<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1996
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
ADEZA BIOMEDICAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 2835 77-0054952
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
----------------
1240 ELKO DRIVE
SUNNYVALE, CA 94089
(408) 745-0975
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
DANIEL O. WILDS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ADEZA BIOMEDICAL CORPORATION
1240 ELKO DRIVE
SUNNYVALE, CA 94089
(408) 745-0975
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
----------------
COPIES TO:
JOSHUA L. GREEN, ESQ. ROBERT L. JONES, ESQ.
WILLIAM W. ERICSON, ESQ. JULIA L. DAVIDSON, ESQ.
VENTURE LAW GROUP COOLEY GODWARD CASTRO HUDDLESON &
A PROFESSIONAL CORPORATION TATUM
2800 SAND HILL ROAD FIVE PALO ALTO SQUARE
MENLO PARK, CALIFORNIA 94025 PALO ALTO, CALIFORNIA 94306-2155
(415) 854-4488 (415) 843-5000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION
STATEMENT.
----------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration 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 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
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par
value per share....... 2,875,000 shares $13.00 $37,375,000 $12,888
</TABLE>
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- -------------------------------------------------------------------------------
(1) Includes 375,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(a).
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS 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>
ADEZA BIOMEDICAL CORPORATION
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED BY ITEMS IN PART I OF FORM S-1
<TABLE>
<CAPTION>
ITEM NUMBER AND HEADING
IN FORM S-1 REGISTRATION STATEMENT HEADING OR LOCATION IN PROSPECTUS
- ------------------------------------ -------------------------------------------
<S> <C>
1. Forepart of Registration State-
ment and Outside Front Cover
Page of Prospectus.............. Outside Front Cover Page; Front of
Registration Statement
2. Inside Front and Outside Back
Cover Pages of Prospectus....... Inside Front and Outside Back Cover Pages
3. Summary Information, Risk Fac-
tors and Ratio of Earnings to
Fixed Charges................... Prospectus Summary; The Company; Risk
Factors
4. Use of Proceeds................. Use of Proceeds
5. Determination of Offering
Price........................... Underwriters
6. Dilution........................ Dilution
7. Selling Security Holders........ Principal and Selling Stockholders
8. Plan of Distribution............ Outside and Inside Front Cover Pages;
Underwriters
9. Description of Securities to be
Registered...................... Description of Capital Stock
10. Interests of Named Experts and
Counsel......................... Legal Matters; Experts
11. Information with Respect to the
Registrant...................... Outside and Inside Front Cover Pages;
Prospectus Summary; Risk Factors; The
Company; Use of Proceeds; Dividend Policy;
Capitalization; Dilution; Selected
Consolidated Financial Data; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Certain
Transactions; Principal and Selling
Stockholders; Description of Capital
Stock; Shares Eligible for Future Sale;
Underwriting; Legal Matters; Experts;
Additional Information; Glossary of Terms;
Consolidated Financial Statements
12. Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities...... Not applicable
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION -- DATED MAY 13, 1996
PROSPECTUS
- --------------------------------------------------------------------------------
2,500,000 Shares
[LOGO OF ADEZA BIOMEDICAL CORPORATION]
Common Stock
- --------------------------------------------------------------------------------
All of the 2,500,000 shares of common stock, par value $0.001 per share (the
"Common Stock"), offered hereby are being sold by Adeza Biomedical Corporation
("Adeza" or the "Company").
Prior to this offering there has been no public market for the Common Stock of
the Company. It is currently anticipated that the initial public offering price
will be between $11.00 and $13.00 per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price.
Application has been made for inclusion of the Company's Common Stock in The
Nasdaq Stock Market's National Market (the "Nasdaq National Market") under the
symbol "ADZA."
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" ON PAGES 6 TO 16 FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK
OFFERED HEREBY.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................... $ $ $
- -----------------------------------------------------------------------------
Total(3)............................ $ $ $
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
</TABLE>
(1) The Company and certain stockholders of the Company (the "Selling
Stockholders") have agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated to be $750,000.
(3) The Selling Stockholders have granted the several Underwriters 30-day over-
allotment options to purchase up to 375,000 additional shares of Common
Stock on the same terms and conditions as set forth above. If all such
additional shares are purchased by the Underwriters, the total Price to
Public will be $ , the total Underwriting Discounts and Commissions will
be $ , the total Proceeds to Company will be $ , and the total Proceeds
to Selling Stockholders will be $ . See "Principal and Selling
Stockholders" and "Underwriting."
- --------------------------------------------------------------------------------
The shares of Common Stock are offered by the several Underwriters subject to
delivery by the Company and the Selling Stockholders and acceptance by the
Underwriters, to prior sale and to withdrawal, cancellation or modification of
the offer without notice. Delivery of the shares to the Underwriters is
expected to be made at the office of Prudential Securities Incorporated, One
New York Plaza, New York, New York, on or about , 1996.
PRUDENTIAL SECURITIES INCORPORATED
NEEDHAM & COMPANY, INC.
TUCKER ANTHONY INCORPORATED
, 1996
<PAGE>
DIAGNOSING PROBLEMS IN WOMEN'S HEALTH CARE
PREMATURE BIRTH
Premature birth is a life-threatening
problem affecting 10% of all births in
the United States. More than 20,000
infants die each year in the U.S. from
premature delivery. Surviving infants
often suffer lifelong mental and physical
handicaps,and the high cost of neonatal [DRAWING OF CHEMICAL STRUCTURE]
intensive care imposes a significant
financial burden.
Adeza received an expedited PMA from
the FDA for a fetal fibronection fFN
ELISA (Enzyme-Linked Immunosorbent Assay)
test to aid in the diagnosis of premature
birth in symptomatic women. Adeza is
preparing PMA supplements for the use of
the assay in asymptomatic women and for
a point-of-care dipstick test. fFN: A Biochemical Indicator
For Premature Birth
[PHOTOS] [DIAGRAMMED DRAWING]
PREECLAMPSIA ENDOMETRIOSIS/INFERTILITY
Preeclampsia, severe hypertension during Endometriosis is a serious condition
pregnancy, is a leading cause of afflicting 10% of all women of
maternal death and affects 7% of all reproductive age in the United
pregnancies in the United States. If States.
If the condition progresses to eclampsia,
the lives of both mother and baby are at Adeza is developing analytical
risk. software and less-invasive
biochemical assays to identify
Adeza has developed an ELISA-based women with endometriosis and
diagnostic test to confirm severe endometriosis-related infertility.
preeclampsia in symptomatic women.
Preclinical evaluations are in
progress in the United States, Europe
and Australia.
Adeza(Registered Trademark) is a
registered trademark of the Company,
and the Adeza logo is a trademark of [LOGO OF
the Company. This Prospectus also ADEZA BIOMEDICAL
contains trademarks and trade names of CORPORATION]
other companies.
- --------------------------------------------------------------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCOUNTED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus, including information under "Risk
Factors." The Common Stock offered hereby involves a high degree of risk.
Unless otherwise indicated, the information in this Prospectus (i) assumes that
the Underwriters' over-allotment options will not be exercised, (ii) reflects
the one-for-2.4 reverse stock split effected in connection with the Company's
reincorporation in Delaware prior to the effectiveness of this offering and
(iii) gives effect to the automatic conversion of all outstanding shares of
Series 1 Preferred Stock and Series 2 Preferred Stock into an equal number of
shares of Common Stock upon the completion of this offering. Certain terms are
defined in the Glossary of Terms beginning on page 65 of this Prospectus.
THE COMPANY
Adeza Biomedical Corporation ("Adeza" or the "Company") develops and markets
diagnostic products and services for women's reproductive health care. The
Company's primary focus is the development and marketing of proprietary tests
for the diagnosis of pregnancy-related and female reproductive disorders,
including premature and late birth, preeclampsia, endometriosis and
infertility. The Company believes its products and services will result in
improved patient management, with a consequent reduction in both patient risk
and overall costs.
The Company has received an expedited premarket approval ("PMA") from the
Food and Drug Administration ("FDA") to market its proprietary enzyme-linked
immunosorbent assay ("ELISA") diagnostic (the "fFN ELISA Test") for use in
women with symptoms of premature birth. The fFN ELISA Test is the only FDA-
approved immunodiagnostic test for this disorder and represents a significant
advance over currently used evaluation techniques. This test measures the
presence of fetal fibronectin ("fFN") in the vaginal fluid of pregnant women in
order to assess the likelihood of premature birth. The Company believes that
its fFN-based products have the potential to become an element of standard
prenatal care. The Company will distribute the fFN ELISA Test in the United
States through an exclusive strategic distribution arrangement with Matria
Healthcare, Inc. ("Matria"), a leading women's health care company. Matria
began shipment of fFN ELISA Tests to a select number of initial customers in
the United States in April 1996 and is expected to commence full-scale
marketing efforts in the second half of 1996. The Company has been selling the
fFN ELISA Test in Japan since 1995 through an exclusive arrangement with
Daiichi Pure Chemicals Co. Ltd. ("Daiichi") and in Europe through a limited
number of distributors.
The women's reproductive health care market represents a large and
increasingly important part of the health care economy, with an estimated $20
billion being spent annually in the United States on obstetrical and
gynecological ("Ob/Gyn") care. Pregnancy-related disorders being addressed by
the Company, including premature birth and preeclampsia, represent significant
opportunities within the women's reproductive health care market. The American
College of Obstetrics and Gynecology estimates that of the annual four million
births in the United States, approximately 400,000 are premature and
approximately 300,000 births are affected by preeclampsia, which accounts for
10% to 25% of premature births. CIGNA Corporation estimates that the costs
associated with premature births are greater than $4.7 billion per year. The
Company also targets the reproductive disorder of endometriosis, which in the
United States is estimated to afflict six million women of reproductive age.
Endometriosis is also closely associated with another of the Company's other
targeted markets, infertility. Annual expenditures in the United States for the
diagnosis and treatment of infertility are estimated to be approximately $2.0
billion.
Adeza's goal is to become a global leader in the diagnosis and treatment of
pregnancy-related and female reproductive disorders by designing, developing
and marketing proprietary diagnostic tests and services for the women's
reproductive health care market. In addition to the fFN ELISA Test, the Company
is developing several other products for this market. The Company is preparing
supplements to its PMA ("PMA Supplements") for the use of the fFN ELISA Test in
assessing the likelihood of premature birth in asymptomatic
3
<PAGE>
women, and for the use of a point-of-care rapid assay (the "fFN Dipstick Test")
for assessing the likelihood of premature birth in symptomatic women. Clinical
trials have been completed by the National Institutes of Health (the "NIH")
which support the use of the fFN ELISA Test for asymptomatic women. The Company
is currently conducting clinical trials to support the use of the fFN Dipstick
in symptomatic women. Additionally, the Company is in the process of designing
clinical trials for the use of the fFN Dipstick Test in assessing the
likelihood of successful induction of labor at term, which may be useful in
avoiding complications related to late birth. The Company's proprietary fFN
vertical flow membrane test (the "fFN Vertical Flow Test") for the assessment
of premature rupture of amniotic membranes ("ROM") has been introduced for sale
in Japan. Finally, the Company has developed a proprietary test based on
cellular fibronectin (the "cFN Test") for the diagnosis of preeclampsia, a
leading cause of maternal death and fetal complications in the United States.
The cFN Test is currently undergoing preclinical evaluations in the United
States, Europe and Australia. The Company also maintains a significant product
development program with the goal of introducing additional proprietary
diagnostics and therapeutics for the women's reproductive health care market.
The Company intends to increase acceptance and create long-term demand by
marketing the cost effectiveness and improved patient care that its products
and services provide to physicians, hospitals, other health care providers and
third-party payors. The Company, together with strategic partners and
distributors, will educate this target market through a variety of means,
including marketing evaluations, seminars, workshops, publications and
professional and trade meetings. The Company believes that the trend toward
management of health care costs will lead to increased awareness of and
emphasis on disease prevention and early patient management, which will
increase demand for its cost-effective diagnostic tests and services.
The Company owns or has licenses to 23 United States patents, and the Company
owns, has licenses to or options to license technology covered by another 16
pending United States patent applications, each in the area of pregnancy-
related and reproductive disorder diagnostics.
The Company's principal executive offices are located at 1240 Elko Drive,
Sunnyvale, California 94089 and its telephone number is (408) 745-0975.
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered by the Company................. 2,500,000 shares
Common Stock to be Outstanding after this
Offering(1)........................................ 7,863,669 shares
Use of Proceeds..................................... To fund research and development,
expand sales and marketing activities,
fund clinical trials, repay
outstanding indebtedness and for
working capital and general corporate
purposes. See "Use of Proceeds."
Proposed Nasdaq National Market Symbol.............. ADZA
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------- -------------------
1993 1994 1995 1995 1996
------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OP-
ERATIONS DATA:
REVENUES:
Contract revenues........... $ 967 $ 1,977 $ 3,416 $ 167 $ --
Product sales............... 504 316 541 99 152
------- ------- ------- -------- ---------
Total revenues................ 1,471 2,293 3,957 266 152
OPERATING COSTS AND EXPENSES:
Research and development,
including manufacturing
start-up costs and costs of
product sales.............. 4,320 3,635 3,460 785 830
Selling, general and admin-
istrative.................. 3,128 1,928 1,725 371 418
------- ------- ------- -------- ---------
Total operating costs and ex-
penses....................... 7,448 5,563 5,185 1,156 1,248
------- ------- ------- -------- ---------
Loss from operations.......... (5,977) (3,270) (1,228) (890) (1,096)
Interest income (expense) and
other, net................... (132) (390) 84 16 19
------- ------- ------- -------- ---------
Net loss...................... $(6,109) $(3,660) $(1,144) $ (874) $ (1,077)
======= ======= ======= ======== =========
Pro forma net loss per
share(2)..................... $ (0.21) $ (0.16) $ (0.20)
======= ======== =========
Shares used in computing pro
forma net loss per share(2).. 5,446 5,446 5,448
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------
ACTUAL AS ADJUSTED(3)
------ --------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................. $1,027 $28,177
Working capital........................................... 235 27,385
Total assets.............................................. 1,860 29,010
Capital lease obligations, net of current portion......... 36 36
Total stockholders' equity................................ 669 27,819
</TABLE>
- --------
(1) Excludes (i) 579,270 shares of Common Stock issuable upon exercise of stock
options outstanding as of May 9, 1996 with a weighted average exercise
price of $1.21 per share, (ii) 404,468 shares of Common Stock issuable upon
exercise of warrants outstanding at May 9, 1996 with a weighted average
exercise price of $2.74 per share, (iii) 662,025 shares reserved for future
issuance as of May 9, 1996 under the Company's 1995 Stock Option and
Restricted Stock Plan, (iv) 250,000 shares reserved for future issuance as
of May 9, 1996 under the Company's 1996 Employee Stock Purchase Plan and
(v) 200,000 shares reserved for future issuance as of May 9, 1996 under the
Company's 1996 Directors' Stock Option Plan. See "Management--Stock Option
and Incentive Plans" and "Description of Capital Stock."
(2) See Note 1 of Notes to Consolidated Financial Statements for information
concerning calculation of the pro forma net loss per share.
(3) As adjusted to reflect the sale of the 2,500,000 shares of Common Stock
offered hereby at an assumed initial public offering price of $12.00 per
share after deducting underwriting discounts and commissions and estimated
offering expenses and the receipt of the estimated net proceeds therefrom.
Does not reflect application of a portion of the net proceeds for repayment
of indebtedness that may be incurred after March 31, 1996 under the
Company's $2.0 million line of credit from certain existing investors. See
"Use of Proceeds" and Notes 5 and 9 to Notes to Consolidated Financial
Statements.
5
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should carefully consider the following
risk factors, in addition to the other information set forth in this
Prospectus, in connection with an investment in the shares of Common Stock
offered hereby. This Prospectus contains forward-looking statements which
involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in this section below.
UNCERTAINTY OF MARKET ACCEPTANCE. Sales of the Company's products have
generated limited revenues to date. The Company's fFN ELISA Test is the only
Company product that has received FDA approval for sale and marketing in the
United States and has generated only limited sales in international markets.
There can be no assurance that the fFN ELISA Test or any of the Company's
other existing or future products, including the fFN Dipstick Test, will gain
any degree of market acceptance among physicians, hospitals, other health care
providers and third-party payors, even if reimbursement and necessary
regulatory approvals are obtained. The Company believes that the commercial
success of its products will depend on the acceptance of such products by its
strategic partners and distributors and by physicians, hospitals, other health
care providers and third-party payors as clinically useful and cost effective,
and there can be no assurance that any such acceptance will be achieved.
Acceptance will also depend upon the ability of the Company and its strategic
partners and distributors to train physicians, hospitals and other health care
providers to use the fFN ELISA Test and the Company's other products, and the
willingness of such individuals to learn to use these products. Failure of the
Company's products to achieve significant market acceptance would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--The Adeza Solution for Premature and
Late Birth/Successful Induction of Labor," "Business--Sales & Marketing;
Strategic Corporate Alliances" and "Business--Third-Party Reimbursement."
DEPENDENCE ON FFN ELISA TEST. The fFN ELISA Test is the primary product
being marketed by the Company and will remain so for the near term both in the
United States and internationally. The Company has been granted an expedited
PMA to market the fFN ELISA Test for the assessment of the likelihood of
premature birth in symptomatic women. In order to market the fFN ELISA Test
for additional indications in the potentially larger market, the Company will
be required to obtain additional regulatory approvals. The Company plans to
use the results of a clinical trial performed by the NIH to file a supplement
to the Company's PMA (a "PMA Supplement") for use of the fFN ELISA Test in
asymptomatic women. There can be no assurance that a PMA Supplement will be
submitted for this indication or that further clinical trials will not be
required in addition to the NIH trials. The Company will also be required to
obtain additional regulatory approvals for the use of the fFN Dipstick Test in
assessing the likelihood of premature birth in symptomatic women, for which
clinical trials are in progress, and for the use of the fFN Dipstick Test in
assessing the likelihood of successful induction of labor in women at term for
which the Company is in the process of designing clinical trials. To date, the
Company has had only limited commercial sales of the fFN ELISA Test in
international markets and has only recently begun shipping to a limited number
of customers in the United States. There can be no assurance that the fFN
ELISA Test or any other product developed by the Company will be safe or
effective, capable of being manufactured in commercial quantities at
acceptable costs, approved by appropriate regulatory or reimbursement
authorities or successfully marketed. Furthermore, because the fFN ELISA Test
represents the Company's principal near-term focus, the Company could be
required to cease operations if the fFN ELISA Test is not successfully
commercialized, and even limited failure of the fFN ELISA Test to gain market
acceptance would have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--The Adeza
Solution for Premature and Late Birth/Successful Induction of Labor."
DEPENDENCE ON STRATEGIC PARTNERS AND DISTRIBUTORS. The Company depends on
strategic partners and distributors for substantially all currently
anticipated sales. Matria has exclusive rights to market and distribute the
fFN ELISA Test and the fFN Dipstick Test, as well as the right to participate
in the development of and distribute immunodiagnostic products for premature
birth that are developed by or acquired for development by the Company in the
United States, Canada and Puerto Rico. The Company currently expects that it
will derive a
6
<PAGE>
substantial portion of its United States revenues for the foreseeable future
from sales of its fFN ELISA Test and fFN Dipstick Test through Matria. The
loss of Matria as a strategic partner or the failure of Matria to effectively
market and distribute the Company's fFN ELISA Test and the fFN Dipstick Test
would have a material adverse effect on the Company's business, financial
condition and results of operations. Because the Company's products are sold
to physicians, hospitals and other health care providers, to be effective,
strategic partners and distributors must possess sufficient technical,
marketing and sales resources and must devote these resources to education of
its target market, physician training and continuing product support. The
amount, timing and effectiveness of the resources that Matria will devote to
promoting the fFN ELISA Test or any other of the Company's products is not
within the control of the Company, and the Company does not have the
contractual right to terminate its marketing agreement with Matria for failure
to sell more than a minimum number of products. In addition, Matria may
terminate this agreement in the event a product competitive with either the
fFN ELISA Test or the fFN Dipstick Test captures a specified percentage of the
market for such product or in the event Matria determines it is unable to
legally market either the fFN ELISA Test or the fFN Dipstick Test due to the
patent position of any third party. Furthermore, Matria was recently formed by
the merger of Tokos Medical Corporation and HealthDyne, Inc., and the failure
of such merged companies to be successfully integrated or a change in
strategic focus of the merged entity could have a material adverse effect on
Matria's ability to market and sell the Company's products, including the fFN
ELISA Test. There can also be no assurance that Matria will continue to market
and support the Company's existing or future products effectively or at all,
or that Matria will not be adversely affected by economic conditions or
industry demand. Matria's failure to successfully market and support the
Company's products in the United States would have a material adverse effect
on the Company's business, financial condition and results of operations.
Additionally, the Company expects it will be dependent on entering into
agreements with additional strategic partners and distributors for sales and
marketing of any future products in the United States, if and when such
products are developed. See "--No Assurance of Successful Product Development"
and "Business--Sales & Marketing; Strategic Corporate Alliances."
The Company anticipates that international sales will continue to represent
a significant portion of its total revenues in the future. Daiichi has
exclusive rights to market and distribute the fFN ELISA Test and the fFN
Vertical Flow Test in Japan. See "Business--Sales & Marketing; Strategic
Corporate Alliances." Additionally, the Company currently has a limited
network of other distributors that market the Company's products in Taiwan,
portions of Europe, Scandinavia, Japan and South Korea. The Company's
international sales are dependent upon the marketing efforts of, and sales by,
these distributors. The Company also relies on certain of these distributors
to assist it in obtaining product registration and reimbursement approvals in
certain international markets. If a distributor fails to invest adequate
capital promoting the Company's products and training physicians, hospitals
and other health care providers in the proper techniques for utilizing the
Company's products, or were to cease operations, the Company would likely be
unable to achieve significant sales in the subject territory. In addition, the
Company has only limited contact with the majority of the end-users of its
products in international markets. Furthermore, Adeza does not currently have
distributors in a number of international markets that it has targeted and
will need to establish additional international distribution relationships to
address these markets. There can be no assurance that the Company will engage
qualified distributors in these markets in a timely manner, if it at all.
Additionally, if the Company is successful in engaging distributors, there can
be no assurance that such distributors will perform their obligations as
expected or that any revenues will be derived from such arrangements. The
failure to engage such distributors or the failure of the distributors to
perform their obligations as expected would have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business--Sales & Marketing; Strategic Corporate Alliances."
In addition, certain of the arrangements that the Company may enter into in
the future with strategic partners may place responsibility on the Company's
partners for preclinical testing and human clinical trials and for the
preparation and submission of applications for regulatory approval of
potential diagnostic or therapeutic products. Should any strategic partner
fail to perform its obligations under such arrangements, the Company's
business, financial condition and results of operations could be materially
adversely affected.
UNCERTAINTY RELATING TO THIRD-PARTY REIMBURSEMENT. In the United States,
physicians, hospitals and other health care providers that perform medical
services generally rely on third-party payors, such as private
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health insurance plans, to reimburse all or part of the cost associated with
the treatment of patients. Although reimbursement for diagnosing premature
birth has generally been available in the United States, because of the
uncertainty relating to health care reform, there can be no assurance that
this will continue to be the case. See "--Uncertainty Related to Health Care
Reform." Furthermore, there can be no assurance, even if the Company's fFN
ELISA Test and other future products are cleared by the FDA for new clinical
applications, that reimbursement at acceptable levels, or at all, will be
available for such procedures. The Company could also be adversely affected by
changes in reimbursement policies of government or private third-party payors,
particularly to the extent that any such changes affect reimbursement for
diagnostic procedures in which the Company's products are used. Failure by
physicians, hospitals and other health care providers to obtain sufficient
reimbursement from third-party payors for tests in which the Company's
products are used, or adverse changes in government and private third-party
payors' policies toward reimbursement for such tests, could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Third-Party Reimbursement."
Market acceptance of the Company's products in international markets may be
dependent in part upon the availability of reimbursement within prevailing
health care payment systems. Reimbursement and health care payment systems in
international markets vary significantly by country, and can include both
government sponsored and private health care insurance. The Company's fFN
ELISA Test and fFN Vertical Flow Test have been approved for reimbursement in
Japan. Although the Company will seek additional international reimbursement
approvals, obtaining such approvals can require 12 to 18 months or longer, and
there can be no assurance that any such approvals will be obtained in a timely
manner, if at all. Failure to receive additional international reimbursement
approvals could have a material adverse effect on market acceptance of the
Company's products in the international markets in which the Company is
seeking approvals and could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business--Third-
Party Reimbursement."
LIMITED MANUFACTURING EXPERIENCE; MANAGEMENT OF EXPANDING OPERATIONS. The
Company has only limited experience in manufacturing its products in
commercial quantities. The Company currently manufactures its products for
research, United States clinical trials, international clinical trials and
limited commercial sales. As a result of the receipt of a PMA for the fFN
ELISA Test, the Company intends to expand its operations generally, including
its manufacturing and laboratory capabilities. Companies often encounter
difficulties associated with scaling up production of new products and
expanding operations, including problems involving production yields, quality
control and assurance, component supply and shortages of qualified personnel.
