and other
charges have been paid; and such other factual
<PAGE>
matters as Landlord may reasonably request. Any such statement delivered
pursuant to this Section 11.8 shall be in a form reasonably acceptable to and
may be relied upon by any prospective purchaser or mortgagee of premises which
include the Premises or any prospective assignee of any such mortgagee.
11.9 WAIVER OF JURY TRIAL.
THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY PARTY(IES) AGAINST ANY OTHER PARTY(IES) ON ANY MATTER ARISING OUT
OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP OF THE
PARTIES CREATED HEREUNDER.
11.10 ACTS OF GOD.
In any case where either party hereto is required to do any act, delays
caused by or resulting from Acts of God, war, civil commotion, fire, flood or
other casualty, labor difficulties not limited to the Premises or Tenant's or
Landlord's business operations, shortages of labor, materials or equipment,
government regulations, unusually severe weather, or other causes beyond such
party's reasonable control shall not be counted in determining the time during
which work shall be completed, whether such time be designated by a fixed date,
a fixed time or a "reasonable time", and such time shall be deemed to be
extended by the period of such delay.
11.11 BROKERAGE.
Tenant represents and warrants that it has dealt with no broker in
connection with this transaction other than the Brokers and agrees to defend,
with counsel reasonably approved by Landlord, indemnify and save Landlord
harmless from and against any and all cost, expense or liability for any
compensation, commissions or charges claimed by a broker or agent, other than
the Brokers, with respect to Tenant's dealings in connection with this Lease.
Landlord represents and warrants to Tenant that it has dealt with no broker in
connection with this transaction other than the Brokers and agrees to defend,
with counsel reasonably approved by Tenant, indemnify and save Tenant harmless
from and against any and all cost, expense or liability for any compensation,
commissions or charges claimed by a broker or agent with respect to Landlord's
dealings in connection with this Lease.
11.12 SUBMISSION NOT AN OFFER.
The submission of a draft of this Lease or a summary of some or all of its
provisions does not constitute an offer to lease or demise the Premises, it
being understood and agreed that neither Landlord nor Tenant shall be legally
bound with respect to the leasing of the Premises
<PAGE>
unless and until this Lease has been executed by both Landlord and Tenant and a
fully executed copy has been delivered to each of them.
11.13 APPLICABLE LAW AND CONSTRUCTION.
This Lease shall be governed by and construed in accordance with the laws
of the state in which the Premises are located. If any term, covenant, condition
or provision of this Lease or the application thereof to any person or
circumstances shall be declared invalid or unenforceable by the final ruling of
a court of competent jurisdiction having final review, the remaining terms,
covenants, conditions and provisions of this Lease and their application to
persons or circumstances shall not be affected thereby and shall continue to be
enforced and recognized as valid agreements of the parties, and in the place of
such invalid or unenforceable provision, there shall be substituted a like, but
valid and enforceable provision which comports to the findings of the aforesaid
court and most nearly accomplishes the original intention of the parties.
There are no oral or written agreements between Landlord and Tenant
affecting this Lease, except as specified in this Lease. This Lease may be
amended, and the provisions hereof may be waived or modified, only by
instruments in writing executed by Landlord and Tenant.
The titles of the several Articles and Sections contained herein are for
convenience only and shall not be considered in construing this Lease,
Unless repugnant to the context, the words "Landlord" and "Tenant"
appearing in this Lease shall be construed to mean those named above and their
respective heirs, executors, administrators, successors and assigns, and those
claiming through or under them respectively to there be more than one tenant,
the obligations imposed by this Lease upon Tenant shall be joint and several.
11.14 SECURITY DEPOSIT.
Tenant has deposited with Landlord the Security Deposit as security for the
full, faithful and punctual performance by Tenant of all of the terms of this
Lease, whether in cash or by delivery to Landlord of a clean, irrevocable letter
of credit in the amount of the Security Deposit. In the event Tenant defaults in
the performance of any of the terms of this Lease, including the payment of
Rent, Landlord may use, apply or retain the whole or any part of the Security
Deposit to the extent required for the payment of any Rent or for any sum which
Landlord may expend or may be required to expend by reason of Tenant's default
in respect of any of the terms of this Lease, including any damages or
deficiency in the re-letting of the Premises, whether accruing before or after
summary proceedings or other re-entry by Landlord. In the case of every such
use, application or retention, Tenant shall, on demand, pay to Landlord the sum
so used, applied or retained which shall be added to the Security Deposit so
that the same shall be replenished to its former amount and Tenant's failure to
do so shall be a material breach of this Lease. Landlord
<PAGE>
shall not be required to keep such deposit separate from its general accounts
and Tenant shall not be entitled to interest on the Security Deposit. The
Security Deposit shall not be deemed a limitation on Landlord's damages or a
payment of liquidated damages or a payment of the monthly Rent due for the last
month of the Term of this Lease. If Tenant shall fully and punctually comply
with all of the terms of this Lease, the Security Deposit, or so much of it as
has not been applied by Landlord, shall be returned to Tenant, without interest
or other increment for its use, after the termination of this Lease and after
delivery of exclusive possession of the Premises to Landlord. In the event of a
sale or lease of the Building, Landlord shall have the right to transfer the
Security Deposit to the vendee or lessee and Landlord shall immediately be
released by Tenant from all liability for the return of such Security Deposit;
and Tenant agrees to look solely to the new owner or landlord for the return of
said Security Deposit; and it is agreed that the provisions hereof shall apply
to every transfer or assignment made of the Security Deposit to a new owner or
landlord. Tenant shall not assign or encumber or attempt to assign or encumber
the monies deposited herein as the Security Deposit and neither Landlord nor its
successors or assigns shall be bound by any such assignment, encumbrance,
attempted assignment or encumbrance. This Lease does not create a trust
relationship between Landlord and Tenant with respect to such Security Deposit,
and Landlord shall be entitled to treat such Security Deposit as Landlord's own
property, subject only to Tenant's right to receive repayment of it as and to
the extent provided in this Section.
If the Security Deposit is in the form of an unconditional, irrevocable
letter of credit, such letter of credit shall be issued by a financial
institution acceptable to Landlord and in the form of Exhibit C attached hereto.
---------
The letter of credit shall be renewed by Tenant at least 30 days prior to
expiration and shall remain in effect until 90 days after the scheduled end of
the Term of the Lease, as such Term may be renewed or extended. If such letter
of credit is not so renewed at least 30 days prior to expiration, Landlord shall
have the right, without notice to Tenant, to draw the entire amount of such
letter of credit and hold such amount as a cash Security Deposit under the terms
of this Section 11.14. Landlord shall provide written notice to Tenant ,
concurrently with Landlord's notice to the issuer of the letter of credit, that
Landlord is drawing on the letter of credit which notice shall state the amount
being drawn.
11.15 SIGNS.
Tenant may install, at its sole cost and expense, signs on the exterior of
the Building and on the canopy over the main entrance to the Premises. All
signage must comply with all applicable laws, codes and regulations, including,
without limitation, zoning and building codes. Tenant shall be responsible for
obtaining all necessary permits and approvals. The location, materials, design
and method of installation of all signage shall be subject to Landlord's prior
written approval, which shall not be unreasonably withheld.
SIGNATURES FOLLOW ON NEXT PAGE
<PAGE>
EXECUTED as a sealed instrument in two or more counterparts on the day and
year first above written.
LANDLORD:
BOULDER 38/th/ LLC
By: Boulder Campus LLC, Manager
By: MSC Boulder LLC, Primary Member
By: /s/ John H. Baxter
---------------------------
Name: John H. Baxter
Title: Member
TENANT:
GENOMICA CORPORATION
By: /s/ Dan Hudspeth
---------------------------
Name: Dan Hudspeth
Title: CFO
<PAGE>
EXHIBIT A
PLAN OF PREMISES
A-1
<PAGE>
EXHIBIT B
WORK LETTER
THIS WORK LETTER AGREEMENT ("Work Letter") is entered into as of the ____
day of _______, 1999 by and between BOULDER 38TH LLC ("Landlord"), and GENOMICA
CORPORATION ("Tenant").
RECITALS
A. Concurrently with the execution of this Work Letter, Landlord and Tenant
have entered into the Lease covering certain Premises more particularly
described in the Lease. All terms not defined herein have the same meaning as
set forth in the Lease.
B. In order to induce Tenant to enter into the Lease and in consideration of
the mutual covenants hereinafter contained, Landlord and Tenant agree as
follows:
1. LANDLORD'S WORK. As used in the Lease and this Work Letter Agreement,
---------------
the term "Landlord's Work" means those items of general tenant improvement
construction shown on the Final Plans (described in Paragraph 4(b) below),
including, but not limited to, partitioning, doors, ceilings, floor coverings,
wall finishes (including paint and wall coverings), electrical (including
lighting, switching, telephones, outlets, etc.), plumbing, heating, ventilating
and air conditioning, fire protection, cabinets and other millwork and
distribution of Building services such as sprinkler and electrical service. All
Landlord's Work and components thereof shall at all times be and remain the sole
property of Landlord. Landlord, at its sole cost, shall erect the walls demising
the Premises, and shall separate the utilities serving the Premises.