There can be no assurance that the Company will be able to develop the
necessary manufacturing capability, build and train the necessary
manufacturing, sales and marketing teams, enter into the necessary
distribution or collaborative relationships, attract, retain and integrate the
required key personnel, or implement the financial and management systems as
required to meet any increased demand for its products. Failure of the Company
to successfully expand its operations in response to any increased demand for
its current and future products, if any, could have a material adverse effect
on the Company's business, financial condition and results of operations. In
addition, the Company's manufacturing facilities are subject to applicable FDA
regulations regarding Good Manufacturing Practices ("GMP"), international
quality standards and other regulatory requirements. Failure by the Company to
maintain its facilities in accordance with GMP regulations, international
quality standards or other regulatory requirements may entail a delay or
termination of production, which could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business--Laboratory Services; Manufacturing" and "Business--Government
Regulation."
LIMITED LABORATORY OPERATING EXPERIENCE. The Company has limited experience
in providing laboratory services to provide results of its diagnostic tests.
The Company intends to provide laboratory results to physicians and other
users of the Company's diagnostic test as a means of ensuring that the users
of such products will have ready access to results. The Company believes that
such laboratory services could generate a significant portion of the Company's
revenues in the near term. The Company expects that over time other commercial
laboratories will also provide results of its diagnostic tests. However, no
commercial laboratory is currently providing results with respect to the
Company's tests, and there can be no assurance that any laboratory
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other than that of the Company will ultimately provide such results. Failure
by the Company to provide accurate and cost-efficient laboratory services and
to generate expected revenues through such services would have a material
adverse effect on the Company's business, financial condition and results of
operations and could expose the Company to significant liability in the event
of errors in test results. There can be no assurance that there will be demand
for the Company's laboratory services or that such services will generate any
additional revenues for the Company. See "Business--Laboratory Services;
Manufacturing."
LIMITED SALES, MARKETING AND DISTRIBUTION EXPERIENCE. The Company has
limited experience in sales, marketing and distribution of its products and
currently relies on strategic partners and distributors for the sales,
marketing and distribution. The Company currently has agreements to sell its
fFN ELISA Test and fFN Dipstick Test in the United States, Canada and Puerto
Rico through Matria and the fFN ELISA Test and the fFN Vertical Flow Test in
Japan through Daiichi. In connection with the commercialization of the fFN
ELISA Test, the Company, in conjunction with Matria, is substantially
increasing its United States sales and marketing efforts. The Company intends
to sell its future products primarily through distributors or by means of
strategic relationships, although the Company may also establish a direct
sales force to sell certain products. There can be no assurance that the
Company's sales and marketing efforts or direct sales force, if established,
will be successful. Failure to establish effective distribution or strategic
partner relationships or to achieve an effective sales and marketing
organization with respect to the Company's future products could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Laboratory Services; Manufacturing" and
"Business--Sales & Marketing; Strategic Corporate Alliances."
NO ASSURANCE OF SUCCESSFUL PRODUCT DEVELOPMENT. The Company's ability to
successfully develop any additional products is uncertain. The Company's
research and development programs with respect to certain of its potential
products are at an early stage. The Company's goal is to develop, manufacture
and market diagnostic tests and, to a lesser extent, therapeutic products
concentrating on its targeted pregnancy-related and female reproductive
disorders. Except for the Company's fFN ELISA Test and the related specimen
collection kit, none of the Company's products have been approved for
commercial sale in the United States. Potential new products will require
significant additional research, development, preclinical and clinical
testing, regulatory approval and additional investment prior to their
commercialization, which may not be successful. There can be no assurance that
the Company's approach will result in the development of commercially
successful products. Additionally, the Company has very limited experience in
the development of therapeutic products. See "Business--The Adeza Solution for
Premature and Late Birth/Successful Induction of Labor" and "Business--The
Adeza Solution for Reproductive Disorders."
DEPENDENCE ON LICENSES; POTENTIAL NEED FOR ADDITIONAL COLLABORATORS. The
Company's strategy for the research and development of certain of its products
contemplates that it will enter into arrangements with collaborators,
licensors, licensees and others. The Company may, therefore, be dependent upon
the subsequent success of these third parties in performing their
responsibilities, including any research activities contemplated under such
arrangements. The Company has obtained, and intends to obtain in the future,
licensed rights to certain proprietary technologies from individuals,
universities and research institutions to which it is, or will be, obligated
to pay royalties and milestone payments if it develops products based upon the
licensed technology. The Company has a worldwide, sublicensable, exclusive
license from the Fred Hutchinson Cancer Research Center to certain patent
rights related to fFN, which constitutes the Company's core technology for its
fFN ELISA Test and fFN Dipstick Test. There can be no assurance that the
Company will be able to enter into additional collaborative, license or other
arrangements that the Company deems necessary or appropriate to develop,
commercialize and market its products, or that any or all of the contemplated
benefits from such collaborative, license or other arrangements will be
realized. There can be no assurance that partners or collaborators will not
pursue alternative technologies or products either on their own or in
collaboration with others, including the Company's competitors, as a means for
developing diagnostic or therapeutic products for the Company's targeted
pregnancy-related and female reproductive disorders. See "Business--Certain
License Agreements; Patents and Proprietary Technology" and "Business--
Advisors and Collaborators."
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OPERATING LOSSES; FLUCTUATIONS IN OPERATING RESULTS. Adeza has generated
limited revenues from product sales which have not been sufficient to cover its
operating expenses. Adeza is substantially dependent upon research and
development contracts, external financing such as that being sought in this
offering and interest income to pursue its intended business activities.
Approximately $15.3 million of the Company's aggregate total revenues to date
have consisted of contract revenues received from its strategic partners,
primarily Matria and Daiichi, for research and product development. The Company
does not expect to generate further material research and development revenues
from these strategic agreements. The Company has not been profitable since
inception and has incurred a cumulative net loss of $23.7 million through March
31, 1996. Losses have resulted principally from costs incurred in research and
development activities, clinical trials, marketing and product introduction
expenses and from general and administrative costs. The Company expects to
incur additional operating losses at least through 1997. The Company's ability
to achieve profitability is dependent on its ability to successfully market and
sell its products, to develop and obtain patent protection and regulatory
approval for its products, to enter into agreements for product development and
commercialization with corporate sponsors and to manufacture its products in a
cost-effective manner. There can be no assurance that the Company will
successfully develop, commercialize, patent, manufacture or market its
products, obtain required regulatory approvals or achieve profitability. Future
revenues and results of operations may fluctuate significantly from quarter to
quarter and will depend upon, among other factors, actions relating to
regulatory and reimbursement matters, the extent to which Matria is successful
in achieving market acceptance of the Company's products, the rate at which the
Company expands its international distribution network, the progress of
clinical trials and the introduction of competitive products for diagnosis of
the Company's targeted pregnancy-related and female reproductive disorders. See
"--Uncertainty of Market Acceptance," "--Dependence on fFN ELISA Test" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
RELIANCE ON PATENTS AND PROTECTION OF PROPRIETARY TECHNOLOGY. The Company's
ability to compete effectively will depend substantially on its ability to
develop and maintain proprietary aspects of its technology. Although the
Company has been granted or has exclusive rights to various patents, the
Company's success will depend in large part on its ability to obtain United
States and foreign patent protection for its products, preserve its trade
secrets and operate without infringing on the proprietary rights of third
parties. There can be no assurance that the Company's issued patents, any
future patents that may be issued as a result of the Company's United States or
international patent applications, or the patents that the Company has
licensed, will offer any degree of protection to the Company's products against
competitive products. There can also be no assurance that any additional
patents will be issued from any of the patent applications owned by or licensed
to the Company, or that any patents that currently are or may be issued or
licensed to the Company or any of the Company's patent applications will not be
challenged, invalidated or circumvented in the future, or that any patents
issued to or licensed by the Company will not be infringed upon or designed
around by others. In addition, there can be no assurance that competitors, many
of whom have substantial resources and have made substantial investments in
competing technologies, will not seek to apply for and obtain patents that will
prevent, limit or interfere with the Company's ability to make, use or sell its
products either in the United States or in international markets. Moreover,
patent law relating to certain of the Company's fields of interest,
particularly as to the scope of claims in issued patents, is still developing
and it is unclear how this uncertainty will affect the Company's patent rights.
The medical device and biotechnology industries have been characterized by
extensive litigation regarding patents and other intellectual property rights,
and companies in these industries have employed intellectual property
litigation as a strategy to gain a competitive advantage. There can be no
assurance that the Company will not in the future become subject to patent
infringement claims and litigation or interference proceedings declared by the
United States Patent and Trademark Office ("USPTO") to determine the priority
of inventions. The defense and prosecution of intellectual property suits,
USPTO interference proceedings and related legal and administrative proceedings
are both costly and time consuming. Litigation may be necessary to enforce
patents issued to or licensed to the Company, to protect the Company's trade
secrets or know-how or to determine the enforceability, scope and validity of
the proprietary rights of others.
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As is typical in its industry, the Company has received notices from third
parties alleging infringement claims. Although there are currently no pending
claims or lawsuits against the Company regarding any possible infringement
claims, there can be no assurance that infringement claims by third parties or
claims for indemnification resulting from infringement claims will not be
asserted in the future or that such assertions, if proven to be true, will not
have a material adverse effect on the Company's business, financial condition
and results of operations. Any litigation or interference proceedings involving
the Company will result in substantial expense to the Company and significant
diversion of effort by the Company's technical and management personnel. An
adverse determination in litigation or interference proceedings to which the
Company may become a party could subject the Company to significant liabilities
to third parties or require the Company to seek licenses from third parties.
Although patent and intellectual property disputes in the medical device and
biotechnology industries have often been settled through licensing or similar
arrangements, costs associated with such arrangements may be substantial and
could include ongoing royalties. Furthermore, there can be no assurance that
necessary licenses would be available to the Company on satisfactory terms, if
at all. Adverse determinations in a judicial or administrative proceeding or
failure to obtain necessary licenses could prevent the Company from
manufacturing and selling its products, which would have a material adverse
effect on the Company's business, financial condition and results of
operations.
In addition to patents, the Company relies on trade secrets and proprietary
know-how, which it seeks to protect, in part, through appropriate
confidentiality and proprietary information agreements. These agreements
generally provide that all confidential information developed or made known to
the individual by the Company during the course of the individuals relationship
with the Company is to be kept confidential and not disclosed to third parties,
except in specific circumstances. The agreements also generally provide that
all inventions conceived by the individual in the course of rendering services
to the Company shall be the exclusive property of the Company. There can be no
assurance that proprietary information or confidentiality agreements with
employees, consultants and others will not be breached, that the Company will
have adequate remedies for any breach, or that the Company's trade secrets will
not otherwise become known to or independently developed by competitors. See
"Business--Certain License Agreements; Patents and Proprietary Technology."
GOVERNMENT REGULATION. The manufacture and sale of medical devices are
subject to extensive regulation by numerous government authorities, both in the
United States and internationally. In the United States, the principal
regulatory authorities are the FDA and corresponding state agencies, such as
the California Department of Health Services ("CDHS"). The process of obtaining
and maintaining required regulatory clearances is lengthy, expensive and
uncertain. The FDA requires companies that desire to market a new medical
device or an existing medical device for use for a new indication to obtain
either a premarket notification clearance under Section 510(k) of the Federal
Food, Drug, and Cosmetic Act ("510(k)") or a PMA prior to the introduction of
such product into the market. In addition, material changes to medical devices
are also subject to FDA review and clearance or approval prior to marketing and
sale in the United States. Though generally believed to be a shorter, less
costly regulatory path than a PMA, the process of obtaining a 510(k) clearance
generally requires the submission of supporting data, which can be extensive
and extend the regulatory process for a considerable length of time. In
addition, the FDA may require review by an advisory panel as a condition for
510(k) clearances, which can further lengthen the regulatory process. The PMA
process can take several years from initial filing and requires the submission
of extensive supporting data and clinical information. No assurance can be
given that any future products or applications developed by the Company will
not require approval under the more lengthy and expensive PMA process or that
such approval will be received. If the Company is required to obtain approval
for any products pursuant to the PMA procedure or, if the 510(k) process with
respect to any products is extended for a considerable length of time, the
commencement of commercial sales of the Company's products will be delayed
substantially or indefinitely.
Sales of medical devices outside of the United States are subject to
international regulatory requirements that vary from country to country. The
time required to obtain approval for sale internationally may be longer or
shorter than that required for FDA approval, and the requirements may differ.
In Europe, the Company will be required to obtain the certifications necessary
to enable the CE mark, an international symbol of adherence to quality
assurance standards and compliance with applicable European Union Medical
Device Directives, to be
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affixed to the Company's products in order to continue sales in member
countries of the European Union. The Company has not obtained such
certifications, and there can be no assurance that it will be able to do so in
a timely manner, if at all. Many countries in which the Company currently
operates or intends to operate either do not currently regulate medical devices
or have minimal registration requirements; however, these countries may develop
more extensive regulations in the future that could adversely affect the
Company's ability to market its products. In addition, significant costs and
requests by regulators for additional information may be encountered by the
Company in its efforts to obtain regulatory approvals. Any such events could
substantially delay or preclude the Company from marketing its products in the
United States or internationally.
Regulatory approvals, if granted, may include significant limitations on the
indicated uses for which the Company's products may be marketed. In addition,
in order for companies to obtain such approvals, the FDA and certain foreign
regulatory authorities impose numerous additional requirements with which
medical device manufacturers must comply. FDA enforcement policy strictly
prohibits the promotion of approved medical devices for uses other than those
specifically cleared for marketing by the FDA. The Company is required to
adhere to GMP regulations and similar regulations in other countries, which
include testing, control and documentation requirements. Ongoing compliance
with GMP and other applicable regulatory requirements will be monitored through
periodic inspections by federal and state agencies, including the FDA and the
CDHS, and by comparable agencies in other countries. Failure to comply with
applicable regulatory requirements could result in, among other things, warning
letters, fines, injunctions, civil penalties, recall or seizure of products,
total or partial suspension of production, refusal of the government to grant
premarket clearance or premarket approval for devices, withdrawal of previously
granted approvals and criminal prosecution. Changes in existing regulations or
adoption of new government regulations or policies could prevent or delay
regulatory approval of the Company's products.
While the Company has received a PMA after an expedited review for the use of
its fFN ELISA Test in assessing the likelihood of premature birth in
symptomatic women, there can be no assurance that the Company will be able to
obtain additional PMA approvals, that the Company will not be required to seek
510(k) clearances for certain products or indications or that necessary
clearances or approvals will be obtained. The Company is preparing a PMA
Supplement for the use of its fFN ELISA Test in screening asymptomatic women,
but there can be no assurance that this PMA Supplement will be filed or, if
filed, will be granted FDA approval. Moreover, regulatory clearances, if
granted, may include significant limitations on the indicated uses for which a
product may be marketed. Delays in receipt of or failure to receive such
approvals or clearances, the loss of previously obtained approvals or
clearances, or failure to comply with existing or future regulatory
requirements would have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--The Adeza
Solution for Premature and Late Birth/Successful Induction of Labor" and
"Business--Government Regulation."
As a provider of health care related services, the Company is subject to
extensive and frequently changing federal, state and local regulations
governing licensure, billing, financial relationships, conduct of operations,
cost-containment and other aspects of the Company's business relationships.
Federal and state certification and licensure programs establish standards for
the day-to-day operation of laboratories such as the Company's. Compliance with
such standards is verified by periodic inspections and requires participation
in proficiency testing programs. There can be no assurance that the Company's
laboratory facilities will pass all future inspections conducted to ensure
compliance with federal or any other applicable licensure or certification
laws. See "Business--Laboratory Services; Manufacturing."
COMPETITION. There is currently significant competition in the women's
reproductive health care market, which the Company expects to increase over
time. Currently, the fFN ELISA Test is the only FDA-approved immunodiagnostic
test for the assessment of the likelihood of premature birth for symptomatic
women. However, there can be no assurance that other, more effective diagnostic
tests for the assessment of the likelihood of premature birth will not receive
FDA approval in the near future. Other companies and institutions with
substantially greater financial, manufacturing, marketing, distribution and
technical resources than the Company are engaged in the research and
development of products similar to those currently being developed or
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commercialized by the Company. Some or all of these products may compete
directly with the Company's products, and other companies and institutions may
choose to enter this market at a later date. Although none of these companies
currently concentrates exclusively on products for the women's reproductive
health care market, there can be no assurance that these or other companies or
institutions will not succeed in developing products or procedures that are
more effective than the Company's or that would render the Company's
technology or products obsolete or uncompetitive. The Company believes that
important competitive factors with respect to the development and
commercialization of its products include the relative speed with which it can
develop products, establish clinical utility, complete the clinical testing
and regulatory approval process, obtain reimbursement and supply commercial
quantities of the product to the market. The Company's inability to compete
favorably with respect to any of these factors could have a material adverse
effect on its business, financial condition and results of operations.
Additionally, Matria and the Company's other strategic partners compete with
other companies that distribute products related to the women's reproductive
health care market to physicians, hospitals and other health care providers,
and there can be no assurance that Matria or such other strategic partners
will be able to compete favorably with these companies. The Company also
competes with other companies for clinical sites to conduct trials. There can
be no assurance that the Company will be able to compete successfully or that
competition will not have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Competition."
RISK OF LIABILITY; ADEQUACY OF INSURANCE COVERAGE. The medical device and
biotechnology industries have historically been litigious, and the Company
faces an inherent business risk of financial exposure to product liability
claims. Inherent in the manufacturing and distribution of the Company's
products is the risk of financial exposure to product liability claims in the
event that the use of its products results in personal injury. Although the
Company has not experienced any claims to date, there can be no assurance that
the Company will not experience losses due to product liability claims in the
future. The marketing and sale of health care services through the Company's
laboratory could expose the Company to the risk of certain types of
litigation. Damages assessed in connection with, and the costs of defending,
any legal action could be substantial. Although the Company is presently
covered by general liability insurance in the amount of $5.0 million per
occurrence and $5.0 million in the aggregate, there can be no assurance that
insurance coverage will provide sufficient funds to satisfy judgments which,
in the future, may be entered against the Company or that liability insurance
in such amounts will be available or affordable in the future. In addition,
there can be no assurance that all of the activities encompassed within the
Company's business are covered under the Company's policies. The Company may
require increased product liability coverage as its products are
commercialized and as it provides increased laboratory services. Such
insurance is expensive, difficult to obtain and may not be available in the
future on acceptable terms, or at all. Furthermore, there can be no assurance
that the Company will have sufficient resources to satisfy any liability or
litigation expenses that may result from any uninsured or underinsured claims.
Any claims or series of claims against the Company, regardless of their merit
or eventual outcome, could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business--
Laboratory Services; Manufacturing."
UNCERTAINTY RELATED TO HEALTH CARE REFORM. Political, economic and
regulatory influences are subjecting the health care industry in the United
States to fundamental change. The Company anticipates that Congress, state
legislatures and the private sector will continue to review and assess
alternative health care delivery and payment systems. Potential approaches
that have been considered include mandated basic health care benefits,
controls on health care spending through limitations on the growth of private
health insurance premiums and Medicare and Medicaid spending, the creation of
large insurance purchasing groups, price controls and other fundamental
changes to the health care delivery system. Legislative debate is expected to
continue in the future, and market forces are expected to demand reduced
costs. The Company cannot predict what impact the adoption of any federal or
state health care reform measures, future private sector reform or market
forces may have on its business, financial condition or results of operations.
See "Business--Third-Party Reimbursement."
RISKS ASSOCIATED WITH INTERNATIONAL SALES. In fiscal 1993, 1994 and 1995 and
for the three months ended March 31, 1996, international sales accounted for
approximately 100%, 45%, 31% and 100%, respectively, of the Company's total
revenues. A number of risks are inherent in international operations and
transactions.
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International sales and operations may be limited or disrupted by the
imposition of government controls, export license requirements, political
instability, trade restrictions, changes in tariffs and difficulties in
staffing, coordinating and managing international operations. Additionally,
the Company's business, financial condition and results of operations may be
adversely affected by fluctuations in international currency exchange rates as
well as constraints on the Company's ability to maintain or increase prices.
The international nature of the Company's business subjects it and its
representatives, agents and distributors to laws and regulations of the
foreign jurisdictions in which they operate or the Company's products are
sold. The regulation of medical devices in a number of such jurisdictions,
particularly in the European Union, continues to develop and there can be no
assurance that new laws or regulations, or new interpretations of existing
laws and regulations, will not have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the laws
of certain foreign countries do not protect the Company's intellectual
property rights to the same extent as do the laws of the United States. See
"Business--Government Regulation" and "Business--Certain License Agreements;
Patents and Proprietary Technology." There can be no assurance that the
Company will be able to successfully further commercialize its current
products or successfully commercialize any future products in any
international market. See "Business--Sales & Marketing; Strategic Corporate
Alliances."
POSSIBLE FUTURE CAPITAL REQUIREMENTS. The Company's capital requirements
depend upon numerous factors, including market acceptance of the fFN ELISA
Test and other products, the progress of the Company's clinical research and
product development programs, the receipt of and time required to obtain
regulatory clearances and approvals, the resources the Company devotes to
developing, manufacturing and marketing its products and other factors. The
timing and amount of such capital requirements cannot accurately be predicted.
There can be no assurance that the Company will not require additional
funding, or that such additional funding, if needed, will be available on
terms acceptable to the Company, or at all. Insufficient capital may require
the Company to delay, scaleback or eliminate certain of its research and
development programs or to attempt to license to third parties the rights to
commercialize products or technologies that the Company itself would otherwise
undertake. See "Use of Proceeds" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."
DEPENDENCE ON QUALIFIED PERSONNEL. The Company is highly dependent upon the
efforts of its senior management and scientific team. The loss of the services
of one or more of these individuals could impede the achievement of its
development objectives. Because of the specialized scientific nature of the
Company's business, Adeza is also highly dependent upon its ability to
continue to attract and retain qualified scientific and technical personnel.
There is intense competition for qualified personnel in the areas of the
Company's activities, and there can be no assurance that Adeza will be able to
continue to attract and retain the qualified personnel necessary for the
development of its business. Loss of the services of, or failure to recruit,
key scientific and technical personnel would be significantly detrimental to
the Company's product development programs. See "Management--Executive
Officers and Directors."
NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE. Prior to this
offering, there has been no public market for the Common Stock. Accordingly,
there can be no assurance that an active trading market for the Common Stock
will develop or be sustained upon completion of this offering. The initial
public offering price of the Common Stock will be determined by negotiations
between the Company and the representatives of the Underwriters. The factors
to be considered in making such determination will include the prevailing
market conditions, the Company's financial and operating history and
condition, its prospects and the prospects for its industry in general, the
management of the Company and the market price of securities for companies in
businesses similar to that of the Company. The securities markets have, from
time to time, experienced significant price and volume fluctuations that may
be unrelated to the operating performance of particular companies. These
fluctuations often substantially affect the market price of a company's common
stock. The market prices for securities of medical device companies have in
the past been, and can in the future be expected to be, especially volatile.
The market price of the Common Stock may be subject to volatility from quarter
to quarter depending upon announcements regarding the results of regulatory
approval filings, clinical studies or other testing, technological innovations
or new commercial products by the Company or its competitors,
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<PAGE>
government regulations, developments or disputes concerning proprietary
rights, changes in reimbursement levels, public concern as to the safety of
products developed by the Company or others, changes in health care policy in
the United States and internationally, the issuance of new or changed stock
market analyst reports and recommendations and economic and other external
factors, as well as continued operating losses by the Company and fluctuations
in the Company's financial results. These factors could have a material
adverse effect on the Company's business, financial condition and results of
operations and may not be indicative of the prices that may prevail in the
public market. See "Underwriting" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
CONTROL BY EXISTING STOCKHOLDERS. Following the completion of this offering,
officers and directors of the Company, together with entities affiliated with
them, will beneficially own approximately 38.5% of the Common Stock of the
Company (approximately 35.5% if the Underwriters' over-allotment options are
exercised in full). These stockholders, acting as a group, will continue to be
able to control the election of all members of the Company's Board of
Directors and to determine all corporate actions after the sale of the shares
offered hereby. The voting power of these stockholders could also have the
effect of delaying or preventing a change in control of the Company. See
"Principal and Selling Stockholders" and "Description of Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE. Upon completion of this offering and based
on the shares outstanding as of April 30, 1996, the Company will have a total
of 7,863,669 shares of Common Stock outstanding, assuming no exercise of
outstanding warrants for 404,468 shares of Common Stock immediately prior to
the closing of this offering and no exercise of options after April 30, 1996.
Of these shares, the 2,500,000 shares offered hereby (2,875,000 shares if the
Underwriters' over-allotment options are exercised in full) will be freely
tradable without restriction or registration under the Securities Act by
persons other than "affiliates" of the Company, as defined under the
Securities Act. The remaining 5,363,669 shares of Common Stock outstanding are
"restricted shares" as that term is defined by Rule 144 as promulgated under
the Securities Act ("Restricted Shares"). Sales of Restricted Shares in the
public market, or the availability of such shares for sale, could adversely
affect the market price of the Common Stock. All directors and executive
officers and certain other stockholders of the Company, holding in the
aggregate substantially all of the shares of Common Stock outstanding prior to
this offering, have agreed with the Underwriters not to sell or otherwise
dispose of any shares of Common Stock for a period of 180 days from the date
of this Prospectus (the "Lock-up Period"), or as earlier determined by
Prudential Securities Incorporated, on behalf of the Underwriters, without the
prior written consent of Prudential Securities Incorporated, on behalf of the
Underwriters. The Company is continuing to seek 180 day lock-up agreements
from certain of its current stockholders and option holders who have not yet
entered into such agreements. The number of shares of Common Stock available
for sale in the public market is further limited by restrictions under the
Securities Act.
Because of the restrictions noted above, beginning 180 days after the
effective date of this offering, 5,334,300 Restricted Shares will be eligible
for sale in the public market subject to Rule 144 and Rule 701 of the
Securities Act. On December 21, 1996, 16,626 shares held by stockholders will
become eligible for sale in the public market pursuant to Rule 144 upon
expiration of a two-year holding period from the date such shares were fully
paid. An additional 12,743 shares held by stockholders will become eligible
for sale in the public market 90 days after the effective date of this
offering pursuant to Rule 701.
In addition, holders of 5,203,465 shares of Common Stock and the holders of
warrants to purchase 136,274 shares of Common Stock may require the Company to
register their shares of Common Stock under the Securities Act, which would
permit such holders to resell a certain amount of their shares without
complying with Rule 144. Registration and sale of such shares could have an
adverse effect on the trading price of the Common Stock. See "Description of
Capital Stock--Registration Rights of Certain Holders."
As of May 9, 1996, options to purchase a total of 579,270 shares of Common
Stock pursuant to the Option Plan were outstanding with a weighted average
exercise price of $1.21 per share, all of which were exercisable as of April
30, 1996 and 237,855 of which were fully vested as of such date. An additional
662,025 shares of
15
<PAGE>
Common Stock were available for future option grants under the 1995 Stock
Option and Restricted Stock Plan. 579,270 shares subject to options held by
officers, directors, certain other employees and former employees are subject
to lock-up agreements. See "Management--Stock Option and Incentive Plans,"
"Shares Eligible for Future Sale," "Underwriting" and Notes 5 and 9 to
Consolidated Financial Statements.
Rule 701 under the Securities Act provides that, beginning 90 days after the
date of this Prospectus, shares of Common Stock acquired on the exercise of
outstanding options may be resold by persons other than affiliates subject
only to the manner of sale provisions of Rule 144, and by affiliates subject
to all provisions of Rule 144 except its two-year minimum holding period. The
Company intends to file one or more registration statements on Form S-8 under
the Securities Act to register shares of Common Stock subject to stock
options.
Prior to this offering, there has been no public market for the Common Stock
of the Company, and no predictions can be made of the effect, if any, that the
sale or availability for shares of additional Common Stock will have on the
trading price of the Common Stock. Nevertheless, sales of substantial amounts
of such shares in the public market, or the perception that such sales could
occur, could adversely affect the trading price of the Common Stock and could
impair the Company's future ability to raise capital through an offering of
its equity securities. See "Shares Eligible for Future Sale" and "Description
of Capital Stock."
EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS. Certain provisions of the
Company's Certificate of Incorporation and Bylaws may have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from attempting to acquire, control of the Company. Such
provisions could limit the price that certain investors might be willing to
pay in the future for shares of the Common Stock. Certain of these provisions
allow the Company to issue preferred stock without any vote or further action
by the stockholders, provide for a classified board of directors, eliminate
the right of stockholders to act by written consent without a meeting and
eliminate cumulative voting in the election of directors. These provisions may
make it more difficult for stockholders to take certain corporate actions and
could have the effect of delaying or preventing a change in control of the
Company. Certain provisions of Delaware law applicable to the Company could
also delay or make more difficult a merger, tender offer or proxy contest
involving the Company, including Section 203 of the Delaware General
Corporation Law, which prohibits a Delaware corporation from engaging in any
business combination with any interested stockholder for a period of three
years unless certain conditions are met. See "Management" and "Description of
Capital Stock."
ABSENCE OF DIVIDENDS. The Company has not declared or paid dividends on its
Common Stock since its inception and does not anticipate declaring or paying
cash dividends to its stockholders in the foreseeable future. See "Dividend
Policy."
DILUTION. Purchasers of the Common Stock offered hereby will experience
immediate and substantial dilution in the net tangible book value per share of
Common Stock from the initial offering price set forth on the cover of this
Prospectus. See "Dilution." A substantial dilution will occur upon exercise of
outstanding options to purchase Common Stock.
16
<PAGE>
THE COMPANY
The Company was founded and incorporated in California in 1985 as "Aspen
Diagnostics Corporation." The Company has operated as "Adeza Biomedical
Corporation" since November 1989 and will reincorporate in Delaware prior to
the effective date of this offering. In December 1989, the Company merged with
Yellowstone Diagnostics Corporation, a health care diagnostics company. The
Company's principal executive offices are located at 1240 Elko Drive,
Sunnyvale, California, 94089 and its telephone number is (408) 745-0975. As
used in this Prospectus, and unless the context requires otherwise, the terms
"Adeza" and the "Company" refer to Adeza Biomedical Corporation, a Delaware
corporation, its California predecessor and its subsidiary.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,500,000 shares of
Common Stock offered hereby assuming an initial public offering price of
$12.00 per share, the mid-point of the price range set forth on the cover of
this Prospectus (after deducting underwriting discounts and commissions and
estimated offering expenses), are estimated to be approximately $27,150,000.
The Company currently intends to use approximately $6.0 million of the net
proceeds from this offering to fund research and development, approximately
$5.0 million to expand the Company's marketing and sales activities,
approximately $4.0 million to fund clinical trials, approximately $500,000 to
repay outstanding indebtedness to certain of the Company's stockholders that
may be incurred under the Company's $2.0 million line of credit from certain
existing investors and the balance for working capital and other general
corporate purposes. These amounts are estimates, and the amount and timing of
the expenditures of the net proceeds for these purposes will depend on
numerous factors, including market acceptance of the Company's fFN ELISA Test
and other products, the status of the Company's product development efforts,
the results of clinical trials, the regulatory approval process, relationships
with strategic corporate partners and distributors, competition and
manufacturing activities. The Company may also use a portion of the net
proceeds to acquire or invest in businesses, products and technologies that
are complementary to those of the Company, although no such acquisitions or
investments are planned or being negotiated as of the date of this Prospectus,
and no portion of the net proceeds has been allocated for any specific
acquisition or investment. Pending such uses, the Company intends to invest
the net proceeds from this offering in short-term, government securities and
other investment-grade, interest-bearing securities.
If the Underwriters' over-allotment options are exercised, the Company will
not receive any of the proceeds from the sale of shares of Common Stock by the
Selling Stockholders. See "Principal and Selling Stockholders."
DIVIDEND POLICY
The Company has never paid cash dividends on its capital stock and does not
anticipate paying cash dividends in the foreseeable future. Any future
determination to pay cash dividends will be at the discretion of the Board of
Directors and will be dependent upon the Company's financial condition,
results of operations, capital requirements and such other factors as the
Board of Directors deems relevant.
17
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of March
31, 1996 (i) on a pro forma basis to reflect the automatic conversion of all
outstanding shares of the Company's Series 1 and Series 2 Preferred Stock into
Common Stock and the filing of the Company's Restated Certificate of
Incorporation to authorize 22,462,220 shares of Common Stock at a par value of
$0.001 per share and 10,000,000 shares of preferred stock at a par value of
$0.001 per share prior to the effectiveness of this offering and (ii) on a pro
forma as adjusted basis to reflect the sale of the 2,500,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $12.00 per
share after deducting underwriting discounts and commissions and estimated
offering expenses and the application of the estimated net proceeds therefrom.
This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements and related Notes thereto included elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1996
-------------------------
PRO FORMA AS ADJUSTED(1)
--------- --------------
(IN THOUSANDS)
<S> <C> <C>
Capital lease obligations, net of current portion..... $ 36 $ 36
Stockholders' equity:
Preferred stock, $0.001 par value; issuable in
series; 10,000,000 shares authorized, no shares
issued and outstanding, pro forma and as adjusted.. -- --
Common Stock, $0.001 par value; 22,462,220 shares
authorized, 5,363,669 and 7,863,669 shares issued
and outstanding pro forma and as adjusted,
respectively....................................... 5 8
Additional paid-in capital.......................... 24,455 51,602
Deferred compensation............................... (64) (64)
Deficit accumulated during development stage........ (23,727) (23,727)
-------- --------
Total stockholders' equity........................ 669 27,819
-------- --------
Total capitalization.............................. $ 705 $ 27,855
======== ========
</TABLE>
- --------
(1) Excludes (i) 579,270 shares of Common Stock issuable upon exercise of
stock options outstanding as of May 9, 1996 with a weighted average
exercise price of $1.21 per share, (ii) 404,468 shares of Common Stock
issuable upon exercise of warrants outstanding at May 9, 1996 with a
weighted average exercise price of $2.74 per share, (iii) 662,025 shares
reserved for future issuance as of May 9, 1996 under the Company's 1995
Stock Option and Restricted Stock Plan, (iv) 250,000 shares reserved for
future issuance as of May 9, 1996 under the Company's 1996 Employee Stock
Purchase Plan and (v) 200,000 shares reserved for future issuance as of
May 9, 1996 under the Company's 1996 Directors' Stock Option Plan. See
"Management--Stock Option and Incentive Plans" and "Description of Capital
Stock."
18
<PAGE>
DILUTION
Purchasers of the Common Stock offered hereby will experience an immediate
and substantial dilution in the net tangible book value of their Common Stock
from the assumed initial public offering price. The pro forma net tangible
book value of the Company at March 31, 1996 was approximately $669,000, or
$0.12 per share. "Net tangible book value" per share is equal to net tangible
assets (tangible assets of the Company less total liabilities) divided by the
number of shares of Common Stock outstanding. Net tangible book value dilution
per share represents the difference between the amount per share paid by
purchasers of Common Stock in this offering and the pro forma net tangible
book value per share of Common Stock immediately after the completion of this
offering. After giving effect to the sale of the 2,500,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $12.00 per
share, after deducting underwriting discounts and commissions and estimated
offering expenses and the application of net proceeds therefrom, the pro forma
net tangible book value of the Company as of March 31, 1996 would have been
$27,819,000 or $3.54 per share. This represents an immediate increase in pro
forma net tangible book value of $3.42 per share to existing stockholders and
an immediate dilution in net tangible book value of $8.46 per share to new
investors purchasing shares of Common Stock in this offering. The following
table illustrates this per share dilution as of March 31, 1996:
<TABLE>
<S> <C> <C>
Assumed initial public offering price.......................... $12.00
Pro forma net tangible book value before this offering....... $0.12
Increase per share attributable to new investors............. 3.42
-----
Adjusted pro forma net tangible book value after this offer-
ing........................................................... 3.54
------
Dilution in net tangible book value to new investors........... $ 8.46
======
</TABLE>
The following table sets forth, on a pro forma basis as of March 31, 1996
after giving effect to the conversion of all outstanding shares of Series 1
and Series 2 Preferred Stock into Common Stock, the difference between the
existing stockholders and the purchasers of shares in this offering at an
assumed initial public offering price of $12.00 per share (before deducting
underwriting discounts and commissions and estimated offering expenses) with
respect to the number of shares purchased from the Company, the total cash
consideration paid and the average price per share paid:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CASH CONSIDERATION
----------------- ----------------------------AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- --------------- -------------------------
<S> <C> <C> <C> <C> <C>
Existing stockholders
(1).................... 5,363,669 68.2% $ 24,855,000 45.3% $ 4.63
New stockholders (1).... 2,500,000 31.8 30,000,000 54.7 12.00
--------- ----- --------------- ---------
Total................. 7,863,669 100.0% $54,855,000 100.0%
========= ===== =============== =========
</TABLE>
- --------
(1) In the event the Underwriters' over-allotment options are exercised in
full, the number of shares held by existing stockholders will be reduced
to 4,988,669 shares, or 63.4% of the total number of shares outstanding
after this offering, and the number of shares held by new investors will
increase to 2,875,000 shares, or 36.6% of the total number of shares
outstanding after this offering. See "Principal and Selling Stockholders."
The foregoing tables assume no exercise of outstanding options or warrants.
As of May 9, 1996, there were 579,270 shares of Common Stock issuable upon
exercise of stock options outstanding under the Company's 1995 Stock Option
and Restricted Stock Plan with a weighted average exercise price of $1.21 per
share and 404,468 shares of Common Stock issuable upon exercise of warrants
outstanding with a weighted average exercise price of $2.74 per share. In
addition, as of May 9, 1996, 662,025 shares of Common Stock reserved for
future issuance under the Company's 1995 Stock Option and Restricted Stock
Plan, 250,000 shares of Common Stock reserved for future issuance under the
Company's 1996 Employee Stock Purchase Plan and 200,000 shares of Common Stock
reserved for future issuance under the Company's 1996 Directors' Stock Option
Plan. If all of the outstanding options and warrants were exercised for Common
Stock, the dilution per share to new investors would be $8.65 per share. See
"Management--Stock Option and Incentive Plans" and Notes 5 and 9 of Notes to
Consolidated Financial Statements.
19
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data is qualified by reference
to and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements and Notes thereto included elsewhere in this
Prospectus. The consolidated statements of operations data set forth below
with respect to each of the three years in the period ended December 31, 1995
and the consolidated balance sheet data at December 31, 1994 and 1995 are
derived from, and are qualified by reference to, the Consolidated Financial
Statements which have been audited by Ernst & Young LLP, independent auditors,
included elsewhere in this Prospectus. The consolidated statements of
operations data for the years ended December 31, 1991 and 1992 and the
consolidated balance sheet data at December 31, 1991, 1992 and 1993 are
derived from the Company's audited consolidated financial statements not
included in this Prospectus. The consolidated statements of operations data
for the three months ended March 31, 1995 and 1996 and the consolidated
balance sheet data at March 31, 1996 have been derived from the unaudited
consolidated financial statements also appearing elsewhere in this Prospectus
which have been prepared on the same basis as the audited consolidated
financial statements and, in the opinion of management, contain all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the results of operations for such periods. The results
of operations for the three months ended March 31, 1996 are not necessarily
indicative of results to be expected for the full year or for any subsequent
period.
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION THREE MONTHS
(JANUARY 1985) ENDED
YEAR ENDED DECEMBER 31, TO MARCH 31,
------------------------------------------ DECEMBER 31, -----------------
1991 1992 1993 1994 1995 1995 1995 1996
------- ------- ------- ------- ------- -------------- -------- -------
CONSOLIDATED STATEMENTS
OF OPERATIONS DATA: (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Contract revenues...... $ 5,299 $ 3,486 $ 967 $ 1,977 $ 3,416 $ 15,300 $ 167 $ --
Product sales.......... 155 432 504 316 541 1,948 99 152
------- ------- ------- ------- ------- -------- -------- -------
Total revenues.......... 5,454 3,918 1,471 2,293 3,957 17,248 266 152
Operating costs and ex-
penses:
Research and develop-
ment, including
manufacturing start-up
costs and costs of
product sales (1)..... 3,311 5,161 4,320 3,635 3,460 25,550 785 830
Selling, general and
administrative........ 2,011 2,819 3,128 1,928 1,725 14,682 371 418
------- ------- ------- ------- ------- -------- -------- -------
Total operating costs
and expenses.......... 5,322 7,980 7,448 5,563 5,185 40,232 1,156 1,248
------- ------- ------- ------- ------- -------- -------- -------
Income (loss) from oper-
ations................. 132 (4,062) (5,977) (3,270) (1,228) (22,984) (890) (1,096)
Interest income (ex-
pense) and other, net.. 67 57 (132) (390) 84 334 16 19
------- ------- ------- ------- ------- -------- -------- -------
Net income (loss)....... $ 199 $(4,005) $(6,109) $(3,660) $(1,144) $(22,650) $ (874) $(1,077)
======= ======= ======= ======= ======= ======== ======== =======
Pro forma net loss per
share(2)............... $ (0.21) $ (0.16) $ (0.20)
======= ======== =======
Shares used in computing
pro forma net loss per
share (2).............. 5,446 5,446 5,448
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------------------------------ ---------
1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
Working capital (defi-
cit)................... $ 4,838 $ 1,387 $ (1,638) $ 2,318 $ 1,273 $ 235
Total assets............ 6,603 3,370 2,666 5,175 2,923 1,860
Convertible notes pay-
able to related par-
ties, including accrued
interest............... -- -- 2,262 -- -- --
Capital lease obliga-
tions, net of current
portion................ 398 372 344 144 49 36
Deferred liability-
noncurrent............. 750 750 750 -- -- --
Deficit accumulated dur-
ing the development
stage.................. (7,732) (11,737) (17,846) (21,506) (22,650) (23,727)
Total stockholders' eq-
uity (deficit)......... 4,575 1,408 (1,755) 2,873 1,740 669
</TABLE>
- --------
(1) Included in research and development expenses for the period from
inception (January 1985) to December 31, 1995 is approximately $553,000
related to the purchase of in-process research and development.
(2) See Note 1 of Notes to Consolidated Financial Statements for information
regarding the computation of pro forma net loss per share.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis contains certain forward-looking statements
relating to future events or the future financial performance of the Company.
Such statements are only predictions and the actual events or results may
differ materially from the results discussed in the forward-looking
statements. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in "Risk Factors" as well as
those discussed elsewhere in this Prospectus. The historical results set forth
in this discussion and analysis are not necessarily indicative of trends with
respect to any actual or projected future financial performance of the
Company. This discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and the related Notes thereto included
elsewhere in this Prospectus.
OVERVIEW
Adeza was founded in January 1985 and, since its inception, has been a
development stage company primarily involved in research and development
activities for the women's reproductive health care market. From inception
through 1992, the Company focused its efforts on developing an alternative to
amniocentesis and diagnostic devices for pregnancy-related and female
reproductive disorders. Since current senior management joined the Company in
the second half of 1992, Adeza has primarily focused on the development and
marketing of proprietary tests for the diagnosis of its targeted pregnancy-
related and female reproductive disorders, including premature and late birth,
preeclampsia, endometriosis and infertility. Adeza currently relies on its
strategic partners and distributors for the sale, marketing and distribution
of its products to physicians, hospitals, other health care providers and
third-party payors. The Company, together with its strategic partners and
distributors, intends to educate its target market as to the clinical
usefulness and cost effectiveness of its products through a variety of means,
including marketing evaluations, seminars, workshops, publications and
professional and trade meetings.
In September 1995, the Company received an expedited PMA from the FDA to
market its fFN ELISA Test in the United States as an aid in assessing the
likelihood of premature birth in symptomatic women. Prior to receiving its
PMA, the Company's sales and marketing efforts were focused on selected
international markets for the purpose of gathering relevant market data and
increasing product awareness. The fFN ELISA Test will be marketed in the
United States, Canada and Puerto Rico through Matria, the Company's strategic
partner. The Company anticipates that Matria will introduce the fFN ELISA Test
in the United States through full-scale marketing efforts commencing in the
second half of 1996. The Company currently expects that it will derive a
substantial amount of its United States revenues for the forseeable future
from sales of its fFN ELISA Test and fFN Dipstick Test through Matria. The
Company anticipates that international sales will continue to represent a
significant portion of its total revenues in the future and intends to expand
its network of international distributors. In general, the Company intends to
recognize revenues upon the shipment of products to Matria or upon the
completion of the laboratory services conducted by the Company. Adeza may
receive additional revenues upon collection of revenues by Matria from its
paying customers. The Company recognizes revenues from international sales
upon shipment of the product to a strategic partner or distributor.
Approximately $15.3 million of the Company's aggregate total revenues to
date have consisted of contract revenues received from its strategic partners,
primarily Matria and Daiichi, for research and product development. In the
future, the Company does not expect to generate further material research and
development revenues from these agreements with its strategic partners. The
Company has also generated approximately $2.1 million since inception through
March 31, 1996 from international product sales. Future revenues and results
of operations may fluctuate significantly from quarter to quarter and will
depend upon, among other factors, actions relating to regulatory and
reimbursement matters, the extent to which Matria is successful in achieving
market acceptance of the Company's products, the rate at which the Company
expands its international distribution network, the progress of clinical
trials and the introduction of competitive products for diagnosis of the
Company's targeted pregnancy-related and female reproductive disorders.
21
<PAGE>
The Company has incurred cumulative net losses of $23.7 million through
March 31, 1996 in the course of its development activities. Losses have
resulted principally from research and development activities, clinical
trials, marketing and product introduction expenses and from general and
administrative costs. The Company expects to incur additional operating losses
at least through 1997. The Company's ability to achieve profitability is
dependent on a number of factors, including acceptance of the Company's
products by physicians, hospitals, other health care providers and third-party
payors, its ability to successfully commercialize the fFN ELISA Test, the
ability of the Company's strategic partners to successfully market and
distribute its products, its ability to obtain reimbursement from third-party
payors for the use of its products and its ability to develop and obtain
patent protection and regulatory approval for its products.
RESULTS OF OPERATIONS
REVENUES
Contract Revenues. Contract revenues increased from $967,000 in 1993 to $2.0
million in 1994 and $3.4 million in 1995, and were $167,000 for the three
months ended March 31, 1995. The Company received no contract revenues in the
three months ended March 31, 1996. Contract revenues were primarily earned as
research and development milestone payments under the Company's strategic
agreements with Matria and Daiichi. The Company does not expect additional
material contract revenues under these strategic agreements, as the research
and development phase of these agreements has been completed.
Product Sales. Product sales decreased from $504,000 in 1993 to $316,000 in
1994 and increased to $541,000 in 1995, and also increased from $99,000 in the
three months ended March 31, 1995 to $152,000 in the comparable 1996 period.
The year-to-year fluctuations were primarily the result of the timing of
inventory orders from international distributors. The increase from three-
month period to three-month period was primarily the result of increased
product sales through Daiichi. The Company expects that Matria will launch
full-scale marketing efforts for the fFN ELISA Test in the United States in
the second half of 1996 and also expects to expand its international
distribution network. There can be no assurance, however, that the Company and
Matria will be successful in their efforts to introduce the fFN ELISA Test in
the United States or that the Company's efforts to expand its international
distribution network will be successful. Additionally, there can be no
assurance that the fFN ELISA Test will be accepted as clinically useful or
cost effective by physicians, hospitals, other health care providers and
third-party payors.
COSTS AND EXPENSES
Research and Development. Research and development expenses consist of costs
related to product development, clinical trials, start-up manufacturing and
product sales. Future manufacturing start-up costs and costs of product sales
will be accounted for separately as costs of goods sold following the full-
scale commercial introduction of the fFN ELISA Test. The Company's research
and development expenses decreased from $4.3 million in 1993 to $3.6 million
in 1994 and $3.5 million in 1995 and increased from $785,000 in the three
months ended March 31, 1995 to $830,000 in the comparable 1996 three-month
period. The decreases from year-to-year were primarily the result of the
Company's cost containment efforts, which were achieved through reduced
personnel costs, partially offset by increased costs of products sold, outside
clinical trial costs and support of third-party research efforts. The increase
from three-month period to three-month period was primarily attributable to an
increase in the cost of products sold and clinical and regulatory expenses,
partially offset by a decrease in research and development expenses. However,
the Company expects that research and development expenses will increase in
future periods, as the sponsorship by the Company of third-party research and
development efforts increase and the Company pursues its research and
development of complementary diagnostic products. In addition, the Company
expects to report a non-cash charge of approximately $250,000 in the second
quarter of 1996 in connection with the issuance of a warrant to the Hutchinson
Center. See Note 9 to Notes to Consolidated Financial Statements.
Selling, General and Administrative. Selling, general and administrative
expenses decreased from $3.1 million in 1993 to $1.9 million in 1994 and $1.7
million in 1995, and increased from $371,000 for the three
22
<PAGE>
months ended March 31, 1995 to $418,000 for the comparable 1996 period. The
decreases from year-to-year were primarily the result of the Company's efforts
to reduce overall operating expenses by reducing management and staff
personnel. The increase from three-month period to three-month period was
primarily attributable to an increase in patent and general corporate legal
expenses. The Company expects that selling, general and administrative
expenses will increase in future periods as the Company increases its sales
and marketing efforts in connection with the commercial introduction of the
fFN ELISA Test in the United States, expansion of its international
distribution network and increased responsibilities as a public company.