2. CONSTRUCTION REPRESENTATIVES. Landlord appoints the following
----------------------------
person(s) as Landlord's representative ("Landlord's Representative") to act for
Landlord in all matters covered by this Work Letter:
James M. Halliday
Great Point Investors LLC
265 Franklin Street, 18/th/ floor
Boston, MA 02110
617.526.8800
and
Doug McDonald
Bancroft Capital Advisors, Inc
1112 Ocean Drive, Suite 300
Manhattan Beach, CA 90266
310.318.9120
Tenant appoints the following person(s) as Tenant's representative ("Tenant
Representative") to act for Tenant in all matters covered by this Work Letter.
Dan Hudspeth, CFO
B-1
<PAGE>
Genomica Corporation
____________________
____________________
All communications with respect to the matters covered by this Work Letter are
to be made to Landlord's Representative or Tenant's Representative, as the case
may be, in writing, in compliance with the notice provisions of the Lease.
Either party may change its representative under this Work Letter at any time by
written notice to the other party in compliance with the notice provisions of
the Lease.
3. DESIGN AND CONSTRUCTION. All Landlord's Work shall be performed by
-----------------------
contractors selected and engaged by Landlord. All bids shall be reviewed with
Tenant on an open book basis. Landlord shall engage a registered professional
architect of its choice to design the interior space of the Premises (the
"Architect").
4. WORK SCHEDULE. Attached hereto as Schedule 1 is a schedule (the "Work
------------- ----------
Schedule") which sets forth the timetable for the planning and completion of the
installation of the Landlord's Work. The Work Schedule has been approved by both
Landlord and Tenant.
5. TENANT IMPROVEMENT PLANS.
------------------------
(a) Preparation of Final Plans. In accordance with the Work Schedule, the
--------------------------
Architect will prepare complete architectural plans and complete, fully-
engineered construction drawings and specifications for all of Landlord's Work,
including mechanical, electrical, plumbing and structural elements (collectively
the "Final Plans"). The Final Plans will show: (i) the subdivision (including
partitions and walls), layout, lighting, finish and decoration work (including
carpeting and other floor coverings) for the Premises; (ii) all internal and
external communications and utility facilities which will require the
installation of conduits or other improvements from the base Building shell; and
(iii) all other specifications for Landlord's Work. The Final Plans will be
submitted to Landlord for Landlord's approval and to Tenant for Tenant's
approval. The parties agree to advise each other in writing of any disapproval
of the Final Plans within five business days of receipt thereof. If either party
in its reasonable discretion does not approve the Final Plans, the Architect
will redesign the Final Plans incorporating the revisions reasonably requested.
Within ten business days of submission of the Final Plans, Landlord shall
provide Tenant with a written summary (the "Excess Cost Summary") of the cost of
the Landlord's Work, based on the Final Plans, that is in excess of the Tenant
Improvement Allowance (defined below) ("Excess Costs"). Tenant agrees to advise
Landlord in writing of any disapproval of the Excess Cost Summary, and the
reasons therefor within five business days of receipt thereof. If Tenant fails
to timely deliver to Landlord Tenant's written disapproval of the Excess Cost
Summary, the Excess Cost Summary shall be deemed approved by Tenant. If the
revised Excess Cost Summary is timely disapproved by Tenant pursuant to this
paragraph, Tenant shall provide to Landlord a written explanation of the
reason(s) for such disapproval concurrently with its disapproval, and the Excess
Cost Summary, as appropriate, shall be promptly revised and resubmitted to
Tenant for approval. If Tenant fails to provide a written explanation as and
when required by this paragraph, the Excess Cost Summary shall be deemed
approved by Tenant. Tenant agrees to approve in writing the revised
B-2
<PAGE>
Excess Cost Summary within five business days of its receipt thereof. If Tenant
fails to timely deliver to Landlord written approval of the Excess Cost Summary,
the Excess Cost Summary shall be deemed approved by Tenant. Tenant's approval of
the Excess Cost Summary shall constitute Tenant's agreement to pay Landlord the
Excess Costs.
(b) Requirements of the Final Plans. The Final Plans will include
-------------------------------
locations and complete dimensions, and Landlord's Work, as shown on the Final
Plans, will: (i) be compatible with the Building shell and with the design,
construction and equipment of the Building; (ii) comply with all applicable
laws, ordinances, rules and regulations of all governmental authorities having
jurisdiction, and all applicable insurance regulations; and (iii) be of a nature
and quality consistent with the overall objectives of Landlord for the Building,
as determined by Landlord in its reasonable but subjective discretion.
(c) Submittal of Final Plans. Once approved, the Architect will submit
------------------------
the Final Plans to the appropriate governmental agencies for plan checking and
the issuance of a building permit. The Architect will make any changes to the
Final Plans which are requested by the applicable governmental authorities to
obtain the building permit. Any changes requested by governmental authorities
will be made only with the prior written approval of Landlord, and only if
Tenant agrees to pay any excess costs resulting from the design and/or
construction of such requested changes (the "Additional Costs"). Landlord shall
revise the Excess Cost Summary by increasing the Excess Costs by the amount of
the Additional Costs resulting from plan modifications required by any
governmental authority. Tenant hereby acknowledges that any such changes will be
subject to the terms of Section 5 below. Any Additional Costs are to be paid by
Tenant to Landlord within ten days after receipt by Tenant of an invoice for
such Additional Costs from Landlord.
6. PAYMENT FOR LANDLORD'S WORK.
---------------------------
(a) Tenant Improvement Allowance and Excess Costs. Landlord shall pay for
---------------------------------------------
Landlord's Work up to a maximum of the Tenant Improvement Allowance. The Tenant
Improvement Allowance shall only be used for:
(i) Payment to the Architect for all usual space planning, design
and architectural fees, including, without limitation, all reasonable
architectural and engineering costs of preparing the Final Plans,
including mechanical, electrical, plumbing and structural drawings,
and all other aspects necessary to complete the Final Plans.
(ii) Payment of plan check, permit and license fees relating to
construction of Landlord's Work.
(iii) Construction of Landlord's Work, including, without limitation,
the following:
(A) Installation within the Premises of all partitioning,
doors, floor coverings, ceilings, wall coverings and painting,
millwork and similar items;
B-3
<PAGE>
(B) All electrical wiring, lighting fixtures, outlets and
switches, and other electrical work to be installed within the
Premises;
(C) The furnishing and installation of all duct work, terminal
boxes, diffusers and accessories required for the completion of
the heating, ventilation and air conditioning systems within
the Premises, including the cost of meter and key control for
after-hour air conditioning;
(D) Any additional tenant requirements including, but not
limited to, air quality control, special heating, ventilation
and air conditioning, noise or vibration control or other
special systems;
(E) All fire and life safety control systems such as fire
walls, sprinklers, fire alarms, including piping and wiring,
installed within the Premises;
(F) All plumbing, including fixtures and pipes, to be
installed within the Premises;
(G) Testing and inspection costs; and
(H) Contractor's fees, including, but not limited to, any fees
based on general conditions.
(iv) All other costs to be reasonably expended by Landlord in the
construction of Landlord's Work.
(b) Changes. If, after the Final Plans and the Excess Costs Summary have
-------
been approved by Landlord and Tenant, as applicable, Tenant requests any changes
or substitutions to the Final Plans or to Landlord's Work during construction,
Tenant shall complete a change order request form approved by Landlord and
forward it to Landlord's representative. All such changes shall be subject to
Landlord's prior written approval in accordance with Paragraph 11. Prior to
commencing any change, Landlord shall prepare and deliver to Tenant, for
Tenant's approval, a change order setting forth the total cost of such change,
which shall include associated architectural, engineering, construction
contractor's costs and fees, and completion schedule changes. If Tenant fails to
approve such change order within five business days after delivery by Landlord,
Tenant shall be deemed to have withdrawn the proposed change and Landlord shall
not proceed to perform the change. Any additional costs related to such change
are to be paid by Tenant to Landlord within ten days after receipt by Tenant of
an invoice for such additional costs from Landlord.
(c) Payment of Excess Costs. Prior to the commencement of Landlord's Work
-----------------------
and within 10 days of approval, or deemed approval, of the Excess Cost Summary
by Tenant, Tenant shall pay to Landlord the Excess Costs. If the amount of the
Excess Costs changes as a result of a change order, Tenant shall pay such
increased amount within 10 days of receipt by Tenant of an invoice, together
with reasonable supporting documentation, for such increased costs.
(d) Credit. Unless specifically set forth herein, Tenant shall not be
------
entitled to any credit for any portion of the Tenant Improvement Allowance which
is not used.