Interest Income (Expense) and Other, Net. Interest income (expense) and
other, net changed from $(132,000) in 1993 to $(390,000) in 1994, primarily
reflecting higher outstanding debt balances, and was $84,000 in 1995,
primarily reflecting lower outstanding debt balances. Interest income
(expense) and other, net increased from $16,000 for the three months ended
March 31, 1995 to $19,000 for the comparable 1996 three-month period,
primarily reflecting lower outstanding debt balances.
Income Taxes. At December 31, 1995, the Company had available net operating
loss carryforwards for federal and state tax purposes of approximately $18.8
million and $5.1 million, respectively. The federal net operating loss
carryforwards will expire at various dates beginning in 2000 through 2010, if
not utilized, and the state net operating loss carryforwards will expire in
1996 through 2000, if not utilized. Utilization of the net operating losses
and credits will be subject to a substantial annual limitation due to the
ownership change provisions of the Internal Revenue Code of 1986, as amended,
and similar state provisions. Under its current operating plan, the Company
expects that such limitations may result in the expiration of combined federal
and state net operating loss carryforwards and credits of approximately $18.7
million prior to their utilization.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations to date primarily through issuances
of equity securities, from payments under agreements with strategic partners
and, to a lesser extent, cash receipts from product sales. Since inception,
the Company raised $23.9 million in aggregate net proceeds from issuances of
equity securities and received an additional $15.3 million in payments from
strategic partners. Further, in April 1996 the Company entered into a $2.0
million line of credit with certain of its existing investors. Amounts
borrowed by the Company under this line of credit will bear simple interest at
an annual rate equal to the applicable Internal Revenue Service imputed rate
in effect at the time such amount is borrowed and will become due and payable
upon the earlier of 30 days following the completion of this offering or May
1997.
The Company's net loss from inception through March 31, 1996 of $23.7
million exceeds the net cash used in operations of $21.1 million for the same
period primarily due to non-cash charges of $553,000 for the purchase of in-
process research and development and $1.5 million for depreciation and
amortization, as well as, to a lesser extent, increases in accounts payable
and accrued liabilities. The Company has also invested approximately $1.2
million in capital equipment, facilities improvements and other long-term
assets. The level of future capital expenditures will be dependent upon
available capital, and the Company currently has no commitments for material
capital expenditures.
At March 31, 1996, the Company's cash and cash equivalents were
approximately $1.0 million. The Company anticipates that its existing capital
resources, including the $2.0 million credit line obtained from certain
existing investors in April 1996 and the anticipated net proceeds from this
offering, will be adequate to fund its planned operations through 1997.
However, the Company expects to incur substantial additional operating costs
related to research and clinical trials, manufacturing start-up, development
of reference laboratory facilities and the expansion of its sales and
marketing activities. The Company's capital requirements will also depend upon
numerous factors, including market acceptance of the fFN ELISA Test and other
products, the progress of the Company's clinical research and product
development programs, the receipt of and time required to obtain regulatory
clearances and approvals, the resources the Company devotes to developing,
manufacturing and marketing its products and other factors. The timing and
amount of such capital requirements cannot be accurately predicted. There can
be no assurance that the Company will not require additional funding, or that
such additional funding, if needed, will be available on terms attractive to
the Company, or at all. Insufficient capital may require the Company to delay,
scaleback or eliminate certain of its research and product development
programs or to attempt to license to third parties the rights to commercialize
products or technologies that the Company itself would otherwise undertake.
23
<PAGE>
BUSINESS
THE COMPANY
Adeza Biomedical Corporation ("Adeza" or the "Company") develops and markets
diagnostic products and services for women's reproductive health care. The
Company's primary focus is the development and marketing of proprietary tests
for the diagnosis of pregnancy-related and female reproductive disorders,
including premature and late birth, preeclampsia, endometriosis and
infertility. The Company believes that its products and services will result
in improved patient management, with a consequent reduction in both patient
risk and overall costs. The Company, in conjunction with its strategic
partners and distributors, intends to market its products to obstetrical and
gynecological ("Ob/Gyn") physicians and third-party payors, who represent a
large and increasingly important part of the health care economy.
The Company has received an expedited premarket approval ("PMA") from the
Food and Drug Administration ("FDA") to begin marketing its enzyme-linked
immunosorbent assay ("ELISA") diagnostic (the "fFN ELISA Test") for use in
women with symptoms of premature birth. The fFN ELISA Test is the only FDA-
approved immunodiagnostic test for this disorder and represents a significant
advance over currently used evaluation techniques. This test measures the
presence of fetal fibronectin ("fFN") in the vaginal fluid of pregnant women
in order to assess the likelihood of premature birth. The Company believes
that its fFN-based products have the potential to become an element of
standard prenatal care. The Company will distribute the fFN ELISA Test in the
United States through an exclusive strategic distribution arrangement with
Matria Healthcare, Inc. ("Matria"), a leading women's health care company.
Matria began shipment of fFN ELISA Tests to a select number of initial
customers in the United States in April 1996 and is expected to commence full-
scale marketing efforts in the second half of 1996. The Company has been
selling the fFN ELISA Test in Japan since 1995 through an exclusive
arrangement with Daiichi Pure Chemicals Co. Ltd. ("Daiichi") and in Europe
through a limited number of distributors.
In addition to the fFN ELISA Test, the Company is developing several other
products for the women's reproductive health care market. The Company is
preparing supplements to its PMA ("PMA Supplements") for the use of the fFN
ELISA Test in assessing the likelihood of premature birth in asymptomatic
women, and for the use of a point-of-care rapid assay (the "fFN Dipstick
Test") for assessing the likelihood of premature birth in symptomatic women.
Clinical trials have been completed by the National Institutes of Health (the
"NIH") which support the use of the fFN ELISA Test for asymptomatic women, and
the Company is conducting clinical trials for the use of the fFN Dipstick Test
in symptomatic women. Additionally, the Company is in the process of designing
clinical trials for the use of the fFN Dipstick Test in assessing the
likelihood of successful induction of labor at term. The Company has also
developed a proprietary fFN vertical flow membrane test (the "fFN Vertical
Flow Test") for the assessment of premature rupture of amniotic membranes
("ROM"), which has been introduced for sale in Japan. Accurate diagnosis of
suspected premature ROM is related to the diagnosis of premature birth and is
important for the prevention of potentially serious neonatal infection. In
addition, the Company has developed a proprietary diagnostic test based on
cellular fibronectin (the "cFN Test") for the pregnancy-related disorder of
preeclampsia, a leading causes of maternal death and serious fetal
complications in the United States. The cFN Test is currently undergoing
preclinical evaluation in the United States, Europe and Australia. The Company
also maintains a product development program with the goal of introducing
additional proprietary diagnostics and therapeutics for the women's
reproductive health care market.
24
<PAGE>
THE ADEZA STRATEGY
Adeza's goal is to become a global leader in the diagnosis and treatment of
pregnancy-related and female reproductive disorders by designing, developing
and marketing proprietary diagnostic tests and services for the women's
reproductive health care market. Adeza's strategy is to:
. Penetrate the Market for Premature Birth Diagnostics. The Company's
strategy is to have its fFN-based products become an element of standard
prenatal care. The Company is focusing its initial marketing efforts on
sales of the fFN ELISA Test for symptomatic women through Matria to
physicians, hospitals, other health care providers and third-party
payors. The Company believes this target market will recognize the
significant benefits in patient health and reduced costs arising from
use of the fFN ELISA Test as a diagnostic for premature birth. In order
to further facilitate market penetration, the Company will also provide
a laboratory service to supply fFN ELISA Test results. The Company
believes that other commercial laboratories will provide the same
service as market penetration of the fFN ELISA Test increases.
. Leverage Expertise in fFN-based Diagnostics. The Company intends to
expand the market for its fFN-based diagnostics to include testing of
asymptomatic women for the likelihood of premature birth and testing for
the likelihood of successful induction at term. In addition, the Company
plans to introduce faster and more convenient formats for its fFN-based
products, as represented by the fFN Dipstick Test.
. Market to Health Care Providers and Third-Party Payors. The Company
intends to increase acceptance and create long-term demand by marketing
the cost effectiveness and improved patient care that its products and
services provide to physicians, hospitals, other health care providers
and third-party payors. The Company, together with its strategic
partners and distributors, intends to educate this target market through
a variety of means, including marketing evaluations, seminars,
workshops, publications and professional and trade meetings.
. Penetrate International Market. The Company may introduce new products
into selected international markets for the purpose of gathering
relevant market data and increasing market awareness. The Company
intends to expand its international distribution network through
agreements with strategic partners and distributors that have
significant presence and experience in the international women's health
care market.
. Continue Product Innovation. Through a focused research and development
program, including joint efforts with various collaborators, the Company
is developing additional products for the diagnosis of premature and
late birth, preeclampsia, endometriosis and infertility. With the goal
of becoming a comprehensive provider, the Company and its collaborators
are also researching a variety of complementary therapeutic approaches
to these targeted disorders. See "--Research and Development."
PREGNANCY-RELATED DISORDERS
The women's reproductive health care market represents a large and
increasingly important part of the health care economy, with an estimated $20
billion being spent annually in the United States on Ob/Gyn care. Obstetrical
care accounts for one in every eight hospital admissions in the United States
at an annual cost of over $10 billion. Obstetrical and neonatal tests result
in annual expenditures on laboratory services in the United States of
approximately $480 million. More than half of all women in the United States
of reproductive age visit their Ob/Gyn for primary health care. The Company
believes that the social and economic cost of inadequate prenatal care and
problem pregnancies has created a significant market opportunity for the
Company's products, and accordingly has targeted the pregnancy-related
disorders of premature and late birth and preeclampsia.
25
<PAGE>
PREMATURE BIRTH AND LATE BIRTH/SUCCESSFUL INDUCTION AT TERM
Premature Birth
Premature birth, defined as delivery between 20 and 37 weeks of gestation,
is a major public health problem in the United States and the leading cause of
death among newly born babies. Of the estimated four million births in the
United States annually, approximately 10% occur prematurely. However, babies
born prematurely often have potentially fatal complications affecting the
cardiovascular, respiratory, digestive and central nervous systems that are
directly related to the premature birth. Even if not fatal, these problems are
often associated with long-term physical and developmental disabilities and
mental retardation.
Approximately $4.7 billion is spent annually in the United States for the
initial medical care of premature babies and their mothers. Compared to the
$10,000 average cost of a term birth, initial medical care for a premature
baby averages $20,000 and frequently exceeds $30,000. Over 20,000 premature
babies die annually during the neonatal period, and another 300,000 babies,
most of which are premature, require intensive care in one of the
approximately 600 neonatal intensive care units in the United States. For
babies born prior to 28 weeks of gestation or weighing less than two pounds
(1,000 grams), initial medical care averages $77,000. In addition, continuing
medical costs for significantly premature babies can be substantial as a
result of the physical and mental developmental complications that often arise
from premature birth.
With respect to the likelihood of premature birth, pregnant women can
generally be divided into two groups: symptomatic, defined as the presence of
symptoms indicating the possibility of premature birth and asymptomatic,
defined as the absence of symptoms indicating the possibility of premature
birth. The challenge for physicians and other health care providers is to be
able to accurately and reliably distinguish women who are actually undergoing
preterm labor from those with "false" labor symptoms. The Company estimates
that approximately 47% of symptomatic women who receive treatment for
premature birth may not need such treatment and that 50% of all asymptomatic
women who deliver prematurely do not otherwise fall into definable risk
categories. Objective assessment of the risk of premature birth in women with
symptoms would allow timely and effective patient management. In addition,
accurate diagnosis of suspected premature ROM is related to the diagnosis of
premature birth, and is important for the prevention of potentially serious
infections of the fetus. At least 20% of all women who experience premature
birth have also had premature ROM.
Symptomatic Women. In the United States, approximately 25% of all pregnant
women seek unscheduled medical care for symptoms of premature birth, resulting
in an estimated one million patient visits each year. Such symptoms may
include uterine contractions, backache, pelvic pain, abdominal fullness or
discomfort, change in vaginal discharge and/or vaginal bleeding. However,
these symptoms are not reliable predictors of premature birth because they
commonly occur in both premature and term births, and the Company believes
that other evaluation techniques that physicians currently use are not
sufficiently reliable to make an accurate diagnosis. Lacking an accurate
diagnostic test, physicians currently evaluate the amniotic membranes for
rupture, the level of uterine activity and the state of the cervix. However,
once the amniotic membranes have ruptured, premature birth is virtually
assured. Similarly, once detectable cervical change occurs, the onset of labor
and imminent delivery of the baby are virtually unavoidable, regardless of the
therapeutic intervention employed. Uterine contractions may be early
indicators of premature birth, but are often actually harmless contractions
that commonly occur in the last half of term pregnancies.
Asymptomatic Women. Diagnosis of the likelihood of premature delivery among
asymptomatic pregnant women currently depends on the evaluation of known risk
factors, such as multiple fetus pregnancies (e.g. twins), poor prenatal care
or previous premature birth. However, these risk factors have limited
usefulness because approximately 50% of women who deliver prematurely are
pregnant for the first time or have no identifiable risk factors. Even when
accurately identified, these risk factors (with the exception of multiple
fetus pregnancies) are not reliable predictors of premature birth.
26
<PAGE>
Late Birth/Successful Induction at Term
Late births are those delivered after 42 weeks of gestation. Approximately
5% of the four million babies born in the United States annually are delivered
late. Late birth significantly increases the medical risk for both the mother
and baby and, if intervention is required, the overall cost of pregnancy and
delivery. The primary risk for late babies is asphyxiation. As a fetus grows
in the relatively confined space of the uterus, there is increased likelihood
of blood flow disruption resulting from umbilical cord compression. When blood
flow through the umbilical cord is compromised, the fetus may lose its source
of oxygen and face death or significant disability if not immediately
delivered, usually by emergency cesarean section. In addition, women with
post-term pregnancies are more likely to develop preeclampsia and therefore be
required to deliver their babies via cesarean section, which increases risk to
the mother and results in costs of approximately $3,000 more than a term
vaginal delivery. In order to limit the risks and costs associated with late
birth, physicians typically seek to induce labor at term. The significant
risks and costs associated with late birth and reasons of social convenience
have led to an increasing reliance on induced labor, which may account for as
many as 25% of all term deliveries.
Physicians induce labor through the application of preparations containing
prostaglandin E2 to the vagina to prepare the cervix for delivery and use
intravenous administration of pitocin to increase the number and force of
uterine contractions. Induction is often accompanied by protracted labor
resulting from the uterus and cervix not being prepared to deliver the baby.
There currently exists no reliable diagnostic to test whether the
physiological preparatory changes necessary for a successful induction have
occurred. Physicians currently assess subjective characteristics of the cervix
to determine preparedness. The Company believes that this subjective
determination does not allow practitioners reliably to determine whether or
not induction of labor will be successful and may contribute to the high
annual cesarean rate (24% of all births) in the United States.
27
<PAGE>
THE ADEZA SOLUTION FOR PREMATURE BIRTH AND LATE BIRTH/SUCCESSFUL INDUCTION OF
LABOR
The Company believes that its current products and its near- and long-term
product candidates will address the need for objective diagnostic tests for
premature birth and late birth. The following table sets forth the Company's
current and near-term products for these disorders.
CURRENT AND NEAR-TERM FFN-BASED PRODUCTS FOR PREMATURE AND LATE BIRTH(/1/)
<TABLE>
<CAPTION>
DISORDER/PRODUCT INDICATION STATUS CURRENT APPROACH
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PREMATURE BIRTH
fFN ELISA Test Laboratory assay to Expedited PMA for use Symptomatic women are
assess likelihood of of test in symptomatic typically held for
premature birth to be women received in observation and are
used in symptomatic 1995. Commercial in- often medicated and
or asymptomatic wom- troduction in Europe monitored for
en. in 1992, Japan in cervical change and
1995 and for symptom- contractions. No
atic women antici- immunodiagnostic test
pated in the United to assess likelihood
States in the second of premature birth
half of 1996. PMA has received FDA
Supplement for use of approval.
test in asymptomatic
woman being prepared
for planned submis-
sion in late 1996.
fFN Dipstick Test Rapid point-of-care FDA concordance trial Symptomatic women are
dipstick analyzed by in progress and PMA typically held for
practitioner on-site Supplement being observa-
to assess likelihood prepared for use of tion and are often
of premature birth. test in symptomatic medicated and moni-
women. tored for cervical
change and contrac-
tions. No
immunodiagnostic test
to assess likelihood of
premature birth has
received FDA approval.
Premature Rupture of
Amniotic Membranes
fFN Vertical Flow Multi-step membrane Commercial Pregnant women with
Test(/2/) test analyzed by introduction in Japan suspected ruptured
practitioner on-site in 1995. No current membranes are
to assess premature plans to introduce in assessed for excess
rupture of amniotic the United States. fluid in the vagina,
membranes. a vaginal secretion
slide test is
performed and vaginal
fluid acidity is
tested.
LATE BIRTH
fFN Dipstick Test Rapid point-of-care Clinical trials Pregnant women beyond
dipstick analyzed by currently being expected delivery
practitioner on-site designed to support a date have labor
to assess likelihood PMA Supplement. induced and/or
of successful cesarean sections. No
induction at or after immunodiagnostic test
term. to assess likelihood
of successful
induction at term has
received FDA
approval.
</TABLE>
(1) The preceding table and other portions of this Business section, including
without limitation "The Adeza Solution for Premature and Late
Birth/Successful Induction of Labor," "The Adeza Solution for
Preeclampsia" and "The Adeza Solution for Reproductive Disorders," contain
forward-looking statements which involve risks and uncertainties with
respect to the products the Company currently intends to develop. Actual
results may differ significantly from those discussed in the forward-
looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed in "Risk Factors."
(2) The fFN Vertical Flow Test for the premature rupture of amniotic membranes
has been specifically developed for sale and marketing in Japan. The
Company is in the early stages of developing a product for detection of
suspected ROM in a more cost-effective, rapid point-of-care format which
it intends to introduce in the United States.
28
<PAGE>
The Company believes that its fFN-based products provide the first objective
and convenient immunodiagnostic tests for assessing the likelihood of
premature birth and late birth/successful induction of labor at term. As
indicated in the diagram below, fFN is a placental protein that is a component
of the placental membranes at the maternal/fetal interface.
NORMAL PREGNANCY
[DRAWING OF FETUS IN UTERUS]
The level of fFN in vaginal secretions is closely correlated to the onset of
labor and subsequent delivery. Although fFN is not the cause of labor and
delivery, its presence in vaginal secretions signals the weakening or
compromise of placental membranes and the probable onset of labor. Results of
the Company's clinical trials indicate that fFN testing will enable physicians
to objectively identify women at risk for preterm labor within the next seven
to 14 days. The Company believes that this will allow appropriate patient
care, resulting in reduced risk to the mother and baby and significantly lower
overall costs to the health care system.
The following chart demonstrates the levels of fFN normally present in
vaginal secretions of pregnant women at different gestational ages. High
levels of fFN between gestational ages of 24 weeks and 34 weeks are associated
with an increased risk of premature birth. By measuring the levels of fFN in
vaginal secretions during such period, physicians are able to better assess
the likelihood of premature birth.
VAGINAL fFN LEVEL AT EACH GESTATIONAL AGE
[CHART OF FFN LEVELS]
29
<PAGE>
The Company has developed, or is developing, a number of tests based on the
detection of fFN as an indicator for premature birth and late birth/successful
induction of labor at term.
fFN ELISA Test
The Company's initial fFN diagnostic product is the fFN ELISA Test that
measures the presence of fFN in vaginal fluid. The fFN ELISA Test consists of
a specimen collection kit and a two-hour microtitre plate kit that will be
used by laboratories and hospitals to provide results on the specimens
collected. The Company believes that the fFN ELISA Test is the first
immunodiagnostic test that will allow accurate predictive assessment of the
risk of premature birth among both symptomatic and asymptomatic pregnant
women. The Company believes that the fFN ELISA Test's predictive ability will
enable physicians to more accurately select the appropriate course of
treatment. If the test is negative, the physician may decide to treat less
aggressively and, for example, not admit a symptomatic woman into a health
care facility for observation. If the test is positive, the physician may
choose to take steps to delay the onset of labor and perhaps initiate
treatment to aid the baby's lung development. The Company believes that early
recognition of women at increased risk leads to improved patient management
via more intense surveillance and selection of appropriate treatments, thereby
improving patient outcome and reducing costs. The fFN ELISA Test has received
an expedited PMA for marketing in the United States as an aid in assessing the
risk of premature birth in symptomatic women. This test is currently being
sold in portions of Europe through a limited number of distributors and in the
Pacific Rim and Japan through Daiichi, and has been approved and assigned
reimbursement points by the Japanese Ministry of Health and Welfare for
assessing the likelihood of premature birth. The Company's strategic partner,
Matria, will market the fFN ELISA Test for use by hospitals, other health care
providers, and eventually commercial reference laboratories, in the United
States, Canada and Puerto Rico. Each fFN ELISA Test will yield up to 44
results. Matria will also market the Company's laboratory service to hospitals
and physicians not equipped to use the fFN ELISA Test to provide results on
the specimen samples they have taken. See "Business--Laboratory Services;
Manufacturing."
Symptomatic Women. The fFN ELISA Test has received a PMA from the FDA for
use in assessing the likelihood of premature birth in symptomatic women
between 24 and 34 weeks of gestation. In clinical trials, symptomatic women
with a negative fFN ELISA Test result had less than a 1% (1-in-150) chance of
delivering within the 14-day period following sample collection. The Company
believes that this high negative correlation in symptomatic women will
significantly reduce costs by allowing physicians to treat some symptomatic
women more appropriately, such as on an outpatient basis, rather than through
observation and hospitalization, as is now often the case. In addition,
symptomatic women who test positive for the presence of fFN between 24 and 34
weeks of gestation have a one in six chance of giving birth within a 14-day
period following administration of the test. The Company believes that this
will result in the proper diagnosis of women who will benefit from proper
patient management. For example, an NIH consensus panel indicates that proper
treatment, such as administration of corticosteroids will result in reduced
risk of respiratory complications for the baby as well as initial cost savings
estimated at more than $3,000 per treated baby born prematurely.
Asymptomatic Women. Based on results from the recently concluded Prematurity
Prediction Study, a multi-center clinical trial conducted by the Maternal
Fetal Medicine Unit of the NIH involving approximately 3,000 patients at 10
sites, the Company is in the process of preparing a PMA Supplement for use of
the fFN ELISA Test in the assessment of the likelihood of premature birth in
asymptomatic women. The results of this trial are expected to be submitted to
the FDA in late 1996, although there can be no assurance that a PMA Supplement
will be submitted at that time or at all. Results of this study indicate that
fFN is a meaningful predictor of premature birth of those asymptomatic women
evaluated between 24 and 30 weeks gestation. The study found that asymptomatic
women at 24 weeks gestation with a negative fFN ELISA Test result had less
than 1% (1-in-200) chance of delivering within the 28-day period following
sample collection. The study concluded that women who tested positive for the
presence of fFN at 24 weeks gestation were 59 times more likely to give birth
before 28 weeks of gestation, when infant morbidity and mortality is most
significant, than women with negative test results at such gestational age.
30
<PAGE>
fFN Dipstick Test
Premature Birth. The fFN Dipstick Test uses the same core technology as the
fFN ELISA Test, but is a convenient, rapid assay designed to allow a physician
or other health care practitioner to test the pregnant woman on-site and have
a result in approximately 10 minutes, without the need for further processing.
The fFN Dipstick Test is currently being evaluated in an FDA concordance trial
that compares the fFN Dipstick Test to the fFN ELISA Test in symptomatic women
in the United States. The Company believes that use of its fFN Dipstick Test
will allow physicians to make more timely treatment decisions for symptomatic
women, particularly those women with an increased risk of premature birth. In
addition, the Company believes that the ease of use of the dipstick format and
the immediate availability of results will broaden the use of the fFN Dipstick
Test to include the physicians who do not have access to laboratories that are
equipped to analyze the fFN ELISA Test.
Late Birth/Successful Induction of Labor. The Company believes that the fFN
Dipstick Test may provide the first objective and convenient test to identify
women who are candidates for successful induction of labor at term. Based on
the results of clinical trials in three countries involving over 250 patients,
the Company believes that vaginal expression of fFN is associated with
successful induction of labor at term among women with cervices that are not
prepared for the process of labor as assessed using the current subjective
evaluation techniques. These studies indicated that women with a positive fFN
test have a shorter duration of induced labor, require less drug
administration and have a significantly lower cesarean section rate than
similar women with a negative fFN test result. The Company believes that more
accurate selection of patients for induction will decrease maternal and fetal
complications associated with failed induction and decrease the cesarean
section rate which, as a result, will decrease costs. The Company is in the
process of designing a multi-center clinical trial to expand the use of the
fFN Dipstick to include the assessment of the likelihood of successful
induction of labor at term.
fFN Vertical Flow Test
Premature Rupture of Amniotic Membranes. In addition to the fFN ELISA Test
and the fFN Dipstick Test, the Company has introduced in Japan its fFN
Vertical Flow Test for assessing premature ROM. Accurate diagnosis of
suspected premature ROM is essential to facilitate prevention of potentially
serious neonatal infection. In addition, premature ROM can be indicative of
the likelihood of premature birth. Prior to delivery of a baby, the mother's
amniotic membranes rupture, releasing amniotic fluid into the vagina. Current
procedures to diagnose premature ROM include pooling (visual evidence of
pooling of amniotic fluid in the vagina), ferning (microscopic evidence of a
fern-like pattern produced by dried vaginal secretions) and nitrazine paper (a
form of pH paper). These procedures are commonly used, but because each has
significant weaknesses, two of the three procedures must be positive to
establish the diagnosis of premature ROM under current standards of care.
Detection of fFN in vaginal secretions indicates the presence of amniotic
fluid verifying that the amniotic membranes have ruptured. The fFN Vertical
Flow Test has been approved and assigned reimbursement points by the Japanese
Ministry of Health and Welfare for identification of premature ROM. The fFN
Vertical Flow Test is currently being sold in Japan by Daiichi.
PREECLAMPSIA
The Company also focuses on the pregnancy-related disorder of preeclampsia.
Preeclampsia is a syndrome characterized by the presence of at least one of
the following symptoms: elevated blood pressure (hypertension), protein in the
urine (proteinuria) and swelling of the face and extremities (edema).
Preeclampsia typically occurs in the later stages of pregnancy, and although
its origin is not currently well understood, it is believed to start at the
time of implantation of the fertilized egg and may have immunological basis.
In the United States, preeclampsia occurs in approximately 7% of all
pregnancies per year and is one of the leading causes of maternal mortality.
Most women develop symptoms of preeclampsia late in pregnancy, although some
women become symptomatic as early as 24 weeks of gestation. The current
standard of care for identifying this disorder includes frequent blood
pressure checks of the mother between 24 and 36 weeks of gestation.
About 5% of all women with preeclampsia develop severe life-threatening
forms of this disorder that may lead to stroke, eclamptic seizures, liver or
kidney failure, severe blood clotting disorders and even death.
31
<PAGE>
Preeclampsia can also have significant harmful effects on fetal well-being.
The only cure for preeclampsia is delivery of the fetus. Thus, many
preeclamptic women have a cesarean section before the onset of significant
complications. Consequently, preeclampsia accounts for approximately 10% to
25% of preterm deliveries, and, as a result, many of these babies suffer from
prematurity-related disorders.
Current diagnosis techniques for preeclampsia are not reliable. Although
diagnosed on the basis of the presence of hypertension, proteinuria and edema,
preeclampsia occasionally occurs in the complete absence of these symptoms. To
further complicate diagnosis of this disorder, many women experience
relatively harmless, transient blood pressure elevation during pregnancy which
may be incorrectly diagnosed as preeclampsia. At the present time, there are
no widely used immunodiagnostic markers for preeclampsia, and those tests that
do exist do not typically provide sufficient warning to prevent potentially
serious complications. Thus physicians must determine whether to perform a
cesarean section on patients that are believed to be preeclamptic regardless
of the gestational age of the fetus. This leads in some cases to unnecessary
cesarean sections, as well as the complications associated with premature
births.
THE ADEZA SOLUTION FOR PREECLAMPSIA
cFN ELISA Test
The Company has determined that cellular fibronectin ("cFN"), a protein
produced by the endothelial cells that line the vascular system that is
related to but distinct from fFN, is elevated in the plasma of women with
preeclampsia but not in the plasma of women with hypertension unrelated to
preeclampsia. Preclinical studies involving approximately 270 patients in
three sites indicate that cFN may be useful as a confirmatory marker for
preeclampsia and that its concentration seems to be proportional to the
severity of disease. Adeza has developed an ELISA test for the detection of
preeclampsia (the "cFN ELISA Test"), which is currently undergoing preclinical
evaluation in the United States, Europe and Australia.
HLA-G
Research conducted with Adeza's university collaborators has indicated that
preeclampsia may be a disease of abnormal trophoblast invasion. Trophoblasts
allow the placenta to implant on the uterus; adverse effects to trophoblasts
may prevent the placenta from gaining proper access to the maternal blood
supply. The Company's collaborations have identified new proteins which may
play roles in controlling trophoblast invasion and influencing the development
of preeclampsia. The first of these proteins, called Human Lymphocyte Antigen
G, or HLA-G, is present on the trophoblasts of normally invading, non-
preeclamptic placenta but markedly lower in concentration on the same types of
cells in preeclamptic placenta. The Company is conducting research on these
proteins with the goal of developing diagnostics for preeclampsia.
REPRODUCTIVE DISORDERS
In addition to the pregnancy-related disorders of premature birth and late
birth/successful induction of labor and preeclampsia, the Company has also
targeted the reproductive disorders of endometriosis and infertility.
ENDOMETRIOSIS
Endometriosis is a disorder manifested by the misplaced growth of the
endometrial tissue that normally lines the uterus and/or the development of
related lesions in the pelvic cavity. In the United States, the disease is
estimated to afflict 10% of women of reproductive age and is a leading cause
of infertility. Symptoms of endometriosis include pelvic pain, abnormal
vaginal bleeding and infertility. The symptoms of pain can range from minor
distress to excruciating pain that leads to possible bed rest and an inability
to function normally. The extent and location of the disease do not directly
correlate with the severity of the symptoms. In the United States, it is
estimated that approximately six million women of reproductive age have some
form of endometriosis. Approximately 30% to 45% of women who have
endometriosis are infertile. Endometriosis is responsible for 20% to 30% of
all gynecological operations and is the leading non-obstetric cause of
hospitalizations for women of reproductive age.
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Physicians currently diagnose endometriosis by performing laparoscopic
surgery to view endometriosis lesions in the pelvic cavity. Laparoscopy is an
invasive surgical procedure usually performed under general anesthesia,
involving inflation of the abdomen and two punctures in order to inspect the
pelvic cavity and diagnose the disease. Laparoscopy is not consistently
accurate in detecting early stage, microscopic disease. Current treatments
include invasive laparoscopic procedures to remove tissue and hormonal therapy
to temporarily suppress the growth of the lesions. These laparoscopic
procedures cost $2,000 to $4,000 per patient. The Company believes that the
development of an accurate diagnostic test would significantly reduce the
costs of treating endometriosis by providing an effective alternative to
laparoscopic surgery in certain cases. Enhanced ability to diagnose
endometriosis would reduce the risk to the patient and allow the physician to
not only detect the disease, but also to determine and monitor the
effectiveness of treatments.
INFERTILITY
It is estimated that about 800,000 new female infertility patients are
diagnosed in the United States each year and that diagnosis and treatment of
such patients costs approximately $2.0 billion per year. While at least 50% of
female infertility cases involve diagnoses which are well understood, much of
the management of female infertility centers around the treatment of poorly
understood factors. At least 25% of infertile women fall into the category of
"unexplained infertility" where extensive tests for known factors have failed
to reveal the cause of their infertility. These women may face open-ended and
undefined therapy that elevates costs and frustrates patients and physicians.
Women with "unexplained infertility" are candidates for assisted reproductive
technologies ("ART"), which are not always successful. Each attempted ART
treatment costs between $8,000 and $10,000. The Company believes that the
ability to predict successful candidates for ART treatments would help prevent
unnecessary lengthy and costly procedures in failed treatments.
THE ADEZA SOLUTION FOR REPRODUCTIVE DISORDERS
ENDOMETRIOSIS
Neural Networks. A neural network is a computer-based form of artificial
intelligence that is capable of identifying and "learning" direct and indirect
relationships between complex sets of data and a given outcome. The strength
of neural network analysis lies in its ability to examine complex and
nonlinear systems, such as human physiologic processes. The Company is
developing a proprietary neural network software, using its endometriosis
database, that the Company believes may be useful in assessing the likelihood
of the existence of endometriosis in a particular patient. The Company may
also apply this technology to its other targeted pregnancy-related and female
reproductive disorders.
Endometriosis-Specific Chemotactic Factor Test. A chemotactic factor has the
property of attracting macrophages and neutrophils in a process called
chemotaxis. The endometriosis-specific chemotactic factor that has been
isolated by Adeza and its collaborators shows the highest level of activity in
peritoneal fluid of patients with minimal to mild endometriosis, as compared
to patients with no endometriosis or moderate to severe endometriosis. A
diagnostic test based on this endometriosis-specific chemotactic factor would,
as a result, allow physicians to detect endometriosis at an early stage. The
Company is developing a proprietary diagnostic test based on this
endometriosis-specific chemotactic factor.
Anti-Endometrial Antibody Assay. The Company has detected an elevated
antibody response against endometrial proteins in the blood of patients with
endometriosis. Adeza's scientists have identified certain antigens that they
believe elicit this antibody response. Adeza is developing an assay test based
on these antigens that would allow physicians to diagnose endometriosis
through the detection of endometriosis-specific antibodies in the blood of
patients with the disease.
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INFERTILITY
Uterine Receptivity Test. The Company believes that the lack of expression
of the Beta-3 integrin correlates with defects in uterine receptivity to
embryo implantation. The Company is in the process of obtaining an exclusive
worldwide option to a proprietary test for defects in uterine receptivity
based on Beta-3 integrin. Such a test would be of significant value by
allowing the triage of women for therapy to correct uterine receptivity
defects prior to attempting ART. Because patients with defined defects in
uterine receptivity often fail to conceive either normally or in response to
in vitro fertilization, the Company believes that such a test could also allow
significant cost savings by potentially reducing the number of unnecessary
failed in vitro fertilization ("IVF") cycles. After signing of the option, the
Company intends to conduct a multi-center trial with major IVF centers to
further evaluate the potential of this test.
Anti-Ovarian Antibody Assay. In order for in vitro fertilization
technologies to be successful, patients must produce mature ova, which is the
purpose of fertility drug treatment prior to the use of in vitro
fertilization. The Company believes that high levels of a certain anti-ovarian
antibody correlate to poor response to fertility drug treatments. The Company
is developing an assay to detect anti-ovarian antibodies in the blood of women
who are candidates to receive drug treatment for ovarian stimulation. The
Company believes this test has the potential to be a useful screen for poor
response to drug-induced ovarian stimulation. If the Company is able to
successfully develop such a test, it believes that the anti-ovarian antibody
assay could lead to significant savings by reducing the number of ovulation
induction treatment cycles that fail due to lack of response.
SALES & MARKETING; STRATEGIC CORPORATE ALLIANCES
DOMESTIC OPERATIONS
The Company's strategy is to sell and market its products primarily through
strategic partners and distributors. The Company, together with its strategic
partners and distributors, markets primarily to physicians, hospitals, other
health care providers and third-party payors. The Company believes that the
trend toward management of health care costs in the United States will lead to
increased awareness of and emphasis on disease prevention and early patient
management, which will increase demand from physicians and third-party payors
for cost-effective diagnostic tests.
The Company, together with its strategic partner, Matria, is currently
preparing for market launch of the fFN ELISA Test, which has exclusive rights
to market the Company's fFN ELISA Test and its fFN Dipstick Test in the United
States, Canada and Puerto Rico. Matria is the surviving entity of the merger
of Tokos Medical Corporation ("Tokos") and HealthDyne, Inc., two leaders in
providing health care services for pregnant women. As of April 30, 1996,
Matria had a field organization of approximately 114 sales and sales support
personnel and 400 nurses. It has over 30 specialists focused on third-party
payors and 100 reimbursement customer service claims management personnel.
Adeza and Matria are currently working to structure reimbursement rates with
major third-party payors in anticipation of the full-scale commercial launch
of the fFN ELISA Test in the United States in the second half of 1996. The
current end-user list price in the United States for the fFN ELISA Test is
$212 for a processed laboratory result from the Company and $2,400 for a
diagnostic kit that is analyzed by the end-user's laboratory, which may be
utilized for eight to 44 tests.
The Company's relationship with Matria is governed by an exclusive marketing
agreement (the "Matria Marketing Agreement") for the Company's fFN ELISA Test
and the fFN Dipstick Test. In addition, Matria has the right to participate in
the development of and obtain rights to distribute immunodiagnostic products
for premature birth that are developed by or acquired for development by the
Company, in the United States, Canada and Puerto Rico. Under the Matria
Marketing Agreement, initially executed in December 1991 with Tokos and
amended in May 1996, the Company received an initial $3.0 million in research
and development funding in 1991. In addition, the Company received another
$1.0 million in milestone payments in 1992 and $4.0 million in 1995 in
connection with the completion of other milestones. Additionally, in
connection with the Matria Marketing Agreement, Matria invested in $2.0
million of the Company's capital stock.
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INTERNATIONAL OPERATIONS
Until the Company's receipt of FDA approval of its fFN ELISA Test in the
United States, Adeza's marketing and sales efforts were focused on selected
international markets for the purpose of gathering relevant market data and
increasing market awareness. These markets include Taiwan, portions of Europe,
Scandinavia, Japan and South Korea. Currently, the Company's international
sales and marketing efforts address the particular health care systems of
individual countries through a network of 11 international distributors with
expertise in their markets. These distributors are supported by the Company's
internal sales and marketing professionals. The Company intends to expand its
international distribution network through agreements with strategic partners
and distributors that have significant presence and experience in the
international women's health care market.
The fFN ELISA Test and fFN Vertical Flow Test are marketed in Japan and
South Korea by the Company's marketing partner, Daiichi. In December 1990, the
Company and Daiichi entered into agreements to co-develop and market Adeza's
in vitro diagnostic products in Japan. Under these agreements, the Company
recognized contract revenue for research and development of $2.0 million in
1991, $2.0 million in 1992, $667,000 in 1993, $667,000 in 1994 and $667,000 in
1995. Additionally, in connection with these agreements, Daiichi purchased an
aggregate of $1.0 million of the Company's capital stock.
The Company expects in the future to enter into additional strategic
partnerships to develop, commercialize and sell its current and future
products. However, there can be no assurance that the Company will be able to
negotiate acceptable agreements in the future, or that such new agreements or
existing agreements will be successful. The Company may also establish a
direct sales force to sell certain products.
Adeza's internal sales and marketing efforts provide technical and clinical
support for the Company's products to the Company's strategic partners and
distributors, including their journal advertising, seminars, congresses and
trade show participation. A primary goal of the Company's direct marketing is
to increase public awareness of the problems and high costs associated with
pregnancy-related and female reproductive disorders it targets. Adeza
collaborates with Ob/Gyn physicians, practitioners and academics to support
the use of the Company's technology. The Company and its strategic partners
have produced an in-service video to facilitate consistent and regular use of
its products by physicians and laboratory technicians, cost/benefit
information and informative product literature in five languages.
RESEARCH AND DEVELOPMENT
The Company's research and development efforts are conducted internally and
through collaborations with academic investigators and clinicians, with a
primary focus on the research and development of additional diagnostics and on
therapeutic products that will complement the Company's diagnostics in
addressing the needs of women with pregnancy-related and reproductive
disorders. Adeza's therapeutic research strategy emphasizes the selection of
naturally occurring compounds which have clear roles in the biochemical
processes frequently associated with premature birth. Total research and
development expenses for the years ended December 31, 1994 and December 31,
1995 and the three month period ended March 31, 1996 were $3.6 million, $3.5
million and $830,000, respectively.
LABORATORY SERVICES; MANUFACTURING
Laboratory Services. The Company offers laboratory services that will
provide results from the fFN ELISA Test. The Company expects that over time
other laboratory service providers will also provide results from this test.
The Company's strategy is to use its laboratory services to help it penetrate
the market by facilitating adoption of the Company's products by physicians,
clinicians and health care providers and to generate additional revenue
through fees for such laboratory services. The Company has limited experience
in providing laboratory services to provide results of its diagnostic tests.
The Company intends to provide laboratory results to physicians and other
users of the Company's diagnostic test as a means of ensuring that the users
of such products will have ready access to results. No commercial laboratory
service provider other than
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the Company is currently providing results with respect to the Company's
tests, and there can be no assurance that any laboratory other than that of
the Company will ultimately provide such results. Failure by the Company to
provide accurate and cost-efficient laboratory services and to generate
expected revenues through such services could have a material adverse effect
on the Company's business, financial condition and results of operations and
could expose the Company to significant liability in the event of errors in
test results. There can be no assurance that there will be demand for the
Company's laboratory services or that such services will generate any
additional revenues for the Company. See "Risk Factors--Limited Laboratory
Operating Experience."
The ability to provide quality laboratory information for the physician
begins with obtaining a high-quality specimen. To maintain the specimen's
integrity during shipment, all specimens are sent following prescribed
shipping instructions. In the case of the fFN samples, a container with a
frozen ice pack is being used to help protect the samples from excess heat. An
overnight courier is used to ensure that the samples are transported from the
point of collection to the laboratory within 24 hours. Validation studies to
ensure the specimens have been transported properly have been performed and
will be an ongoing part of Adeza's laboratory quality assurance program.
As of April 30, 1996, Adeza employed five California Licensed Clinical
Laboratory Scientists and retained the services of a Laboratory Director and a
Clinical Consultant. The laboratory is staffed and equipped to process 240 to
480 fFN samples in the course of each eight hour shift, six days a week. The
Company believes that this laboratory capacity will be sufficient through
1997. In addition to the fFN testing, the Company intends to use its
laboratory to offer clinical testing services for additional products if and
as such products are introduced and expansion of the Company's existing
laboratory facilities may be required to perform such additional testing.
Adeza's laboratory is certified under the Clinical Laboratory Improvement
Amendments of 1988 ("CLIA") for its laboratory services. It is also certified
by the State of California Department of Health Services. CLIA is intended to
ensure the quality and reliability of all medical testing in laboratories in
the United States by requiring that any facility in which testing is performed
meet specified standards in areas such as personnel qualification,
administration, participation in proficiency testing, patient test management,
quality control, quality assurance and inspections. The regulations
promulgated under CLIA have established three levels of regulatory control
based on test complexity--"waived," "moderately" and "highly" complex. The fFN
ELISA Test is currently catagorized as highly complex, and Adeza's laboratory
has been certified to perform tests at the highly complex level.
The federal and state certification and licensure programs establish
standards for the day-to-day operation of a medical laboratory, including, but
not limited to, personnel and quality control. Compliance with such standards
is verified by periodic inspections by inspectors employed by federal or state
regulatory agencies. In addition, federal regulatory authorities require
participation in a proficiency testing program approved by the Department of
Health and Human Services ("DHHS") for each of the specialties and
subspecialties for which a laboratory seeks approval from Medicare or Medicaid
and licensure under CLIA. Proficiency testing programs involve actual testing
of specimens that have been prepared by an entity running an approved program
for testing by the laboratory. On March 14, 1990, the DHHS published final
regulations setting forth the standards for the day-to-day operation of all
laboratories that participate in Medicare and Medicaid, as well as those
laboratories which engage in interstate commerce and, therefore, are regulated
under CLIA. These regulations generally became effective on September 1, 1992
and apply to the Company's laboratory. The Company believes it is in
compliance with these regulations.
Existing federal laws governing Medicare and Medicaid, as well as some state
laws, also regulate certain aspects of the relationship between health care
providers, including laboratories, and their referral sources, including
physicians, hospitals and other laboratories. One provision of these laws,
known as the "anti-kickback law," contains extremely broad proscriptions, and
relatively little regulatory guidance or judicial precedent exists concerning
its application. Violation of this provision may result in exclusion from
Medicare and Medicaid or
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criminal penalties. The Company seeks to structure its arrangements with
physicians and other providers to be in compliance with this law, and to keep
up-to-date on developments concerning the law's application by means including
consultation with legal counsel. However, the Company is unable to predict how
the law will be applied in the future, and no assurances can be given that its
arrangements will not be subject to scrutiny under this law.
Any exclusion or suspension from participation in the Medicare and Medicaid
programs, any loss of licensure or accreditation, or any inability to obtain
any required license or permit, whether arising from any action by DHHS, any
state, or any other regulatory authority, would have a material adverse effect
on the Company's business. Any significant civil or criminal penalty resulting
from such proceedings could have a material adverse effect on the Company.
The FDA does not currently regulate laboratory testing services. Certain
federal and state laws govern the handling and disposal of medical specimens,
infectious and hazardous wastes and radioactive materials. Failure to comply
could subject an entity covered by these laws to fines, criminal penalties
and/or other enforcement actions.
Pursuant to the Occupational Safety and Health Act, laboratories have a
general duty to provide a workplace to their employees that is safe from
hazard. Over the past few years, the Occupational Safety and Health
Administration ("OSHA") has issued rules relevant to certain hazards that are
found in the laboratory. Failure to comply with any applicable OSHA rules or
with the general duty to provide a safe workplace could subject an employer,
including a laboratory employer, to substantial fines and penalties.
Manufacturing. As of April 30, 1996, Adeza employed six full-time employees
in manufacturing and four full-time employees in its quality assurance
department. The manufacturing facility is located at the Company's
headquarters in Sunnyvale, California and consists of approximately 4,400
square feet of dedicated manufacturing and quality assurance space.
The Company currently manufactures the fFN ELISA Test, the fFN Dipstick Test
and the fFN Vertical Flow Test at its facilities in Sunnyvale. The Company
believes that it has the capacity to meet its estimated production
requirements for 1997. Adeza's manufacturing facility has a current license
from the State of California, Department of Health Services Food and Drug
Branch Manufacturing and is also registered with the FDA as a device
manufacturer.
The Company has no therapeutic manufacturing facilities at the present time
and plans to rely upon outside manufacturers to produce any therapeutic
products. The Company believes that there is substantial worldwide production
capacity for therapeutics and that it will be able to establish manufacturing
arrangements on acceptable terms. However, there can be no assurance that
appropriate production capacity for therapeutics will be available if and when
needed by the Company or that the Company will be able to establish
manufacturing arrangements on acceptable terms, if at all.
CERTAIN LICENSE AGREEMENTS; PATENTS AND PROPRIETARY TECHNOLOGY
Certain License Agreements. The Company seeks to obtain technologies that
complement and expand its existing technology base. Where consistent with its
business strategy, the Company intends to license product and marketing rights
from selected research and educational institutions to capitalize on the
research and development capabilities and technology bases of these entities.
The Company's material license agreement covering the technology related to
the Company's fFN-based products is with the Fred Hutchinson Cancer Research
Center (the "Hutchinson Center"). In August 1992, Adeza entered into an
amended license agreement (the "Hutchinson Agreement") which superseded
certain previous license agreements between the two entities. Under the
Hutchinson Agreement, the Company was granted a worldwide, sublicensable,
exclusive license (subject to the rights of certain United States governmental
agencies and a grant-back to the Hutchinson Center for non-commercial research
purposes) to certain patent rights related to fFN and antibodies made against
fFN,
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which constitutes Adeza's core technology for its fFN-based products,
including the fFN ELISA Test and the fFN Dipstick Test. The Company paid up-
front license fees upon execution of the Hutchinson Agreement, in January 1993
and upon receipt of a PMA for the fFN ELISA Test. The Company is also
obligated to pay royalties to the Hutchinson Center on actual product sales in
the United States by the Company during the remainder of the term of a
licensed patent, subject to an annual minimum royalty. In addition, in
connection with Matria's market launch of the fFN ELISA Test, the Company
granted the Hutchinson Center a warrant to purchase 25,000 shares of Common
Stock.
In addition to the Hutchinson Agreement, the Company is a party to numerous
option and license agreements with research and educational institutions for
the in-licensing of a variety of key technologies, including the University of
California at San Francisco for the use of HLA-G for diagnosis and treatment
of preeclampsia, the University of Pennsylvania for the potential diagnostic
and therapeutic applications of a chemotactic factor associated with
endometriosis and for certain antibodies made against fetal fibronectin and
the University of Alabama at Birmingham for a therapeutic agent for treatment
of women at risk for preterm delivery. Certain of these agreements require the
Company or the other parties to meet certain performance obligations in order
to retain their rights under such agreements or require the Company to make
certain payments in order to obtain or maintain rights to the subject
technology.
Patents and Proprietary Technology. The Company's success will depend in
part on its ability to obtain patent protection for its products and
processes, to preserve its trade secrets and to operate without infringing the
proprietary rights of third parties. The Company's policy is to protect its
technology base by filing patent applications on internal proprietary
technology as well as on in-licensed technology. The Company owns or has
licenses to 23 United States patents and the Company owns, has licenses to or
options to license technology covered by another 16 pending United States
patent applications, each in the area of pregnancy-related and reproductive
disorder diagnostics.
The Company's ability to protect its proprietary position is in part
dependent on the issuance of patents on current and future applications. The
Company currently has applications pending in the United States, Japan, Canada
and certain countries in Europe. The validity and breadth of claims in medical
technology patents involve complex legal and factual questions and therefore
are highly uncertain. No assurance can be given that any pending patent
applications or any future patent applications will be issued, that the scope
of any patent protection will exclude competitors or provide competitive
advantages to the Company, that any of the Company's patents will be held
valid if subsequently challenged or that others will not claim rights in or
ownership to the patents and other proprietary rights held by the Company.