B-4
<PAGE>
7. CONSTRUCTION OF LANDLORD'S WORK. Until Landlord approves the Final
-------------------------------
Plans, Tenant approves the Excess Cost Summary and pays the Excess Costs to
Landlord, and all necessary permits have been obtained from the appropriate
governmental authorities, Landlord will be under no obligation to cause the
construction of any of Landlord's Work. Once the foregoing conditions have been
met, Landlord's contractor will commence and diligently proceed with the
construction of the Landlord's Work pursuant to the terms of a [negotiated bid]
contract between Landlord and Landlord's contractor calling for the completion
of Landlord's Work in a good and workmanlike manner conforming to all applicable
Legal Requirements, subject to Tenant Delays (as described in Paragraph 8 below)
and Force Majeure Delays (as described in Paragraph 9 below). The costs of
Landlord's Work shall be paid as provided in Paragraphs 5 and 6 hereof.
Construction inspections will be made periodically by qualified Landlord
employees or subcontractors and Tenant shall have the right to have qualified
Tenant employees or subcontractors review compliance of Landlord's Work with the
Final Plans.
8. TENANT DELAYS. For purposes of this Work Letter, "Tenant Delays"
-------------
means any delay in the completion of the Landlord's Work resulting from any or
all of the following:
(a) Tenant's failure to timely perform any of its obligations pursuant to
this Work Letter, including any failure to approve any item or complete,
on or before the due date therefor, any action item which is Tenant's
responsibility pursuant to this Work Letter or the Work Schedule;
(b) Change orders requested by Tenant after approval of the Final Plans;
(c) Any delay of Tenant in making payment to Landlord for any costs due
from Tenant under this Work Letter or the Lease; or
(d) Any other act or failure to act by Tenant, Tenant's employees,
agents, architects, independent contractors, consultants and/or any other
person performing or required to perform services on behalf of Tenant.
9. FORCE MAJEURE DELAYS. For purposes of the Work Letter, "Force Majeure
--------------------
Delays" means any and all causes beyond Landlord's reasonable control,
including, without limitation, delays caused by Tenant, other tenants,
governmental regulation, governmental restriction, strike, labor dispute, riot,
accident, mechanical breakdown, shortages of or inability to obtain labor, fuel,
steam, water, electricity or materials, acts of God, war, enemy action, civil
commotion, fire or other casualty.
10. APPROVALS. Whenever any party under this Work Letter must reasonably
---------
grant its approval such party shall also not unreasonably delay or condition its
approval. Unless otherwise required by the terms of this Work Letter, any
approval shall be deemed granted unless such party responds within seven days
after its receipt of the items for which approval is sought. Any such request to
the Landlord shall be sent in writing to each of the people listed as the
Landlord's Representative in Section 2 above, provided, however, any approval
needs to be signed by James M. Halliday.
B-5
<PAGE>
11. LANDLORD'S APPROVAL. Landlord, in its sole discretion, may withhold
-------------------
its approval of the Final Plans, change orders or other documents or plans that:
(a) Exceeds or adversely affects the structural integrity of the
Building, or any part of the heating, ventilating, air conditioning, plumbing,
mechanical, electrical, communication, or other systems of the Building;
(b) Is not approved by any Superior Mortgagee or Superior Lessee at the
time the work is proposed;
(c) Would not be approved by a prudent owner of property similar to the
Building;
(d) Violates any agreement which affects the Building or the Land or
binds the Landlord;
(e) Landlord believes will reduce the market value of the Premises or the
Building at the end of the Term of the Lease; or
(f) Does not conform to the applicable building code or is not approved
by any governmental, quasi-governmental, or utility authority with jurisdiction
over the Premises.
12. DEFAULTS BY TENANT. In the event of any default by Tenant with
------------------
respect to any of the provisions of this Work Letter or any other agreement with
Landlord relating to construction in or about the Premises, Landlord may, in
addition to exercising any other right or remedy Landlord may have, treat such
default as a default by Tenant under the Lease and exercise any or all rights
available under the Lease in connection therewith, including, if applicable, the
right of termination. In the event of any termination of the Lease by Landlord,
Landlord may elect in its absolute discretion, with respect to any work
performed by or on behalf of Tenant prior to the date of such termination, to
either:
(a) retain for its own use part or all of any such work, without
compensation to Tenant therefor; or
(b) demolish or remove part or all of any such work and restore part or
all of the Premises to its condition prior to the initial tender of
possession thereof to Tenant, in which event Tenant shall reimburse
Landlord upon demand for all costs reasonably incurred by Landlord in
connection with such demolition, removal and/or restoration.
B-6
<PAGE>
IN WITNESS WHEREOF, the undersigned Landlord and Tenant have caused this Work
Letter to be duly executed by their duly authorized representatives as of the
date of the Lease.
LANDLORD:
BOULDER 38TH LLC
By: Boulder Campus LLC, Manager
By: MSC Boulder LLC, Primary Member
By: __________________________
Name:
Title:
TENANT:
GENOMICA CORPORATION
By: __________________________
Name:
Title:
B-7
<PAGE>
Schedule 1
Work Schedule
B-8
<PAGE>
EXHIBIT C
[On Bank's Letterhead]
IRREVOCABLE LETTER OF CREDIT
_____________, 1999
Irrevocable Letter of Credit No._________
Beneficiary
- -----------
Boulder 38/th/ LLC
c/o Great Point Investors LLC
265 Franklin Street, 18/th/ floor
Boston, MA 02110
Attn: John H. Baxter
Applicant
- ---------
[TENANT NAME AND ADDRESS]
Expiration Date: ____________________
- ---------------
Ladies and Gentlemen:
_________________________ ("Issuer") hereby issues our unconditional and
irrevocable Letter of Credit No._______ in Beneficiary's favor in the amount of
_____________________ U.S. Dollars ($_______________) available by your sight
drafts drawn on us and accompanied by a written statement signed on behalf of
Boulder 38/th/ LLC, its successors or assigns, stating as follows:
"The undersigned certifies that Boulder 38/th/ LLC and/or its successors
and assigns is entitled to draw under the Irrevocable Letter of Credit
No.______ pursuant to the terms of a Lease, dated ___________, 1999,
between Boulder 38/th/ LLC and _________________________."
Partial drawings are permitted.
We engage with you that all drafts drawn under and in compliance with the terms
of this Irrevocable Letter of Credit will be duly honored if presented to us on
or before the expiration date set forth above. Any draft drawn by you under
this Irrevocable Letter of Credit must bear the clause "Drawn on Irrevocable
Letter of Credit No. _______ of _____________________".
C-1
<PAGE>
It is a condition of this Irrevocable Letter of Credit that it shall be deemed
automatically extended without amendment for additional successive one year
periods from the expiration date hereof, or any future expiration date, unless
60 days prior to any expiration date we notify you by certified mail, return
receipt requested or overnight courier that we elect not to consider this
Irrevocable Letter of Credit renewed for any such additional period.
This Irrevocable Letter of Credit is fully transferable and assignable by
Beneficiary. Beneficiary shall send a written request to Issuer to assign or
transfer this Irrevocable Letter of Credit and upon presentation of this
Irrevocable Letter of Credit, as it may be amended, to Issuer, Issuer shall re-
issue this Irrevocable Letter of Credit in the then outstanding amount in favor
of Beneficiary's successor, assign or transferee. Any subsequent successor,
assignee or transferee of this Letter of Credit may also assign this Letter of
Credit as provided for herein.
Partial drawings and reductions are permitted.
This Irrevocable Letter of Credit sets forth in full the terms of our
undertaking, and such undertaking shall not in any way be limited, modified,
amended or amplified, except by a written document executed by the parties
hereto.
Except as otherwise expressly stated herein, this Irrevocable Letter of Credit
is subject to the Uniform Customs and Practices for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500.
Very truly yours,
____________________________
By:________________________
Name:
Title:
C-1
<PAGE>
EXHIBIT 10.24
Customer No. 1188
MASTER LEASE AGREEMENT
Lessor: TRANSAMERICA BUSINESS CREDIT CORPORATION
Riverway 11
West Office Tower
West Higgins
Rosemont, Illinois 60018
Lessee: GENOMICA CORPORATION
4001 Discovery Drive
Suite 130
Boulder, Colorado 80303-7817
The lessor pursuant to this Master Lease Agreement ("Agreement") dated as of
November 3, 1998, is Transamerica Business Credit Corporation ("Lessor"). All
equipment, together with all present and future additions, parts, accessories,
attachments, substitutions, repairs, improvements, and replacements thereof or
thereto, which are the subject of a Lease (as defined in the next sentence)
shall be referred to as "Equipment." Simultaneous with the execution and
delivery of this Agreement, the parties are entering into one or more Lease
Schedules (each, a "Schedule") which refer to and incorporate by reference this
Agreement, each of which constitutes a lease (each, a "Lease") for the Equipment
specified therein. Additional details pertaining to each Lease are specified in
the applicable Schedule. Each Schedule that the parties hereafter enter into
shall constitute a Lease. Lessor has no obligation to enter into any additional
leases with, or extend any future financing to, Lessee.
1. LEASE. Subject to and upon all of the terms and conditions of
-----
this Agreement and each Schedule, Lessor hereby agrees to lease to Lessee and
Lessee hereby agrees to lease from Lessor the Equipment having an aggregate cost
of $1,000,000 (but not to exceed $1,000,000) for the Term (as defined in
Paragraph 2 below) thereof. The timing and financial scope of Lessor's
obligation to enter into Leases hereunder are limited as set forth in the
Commitment Letter executed by Lessor and Lessee, dated as of October 1, 1998 and
attached hereto as Exhibit A (the "Commitment Letter").
2. TERM. Each Lease shall be effective and the term of each Lease
----
("Term") shall commence on the commencement date specified in the applicable
Schedule and, unless sooner terminated (as hereinafter provided), shall expire
at the end of the term specified in such Schedule: provided, however, that
-------- -------
obligations due to be performed by Lessee during the Term shall continue until
they have been performed in full. Schedules will only be executed after the
delivery of the Equipment to Lessee or upon completion of deliveries of items of
such Equipment with aggregate cost of not less than $50,000.
3. RENT. Lessee shall pay as rent to Lessor, for use of the
----
Equipment during the Term or Renewal Term (as defined in Paragraph 8), rental
payments equal to the sum of all rental payments including, without limitation,
security deposits, advance rents, and interim rents payable in the amounts and
on the dates specified in the applicable Schedule ("Rent"). If any Rent or other
amount payable by Lessee is not paid within five days after the day on which it
becomes payable. Lessee will pay on demand, as a late charge. an amount equal to
5% of such unpaid Rent or other amount but only to the extent permitted by
applicable law. All payments provided for herein shall be payable to Lessor at
its address specified above, or at any other place designated by Lessor.
4. LEASE NOT CANCELABLE; LESSEE'S OBLIGATIONS ABSOLUTE. No Lease
---------------------------------------------------
may be canceled or terminated except as expressly provided herein. Lessee's
obligation to pay all Rent due or to become due hereunder shall be absolute and
unconditional and shall not be subject to any delay, reduction, set-off,
defense, counterclaim, or recoupment for any reason whatsoever, including any
failure of the Equipment or any representations by the manufacturer or the
vendor thereof. If the Equipment is unsatisfactory for any reason, Lessee
<PAGE>
shall make any claim solely against the manufacturer or the vendor thereof and
shall nevertheless pay Lessor all Rent payable hereunder.
5. SELECTION AND USE OF EQUIPMENT. Lessee agrees that it shall be
------------------------------
responsible for the selection and use of, and results obtained from, the
Equipment and any other associated equipment or services.
6. WARRANTIES. LESSOR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS
----------
OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE
DESIGN OR CONDITION OF THE EQUIPMENT OR ITS MERCHANTABILITY, SUITABILITY,
QUALITY, OR FITNESS FOR A PARTICULAR PURPOSE, AND HEREBY DISCLAIMS ANY SUCH
WARRANTY. LESSEE SPECIFICALLY WAIVES ALL RIGHTS TO MAKE A CLAIM AGAINST LESSOR
FOR BREACH OF ANY WARRANTY WHATSOEVER. LESSEE LEASES THE EQUIPMENT "AS IS." IN
NO EVENT SHALL LESSOR HAVE ANY LIABILITY, NOR SHALL LESSEE HAVE ANY REMEDY
AGAINST LESSOR, FOR ANY LIABILITY, CLAIM, LOSS, DAMAGE, OR EXPENSE CAUSED
DIRECTLY OR INDIRECTLY BY THE EQUIPMENT OR ANY DEFICIENCY OR DEFECT THEREOF OR
THE OPERATION, MAINTENANCE, OR REPAIR THEREOF OR ANY CONSEQUENTIAL DAMAGES AS
THAT TERM IS USED IN SECTION 2-719(3) OF THE MODEL UNIFORM COMMERCIAL CODE, AS
AMENDED FROM TIME TO TIME ("UCC"). Lessor grants to Lessee, for the sole purpose
of prosecuting a claim, the benefits of any and all warranties made available by
the manufacturer or the vendor of the Equipment to the extent assignable.
7. DELIVERY. Lessor hereby appoints Lessee as Lessor's agent for
--------
the sole and limited purpose of accepting delivery of the Equipment from each
vendor thereof. Lessee shall pay any and all delivery and installation charges.
Lessor shall not be liable to Lessee for any delay in, or failure of, delivery
of the Equipment.
8. RENEWAL. So long as no Event of Default or event which, with the
-------
giving of notice, the passage of time, or both, would constitute an Event of
Default, shall have occurred and be continuing, or the Lessee shall not have
exercised its purchase option under Paragraph 9 hereof, each Lease will
automatically renew for a term specified in the applicable Schedule (the
"Renewal Term") on the terms and conditions of this Agreement or as set forth in
such Schedule; provided, however, that Obligations due to be performed by the
-------- -------
Lessee during the Renewal Term shall continue until they have been performed in
full.
9. PURCHASE OPTION. So long as no Event of Default or event which,
---------------
with the giving of notice, the passage of time, or both, would constitute an
Event of Default, shall have occurred and be continuing, Lessee may, upon
written notice to Lessor received at least one hundred eighty days before the
expiration of a Term, purchase all, but not less than all, the Equipment covered
by the applicable Lease on the date specified therefor in the applicable
Schedule ("Purchase Date"). The purchase price for such Equipment shall be its
fair market value as set forth in the applicable Schedule determined on an "In-
place, In-use" basis, as mutually agreed by Lessor and Lessee, or, if they
cannot agree, as determined by an independent appraiser selected by Lessor and
approved by Lessee, which approval will not be unreasonably delayed or withheld.
Lessee shall pay the cost of any such appraisal. So long as no Event of Default
or event which, with the giving of notice, the passage of time, or both, would
constitute an Event of Default shall have occurred and be continuing, Lessee
may, upon written notice to Lessor received at least one hundred eighty days
prior to the expiration of the Renewal Term, purchase all, but not less than
all, the Equipment covered by the applicable Schedule by the last date of the
Renewal Term (the "Alternative Purchase Date") at a purchase price equal to its
then fair market value on an "In-place, In-use" basis. On the Purchase Date or
the Alternative Purchase Date, as the case may be, for any Equipment, Lessee
shall pay to Lessor the purchase price, together with all sales and other taxes
applicable to the transfer of the Equipment and any other amount payable and
arising hereunder. in immediately available funds, whereupon Lessor shall
transfer to Lessee, without recourse or warranty of any kind. express or
implied, all of Lessor's right, title, and interest in and to such Equipment on
an "As Is, Where Is" basis.
10. OWNERSHIP; INSPECTION; MARKING; FINANCING STATEMENTS. Lessee
----------------------------------------------------
shall affix to the Equipment any labels supplied by Lessor indicating ownership
of such Equipment. The Equipment is and shall be the sole property of Lessor.
Lessee shall have no right, title, or interest therein. except as lessee under a
Lease. The Equipment is and shall at all times be and remain personal property
and shall not become a fixture. Lessee shall obtain and record such instruments
and take such steps as may be necessary to prevent any person
2
<PAGE>
from acquiring any rights in the Equipment by reason of the Equipment being
claimed or deemed to be real property. Upon request by Lessor, Lessee shall
obtain and deliver to Lessor valid and effective waivers, in recordable form, by
the owners, landlords, and mortgagees of the real property upon which the
Equipment is located or certificates of Lessee that it is the owner of such real
property, or that such real property, is neither leased nor mortgaged. Lessee
shall make the Equipment and its maintenance records available for inspection by
Lessor at reasonable times and upon reasonable notice. Lessee shall execute and
deliver to Lessor for filing any UCC financing statements or similar documents
Lessor may reasonably request.
11. EQUIPMENT USE. Lessee agrees that the Equipment will be operated
-------------
by competent, qualified personnel in connection with Lessee's business for the
purpose for which the Equipment was designed and in accordance with applicable
operating instructions, laws, and government regulations, and that Lessee shall
use all reasonable precautions to prevent loss or damage to the Equipment from
fire and other hazards. Lessee shall procure and maintain in effect all orders,
licenses, certificates, permits, approvals, and consents required by federal,
state, or local laws or by any governmental body, agency, or authority, in
connection with the delivery, installation, use, and operation of the Equipment.
12. MAINTENANCE. Lessee, at its sole cost and expense, shall keep
-----------
the Equipment in a suitable environment as specified by the manufacturer's
guidelines or the equivalent, shall meet all recertification requirements, and
shall maintain the Equipment in its original condition and working order,
ordinary wear and tear excepted. At the reasonable request of Lessor, Lessee
shall furnish all proof of maintenance.
13. ALTERATION; MODIFICATIONS; PARTS. Lessee may alter or modify the
--------------------------------
Equipment only with the prior written consent of Lessor. Any alteration shall be
removed and the Equipment restored to its normal, unaltered condition at
Lessee's expense (without damaging the Equipment's originally intended function
or its value) prior to its return to Lessor. Any part installed in connection
with warranty or maintenance service or which cannot be removed in accordance
with the preceding sentence shall be the property of Lessor.