Furthermore, there can be no assurance that others have not developed or will
not develop similar products, duplicate any of the Company's products or
design around the Company's patents. In addition, others may hold or receive
patents or file patent applications that contain claims having a scope that
covers products developed by the Company. In the event that any relevant
claims of third-party patents are upheld as valid and enforceable, the Company
could be prevented from practicing the subject matter claimed in such patents
or could be required to obtain licenses from the patent owners of each of such
patents or to redesign its products or processes to avoid infringement. There
can be no assurance that such licenses would be available or, if available,
would be on terms acceptable to the Company or that the Company would be
successful in any attempt to redesign its products or processes to avoid
infringement. The Company also relies upon unpatented trade secrets to protect
its proprietary technology, and no assurance can be given that others will not
independently develop or otherwise acquire substantially equivalent techniques
or otherwise gain access to the Company's proprietary technology or that the
Company can ultimately protect meaningful rights to such unpatented
proprietary technology.
Litigation regarding patent and other intellectual property rights which
would result in substantial cost to and diversion of effort by the Company may
be necessary to enforce patents issued to the Company, to protect trade
secrets or know-how owned by the Company, to defend the Company against
claimed infringement of the rights of others or to determine the ownership,
scope or validity of the proprietary rights of the Company and others. An
adverse determination in any such litigation could subject the Company to
significant liability to third parties, could require the Company to seek
licenses from third parties, which licenses may not be available or, if
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available, may not be on terms acceptable to the Company, and ultimately could
prevent the Company from manufacturing, selling or using its products, any of
which could have a material adverse effect on the Company's business,
financial condition and results of operations.
Adeza also relies on trade secrets and proprietary know-how. The Company's
policy is to require each of its employees, consultants and advisors to
execute a confidentiality agreement upon the commencement of any employment,
consulting or advisory relationship with the Company. Each agreement provides
that all confidential information developed or made known to the individual
during the course of the relationship will be kept confidential and not
disclosed to third parties except in specified circumstances. In the case of
employees, the agreements provide that all inventions conceived of by an
individual shall be the exclusive property of the Company, other than
inventions unrelated to the Company and developed entirely on the employee's
own time. There can be no assurance, however, that these agreements will
provide meaningful protection or adequate remedies for misappropriation of the
Company's trade secrets in the event of unauthorized use or disclosure of such
information.
THIRD-PARTY REIMBURSEMENT
The Company's strategy is to increase acceptance of its products and create
long-term demand by marketing the cost effectiveness and improved patient care
that its products provide to third-party payors. The Company, together with
its strategic partners and distributors, intends to educate such third-party
payors through a variety of means, including marketing evaluations, seminars,
workshops, publications and professional and trade meetings. Adeza and Matria
are currently working to structure reimbursement rates with major third-party
payors in anticipation of the full-scale commercial launch of the fFN ELISA
Test in the United States in the second half of 1996.
The Company's ability to successfully commercialize its products depends in
part on the availability of, and the Company's ability to obtain, adequate
levels of third-party reimbursement for use of its diagnostic tests. In the
United States, hospitals, physicians and other health care providers that
purchase diagnostic tests such as the fFN ELISA Test generally rely on third-
party payors, principally federal Medicare, state Medicaid and private and
corporate health insurance plans, to reimburse all or part of the cost
associated with the use of such tests. Although reimbursement for diagnosing
premature birth has generally been available in the United States, there can
be no assurance that this will continue to be the case. Third-party payors may
deny reimbursement if they determine that a prescribed diagnostic test has not
received appropriate FDA or other governmental regulatory clearances, is not
used in accordance with cost-effective treatment methods as determined by the
payor, or is experimental, unnecessary or inappropriate. The Company's ability
to commercialize its products successfully will depend in part on the extent
to which appropriate reimbursement levels for the cost of such products and
related treatment are obtained from government authorities, private health
insurers and other organizations, such as health maintenance organizations
("HMOs"). Third-party payors are increasingly challenging the prices charged
for medical products and services. The Company is unable to predict what
changes will be made in the reimbursement methods used by third-party health
care payors. Also, the trend towards managed health care in the United States
and the concurrent growth of organizations such as HMOs, which could control
or significantly influence the purchase of health care services and products,
as well as legislative proposals to reform health care or reduce government
insurance programs, may all result in lower prices for the Company's products.
The Company is unable to forecast what additional legislation or regulation,
if any, relating to the health care industry or third-party coverage and
reimbursement may be enacted in the future or what effect such legislation or
regulation would have on the Company's business. The cost containment measures
that health care providers are instituting and the impact of any health care
reform could have an adverse effect on the Company's ability to sell its
products and may have a material adverse effect on the Company's business,
financial condition and results of operations.
Reimbursement systems in international markets vary significantly by
country, and by region within some countries, and reimbursement approvals must
be obtained on a country-by-country basis. Many international markets have
government managed health care systems that control reimbursement for new
diagnostic tests and procedures. In most markets, there are private insurance
systems as well as government managed systems.
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Market acceptance of the Company's products will depend on the availability
and level of reimbursement in international markets targeted by the Company.
Currently, the Company's fFN ELISA Test and fFN Vertical Flow Test have been
approved for reimbursement in Japan. However, there can be no assurance that
the Company will obtain reimbursement in any other countries for these
products or in any country for its future products within a particular time,
for a particular amount, or at all.
Regardless of the type of reimbursement system, the Company believes that
physician and clinician acceptance and advocacy of the use of the Company's
products will be required to obtain reimbursement. Availability of
reimbursement will depend on the clinical efficacy and cost of the Company's
products. There can be no assurance that reimbursement for any of the
Company's products in the United States or foreign countries under either
government or private reimbursement systems will be available, or if
available, will not be decreased in the future, or that physicians and
clinicians will support and advocate reimbursement for the use of the
Company's products. Failure by physicians, clinicians and other users of the
Company's products to obtain sufficient reimbursement from third-party health
care payors for the use of the Company's products could have a material
adverse effect on the Company's business, financial condition and results of
operations.
GOVERNMENT REGULATION
The manufacturing, testing, labeling, distribution, marketing, promotion and
sale of the Company's products are subject to extensive and rigorous
regulation by the FDA and, to varying degrees of regulation, by other Federal,
state and foreign regulatory agencies. The Company's products are regulated by
the FDA under the Federal Food, Drug and Cosmetic Act (the "FDC Act"), as
amended by the Medical Device Amendments of 1976 and the Safe Medical Devices
Act of 1990, among other laws. Under the FDC Act and the regulations
promulgated thereunder, the FDA regulates, among other things, the clinical
testing, manufacturing, labeling, distribution, sale and promotion of medical
devices in the United States. In addition, various foreign countries in which
the Company's products are or may be sold, including Germany, France, Japan
and Canada, impose local regulatory requirements. The testing for, preparation
of and subsequent FDA and foreign regulatory review of required applications
is expensive, lengthy and uncertain. Failure to comply with FDA and similar
foreign requirements could result in civil penalties or criminal prosecutions,
restrictions on or injunction against marketing of the Company's products,
seizure or recall of the Company's products, total or partial suspension of
products, refusal by the government to grant premarket clearance or approval
of the Company's products, withdrawal of market approval or other regulatory
action. There can be no assurance that the Company will be able to obtain
necessary regulatory approvals or clearances on a timely basis or at all, and
delays in receipt of or failure to receive such approvals or clearances, the
loss of previously received approvals or clearances, or failure to comply with
existing or future regulatory requirements would have a material adverse
effect on the Company's business, financial condition and results of
operations.
The FDC Act, among other things, classifies medical devices into three
categories over which the FDA maintains increasing levels of regulation: Class
I (general controls--e.g., labeling, premarket notification and GMPs), II
(general and special controls--e.g., performance standards, postmarket
surveillance and FDA guidelines) and III (premarket approval). Before a new
device can be introduced into the market, the manufacturer typically must
obtain FDA clearance or approval through either a 510(k) premarket
notification or a PMA. Because the Company believes that the majority of
Adeza's products are or will ultimately be classified as Class III devices,
they are or will be subject to the requirement of premarket approval by the
FDA. However, a 510(k) premarket notification will be sufficient for a
proposed device that is "substantially equivalent" to a legally marketed Class
I or Class II medical device or a Class III medical device for which the FDA
has not required submission of PMAs. Prior to marketing any of these devices,
the Company is required to submit a 510(k) premarket notification to the FDA
and await the FDA's determination that the product may be marketed. In 510(k)
premarket notification the Company must, among other things, demonstrate that
the product to be marketed is substantially equivalent to the predicate
device. Test data from clinical trials is often required to demonstrate
substantial equivalence and that the products are safe and effective, which
may delay the 510(k) premarket notification review period or which may result
in a finding that the product is not substantially equivalent and that a full
PMA is required.
40
<PAGE>
Following submission of a 510(k) premarket notification, a company may not
market the device for clinical use until the FDA finds that product is
substantially equivalent. It generally takes four to 12 months from the date
of submission of a 510(k) to obtain premarket clearance, but it may take
longer. The FDA may agree that the product is substantially equivalent to a
predicate device and allow the product to be marketed in the United States.
The FDA, however, may (i) determine that the new device is not substantially
equivalent and require a PMA or (ii) require further information, such as
additional test data, including data from clinical studies, before it is able
to make a determination regarding substantial equivalence. By requesting
additional information, the FDA can further delay market introduction of a
company's products. Further, for any devices cleared through the 510(k)
process, modifications or enhancements that could significantly affect safety
or effectiveness, or constitute a major change in intended use, require new
510(k) submissions.
In February 1990, Adeza received FDA clearance of its 510(k) premarket
notification for its specimen collection kit and received FDA clearance of
revisions to this 510(k) in September 1995. However there can be no assurance
that the FDA will act favorably or quickly in its review of the Company's
future 510(k) submissions, if any, and significant difficulties and costs may
be encountered by the Company in its efforts to obtain FDA clearance that
could delay or preclude the Company from selling its products in the United
States. Furthermore, there can be no assurance that the FDA will not request
additional data, require that the Company conduct further clinical studies or
require a PMA, causing the Company to incur further cost and delay.
If a device does not qualify for the premarket notification procedure, a
company must file a PMA. The PMA requires more extensive pre-filing testing
than required for a 510(k) premarket notification and usually involves a
significantly longer review process. The PMA generally must contain results of
laboratory and human clinical studies establishing the safety and
effectiveness of the device for its intended use. The PMA must also give a
detailed description of the proposed labeling as well as the methods,
facilities and controls used for manufacturing the device. After a preliminary
review, the FDA makes an initial determination regarding whether a PMA is
sufficiently complete to permit substantial review and fileable. If a PMA is
accepted for filing, the FDA begins a more in-depth review process, which
likely will include review by a scientific advisory panel. During the PMA
review process, the FDA will conduct an inspection of the manufacturer's
facilities to ensure compliance with the applicable Good Manufacturing
Practices ("GMP") requirements. If the FDA evaluation of both the PMA and the
manufacturing facilities is favorable, the FDA may issue an "approvable"
letter, which usually contains a number of conditions that must be met in
order to secure final approval of the PMA. When those conditions have been
fulfilled to the satisfaction of the FDA, the agency will issue a PMA approval
letter, authorizing commercial distribution of the device for those
indications for which the FDA deems the data to be adequate. The FDA will also
indicate the intended uses or labeling claims, which the FDA will endorse, and
the product may only be marketed for these uses. In addition, the FDA can
revoke its approval after it has initially been given, and once approved, a
product is subject to various other regulatory controls that may be imposed by
the FDA. There can be no assurance that the existing FDA approval for the fFN
ELISA Test will not be revoked or that the fFN ELISA Test will meet other
regulatory controls that may be imposed. If the FDA's evaluation of the PMA or
manufacturing facilities is not favorable, the FDA will deny the application
or issue a "non-approvable" letter. The FDA may determine that additional
clinical data is necessary and delay the PMA to
allow conduction of clinical trials and submission of data to the FDA.
In October 1992, the Company submitted a PMA for the use of its fFN ELISA
Test for use in assessing the likelihood of premature birth in symptomatic
women. In January 1993, the FDA notified the Company of its initial
determination not to accept the PMA for filing pending the submission of
further clinical information by the Company. In response to subsequent
discussions with the FDA, Adeza expanded its clinical studies of the fFN ELISA
Test and submitted these results to the FDA in October 1994. In December 1994,
the FDA notified the Company of its decision to file the PMA with expedited
review, and in April 1995, an FDA advisory panel determined that the fFN ELISA
Test was safe and effective for the symptomatic indication and recommended
approval of the PMA by the FDA. In September 1995, the Company was notified by
the FDA that it is permissible to commercially distribute the fFN ELISA Test
in the United States for its intended use.
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Once an original PMA is reviewed and approved by the FDA, a Company may seek
authorization to market the approved product in a different format or for
additional clinical uses not described in the original PMA. Permission to
market the device for a claim different from that specified in the original
PMA is typically submitted to the FDA by a Company in the form of a PMA
Supplement. The FDA typically requires that the Company provide new clinical
data to facilitate its review of the new product format or clinical use. Adeza
is currently planning to submit two PMA Supplements to its original approved
PMA covering the fFN ELISA Test. In the first PMA Supplement, the Company
currently intends to request permission to expand the intended use of the fFN
ELISA Test to include assessment of the likelihood of premature birth for
asymptomatic women. In the second PMA Supplement, the Company currently
intends to request permission to market the fFN Dipstick Test for assessment
of the likelihood of premature birth in symptomatic women.
There can be no assurance that the Company will be able to meet the FDA's
PMA requirements or that any necessary regulatory approvals will be obtained
by the Company in the United States or any other country. Adeza's failure to
obtain any required regulatory approvals, as well as any delay which may be
experienced in obtaining such approvals, could materially and adversely affect
the marketing of the Company's products and its ability to generate revenues.
Adeza's failure to obtain any necessary regulatory approvals, any delay on
receiving such approvals, the restriction, suspension or revocation of
regulatory approvals, if obtained, or the failure to comply with regulatory
requirements would have a material adverse effect on the Company's business,
financial condition and results of operations.
Distribution of the Company's products outside the United States is subject
to FDA export and extensive foreign government regulation. These regulations,
including the requirements for approvals or clearance to market, the time
required for regulatory review and the sanctions imposed for violations, vary
from country to country. Since the fFN ELISA Test has been approved for
marketing in the United States by the FDA, there are currently no significant
restrictions limiting exportation of the device. Exportation of devices which
have not yet been cleared for domestic commercial distribution requires
permission from the country in which the device will be marketed and the
receipt of an 801(e) authorization, which is the approval of the FDA to export
a device. Adeza has obtained 801(e) clearances for export of the fFN Vertical
Flow Test to 22 countries, including the United Kingdom, Australia, Germany,
France and Spain. Additionally, Adeza has obtained approval and reimbursement
for the fFN ELISA Test and the from the Ministry of Health and Welfare in
Japan. On April 26, 1996, the export provisions in the FDC Act were amended in
Chapter 1A of Title II, Supplemental Appropriations For the Fiscal Year Ending
September 30, 1996, in the FDA Export Reform and Enhancement Act of 1996 to
revise the terms and conditions under which biologies may be exported under
Sections 801 and 801 of the FDC Act. This new legislation was designed to
facilitate the export of drugs by revising and in some circumstances
eliminating the requirement for FDA approval as a condition of export. Because
the legislation has just been enacted and there are no FDA regulations or
existing policies with respect to its implementation, the Company is unable to
reliably predict the extent of benefit that its export opportunities may
enjoy, if any. However, despite such new legislation, there can be no
assurance that the Company will obtain additional regulatory approvals in
other countries or that it will not be required to incur significant costs in
obtaining or maintaining its foreign regulatory approvals. Failure to obtain
necessary regulatory approvals, the restriction, suspension or revocation of
existing approvals or any other failure to comply with regulatory requirements
outside the United States could have a material adverse effect on the
Company's business, financial condition and results of operations.
The FDC Act and California laws also require the Company to be licensed and
to manufacture its products in compliance with current GMP regulations. These
regulations require that the Company manufacture its products and maintain
related documentation in a prescribed manner with respect to manufacturing,
testing and control activities. The Company is also required to comply with
various FDA requirements for labeling and the FDA prohibits a device, even if
approved, approved under a PMA, from being marketed for unapproved clinical
uses. If the FDA believes that a company is not in compliance with the
regulations, it can, among other things, institute proceedings to detain or
seize a product, issue a recall, prohibit marketing and sales of the company's
products and assess civil and criminal penalties against the company, its
officers or its employees. There can be
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no assurance that its manufacturing facility will satisfy GMP or California
manufacturing requirements. The Company's facilities and manufacturing
processes have been periodically inspected by the State of California and
other agencies, but remain subject to audit from time to time. The Company
believes that it is in substantial compliance with all applicable federal and
state regulations. Nevertheless, there can be no assurance that the FDA or a
state agency will agree with the Company's position, or that its GMP
compliance will not be challenged at some subsequent point in time.
Enforcement of the GMP regulations has increased significantly in the last
several years and the FDA has publicly stated that compliance will be more
strictly scrutinized. In the event that the Company is determined to be in
noncompliance with FDA regulations, the FDA or state agency has the power to
assert penalties or remedies, including, among other things warning letters,
fines, injunctions, civil penalties, recall or seizure of products, total or
partial suspension of production, refusal of the government to grant premarket
clearance or premarket approval for devices, withdrawal of previously granted
approvals and criminal prosecution. Such penalties or remedies could have a
materially adverse effect on the Company's business, financial condition and
results of operations.
In addition, the manufacture, sale or use of the Company's products are also
subject to regulation by other federal entities, such as the OSHA and the
Environmental Protection Agency, and by various state agencies, including the
California Environmental Protection Agency. Federal and state regulations
regarding the manufacture, sale or use of the Company's products are subject
to future change, which changes could have a material adverse effect on the
Company's business, financial condition and results of operations.
COMPETITION
Although Adeza believes it is well positioned to take advantage of the
opportunities of the women's reproductive health care market, the Company
expects competition is this market to increase. The fFN ELISA Test is the only
FDA-approved immunodiagnostic test for the assessment of the likelihood of
premature birth for symptomatic women and represents a significant advance
over currently used subjective evaluation techniques. However, there can be no
assurance that other, more effective diagnostic tests for the assessment of
the likelihood of premature birth will not receive FDA approval in the near
future. Other companies and institutions with substantially greater financial,
manufacturing, marketing, distribution and technical resources than the
Company are engaged in the research and development of products similar to
those currently being developed or commercialized by the Company. For example,
companies such as Abbott Laboratories, American Home Products Corp., Bayer AG,
Boehringer Mannheim GmbH, Bristol Myers Squibb Co., Eli Lilly & Co., G.D.
Searle and Co. (a subsidiary of Monsanto Co.), Johnson & Johnson, TAP
Pharmaceuticals Inc. and Zeneca Group PLC. are engaged in the development,
manufacture and marketing of diagnostic and therapeutic products relating to
women's reproductive health care and are therefore potential competitors of
the Company. Although none of these companies currently concentrates
exclusively on products for the women's reproductive health care market, there
can be no assurance that these or other companies or institutions will not
succeed in developing products or procedures that are more effective than the
Company's or that would render the Company's technology or products obsolete
or uncompetitive.
The Company's fFN ELISA Test will be distributed in the United States
through an exclusive strategic distribution arrangement with Matria. The
Company believes Matria competes with other companies that distribute products
related to the women's reproductive health care market to physicians,
clinicians, hospitals and other health care providers. These companies include
Apria Healthcare, Caremark International and Coram Healthcare. The Company
believes that Matria's extensive sales and marketing network competes
favorably with these and other companies, although there can be no assurance
that it will continue to do so.
The medical industry is characterized by rapid and significant technological
change. Consequently, the Company's success will depend in part on its ability
to respond quickly to medical and technological changes through the
development and commercialization of new products. The Company believes that
for all its products, important competitive factors include the relative speed
with which companies can develop products, establish clinical utility,
complete the clinical testing and regulatory approval process, obtain
reimbursement and supply commercial quantities of the product to the market.
The Company's inability to compete favorably with respect
43
<PAGE>
to any of these factors could have a material adverse effect on its business,
financial condition and results of operations. Product development involves a
high degree of risk and there can be no assurance that the Company's current
products will become commercially successful or that the Company's research
and development efforts will result in commercially successful future
products.
EMPLOYEES
As of April 30, 1996, the Company employs 40 full and part time personnel,
including 21 in research, development, clinical and regulatory affairs, six in
manufacturing, four in quality assurance, two in marketing and sales, and
seven in administration. Each of the Company's employees has signed a
confidentiality agreement and none is covered by a collective bargaining
agreement. The Company has never experienced employment-related work stoppages
and considers its employee relations to be good.
PROPERTIES
Adeza maintains its headquarters in Sunnyvale, California in one leased
facility, aggregating approximately 17,600 square feet, which contains
laboratory, research and development, production, manufacturing, marketing and
sales and general administration and finance. The lease for this facility
expires in August 1997. Adeza has a right of first refusal that, if exercised,
would extend the term of the lease for an additional five year period, to
2002. The Company currently pays monthly rent of approximately $20,000. The
Company believes that its existing facilities are adequate to meet its
immediate needs and that suitable additional space will be available in the
future on commercially reasonable terms as needed.
LEGAL PROCEEDINGS
As of the date of this Prospectus, the Company is not a party to any
material legal proceedings.
ADVISORS AND COLLABORATORS
The Company has established a network of medical, clinical and scientific
advisors and collaborators to consult with the Company's scientists and
clinical research staff and to advise the Company on its research and
development program, the design of its products and on other medical and
scientific matters relating to the Company's business. The Company's advisors
and collaborators include the following individuals:
Gary S. David, Ph.D., Independent Consultant, formerly conducted
immunogenetics and immunochemistry research at the City of Hope, cancer
immunobiology at the Salk Institute, and immunochemistry and tumor
immunobiology at the Scripps Clinic and Research Foundation.
Susan Fischer, Ph.D., Chairman and Professor of the Department of Oral
Biology, Professor of Obstetrics, Gynecology & Reproductive Sciences,
Professor of Pharmaceutical Chemistry and Associate Director of UCSF Mass
Spectrometry Facility, University of California at San Francisco, San
Francisco, California.
Thomas Garite, M.D., Chairman and Professor of the Department of Obstetrics
& Gynecology, University of California at Irvine, Irvine California; Diplomat
and Examiner, American Board of Obstetrics and Gynecology; Member, American
Board of Obstetrics and Gynecology Maternal Fetal Medicine Division Committee;
Editor, the American Journal of Obstetrics and Gynecology.
Linda Giudice, M.D., Ph.D., Associate Professor of Obstetrics & Gynecology;
Chief, Division of Reproductive Endocrinology and Infertility, Chief,
Gynecology, Lucille Packard Children's Hospital at Stanford University,
Stanford, California.
Jay Iams, M.D., Professor, Obstetrics & Gynecology, Director of Maternal
Medicine Division of the Department of Obstetrics & Gynecology, Ohio State
University, Columbus, Ohio.
Charles Lockwood, M.D., Chairman and Professor of Obstetrics & Gynecology,
New York University School of Medicine, New York, New York.
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Judith Luborsky, Ph.D., Associate Professor of Obstetrics & Gynecology, Rush
Presbyterian St. Luke's Medical Center, Chicago, Illinois.
James Roberts, M.D., Professor of Obstetrics & Gynecology, University of
Pittsburgh, Pittsburgh, Pennsylvania; Chairman, Maternal-Fetal Medicine Unit
of the National Institutes of Health.
Robert Taylor, M.D., Ph.D., Associate Professor of Obstetrics & Gynecology,
University of California at San Francisco, San Francisco, California.
The Company has entered into consulting agreements with most of the listed
advisors and collaborators. Each of the Company's advisors and collaborators
has entered into a confidentiality and non-disclosure agreement with the
Company. These advisors and collaborators are generally employed by employers
other than the Company and may have commitments to or consulting or advisory
contracts with other entities that may limit their availability to the
Company. Although generally each advisor and collaborator agrees not to
perform services for another person or entity which would create a conflict of
interest with the individual's services for the Company, there can be no
assurance that such conflict will not arise.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to the
executive officers and directors of the Company and their ages and positions
as of April 30, 1996:
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Daniel O. Wilds......... 47 President, Chief Executive Officer and
Director
Emory V. Anderson....... 42 Vice President and Chief Financial Officer
Robert O. Hussa, 55
Ph.D. ................. Vice President and Chief Technical Officer
David C. Casal, Ph.D. .. 41 Vice President, Clinical and Regulatory
Affairs
Andrew E. Senyei, 46
M.D.(1)................ Chairman of the Board of Directors
Nelson N.H. Teng, M.D., 50
Ph.D. ................. Director
Nancy S. Amer(2)........ 35 Director
Nancy D. Burrus(1)...... 41 Director
Craig C. Taylor(2)...... 45 Director
</TABLE>
- --------
(1) Member of Compensation Committee
(2) Member of Audit Committee
Daniel O. Wilds has been the President and Chief Executive Officer of Adeza
since July 1992. Prior to joining Adeza, Mr. Wilds was employed by Baxter
Healthcare Corporation ("Baxter"). From 1968 until June 1992, Mr. Wilds was
President of Baxter's Chemotherapy Service division, President and Chief
Operating Officer of its diagnostic joint venture with Genentech and President
and Chief Executive Officer of Medisense, Inc. (a fully integrated diagnostic
company in which Baxter owns a minority interest). Mr. Wilds was also General
Manager of Baxter's Mexico City operations, General Manager of its Container
Development Business Center, Director of Strategy Development and Vice
President of its Corporate Alliances function.