14. RETURN OF EQUIPMENT. Except for Equipment that has suffered a
-------------------
Casualty Loss (as defined in Paragraph 15 below) and is not required to be
repaired pursuant to Paragraph 15 below or Equipment purchased by Lessee
pursuant to Paragraph 9 above, upon the expiration of the Renewal Term of a
Lease, or upon demand by Lessor pursuant to Paragraph 22 below, Lessee shall
contact Lessor for shipping instructions and, at Lessee's own risk, immediately
return the Equipment, freight prepaid, to a location in the continental United
States specified by Lessor. At the time of such return to Lessor, the Equipment
shall (i) be in the operating order, repair, and condition as required by or
specified in the original specifications and warranties of each manufacturer and
vendor thereof, ordinary wear and tear excepted, (ii) meet all recertification
requirements, and (iii) be capable of being promptly assembled and operated by a
third party purchaser or third party lessee without further repair, replacement,
alterations, or improvements, and in accordance and compliance with any and all
statutes, laws, ordinances, rules, and regulations of any governmental authority
or any political subdivision thereof applicable to the use and operating of the
Equipment. Except as otherwise provided under Paragraph 9 hereof, at least one
hundred eighty days before the expiration of the Renewal Term, Lessee shall give
Lessor notice of its intent to return the Equipment at the end of such Renewal
Term. During the one hundred eighty-day period prior to the end of a Term or the
Renewal Term, Lessor and its prospective purchasers or lessees shall have, upon
not less than two business days prior notice to Lessee and during normal
business hours, or at any time and without prior notice upon the occurrence and
continuance of an Event of Default, the right of access to the premises on which
the Equipment is located to inspect the Equipment, and Lessee shall cooperate in
all other respects with Lessor's remarketing of the Equipment. The provisions of
this Paragraph 14 are of the essence of the Lease, and upon application to any
court of equity having jurisdiction in the premises, Lessor shall be entitled to
a decree against Lessee requiring specific performance of the covenants of
Lessee set forth in this Paragraph 14. If Lessee fails to return the Equipment
when required, the terms and conditions of the Lease shall continue to be
applicable and Lessee shall continue to pay Rent until the Equipment is received
by Lessor.
15. CASUALTY INSURANCE; LOSS OR DAMAGE. Lessee will maintain, at its
----------------------------------
own expense, liability and property damage insurance relating to the Equipment.
insuring against such risks as are customarily insured against on the type of
equipment leased hereunder by businesses in which Lessee is engaged in such
amounts, in such form, and with insurers satisfactory to Lessor; provided,
--------
however, that the amount of
- -------
3
<PAGE>
insurance against damage or loss shall be not less than the greater of (a) the
replacement value of the Equipment and (b) the stipulated loss value of the
Equipment specified in the applicable Schedule ("Stipulated Loss Value"). Each
liability insurance policy shall provide coverage (including, without
limitation, personal injury coverage) of not less than $1,000,000 for each
occurrence, and shall name Lessor as an additional insured; and each property
damage policy shall name Lessor as sole loss payee and all policies shall
contain a clause requiring the insurer to give Lessor at least thirty days'
prior written notice of any alteration in the terms or cancellation of the
policy. Lessee shall furnish to Lessor a copy of each insurance policy (with
endorsements) or other evidence satisfactory to Lessor that the required
insurance coverage is in effect; provided, however, Lessor shall have no duty to
-------- -------
ascertain the existence of or to examine the insurance policies to advise Lessee
if the insurance coverage does not comply with the requirements of this
Paragraph. If Lessee fails to insure the Equipment as required, Lessor shall
have the right but not the obligation to obtain such insurance, and the cost of
the insurance shall be for the account of Lessee due as part of the next due
Rent. Lessee consents to Lessor's release, upon its failure to obtain
appropriate insurance coverage, of any and all information necessary to obtain
insurance with respect to the Equipment or Lessor's interest therein.
Until the Equipment is returned to and received by Lessor as provided
in Paragraph 14 above, Lessee shall bear the entire risk of theft or destruction
of or damage to, the Equipment including, without limitation, any condemnation,
seizure, or requisition of title or use ("Casualty Loss"). No Casualty Loss
shall relieve Lessee from its obligations to pay Rent except as provided in
clause (b) below. When any Casualty Loss occurs, Lessee shall immediately notify
Lessor and, at the option of Lessor, shall promptly (a) place such Equipment in
good repair and working order; or (b) pay Lessor an amount equal to the
Stipulated Loss Value of such Equipment and all other amounts (excluding Rent)
payable by Lessee hereunder, together with a late charge on such amounts at a
rate per annum equal to the rate imputed in the Rent payments hereunder (as
reasonably determined by Lessor) from the date of the Casualty Loss through the
date of payment of such amounts, whereupon Lessor shall transfer to Lessee,
without recourse or warranty (express or implied), all of Lessor's interest, if
any, in and to such Equipment on an "AS IS, WHERE IS" basis. The proceeds of any
insurance payable with respect to the Equipment shall be applied, at the option
of Lessor, either towards (i) repair of the Equipment or (ii) payment of any of
Lessee's obligations hereunder. Lessee hereby appoints Lessor as Lessee's
attorney-in-fact to make claim for, receive payment of, and execute and endorse
all documents, checks or drafts issued with respect to any Casualty Loss under
any insurance policy relating to the Equipment.
16. TAXES. Lessee shall pay when due, and indemnify and hold Lessor
-----
harmless from, all sales, use, excise, and other taxes, charges, and fees
(including, without limitation, income, franchise, business and occupation,
gross receipts, licensing, registration, titling, personal property, stamp and
interest equalization taxes, levies, imposts, duties, charges, or withholdings
of any nature), and any fines, penalties, or interest thereon, imposed or levied
by any governmental body, agency, or tax authority upon or in connection with
the Equipment, its purchase, ownership, delivery, leasing, possession, use, or
relocation of the Equipment or otherwise in connection with the transactions
contemplated by each Lease or the Rent thereunder, excluding taxes on or
measured by the net income of Lessor. Upon request, Lessee will provide proof of
payment. Unless Lessor elects otherwise, Lessee will pay all property taxes on
the Equipment. Lessee shall timely prepare and file all reports and returns
which are required to be made with respect to any obligation of Lessee under
this Paragraph 16. Lessee shall, to the extent permitted by law, cause all
billings of such fees, taxes, levies, imposts, duties, withholdings, and
governmental charges to be made to Lessor in care of Lessee. Upon request.
Lessee will provide Lessor with copies of all such billings.
17. LESSOR'S PAYMENT. If Lessee fails to perform its obligations
----------------
under Paragraph 15 or 16 above, or Paragraph 23 below, Lessor shall have the
right to substitute performance, in which case Lessee shall immediately
reimburse Lessor therefor.
18. GENERAL INDEMNITY. Each Lease is a net lease. Therefore, Lessee
-----------------
shall indemnify Lessor and its successors and assigns against, and hold Lessor
and its successors and assigns harmless from, any and all claims, actions,
damages, obligations, liabilities, and all costs and expenses, including,
without limitation, legal fees incurred by Lessor or its successors and assigns
arising out of each Lease including, without limitation, the purchase,
ownership, delivery, lease, possession, maintenance, condition, use, or return
of the Equipment, or arising by operation of law, except that Lessee shall not
be liable for any claims, actions, damages, obligations, and costs and expenses
determined by a non-appealable, final order of a court of competent jurisdiction
4
<PAGE>
to have occurred as a result of the gross negligence or willful misconduct of
Lessor or its successors and assigns. Lessee agrees that upon written notice by
Lessor of the assertion of any claim, action, damage, obligation, liability, or
lien, Lessee shall assume full responsibility for the defense thereof, provided
that Lessor's failure to give such notice shall not limit or otherwise affect
its rights hereunder. Any payment pursuant to this Paragraph (except for any
payment of Rent) shall be of such amount as shall be necessary so that, after
payment of any taxes required to be paid thereon by Lessor, including taxes on
or measured by the net income of Lessor, the balance will equal the amount due
hereunder. The provisions of this Paragraph with regard to matters arising
during a Lease shall survive the expiration or termination of such Lease.
19. ASSIGNMENT BY LESSEE. Lessee shall not, without the prior
--------------------
written consent of Lessor, (a) assign, transfer, pledge, or otherwise dispose of
any Lease or Equipment, or any interest therein; (b) sublease or lend any
Equipment or permit it to be used by anyone other than Lessee and its employees;
or (c) move any Equipment from the location specified for it in the applicable
Schedule, except that Lessee may move Equipment to another location within the
United States provided that Lessee has delivered to Lessor (A) prior written
notice thereof and (B) duly executed financing statements and other agreements
and instruments (all in form and substance satisfactory to Lessor) necessary or,
in the opinion of the Lessor, desirable to protect Lessor's interest in such
Equipment. Notwithstanding anything to the contrary in the immediately preceding
sentence, Lessee may keep any Equipment consisting of motor vehicles or rolling
stock at any location in the United States.
20. ASSIGNMENT BY LESSOR. Lessor may assign its interest or grant a
--------------------
security interest in any Lease and the Equipment individually or together, in
whole or in part. If Lessee is given written notice of any such assignment, it
shall immediately make all payments of Rent and other amounts hereunder directly
to such assignee. Each such assignee shall have all of the rights of Lessor
under each Lease assigned to it. Lessee shall not assert against any such
assignee any set-off, defense, or counterclaim that Lessee may have against
Lessor or any other person.
21. DEFAULT; NO WAIVER. Lessee or any guarantor of any or all of the
------------------
obligations of Lessee hereunder (together with Lessee, the "Lease Parties")
shall be in default under each Lease upon the occurrence of any of the following
events (each, an "Event of Default"): (a) Lessee fails to pay within five days
of when due any amount required to be paid by Lessee under or in connection with
any Lease; (b) any of the Lease Parties fails to perform any other provision
under or in connection with a Lease or violates any of the covenants or
agreements of such Lease Party under or in connection with a Lease; (c) any
representation made or financial information delivered or furnished by any of
the Lease Parties under or in connection with a Lease shall prove to have been
inaccurate in any material respect when made; (d) any of the Lease Parties makes
an assignment for the benefit of creditors, whether voluntary or involuntary, or
consents to the appointment of a trustee or receiver, or if either shall be
appointed for any of the Lease Parties or for a substantial part of its property
without its consent and, in the case of any such involuntary proceeding such
proceeding remains undismissed or unstayed for forty-five days following the
commencement thereof; (e) any petition or proceeding is filed by or against any
of the Lease Parties under any Federal or State bankruptcy or insolvency code or
similar law and, in the case of any such involuntary petition or proceeding,
such petition or proceeding remains undismissed or unstayed for forty-five days
following the filing or commencement thereof or any of the Lease Parties takes
any action authorizing any such petition or proceeding; (f) any of the Lease
Parties fails to pay when due any indebtedness for borrowed money or under
conditional sales or installment sales contracts or similar agreements, leases,
or obligations evidenced by bonds, debentures, notes, or other similar
agreements or instruments to any creditor (including Lessor under any other
agreement) after any and all applicable cure periods therefor shall have
elapsed; (g) any judgment shall be rendered against any of the Lease Parties
which shall remain unpaid or unstayed for a period of sixty days: (h) any of the
Lease Parties shall dissolve, liquidate, wind up or cease its business, sell or
otherwise dispose of all or substantially all of its assets, or make any
material change in its lines of business; (i) any of the Lease Parties shall
amend or modify its name, unless such Lease Party delivers to Lessor, thirty
days prior to any such proposed amendment or modification, written notice of
such amendment or modification and within ten days before such amendment or
modification delivers executed financing statements (in form and substance
satisfactory to the Lessor); (j) any of the Lease Parties shall merge or
consolidate with any other entity or make any material change in its capital
structure, in each case without Lessor's prior written consent, which shall not
be unreasonably withheld; (k) any of the Lease Parties shall suffer any loss or
suspension of any material license, permit, or other right or asset necessary to
the profitable conduct of its business, fail generally to pay its debts as they
mature, or call a meeting for the purposes of compromising its debts: (1) any of
the Lease Parties shall deny or disaffirm its obligations hereunder or under any
5
<PAGE>
of the documents delivered in connection herewith; (m) there is a change, which
change results from a single transaction or series of related transactions, but
not from the sale of newly issued securities to investors, in more than 35% of
the ownership of any equity interests of any of the Lease Parties on the date
hereof or more than 35% of such interests become subject to any contractual.
judicial or statutory lien, charge, security interest, or encumbrance; or (n)
any of the Lease Parties suffers a material adverse change in the business,
prospects, operations, results of operations, asses, liabilities, or condition
(financial or otherwise).
22. REMEDIES. Upon the occurrence and continuation of an Event of
--------
Default, Lessor shall have the right, in is sole discretion, to exercise any one
or more of the following remedies: (a) terminate each Lease; (b) declare any and
all Rent and other amounts then due and any and all Rent and other amounts to
become due under each Lease (collectively, the "Lease Obligations") immediately
due and payable; (c) take possession of any or all items of Equipment, wherever
located, without demand, notice, court order, or other process of law, and
without liability for entry to Lessee's premises, for damage to Lessee's
property, or otherwise; (d) demand that Lessee immediately return any or all
Equipment to Lessor in accordance with Paragraph 14 above, and, for each day
that Lessee shall fail to return any item of Equipment, Lessor may demand an
amount equal to the Rent payable for such Equipment in accordance with Paragraph
14 above; (e) lease, sell, or otherwise dispose of the Equipment in a
commercially reasonable manner, with or without notice and on public or private
bid; (f) recover the following amounts from the Lessee (as damages, including
reimbursement of costs and expenses, liquidated for all purposes and not as a
penalty): (i) all costs and expenses of Lessor reimbursable to it hereunder,
including, without limitation, expenses of disposition of the Equipment, legal
fees, and all other amounts specified in Paragraph 23 below; (ii) an amount
equal to the sum of (A) any accrued and unpaid Rent through the later of (1) the
date of the applicable default, (2) the date that Lessor has obtained possession
of the Equipment, or (3) such other date as Lessee has made an effective tender
of possession of the Equipment to Lessor (the "Default Date") and (B) if Lessor
resells or re-lets the Equipment, Rent at the periodic rate provided for in each
Lease for the additional period that it takes Lessor to resell or re-let all of
the Equipment; (iii) the present value of all future Rent reserved in the Leases
and contracted to be paid over the unexpired Term of the Leases discounted at
five percent compound interest; (iv) the reversionary value of the Equipment as
of the expiration of the Term of the applicable Lease as set forth on the
applicable Schedule; and (v) any indebtedness for Lessee's indemnity under
Paragraph 18 above, plus a late charge at the rate specified in Paragraph 3
above, less the amount received by Lessor, if any, upon sale or re-let of the
Equipment; and (g) exercise any other right or remedy to recover damages or
enforce the terms of the Leases. Upon the occurrence and continuance of an Event
of Default or an event which with the giving of notice or the passage of time,
or both, would result in an Event of Default, Lessor shall have the right.
whether or not Lessor has made any demand or the obligations of Lessee hereunder
have matured, to appropriate and apply to the payment of the obligations of
Lessee hereunder all security deposits and other deposits (general or special,
time or demand, provisional or final) now or hereafter held by and other
indebtedness or property now or hereafter owing by Lessor to Lessee. Lessor may
pursue any other rights or remedies available at law or in equity, including,
without limitation, rights or remedies seeking damages, specific performance,
and injunctive relief Any failure of Lessor to require strict performance by
Lessee, or any waiver by Lessor of any provision hereunder or under any
Schedule, shall not be construed as a consent or waiver of any other breach of
the same or of any other provision. Any amendment or waiver of any provision
hereof or under any Schedule or consent to any departure by Lessee herefrom or
therefrom shall be in writing and signed by Lessor.
No right or remedy is exclusive of any other provided herein or
permitted by law or equity. All such rights and remedies shall be cumulative and
may be enforced concurrently or individually from time to time.
23. LESSOR'S EXPENSE. Lessee shall pay Lessor on demand all costs
----------------
and expenses (including legal fees and expenses) incurred in connection with the
preparation, execution and delivery of this Agreement and any other agreements
and transaction contemplated hereby, which expenses shall not exceed $3,000
without the written consent of Lessee and all costs and expenses in protecting
and enforcing Lessor's rights and interests in each Lease and the equipment,
including, without limitation, legal, collection, and remarketing fees and
expenses incurred by Lessor in enforcing the terms, conditions, or provisions of
each Lease or upon the occurrence and continuation of an Event of Default.
24. LESSEE'S WAIVERS. To the extent permitted by applicable law,
----------------
Lessee hereby waives any and all rights and remedies conferred upon a lessee by
Sections 2A-508 through 2A-522 of the UCC. To the extent permitted by applicable
law, Lessee also hereby waives any rights now or hereafter conferred by statute
or
6
<PAGE>
otherwise which may require Lessor to sell, lease, or otherwise use any
Equipment in mitigation of Lessor's damages as set forth in Paragraph 22 above
or which may otherwise limit or modify any of Lessor's rights or remedies under
Paragraph 22. Any action by Lessee against Lessor for any default by Lessor
under any Lease shall be commenced within one year after any such cause of
action accrues.
25. NOTICES; ADMINISTRATION. Except as otherwise provided herein,
-----------------------
all notices, approvals, consents, correspondence, or other communications
required or desired to be given hereunder shall be given in writing and shall be
delivered by overnight courier, hand delivery, or certified or registered mail,
postage prepaid, if to Lessor, then to Transamerica Technology Finance Division,
76 Batterson Park Road, Farmington, Connecticut 06032, Attention: Assistant Vice
President, Lease Administration, with a copy to Lessor at Riverway II, West
Office Tower, 9399 West Higgins Road, Rosemont, Illinois 60018, Attention: Legal
Department, if to Lessee, then to Genomica Corporation, 4001 Discovery Drive,
Suite 130, Boulder, Colorado 80303-7817, Attention: Vice President Finance &
Chief Financial Officer or such other address as shall be designated by Lessee
or Lessor to the other party. All such notices and correspondence shall be
effective when received.