Emory V. Anderson has been the Vice President and Chief Financial Officer of
Adeza since October 1992. Prior to joining Adeza, Mr. Anderson served as
Executive Vice President, Chief Operating Officer and Chief Financial Officer
of Indesys, Inc., which he co-founded in 1984. Previously, Mr. Anderson held
the position of Director of Finance for Atari, Inc.
Robert O. Hussa has been the Vice President of Research and Development and
the Chief Technical Officer of Adeza since May 1993. From January 1990 to May
1993, Dr. Hussa was Vice President of Imaging and Therapeutics Research and
Development at Hybritech, Inc. ("Hybritech"), where he developed in vitro
diagnostic tests in the areas of reproductive endocrinology, cardiovascular
disease and cancer. From June 1986 to December 1989, he was Director of Assay
Development at Hybritech. Prior to joining Hybritech, Dr. Hussa was a
Professor of Gynecology & Obstetrics and of Biochemistry at the Medical
College of Wisconsin, where he worked for 18 years.
David C. Casal has been the Vice President, Clinical and Regulatory Affairs
of Adeza since November 1994, was Adeza's Director of Scientific Affairs from
October 1991 to November 1994 and was Adeza's Director of Clinical and
Regulatory Affairs from January 1990 to October 1991. Dr. Casal was previously
the Manager of Clinical Programs at Ligand Pharmaceutical, Inc., formerly
Progenex Incorporated, and was also a Senior Research Scientist at Hybritech,
where he was responsible for the clinical evaluation and approval of numerous
in vitro diagnostic assays.
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Andrew E. Senyei has been a director of Adeza since 1987 and has been
involved in Adeza's development since joining the Company as a consultant in
1986. Dr. Senyei has been a General Partner of Enterprise Partners, a venture
capital firm, since 1987. Dr. Senyei was a founder of Molecular Biosystems
and, prior to joining Enterprise Partners, was a practicing clinician and
Adjunct Associate Professor of Obstetrics, Gynecology and Pediatrics at the
University of California, Irvine. Dr. Senyei currently serves on the Board of
Directors of Ligand Pharmaceutical, Inc.
Nelson N.H. Teng co-founded Adeza and has served on the Company's Board of
Directors since 1985. Dr. Teng was the Medical Director and Vice President of
Research at Adeza from 1988 to 1989. Dr. Teng is currently an Associate
Professor in Obstetrics and Gynecology and Director of Gynecological Oncology
at the Stanford University School of Medicine, where he has been on the
faculty since 1981. Dr. Teng currently serves on the Board of Directors of
Univax Biologics.
Nancy S. Amer has served as a director of Adeza since May 1992. Ms. Amer has
been a Managing Director of Harvard Private Capital Group, Inc., Boston,
Massachusetts since 1990. Prior to joining Harvard Private Capital Group,
Inc., Ms. Amer was a senior consultant with the Boston Consulting Group, Inc.
Ms. Amer currently serves on the Board of Directors of Cambridge NeuroScience,
Inc., Playtex Products, Inc. and Procept, Inc. and several privately held
companies.
Nancy D. Burrus has been a director of Adeza since December 1994. Ms. Burrus
has been a General Partner with Indosuez Ventures since 1991 where she has
been active in early stage health care company investing. Prior to joining
Indosuez Ventures, Ms. Burrus was a Vice President of Morgan Stanley Ventures.
Craig C. Taylor co-founded Adeza and has served on the Company's Board of
Directors since 1986. Mr. Taylor has been a General Partner with Asset
Management Associates, an early stage venture capital firm, since 1977 where
he has participated in the establishment and growth of high technology and
health care companies including Amgen, Hybritech and Applied Biosystems. Mr.
Taylor currently serves on the Board of Directors of Telor Ophthalmic
Pharmaceutical, Metra Biosystems, Pharmacyclics and Lynx Therapeutics and
several privately held companies.
BOARD OF DIRECTORS COMMITTEES, COMPENSATION OF DIRECTORS AND OTHER INFORMATION
All directors hold office until the next annual meeting of stockholders of
the Company and until their successors have been duly elected and qualified.
The officers of the Company are appointed annually and serve at the discretion
of the Board of Directors.
Directors currently receive no cash fees for services provided in their
capacity as directors but may be reimbursed for out-of-pocket expenses
incurred in connection with services performed for the benefit of the Company.
The Company has adopted the 1996 Directors' Stock Option Plan under which
current and future nonemployee directors will be eligible to receive stock
options in consideration for their services. See "Management--Stock Option and
Incentive Plans."
The Board of Directors designated a Compensation Committee (the
"Compensation Committee") in 1995 to review and approve the compensation and
benefits for the Company's executive officers, administer the Company's 1995
Stock Option and Restricted Stock Plan and make recommendations to the Board
of Directors regarding such matters. The Compensation Committee is currently
composed of Andrew E. Senyei and Nancy D. Burrus.
The Board of Directors designated an Audit Committee in 1995 to review the
scope and results of financial audits and other services performed by the
Company's independent accountants and to make recommendations to the Board of
Directors regarding such matters. The committee is currently composed of Nancy
S. Amer and Craig C. Taylor. No interlocking relationship exists between the
Company's Board of Directors, the
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Compensation Committee or Audit Committee and the board of directors,
compensation committee or audit committee of any other company, nor has any
such interlocking relationship existed in the past. See "Certain
Transactions."
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Certificate of Incorporation limits the liability of directors
to the maximum extent permitted by Delaware law. Delaware law provides that a
director of a corporation will not be personally liable for monetary damages
for breach of such individual's fiduciary duties as a director except for
liability (i) for any breach of such director's duty of loyalty to the
corporation, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which a director derives an improper personal benefit.
The Company's Bylaws provide that the Company will indemnify its directors
and may indemnify its officers, employees and other agents to the fullest
extent permitted by law. The Company believes that indemnification under its
Bylaws covers at least negligence and gross negligence on the part of an
indemnified party and permits the Company to advance expenses incurred by an
indemnified party in connection with the defense of any action or proceeding
arising out of such party's status or service as a director, officer, employee
or other agent of the Company upon an undertaking by such party to repay such
advances if it is ultimately determined that such party is not entitled to
indemnification.
The Company has entered into separate indemnification agreements with each
of its directors and officers. These agreements require the Company, among
other things, to indemnify such director or officer against expenses
(including attorney's fees), judgments, fines and settlements (collectively,
"Liabilities") paid by such individual in connection with any action, suit or
proceeding arising out of such individual's status or service as a director or
officer of the Company (other than Liabilities arising from willful misconduct
or conduct that is knowingly fraudulent or deliberately dishonest) and to
advance expenses incurred by such individual in connection with any proceeding
against such individual with respect to which such individual may be entitled
to indemnification by the Company. The Company believes that its Certificate
of Incorporation and Bylaw provisions and indemnification agreements are
necessary to attract and retain qualified persons as directors and officers.
At present, the Company is not aware of any pending litigation or proceeding
involving any director, officer, employee or agent of the Company where
indemnification will be required or permitted. The Company is not aware of any
threatened litigation or proceeding that might result in a claim for such
indemnification.
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EXECUTIVE COMPENSATION
The following table sets forth certain compensation paid by the Company
during the fiscal year ended December 31, 1995 to the Company's Chief
Executive Officer and the Company's other most highly compensated executive
officers whose total cash compensation exceeded $100,000 (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- --------------------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- --------------------------- --------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Daniel O. Wilds
President and Chief
Executive Officer...... $191,255 $48,125 $ 0 248,463 $ 0
Emory V. Anderson
Vice President and Chief
Financial Officer...... 126,458 17,250 0 46,885 0
Robert O. Hussa
Vice President and Chief
Technical Officer...... 175,611 24,750 0 58,607 0
David C. Casal
Vice President, Clinical
and Regulatory
Affairs................ 110,052 10,000 0 30,603 0
</TABLE>
The following table shows certain information regarding stock options
granted to the Named Executive Officers during the fiscal year ended December
31, 1995. No stock appreciation rights were granted to these individuals
during the year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
NUMBER OF SHARES PERCENTAGE OF STOCK PRICE APPRECIATION
UNDERLYING TOTAL OPTIONS EXERCISE FOR OPTION TERM(2)
OPTIONS GRANTED TO PRICE PER EXPIRATION ---------------------------
NAME GRANTED(#)(1) EMPLOYEES SHARE DATE 5% 10%
---- ---------------- ------------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel O. Wilds......... 248,463 53.43% $0.24 5/05 $ 37,502 $ 95,038
Emory V. Anderson....... 46,885 10.08 0.24 5/05 7,077 17,934
Robert O. Hussa......... 58,607 12.60 0.24 5/05 8,846 22,418
David C. Casal.......... 30,603 6.58 0.24 5/05 4,620 11,707
</TABLE>
- --------
(1) These stock options, which were granted under the 1995 Stock Option and
Restricted Stock Plan, represent both vested and unvested options. The
maximum term of each option grant is ten years from the date of grant. The
exercise price is equal to the fair market value of the stock on the grant
date.
(2) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the Securities and Exchange Commission. There is no
assurance provided to any executive officer or any other holder of the
Company's securities that the actual stock price appreciation over the 10-
year option term will be at the assumed 5% and 10% levels or at any other
defined level. Unless the market price of the Common Stock appreciates
over the option term, no value will be realized from the option grants
made to the executive officers.
49
<PAGE>
The following table sets forth information for the Named Executive Officers
with respect to exercises of options to purchase common stock in the fiscal
year ended December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END(1)
---------------------------- -------------------------
NAME EXERCISABLE(2) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Daniel O. Wilds.......... 248,463 0 $1,788,934 0
Emory V. Anderson........ 46,885 0 337,572 0
Robert O. Hussa.......... 58,607 0 421,970 0
David C. Casal........... 30,603 0 220,342 0
</TABLE>
- --------
(1) Based on the fair market value of the Common Stock as of December 31,
1995, as determined by the Board of Directors ($7.44 per share), minus the
per share exercise price, multiplied by the number of shares underlying
the option.
(2) As of April 30, 1996, of the 248,463, 46,885, 58,607 and 30,603 option
shares held by Daniel O. Wilds, Emory V. Anderson, Robert O. Hussa and
David C. Casal, respectively, 127,687, 25,542, 33,095 and 16,122 option
shares, respectively, were subject to repurchase by the Company.
STOCK OPTION AND INCENTIVE PLANS
1995 Stock Option and Restricted Stock Plan
The Company's 1995 Stock Option and Restricted Stock Plan (the "Plan") was
adopted by the Board of Directors and approved by the stockholders in July
1995. The Plan was adopted as a successor to the Company's 1988 Employee Stock
Plan and 1992 Key Executive Stock Plan (collectively, the "Predecessor
Plans"). A total of 1,244,083 shares have been authorized for issuance under
the Plan, plus an automatic increase on the first trading day of the 1997,
1998, 1999, 2000 and 2001 calendar year and an additional number of shares
equal to 3.5% of the number of shares of Common Stock outstanding on December
31 of the immediately preceding calendar year, with each such annual increase
not to exceed 500,000 shares. However, in no event may any one participant in
the Plan receive option grants or direct stock issuances in any calendar year
for more than 1,000,000 shares. The Plan provides for the grant to employees
of the Company (including officers and employee directors) of "incentive stock
options" within the meaning of Section 422 of the Code ("ISOs") and for the
grant of nonstatutory stock options ("NSOs") and stock purchase rights to
employees, employee directors and consultants of the Company. The Plan is
administered by the Board of Directors or a committee of the Board of
Directors (the "Administrator") and is divided into two separate components:
the option grant program and the stock issuance program.
Option Grant Program. The Administrator has the authority to grant ISOs to
the employees of the Company and to grant NSOs to the employees, employee
directors and consultants of the Company. The Administrator determines the
individuals to be granted options under the Plan and the terms of such
options, including the exercise price, the number of shares subject to such
options, the maximum term for which such options are to remain outstanding,
the date upon which such options are to become exercisable and the vesting
schedule, if any, applicable to such options. The exercise price of all ISOs
granted under the Plan must be at least equal to the fair market value of the
Common Stock of the Company on the date of grant. The exercise price of all
NSOs granted under the Plan must equal at least 85% of the fair market value
of the Common Stock on the date of grant. The exercise price of any ISO
granted to an optionee who owns stock representing more than 10% of the voting
power of the Company's outstanding capital stock (a "10% Stockholder") must
equal at least 110% of the fair market value of the Common Stock on the date
of grant. Payment of the exercise price may be made in cash, by check or
promissory note, in shares of properly registered Common Stock (valued at the
fair market value as of the exercise date of the option) that meet certain
holding requirements or, to the extent the option is exercised for vested
shares, through a special sale and remittance procedure conducted by a
Company-designated brokerage firm whereby the Company is paid sufficient funds
to cover the aggregate
50
<PAGE>
exercise price of the purchased shares along with all taxes that the Company
would be required to withhold as a result of such exercise.
The term of a stock option granted under the Plan may not exceed 10 years;
provided, however, that the term of an ISO granted to a 10% Stockholder may
not exceed five years. No option may be transferred by the optionee other than
by will or the laws of descent or distribution, except that an NSO may be
assigned in accordance with the terms of a domestic relations or order
(substantially complying with the requirements of Section 414(p) of the Code)
conveying marital property rights to any spouse or former spouse of the
optionee pursuant to applicable state domestic relations laws. Except as set
forth in the foregoing sentence, each option may be exercised during the
lifetime of the optionee only by such optionee. To the extent an optionee
would have the right in any calendar year to exercise for the first time one
or more ISOs for shares having an aggregate fair market value (under all plans
of the Company and determined for each share as of the date the option to
purchase the share was granted) in excess of $100,000, any such excess options
shall be treated as NSOs. In the event of certain changes in control of the
Company, the Plan requires that each outstanding option accelerate so that
each such option shall immediately prior to the effective date of the change
in control, become fully exercisable for all the phases of Common Stock
subject to the option, except to the extent assumed by the successor
corporation (or parent thereof) replaced with a comparable option to purchase
shares of stock of the successor corporation (or parent thereof), replaced
with a cash incentive program of the successor corporation or in subject to
other limitation imposed by the Administration in connection with the change
in control. Upon the termination of an optionee's employment or other
relationship with the Company, such optionee will have a limited time within
which to exercise any outstanding options, which time period will vary
depending on the length of the optionee's relationship with the Company and
the reason for termination. The Administrator has the discretion to grant
options that are exercisable for unvested shares of Common Stock and, to the
extent that an optionee holds options for such unvested shares of Common Stock
upon termination from the Company, the Company will have the right to
repurchase any or all of such unvested shares at the per-share exercise price
paid by the optionee for such unvested shares.
As of December 31, 1995, options to purchase a total of 986 shares of Common
Stock had been exercised, options to purchase a total of 516,284 shares at a
weighted average exercise price of $0.24 per share were outstanding and an
aggregate of 166,063 shares remained available for future option grants under
the Plan. Additionally, options to purchase a total of 32,888 shares of Common
Stock had been exercised under the Predecessor Plans.
Stock Issuance Program. In addition to the Option Grant Program, the
Administrator may grant direct and immediate issuances of shares of Common
Stock, without any intervening option grants, pursuant to the Company's Stock
Issuance Program. The purchase price per share of all Common Stock issued
under the Plan must equal at least 85% of the fair market value of the Common
Stock on the date of issuance. Payment of the exercise price may be made in
cash, by check or promissory note, or in past services rendered to the Company
(or any parent or subsidiary of the Company).
Shares of Common Stock issued under the Plan's stock issuance program may,
in the discretion of the Administrator, be fully and immediately vested upon
issuance, or may vest in one or more installments over the term of the
recipient's service for the Company or upon attainment of specified
performance objectives. An individual who is issued shares of Common Stock
under the Plan's stock issuance program will, upon issuance, have full
stockholder rights with respect to such shares whether or not such shares are
vested as of the date of issuance. To the extent that an individual who was
issued Common Stock pursuant to the Plan's stock issuance program either
terminates his or her employment (or other relationship) with the Company
while holding unvested shares of Common Stock or fails to attain the specified
performance objectives upon which the vesting of such Common Stock was
contingent, the Company may cause such individual to immediately surrender the
unvested shares to the Company for cancellation in exchange for a refund of
any cash or cash-equivalent consideration paid for such unvested shares.
The Administrator has the authority to amend the Plan as long as such action
does not adversely affect the rights and obligations with respect to options
or unvested stock issuances then outstanding under the Plan and provided
further that stockholder approval shall be required for an amendment to
increase the number of shares
51
<PAGE>
subject to the Plan (other than for permissible adjustments in the event of
certain changes in the Company's capitalization), to materially modify the
eligibility requirements for Plan participation, to materially increase the
benefits accruing to participants under the Plan; or to increase the annual
limitation on grants to Plan participants. If not terminated earlier, the Plan
will terminate in 2005.
1996 Employee Stock Purchase Plan
The Company's 1996 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors in May 1996. The Company is currently
seeking stockholder approval of the Purchase Plan and expects to have such
approval prior to the commencement of this offering. A total of 250,000 shares
of Common Stock has been reserved for issuance under the Purchase Plan. The
Purchase Plan, which is intended to qualify under Section 423 of the Code,
will be implemented by a series of offering periods of 12 months duration,
with new offering periods (other than the first offering period) commencing on
or about January 1 and July 1 of each year. Each offering period will consist
of two consecutive purchase periods of six months duration, with the last day
of such period being designated a purchase date. The initial offering period
will begin on the date of this offering and will continue through June 30,
1997, with the first purchase date occurring on December 31, 1996 and
subsequent purchase dates to occur every six months thereafter. The Purchase
Plan permits eligible employees to purchase Common Stock through payroll
deductions, which may not exceed 15% of an employee's compensation, at a price
equal to the lower of 85% of the fair market value of the Common Stock at the
beginning of the offering period or the purchase date. If the fair market
value of the Common Stock on a purchase date is less than the fair market
value at the beginning of the offering period, a new 12 month offering period
will automatically begin on the first business day following the purchase date
with a new fair market value. The maximum number of shares an employee may
purchase during each offering period shall be determined on the offering date
by dividing $25,000 by the fair market value of a share of the Company's
Common Stock on the offering date (subject to certain limitations imposed by
the Code). Employees may end their participation in an offering at any time
during this offering period prior to the purchase date, and participation ends
automatically on termination of employment with the Company. The Purchase Plan
provides that in the event of a merger of the Company with or into another
corporation or a sale of substantially all of the Company's assets, each right
to purchase stock under the Purchase Plan will be assumed or an equivalent
right substituted by the successor corporation unless the Board of Directors
shortens this offering period so that employees' rights to purchase stock
under the plan are exercised prior to the merger or sale of assets. The Board
of Directors has the power to amend or terminate the Purchase Plan as long as
such action does not adversely affect any outstanding rights to purchase stock
thereunder. If not terminated earlier, the Purchase Plan will have a term of
20 years.
1996 Directors' Stock Option Plan
The 1996 Directors' Stock Option Plan (the "Directors' Plan") was adopted by
the Board of Directors in May 1996. The Company is currently seeking
stockholder approval of the Directors' Plan and expects to have such approval
prior to the commencement of this offering. A total of 200,000 shares of
Common Stock has been reserved for issuance under the Directors' Plan. The
Directors' Plan provides for the grant of NSOs to non-employee directors of
the Company. The Directors' Plan is designed to work automatically without
administration; however, to the extent administration is necessary, it will be
performed by the Board of Directors. The Directors' Plan provides that each
person who is a non-employee director on the date of this offering and each
person who first becomes a non-employee director of the Company after the date
of this offering shall be granted a NSO to purchase 10,000 shares of Common
Stock (the "First Option"). Thereafter, on the date of each Annual Meeting of
the Company's stockholders, commencing in 1997, each non-employee director
shall be automatically granted an additional NSO to purchase 5,000 shares of
Common Stock (a "Subsequent Option") if, on such date, he or she shall have
served on the Company's Board of Directors for at least six months. The
Directors' Plan provides that the First Option shall become exercisable in
installments as to 25% of the total number of shares subject to the First
Option on each anniversary of the date of grant of the First Option; each
Subsequent Option shall become exercisable in full on the fourth anniversary
of the date of grant of that Subsequent Option. The exercise price of all
stock options granted under the Directors' Plan shall be equal to
52
<PAGE>
the fair market value of a share of the Company's Common Stock on the date of
grant of the option. Options granted under the Directors' Plan have a term of
10 years. In the event of the dissolution or liquidation of the Company, a sale
of all or substantially all of the assets of the Company, the merger of the
Company with or into another corporation in which the Company is not the
surviving corporation or any other capital reorganization in which more than
50% of the shares of the Company entitled to vote are exchanged, each non-
employee director shall have either (i) a reasonable time within which to
exercise the option, including any part of the option that would not otherwise
be exercisable, prior to the effectiveness of such liquidation, dissolution,
sale, merger, consolidation or reorganization, at the end of which time the
option shall terminate or (ii) the right to exercise the option, including any
part of the option that would not otherwise be exercisable, or receive a
substitute option with comparable terms, as to an equivalent number of shares
of stock of the corporation succeeding the Company or acquiring its business by
reason of such liquidation, dissolution, sale, merger, consolidation or
reorganization. The Board of Directors may amend or terminate the Directors'
Plan; provided, however, that no such action may adversely affect any
outstanding option, and the provisions regarding the grant of options under the
plan may be amended only once in any six-month period, other than to comport
with changes in the Employee Retirement Income Security Act of 1974, as amended
or the Code. If not terminated earlier, the Directors' Plan will have a term of
10 years.
401(k) Plan
The Company has a tax-qualified employee savings and retirement plan (the
"401(k) Plan") covering all of the Company's employees. Pursuant to the 401(k)
Plan, employees may elect to reduce their current compensation by up to the
statutorily prescribed annual limit ($9,500 in 1996) and have the amount of
such reduction contributed to the 401(k) Plan. The 401(k) Plan permits, but
does not require, additional matching contributions to the 401(k) Plan by the
Company on behalf of all participants in the 401(k) Plan. To date, the Company
has not made matching contributions under the 401(k) Plan. The 401(k) Plan is
intended to qualify under Section 401 of the Code so that contributions by
employees or by the Company to the 401(k) Plan, and income earned on 401(k)
Plan contributions, are not taxable to employees until withdrawn from the
401(k) Plan, and so that contributions by the Company, if any, will be
deductible by the Company when made. The Trustee under the 401(k) Plan, at the
direction of each participant, invests the assets of the 401(k) Plan in any of
six investment options.
EMPLOYMENT AGREEMENTS
The Company does not presently have any employment contracts in effect with
its Chief Executive Officer or any of the other Named Executive Officers.
53
<PAGE>
CERTAIN TRANSACTIONS
Prior to December 1994, the Company sold to certain investors an aggregate
of 525,692 shares of its Series A Preferred Stock, 3,199,436 shares of its
Series B Preferred Stock, 4,992,955 shares of its Series C Preferred Stock,
362,318 shares of its Series D Preferred Stock, 654,761 shares of its Series E
Preferred Stock and 1,201,922 shares of its Series F Preferred Stock. In
December 1994, 64,635 shares of Series A Preferred Stock and 517,390 shares of
Series B Preferred Stock were converted to Common Stock. Subsequently in
December 1994, the Company effected a recapitalization, whereby all
outstanding shares of its Preferred Stock were converted into and exchanged
for shares of a newly created Series 1 Preferred Stock based upon the
outstanding series' respective liquidation preferences, and all outstanding
shares of Common Stock were subject to a reverse stock split (the "1994
Recapitalization"). Upon the consummation of the 1994 Recapitalization, each
outstanding share of Series A Preferred Stock was converted and reconstituted
as .081305 shares of Series 1 Preferred Stock; each outstanding share of
Series B Preferred Stock was converted and reconstituted as .081305 shares of
Series 1 Preferred Stock; each outstanding share of Series C Preferred Stock
was converted and reconstituted as .155837 shares of Series 1 Preferred Stock;
each outstanding share of Series D Preferred Stock was converted and
reconstituted as .311654 shares of Series 1 Preferred Stock; each outstanding
share of Series E Preferred Stock was converted and reconstituted as .474293
shares of Series 1 Preferred Stock; and each outstanding share of Series F
Preferred Stock was converted and reconstituted as .352341 shares of Series 1
Preferred Stock.