26. REPRESENTATIONS. Lessee represents and warrants to Lessor that
---------------
(a) Lessee is duly organized, validly existing, and in good standing under the
laws of the State of its incorporation; (b) the execution, delivery, and
performance by Lessee of this Agreement are within Lessee's powers, have been
duly authorized by all necessary action, and do not and will not contravene (i)
Lessee's organizational documents or (ii) any law, regulation, rule, or
contractual restriction binding on or affecting Lessee; (c) no authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery, and
performance by Lessee of this Agreement; (d) each Lease constitutes the legal,
valid, and binding obligations of Lessee enforceable against Lessee in
accordance with its terms; (e) the cost of each item of Equipment does not
exceed the fair and usual price for such type of equipment purchased in like
quantity and reflects all discounts, rebates, and allowances for the Equipment
(including, without limitation, discounts for advertising, prompt payment,
testing, or other services) given to the Lessee by the manufacturer, supplier,
or any other person; and (f) all information supplied by Lessee to Lessor in
connection herewith is correct and does not omit any material statement
necessary to insure that the information supplied is not misleading.
27. FURTHER ASSURANCES. Lessee, upon the request of Lessor, will
------------------
execute, acknowledge, record, or file, as the case may be, such further
documents and do such further acts as may be reasonably necessary, desirable, or
proper to carry out more effectively the purposes of this Agreement. Lessee
hereby appoints Lessor as its attorney-in-fact to execute on behalf of Lessee
and authorizes Lessor to file without Lessee's signature any UCC financing
statements and amendments Lessor deems advisable.
28. FINANCIAL STATEMENTS. Lessee shall deliver to Lessor: (a) as
--------------------
soon as available, but not later than 120 days after the end of each fiscal year
of Lessee and its consolidated subsidiaries, the consolidated balance sheet,
income statement, and statements of cash flows and shareholders equity for
Lessee and its consolidated subsidiaries (the "Financial Statements") for such
year, reported on by independent certified public accountants without an adverse
qualification; and (b) as soon as available, but not later than 60 days after
the end of each of the first three fiscal quarters in any fiscal year of Lessee
and its consolidated subsidiaries, the Financial Statements for such fiscal
quarter, together with a certification duly executed by a responsible officer of
Lessee that such Financial Statements have been prepared in accordance with
generally accepted accounting principles and are fairly stated in all material
respects (subject to normal year-end audit adjustments). Lessee shall also
deliver to Lessor as soon as available copies of all press releases and other
similar communications issued by Lessee.
29. CONSENT TO JURISDICTION. Lessee irrevocably submits to the
-----------------------
jurisdiction of any Illinois state or federal court sitting in Illinois for any
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby, and Lessee irrevocably agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
Illinois state or federal court.
30. WAIVER OF JURY TRIAL. LESSEE AND LESSOR IRREVOCABLY WAIVE ALL
--------------------
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
7
<PAGE>
31. FINANCE LEASE. Lessee and Lessor agree that each Lease is a
-------------
"Finance Lease" as defined by Section 2A-103(g) of the UCC. Lessee acknowledges
that Lessee has reviewed and approved each written Supply Contract (as defined
by UCC 2A-103(y)) covering Equipment purchased from each "Supplied' (as defined
by UCC 2A-103(x)) thereof.
32. NO AGENCY. Lessee acknowledges and agrees that neither the
---------
manufacturer or supplier, nor any salesman, representative, or other agent of
the manufacturer or supplier, is an agent of Lessor. No salesman,
representative, or agent of the manufacturer or supplier is authorized to waive
or alter any term or condition of this Agreement or any Schedule and no
representation as to the Equipment or any other manner by the manufacturer or
supplier shall in any way affect Lessee's duty to pay Rent and perform its other
obligations as set forth in this Agreement or any Schedule.
33. GOVERNING LAW; SEVERABILITY. EACH LEASE SHALL BE GOVERNED BY THE
---------------------------
LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. IF ANY PROVISION SHALL BE HELD TO BE INVALID OR
UNENFORCEABLE, THE VALIDITY AND ENFORCEABILITY OF THE REMAINING PROVISIONS SHALL
NOT IN ANY WAY BE AFFECTED OR IMPAIRED.
LESSEE ACKNOWLEDGES THAT LESSEE HAS READ THIS AGREEMENT AND THE SCHEDULE HERETO,
UNDERSTANDS THEM, AND AGREES TO BE BOUND BY THEIR TERMS AND CONDITIONS. FURTHER,
LESSEE AND LESSOR AGREE THAT THIS AGREEMENT, THE SCHEDULES DELIVERED IN
CONNECTION HEREWITH FROM TIME TO TIME, AND THE COMMITMENT LETTER ARE THE
COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES,
SUPERSEDING ALL PROPOSALS OR PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER
COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF. SHOULD
THERE EXIST ANY INCONSISTENCY BETWEEN THE TERMS OF THE COMMITMENT LETTER AND
THIS AGREEMENT, THE TERMS OF THIS AGREEMENT SHALL PREVAIL.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be duly executed by their duly authorized officers as of the date
first written above.
GENOMICA CORPORATION
By: /s/ William E. Seamans
------------------------------
Name: William E. Seamans
Title: V.P. Finance
Federal Tax ID: 23-2821818
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ Gary P.Moro
------------------------------
Name: Gary P. Moro
Title: Vice President
9
<PAGE>
TRANSAMERICA
BUSINESS CREDIT
[Gerald A. Michaud
Letterhead Information]
Exhibit A
October 1, 1998
Mr. William E. Seamans
Genomica Corporation
4001 Discovery Drive
Suite 130
Boulder, CO 80303-7817
Dear Bill:
Transamerica Business Credit Corporation - Technology Finance Division
("Lessor") is pleased to offer this commitment (this "Commitment") to lease the
equipment described below to Genomica Corporation ("Lessee"). This Commitment
supercedes all prior correspondence, proposals, and oral or other communications
relating to leasing arrangements between Lessor and Lessee.
The outline of this offer is as follows:
Lessor: Transamerica Business Credit Corporation - Technology
- ------
Finance Division and/or its affiliates, successors or
assigns.
Lessee: Genomica Corporation
- ------
Equipment Cost: Not to exceed $1,000,000 in the aggregate, of which up
- --------------
to $300,000 may be for software and other soft costs.
Equipment: Office and computer equipment, software and related
- ---------
soft costs, including but not limited to all
additions, accessions, improvements, replacements and
attachments thereto and proceeds (including insurance
proceeds) thereof (the "Equipment"). Equipment
purchased prior to the date hereof will be financed at
its net book value.
Location of Equipment: 4001 Discovery Drive, Boulder, CO.
- ---------------------
Anticipated Draw-Down A minimum of $200,000 will be drawn on or before
- ---------------------
Schedule: October 31, 1998, and the remaining availability will
- --------
be drawn on or before December 30, 1999.
Lease Term: Each Lease Term will commence upon delivery of the
- ----------
Equipment or upon each delivery of items of Equipment
having an aggregate cost of not less than $50,000, and
will continue through 36 months from the first day of
the month next following or coincident with
commencement of that Lease Term.
Payment Terms: Monthly Rent equal to 3.1551% of Equipment Cost will
- ------------- be payable monthly in advance. The first and last
Monthly Rent payments will be and payable on or before
commence of each Lease Term.
Adjustment to Lessor reserves the right to increase shall charge at
- ------------- the rate set forth above as of the date each lease Term
Monthly Rent: commences proportionally to the change in the weekly
- ------------ Average of interest rates of three-year U.S. Treasury
Securities as
1
<PAGE>
published in the Wall Street Journal from
the week ending August 7, 1998 to the week preceding
the commencement of such Lease Term. As of the date
each Lease Term commences, the Monthly Rent will be
fixed for that entire Lease Term.
Purchase Option: At the expiration of each Lease Term, the Lessee will
- ---------------
have the option to purchase all (but not less than all)
of the Equipment for its then Fair Market Value, plus
any applicable sales or other taxes. It will be agreed
that Fair Market Value will be 10% of Equipment Cost.
Automatic Renewal: In the event the Lessee does not exercise the Purchase
- -----------------
Option described above, each Lease will automatically
renew for a term of twelve months with Monthly Rentals
equal to 1.25% of Equipment Cost payable monthly in
advance. At the expiration of the renewal period, the
Lessee will have the option to purchase all (but not
less than all) the Equipment for its then fair market
value which shall not exceed 5% of equipment cost, plus
applicable sales and other taxes.
Interim Rent: Interim Rent will accrue from the date each Lease Term
- ------------ commences until the next following first day of a month
(unless the Lease Term commences on the first day of a
month). Interim Rent will be calculated at the daily
equivalent of the currently adjusted Monthly Rent.
Conditions Precedent Each Lease will be subject to the following:
- --------------------
to Lease Term 1. No material adverse change in the financial
- ------------- condition, operation or prospects of the Lessee
Commencement prior to funding. The Lessor reserves the right not
- ------------ to fund any unused portion of its commitment in the
event of a material adverse change in the financial
condition, operation or prospects of the Lessee.
2. Completion of the documentation and final terms of
the proposed financing satisfactory to Lessor and
Lessor's counsel.
3. Results of al1 due diligence, including lien,
judgment and tax search and other matters Lessor may
request shall be satisfactory to Lessor and Lessor's
counsel.
4. Receipt by Lessor of duly executed Lease
documentation in form and substance satisfactory to
Lessor and its counsel.
5. Lessor shall receive a valid and perfected first
priority lien and security interest in the Equipment
and Lessor shall have received satisfactory evidence
that there are no liens on the Equipment except as
expressly permitted herein.
6. Evidence satisfactory to Lessor of either (i) a firm
commitment from existing investors to provide a
bridge loan in an amount at least double the
aggregate of all amounts drawn and requested to be
drawn hereunder, or (ii) receipt of at least
$5,000,000 gross proceeds of a Series B Preferred
Stock offering.
Additional Covenants: There will be no actual or threatened conflict with, or
- -------------------- violation of, any regulatory statute, standard or rule
relating to the Lessee, its present or future
operations, or the Equipment.
Lessee will be required to provide quarterly financial
information. All information ??illegible on original??
will not omit any statement necessary to make the
information supplied not be misleading. There will be
no material breach of the representations and
warranties of the Lessee in the lease. The
representations will include that the Equipment Cost of
each item of the Equipment does not exceed the fair and
usual price for like quantity purchased of such item
and reflects all discounts, rebates and allowances for
the Equipment
2
<PAGE>
given to Lessee by the manufacturer, supplier or
anyone else including, without limitation, discounts
for advertising, prompt payment, testing or other
services.
Net Lease: The Leases will be net leases under which the Lessee
- --------- will be responsible for maintenance, insurance, taxes
and all other costs and expenses.
Taxes: Sales or use taxes will be added to the Equipment Cost
- ----- or collected on the gross rentals, as appropriate.
Insurance: Prior to any delivery of equipment, the Lessee will
- --------- furnish confirmation of insurance acceptable to the
Lessor covering the Equipment including primary, all
risk, physical damage, property damage and bodily
injury with appropriate loss payee and additional
insured endorsements in favor of the Lessor.
Expenses: All costs and expenses incurred by the Lessor in
- -------- connection with the underwriting and closing of the
Leases will be paid by the Lessee whether or not any
Leases are consummated and funds are advanced by the
Lessor. Such Expenses will not exceed $3,000 without
the consent of the Lessee.
Law: This letter and the proposed Lease are intended to be
- --- governed by and construed in accordance the Illinois
law without regard to its conflict of law provisions.
Indemnity: Lessee agrees to indemnify and to hold harmless
- --------- Lessor, and its officers, directors and employees
against all claims, damages, liabilities and expenses
which may be incurred by or asserted against any such
person in connection with or arising out of this
letter and the transactions contemplated hereby, other
than claims, damages, liability, and expense resulting
from such person's gross negligence or willful
misconduct.
Confidentiality: This letter is delivered to you with the understanding
- --------------- that neither it nor its substance shall be disclosed
publicly or privately to any third person except those
who are in a confidential relationship to you (such as
your legal counsel and accountants), or where the same
is required by law and then only on the basis that it
not be further disclosed, which conditions Lessee and
its agents agree to be bound by upon acceptance of
this letter.
Without limiting the generality of the foregoing, none
of such persons shall use or refer to Lessor or to any
affiliate name in any disclosures made in connection
with any of the transactions without Lessor's prior
written consent.
Upon completion of the initial takedown by Lessor and
Lessee, the Lessor will no longer be required to
obtain Lessors' prior written consent to disclose the
transaction contemplated hereby. In addition, the
Lessee agrees to provide camera ready artwork of
typestyles and logos of the Lessee for use in
promotional material by the Lessor.
Conditions of Acceptance: This Commitment Letter is intended to be a summary of
- ------------------------ the most important elements of the agreement to enter
into a leasing transaction with Lessee, and it is
subject to all requirements and conditions contained
in Lease documentation proposed by Lessor or its
counsel in the course of closing the Lease described
herein. Not every provision that imposes duties,
obligations, burdens, or limitations on Lessee is
contained herein, but shall be contained in the final
Lease documentation satisfactory to Lessor and its
counsel.
3
<PAGE>
EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY SUIT, ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATED TO THIS LETTER OR THE TRANSACTION
DESCRIBED IN THIS LETTER.
Application Fee: The $10,000 Application Fee previously paid by the
- --------------- Lessee shall be first applied to the costs and
expenses of the Lessor in connection with closing the
transaction (capped at $3,000), and the remainder
shall be applied pro rata to the second month's rent
due under each Lease Schedule.
Commitment Expiration: This Commitment shall expire on October 8, 1998,
- --------------------- unless prior the thereto either extended in writing by
the Lessor or accepted as provided below by the
Lessee.
Should you have any questions, please call me. If you wish to accept this
Commitment, please so indicate by signing and returning the enclosed duplicate
copy of this letter to me by October 8, 1998.
Yours truly,
TRANSAMERICA BUSINESS CREDIT
CORP - TECHNOLOGY FINANCE
DIVISION
By: /s/ Gerald A. Michaud
-----------------------------------
Gerald A. Michaud
Senior Vice President - Marketing
Accepted this 8 day of October, 1998
-
GENOMICA CORPORATION
By: /s/ William E. Seamans
---------------------------------
Name: William E. Seamans
Title: V.P. Finance
4
<PAGE>
SECRETARY'S CERTIFICATE
I, William Seamans, hereby state that I am the duly elected acting and
---------------
qualified Secretary of Genomica Corporation, a Delaware corporation (the
"Company"), and that:
(a) Through a unanimous consent in lieu of a Board of Directors
meeting of the Company, proposed in accordance with its bylaws and the laws of
said State on the 10 day of September, 1998, signed by a quorum for the
-- --------- -
transaction of business, the following resolutions were duly and regularly
adopted:
RESOLVED, that the form, terms and provisions of all of the documents
and instruments executed by the Company with and/or in favor of Transamerica
Business Credit Corporation (the "Agreements"), and the transactions
contemplated thereby be, and the same are, in all respects approved, and that
the President, each Vice President and each other officer of the Company (the
"Authorized Persons"), or any of them, be, and they hereby are, authorized,
empowered, and directed to execute and deliver the Agreements and any and all
other agreements, documents, instruments and certificates required or desirable
in connection therewith, if necessary or advisable, with such changes as they
may deem in the best interest of the Company, and their execution and delivery
of the Agreements, and all such other agreements, documents, instruments and
certificates, shall be deemed to be conclusive evidence that the same are in all
respects authorized and approved; and be it further
RESOLVED, that the actions of any Authorized Person heretofore taken
in furtherance of the Agreements be, and hereby are, approved, adopted and
ratified in all respects.
(i) The above resolutions: (a) are not contrary to the Articles or
Certificate of Incorporation or bylaws of the Company and (b) have not been
amended, modified, rescinded or revoked and are in full force and effect on the
date hereof.
(ii) The following persons are duly qualified and acting officers of
the Company, duly elected to the offices set forth opposite their respective
names, and the signature appearing opposite the name of each such officer is his
authentic signature:
<TABLE>
<CAPTION>
Name Office Signature
---- ------ ---------
<S> <C> <C>
Thomas G. Marr President & Chief Scientist Thomas G. Marr
- ----------------------------------- -------------------------------------- ------------------------------
___________________________________ ______________________________________ ______________________________
William E. Seamans V.P. Finance & C.F.O. William E. Seamans
- ----------------------------------- -------------------------------------- ------------------------------
</TABLE>
IN WITNESS WHEREOF, I have executed this Certificate, this 3 day of
-
November, 1998.
- --------
William E. Seamans
-----------------------------------
Secretary
[CORPORATE SEAL]
Form 3
William E. Seamans is a duly qualified and acting officer of
the company, duly elected to the office set forth opposite
his respective name, and the signature appearing opposite
his name is his authentic signature.
by: Thomas G. Marr
------------------------------------
Thomas G. Marr
President
-1-
<PAGE>
GENOMICA CORPORATION
CUSTOMER NO. 1188
CONTACT INFORMATION FORM
Please provide us with the names and telephone numbers of the individuals
that we should contact when inquiring about the following:
1. Documentation Questions
2. Accounts Payable
3. Equipment Questions
4. Insurance Questions
1. NAME: /s/ William Seamans PHONE: 303 544 4030
-------------------------------- ------------------------
E-MAIL ADDRESS: [email protected]
--------------------------------------------------------------
2. NAME: Donna Sichko PHONE: 303 544 4019
---------------------------------- ------------------------
E-MAIL ADDRESS: [email protected]
--------------------------------------------------------------
FAX: 303 402 9877
--------------------------
BILLING ADDRESS: 4001 Discovery Drive, Ste 130
-------------------------------------------------------------
Boulder, CO 80303
-----------------------------------------------------------
___________________________________________________________
3. NAME: Ed Moxley PHONE: 303 544 4017
---------------------------------- ------------------------
E-MAIL ADDRESS: [email protected]
--------------------------------------------------------------
4. NAME: William Seamans PHONE:________________________
---------------------------------
E-MAIL ADDRESS:______________________________________________________________
(please print)
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated March 13, 2000 and to all references to our Firm included in or made a
part of this registration statement.
Denver, Colorado,
March 14, 2000.