In December 1994, the Company sold shares of its Series 2 Preferred Stock to
certain investors, including Tokos, Hambrecht & Quist, Aeneas Venture
Corporation, Aspen Venture Partners, Asset Management Associates, Charter
Ventures, and Enterprise Partners (the "Series 2 Holders"), at a price of
$2.40 per share. The Series 2 Holders paid for the Series 2 Preferred Stock in
cash and by the surrendering for cancellation of certain outstanding
promissory notes issued by the Company. In addition, the Company concurrently
issued warrants to purchase shares of Series 2 Preferred Stock to certain of
the Series 2 Holders at an exercise price of $2.40 per share.
All shares of the Series 1 and Series 2 Preferred Stock issued by the
Company will convert into shares of Common Stock at a one-to-one ratio upon
the closing of the sale of the shares of Common Stock offered hereby.
In April 1996, the Company obtained a $2.0 million aggregate committed line
of credit from certain of the Company's existing investors, pursuant to which
Aeneas Venture Corporation agreed to lend the Company up to $250,000, Asset
Management Associates agreed to lend the Company up to $356,118, Enterprise
Partners agreed to lend the Company up to $356,118, a fund affiliated with
Indosuez Partners agreed to lend the Company up to $265,134, and certain other
investors of the Company agreed to lend the Company an aggregate of up to
$772,630 in exchange for convertible secured promissory notes (the "Notes")
that will become due and payable upon the earlier of 30 days following the
completion of this offering or May 1997 (the "Line of Credit"). The Company
intends to use a portion of the proceeds obtained from this offering to repay
any indebtedness incurred pursuant to the Line of Credit. In connection with
the Line of Credit, the Company issued warrants to purchase Common Stock,
exercisable at 85% of the offering price in an amount equal to 10% of their
respective commitments under the Line of Credit plus an additional 5% of the
outstanding principal amount of their respective Notes issued under the Line
of Credit for each full or partial calendar month that such principal amount
remains outstanding. The aggregate warrant coverage that the Company is
entitled to provide to each investor pursuant to the Line of Credit is capped
at 50% of each investor's contribution to the aggregate amount of the Notes
issued under the Line of Credit. The warrants issued in connection with the
Line of Credit are not exercisable for a period of one year following the
closing of this offering and expire on April 30, 2001, or earlier upon the
sale of all or substantially all of the assets of the Company or upon the
acquisition of the Company by another entity pursuant to which the
stockholders of the Company immediately prior to such acquisition possess a
minority of the voting power of the acquiring entity immediately following
such acquisition.
54
<PAGE>
In December 1992, Adeza entered into a promissory note agreement with Daniel
O. Wilds, the Company's President and Chief Executive Officer, which allowed
Mr. Wilds to borrow up to $140,000. Interest on the note accrues at a rate of
6.15% per annum. The note and accrued interest are due upon the earlier of (i)
voluntary termination, (ii) 12 months after involuntary termination, (iii)
closing of an initial underwritten public offering of the Common Stock, (iv)
merger of the Company, (v) sale of all the assets of the Company or (vi) July
19, 1997. As of April 30, 1996, the outstanding principal balance under this
note was $100,000.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions, including loans, between
the Company and its officers, directors, principal stockholders and their
affiliates will be approved by a majority of the Board of Directors, including
a majority of the independent and disinterested directors, and will continue to
be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
55
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of April 30, 1996 (after
giving effect to the conversion of the Company's Series 1 and Series 2
Preferred Stock into Common Stock at a one-to-one ratio), and as adjusted to
reflect the sale of shares offered hereby, as to (i) each person (or group of
affiliated persons) known by the Company to own beneficially more than 5% of
the Company's outstanding Common Stock, (ii) each of the Company's directors,
(iii) each of the Named Executive Officers and (iv) all current directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED AFTER OWNED AFTER
SHARES OFFERING IF OFFERING IF
BENEFICIALLY OVER-ALLOTMENT NUMBER OVER-ALLOTMENT
OWNED PRIOR TO OPTION OF OPTION
OFFERING(1) NOT EXERCISED SHARES EXERCISED(1)
----------------- ----------------- BEING ---------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT OFFERED(1) NUMBER PERCENT
- ------------------------------------ --------- ------- --------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Aeneas Venture Corporation(2).... 1,115,116 20.47% 1,115,116 14.03% 255,049 860,067 10.82%
c/o Harvard Management Company,
Inc.
600 Atlantic Avenue, 26th Floor
Boston, MA 02210-2203
Entities affiliated with
Charter Venture Capital(3)...... 786,492 14.51 786,492 9.93 0 786,492 9.93
525 University Avenue, Suite
1500
Palo Alto, CA 94301
Entities affiliated with
Asset Management Associates(4).. 624,199 11.52 624,199 7.88 0 624,199 7.88
2275 East Bayshore Road, Suite
150
Palo Alto, CA 94303
Enterprise Partners(5)........... 641,682 11.85 641,682 8.11 0 641,682 8.11
7979 Ivanhoe Avenue, Suite 550
La Jolla, CA 92037
Funds affiliated with
Invesco Trust Company........... 416,666 7.77 416,666 5.30 0 416,666 5.30
c/o Health Care Group
7800 E. Union Avenue, Suite 800
Denver, CO 80237
STF II, L.P.(6) ................. 419,265 7.81 419,265 5.33 0 419,265 5.33
c/o Indosuez Ventures
2180 Sand Hill Road, Suite 450
Menlo Park, CA 94025
Aspen Venture Partners LP(7)..... 401,589 7.45 401,589 5.09 28,500 373,089 4.73
c/o Alliance Technology Venture
3343 Peachtree Road, N.E.
Suite 1140, East Tower
Atlanta, GA 30326
Daniel O. Wilds(8)............... 256,796 4.57 256,796 3.16 0 256,796 3.16
c/o Adeza Biomedical Corporation
1240 Elko Drive
Sunnyvale, CA 94089
Robert O. Hussa, Ph.D.(9)........ 66,940 1.23 66,940 * 0 66,940 *
c/o Adeza Biomedical Corporation
1240 Elko Drive
Sunnyvale, CA 94089
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED AFTER OWNED AFTER
OFFERING IF OFFERING IF
SHARES BENEFICIALLY OVER-ALLOTMENT NUMBER OVER-ALLOTMENT
OWNED PRIOR TO OPTION OF OPTION
OFFERING(1) NOT EXERCISED SHARES EXERCISED(1)
------------------- ----------------- BEING -----------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT OFFERED(1) NUMBER PERCENT
- ------------------------------------ ----------- ------- -------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Emory V. Anderson(10).................. 67,718 1.25 67,718 * 0 67,718 *
c/o Adeza Biomedical Corporation
1240 Elko Drive
Sunnyvale, CA 94089
David C. Casal, Ph.D.(11).............. 38,936 * 38,936 * 0 38,936 *
c/o Adeza Biomedical Corporation
1240 Elko Drive
Sunnyvale, CA 94089
Andrew E. Senyei, M.D.(5)(12).......... 664,251 12.25 664,251 8.38 0 664,251 8.38
c/o Enterprise Partners
7979 Ivanhoe Avenue, Suite 550
La Jolla, CA 92037
Nelson N. H. Teng, M.D.(13)............ 39,717 * 39,717 * 0 39,717 *
c/o Stanford University School of
Medicine
Department of Obstetrics/Gynecology
3000 Pasteur Drive
Palo Alto, CA 94305-5317
Nancy S. Amer(2)....................... 1,115,116 20.47 1,115,116 10.82 255,049 860,067 10.82
c/o Harvard Management Company, Inc.
600 Atlantic Avenue, 26th Floor
Boston, MA 02210
Craig C. Taylor(4)..................... 624,199 11.52 624,199 8.01 0 624,199 8.01
c/o Asset Management Associates
2275 E. Bayshore Road, Suite 150
Palo Alto, CA 94303
Nancy D. Burrus(6)..................... 419,265 7.81 419,265 5.33 0 419,265 5.33
c/o Indosuez Ventures
2180 Sand Hill Road, Suite 450
Menlo Park, CA 94025
All directors and officers as a group
(9 persons)
(2)(3)(4)(5)(6)(8)(9)(10)(11)(12)(13).. 3,292,938 54.32 3,292,938 38.46 255,049 3,037,889 35.48
</TABLE>
- --------
* Less than 1%.
(1) Includes the number of shares and percentage ownership represented by such
shares determined to be beneficially owned by a person in accordance with
the rules of the Securities and Exchange Commission plus all additional
options and warrants to purchase Common Stock exercisable at any time
after 60 days from April 30, 1996. Such shares, however, are not deemed
outstanding for the purposes of computing the percentage ownership of each
other person. Such exercisable options are shown in the footnotes to this
table for each such person. The persons named in this table have sole
voting and investment power with respect to all shares of Common Stock
shown as owned by them, subject to community property laws where
applicable and except as indicated in the other footnotes to this table.
(2) Includes 1,031,487 shares held by Aeneas Venture Corporation and 83,629
shares issuable upon the exercise of outstanding warrants exercisable
within 60 days of April 30, 1996. Nancy S. Amer, a director of the
Company, is a Managing Director of Harvard Private Capital Group, Inc.,
the investment advisor for Aeneas Venture Corporation, and, as such, may
be deemed to share voting and investment power with respect to such
shares. Ms. Amer disclaims beneficial ownership of such shares.
(3) Includes 573,432 shares held by Charter Ventures and 53,146 shares
issuable upon the exercise of an outstanding warrant held by Charter
Ventures exercisable within 60 days of April 30, 1996. Also includes
155,433 shares held by Charter Ventures II, L.P. and 4,481 shares issuable
upon the exercise of an outstanding warrant held by Charter Ventures II,
L.P. exercisable within 60 days of April 30, 1996.
57
<PAGE>
(4) Includes 455,878 shares held by Asset Management Associates 1984, L.P.,
49,548 shares issuable upon the exercise of an outstanding warrant held
by Asset Management Associates 1984, L.P. exercisable within 60 days of
April 30, 1996, and 2,507 shares issuable upon the exercise of an
outstanding option held by Asset Management Associates 1984, L.P.
exercisable within 60 days of April 30, 1996. Also includes 112,775
shares held by Asset Management Associates 1989, L.P. and 3,491 shares
issuable upon the exercise of an outstanding warrant held by Asset
Management Associates 1989, L.P. exercisable within 60 days of April 30,
1996. Craig C. Taylor, a director of the Company, is a general partner of
AMC Partners 84 and of AMC Partners 89, L.P., the general partners of
Asset Management Associates 1984, L.P. and of Asset Management Associates
1989, L.P., respectively, and, as such, may be deemed to share voting and
investment power with respect to such shares. Mr. Taylor disclaims
beneficial ownership of such shares except to the extent of his pecuniary
interest therein.
(5) Includes 53,039 shares issuable upon the exercise of outstanding warrants
exercisable within 60 days of April 30, 1996. Andrew E. Senyei, a
director of the Company, is a general partner of Enterprise Partners,
and, as such, may be deemed to share voting and investment power with
respect to such shares. Dr. Senyei disclaims beneficial ownership of such
shares except to the extent of his pecuniary interest therein.
(6) Includes 416,666 shares and 2,599 shares issuable upon exercise of an
outstanding warrant exercisable within 60 days of April 30, 1996 held by
STF II, L.P., a fund affiliated with Indosuez Ventures. Nancy D. Burrus,
a director of the Company, is a General Partner of STF II, L.P. and, as
such, may be deemed to share voting and investment power with respect to
such shares. Ms. Burrus disclaims beneficial ownership of such shares
except to the extent of her pecuniary interest therein.
(7) Includes 378,158 shares held by Aspen Ventures Partners L.P. and 981
shares issuable upon the exercise of outstanding warrants exercisable
within 60 days of April 30, 1996.
(8) Represents 256,796 shares issuable upon the exercise of outstanding
options held by Mr. Wilds exercisable within 60 days of April 30, 1996,
at which date, 130,039 shares of such shares are fully vested.
(9) Represents 66,940 shares issuable upon the exercise of outstanding
options held by Dr. Hussa exercisable within 60 days of April 30, 1996,
at which date, 27,919 shares of such shares are fully vested.
(10) Represents 67,718 shares issuable upon the exercise of outstanding
options held by Mr. Anderson exercisable within 60 days of April 30,
1996, at which date, 23,798 shares of such shares are fully vested.
(11) Represents 38,936 shares issuable upon the exercise of outstanding
options held by Dr. Casal exercisable within 60 days of April 30, 1996,
at which date, 15,797 shares of such shares are fully vested.
(12) Includes 11,950 shares held directly by Dr. Senyei and 6,638 shares
issuable upon the exercise of outstanding options held by Dr. Senyei
exercisable within 60 days of April 30, 1996. Also includes 1,327 shares
held by Jack Sills, M.D. and Beverly J. Verano, Co-Trustees of the Alison
Marie Senyei Trust, U/T/D 11/20/90, 1,327 shares held by Jack Sills, M.D.
and Beverly J. Verano, Co-Trustees of the Grant Drew Senyei Trust, U/T/D
11/20/90 and 1,327 shares held by Jack Sills, M.D. and Beverly J. Verano,
Co-Trustees of the Kelly Joanne Senyei Trust, U/T/D 11/20/90. Dr. Senyei
disclaims beneficial ownership of such shares held by the Co-Trustees
except to the extent of his pecuniary interest therein.
(13) Includes 25,891 shares held by Nelson N. H. Teng and 13,826 shares
issuable upon the exercise of outstanding options held by Dr. Teng
exercisable within 60 days of April 30, 1996, at which date, 4,191 shares
of such shares are fully vested.
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DESCRIPTION OF CAPITAL STOCK
Upon completion of this offering, the authorized capital stock of the
Company will consist of 22,462,220 shares of Common Stock, $0.001 par value,
and 10,000,000 shares of Preferred Stock, $0.001 par value.
COMMON STOCK
As of April 30, 1996, there were 5,363,669 shares of Common Stock
outstanding that were held of record by approximately 99 stockholders after
giving effect to the conversion of the Company's Series 1 and Series 2
Preferred Stock into Common Stock at a one-to-one ratio. There will be
7,863,669 shares of Common Stock outstanding (assuming exercise of outstanding
options under the 1995 Stock Option and Restricted Stock Plan after April 30,
1996) after giving effect to the sale of the shares of Common Stock offered
hereby. See "Management--Stock Option and Incentive Plans."
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may
be applicable to any outstanding Preferred Stock, the holders of Common Stock
are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the Board of Directors out of funds legally available
therefor. See "Dividend Policy." In the event of a liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
rights of Preferred Stock, if any, then outstanding. The Common Stock has no
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions available to the Common Stock. All
outstanding shares of Common Stock are fully paid and non-assessable.
PREFERRED STOCK
Upon completion of this offering, the Company will be authorized to issue
10,000,000 shares of undesignated Preferred Stock. The Board of Directors will
have the authority to issue the undesignated Preferred Stock in one or more
Series and to determine the powers, preferences and rights and the
qualifications, limitations or restrictions granted to or imposed upon any
wholly unissued series of undesignated Preferred Stock and to fix the number
of shares constituting any Series and the designation of such series, without
any further vote or action by the stockholders. The issuance of Preferred
Stock may have the effect of delaying, deferring or preventing a change in
control of the Company without further action by the stockholders and may
adversely affect the voting and other rights of the holders of Common Stock.
At present, the Company has no plans to issue any shares of Preferred Stock.
REGISTRATION RIGHTS OF CERTAIN HOLDERS
The holders of 5,203,465 shares of Common Stock, the holder of a warrant
exercisable for 91,666 additional shares of Common Stock and the holders of
the additional Common Stock issuable upon exercise of the Warrants issued
pursuant to the Committed Line of Funding (the "Registrable Securities") or
their transferees are entitled to certain rights with respect to the
registration of such shares under the Securities Act. These rights are
provided under the terms of an investors' rights agreement (the "Rights
Agreement") between the Company and the holders of Registrable Securities. The
holders of at least 40% of the Registrable Securities may require, on two
occasions at any time after 120 days following the effective date of this
offering, that the Company use its best efforts to register the Registrable
Securities for public resale; provided, among other limitations, that the
proposed aggregate selling price, prior to deductions for underwriting
discounts and commissions, is at least $5.0 million. The Company may delay
such registration by up to 90 days for business reasons (but not more than
once in any 12-month period). If the Company registers any of its Common Stock
either for its own account or for the account of other security holders, the
holders of Registrable Securities are entitled to include their shares of
Common Stock in the registration. A holder's right to include shares in an
underwritten registration is subject to the ability of the underwriters to
limit the number of shares so included in the offering. Holders of Registrable
Securities may also require the Company, on no more than one occasion over any
twelve-month period, to
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<PAGE>
register all or a portion of their Registrable Securities on Form S-3 when use
of such form becomes available to the Company, provided, among other
limitations, that the proposed aggregate selling price, prior to deductions for
underwriting discounts and commissions, is at least $500,000 and, provided
further, that the Company will not be required to make such a registration
within 120 days following the effective date of any other registration effected
under the Rights Agreement. The Company may delay such registration by up to 90
days for business reasons. Subject to certain limitations contained in the
Rights Agreement, all fees, costs and expenses of registrations effected
pursuant to the Rights Agreement, excluding those incurred with respect to
registrations on Form S-3, must be borne by the Company and all selling
expenses (including underwriting discounts and selling commissions) relating to
Registrable Securities must be borne by the holders of the securities being
registered. Subject to certain limitations contained in the Rights Agreement,
all fees, costs, and expenses (excluding selling expenses) for the first three
registrations on Form S-3 shall be borne by the Company and, thereafter, by the
holders of the securities being registered (including selling expenses).
ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW
The Company is subject to the provisions of Section 203 of the Delaware Law.
In general, the statute prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date that the person became an interested
stockholder unless (with certain exceptions) the business combination or the
transaction in which the person became an interested stockholder is approved in
a prescribed manner. Generally, a "business combination" includes a merger,
asset or stock sale or other transaction resulting in a financial benefit to
the stockholder, and an "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years prior, did own) 15% or
more of the corporation's outstanding voting stock. This provision may have the
effect of delaying, deferring or preventing a change in control of the Company
without further action by the stockholders. In addition, upon completion of
this offering, certain provisions of the Company's charter documents, including
a provision eliminating the ability of stockholders to take actions by written
consent, may have the effect of delaying or preventing changes in control or
management of the Company, which could have an adverse effect on the market
price of the Company's Common Stock. The Company's stock option and purchase
plans generally provide for assumption of such plans or substitution of an
equivalent option of a successor corporation or, alternatively, at the
discretion of the Board of Directors, exercise of some or all of the options
stock, including non-vested shares, or acceleration of vesting of shares issued
pursuant to stock grants, upon a change of control or similar event. The Board
of Directors has authority to issue up to 10,000,000 shares of Preferred Stock
and to fix the rights, preferences, privileges and restrictions, including
voting rights, of these shares without any further vote or action by the
stockholders. The rights of the holders of the Common Stock will be subject to,
and may be adversely affected by, the rights of the holders of any Preferred
Stock that may be issued in the future. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of the outstanding voting stock of the
Company, thereby delaying, deferring or preventing a change in control of the
Company. Furthermore, such Preferred Stock may have other rights, including
economic rights senior to the Common Stock, and, as a result, the issuance of
such Preferred Stock could have a material adverse effect on the market value
of the Common Stock. The Company has no present plan to issue shares of
Preferred Stock.
WARRANTS AND OTHER RIGHTS
The Company also has outstanding warrants exercisable for 268,194 shares of
Common Stock at an exercise price of $2.40 per share, 91,666 shares of Common
Stock at an exercise price of $2.88 per share and 25,000 shares of Common Stock
at an exercise price of $0.01 per share. Additionally, the Company has
outstanding warrants exercisable for shares of Common Stock at an exercise
price of $2.40 per share, exercisable in connection with an acquisition for a
number of shares determined at the time of such acquisition In connection with
the Committed Line of Funding, the Company issued warrants which expire in five
years to purchase shares of Common Stock at 85% of this offering price as more
fully described under "Certain Transactions."
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Company's Common Stock is Harris
Trust Company.
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SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering and based on the shares outstanding as of
April 30, 1996, the Company will have a total of 7,863,669 shares of Common
Stock outstanding, assuming no exercise of outstanding warrants for 404,468
shares of Common Stock immediately prior to the closing of this offering and
no exercise of options after April 30, 1996. Of these shares, the 2,500,000
shares offered hereby (2,875,000 shares if the Underwriters' over-allotment
options are exercised in full) will be freely tradable without restriction or
registration under the Securities Act by persons other an "affiliates" of the
Company, as defined under the Securities Act. The remaining 5,363,669 shares
of Common Stock outstanding are "restricted shares" as that term is defined by
Rule 144 as promulgated under the Securities Act (the "Restricted Shares").
Sales of Restricted Shares in the public market, or the availability of such
shares for sale, could adversely affect the market price of the Common Stock.
All directors and executive officers and certain other stockholders of the
Company, holding in the aggregate substantially all of the shares of Common
Stock outstanding prior to this offering, have agreed with the Underwriters
not to sell or otherwise dispose of any shares of Common Stock for a period of
180 days after the date of this Prospectus (the "Lock-up Period") without the
prior written consent of Prudential Securities Incorporated. The Company is
continuing to seek 180 day lock-up agreements from certain of its current
stockholders and option holders who have not entered into such agreements. The
number of shares of Common Stock available for sale in the public market is
further limited by restrictions under the Securities Act.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for
at least two years, including persons who may be deemed "affiliates" of the
Company, would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of 1% of the number of shares of
Common Stock then outstanding (approximately 78,637 shares) immediately after
this offering, assuming no exercise of underwriters' over-allotment options)
or the average weekly trading volume of the Common Stock as reported through
the Nasdaq National Market during the four calendar weeks preceding the filing
of a Form 144 with respect to such sale. Sales under Rule 144 are also subject
to certain manner of sale provisions and notice requirements and to the
availability of current public information about the Company. In addition, a
person who is not deemed to have been an affiliate of the Company at any time
during the 90 days preceding a sale, and who has beneficially owned for at
least three years the shares proposed to be sold, would be entitled to sell
such shares under Rule 144(k) without regard to the requirements described
above.
Because of the restrictions noted above, beginning 180 days after the
effective date of this offering, 5,334,300 Restricted Shares will be eligible
for sale in the public market subject to Rule 144 and Rule 701 of the
Securities Act. On December 21, 1996, 16,626 shares held by stockholders will
become eligible for sale in the public market pursuant to Rule 144 upon
expiration of a two-year holding period from the date such shares were fully
paid. An additional 12,743 shares will become eligible for sale in the public
market 90 days after the effective date of this offering pursuant to Rule 701.
In addition, holders of 5,203,465 shares of Common Stock and the holders of
warrants to purchase 136,274 shares of Common Stock may require the Company to
register their shares of Common Stock under the Securities Act, which would
permit such holders to resell a certain amount of their shares without
complying with Rule 144. Registration and sale of such shares could have an
adverse effect on the trading price of the Common Stock. See "Description of
Capital Stock--Registration Rights of Certain Holders."
As of May 9, 1996, options to purchase a total of 579,270 shares of Common
Stock pursuant to the Option Plan were outstanding with a weighted average
exercise price of $1.21 per share, all of which were exercisable as of April
30, 1996, and 237,855 of which were fully vested as of April 30, 1996. An
additional 662,025 shares of Common Stock were available for future option
grants under the Option Plan. 579,270 shares subject to options held by
officers, directors, certain other employees and former employees and certain
investors are subject to lockup agreements. See "Management--Stock Option and
Incentive Plans," Notes 5 and 9 of Notes to Financial Statements, and
"Underwriting."
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Rule 701 under the Securities Act provides that, beginning 90 days after the
date of this Prospectus, shares of Common Stock acquired on the exercise of
outstanding options may be resold by persons other than affiliates subject
only to the manner of sale provisions of Rule 144, and by affiliates subject
to all provisions of Rule 144 except its two-year minimum holding period. The
Company intends to file one or more registration statements on Form S-8 under
the Securities Act to register shares of Common Stock subject to stock
options.
Prior to this offering, there has been no public market for the Common Stock
of the Company, and no predictions can be made of the effect, if any, that the
sale or availability for shares of additional Common Stock will have on the
trading price of the Common Stock. Nevertheless, sales of substantial amounts
of such shares in the public market, or the perception that such sales could
occur, could adversely affect the trading price of the Common Stock and could
impair the Company's future ability to raise capital through an offering of
its equity securities. See "Risk Factors--Shares Eligible for Future Sale" and
"Description of Capital Stock."
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UNDERWRITING
The Underwriters named below (the "Underwriters"), for whom Prudential
Securities Incorporated, Needham & Company, Inc. and Tucker Anthony
Incorporated are acting as representatives (the "Representatives"), have
severally agreed, subject to the terms and conditions in the Underwriting
Agreement, to purchase from the Company the numbers of shares of Common Stock
set forth below opposite their respective names:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Prudential Securities Incorporated.................................
Needham & Company, Inc.............................................
Tucker Anthony Incorporated........................................
---------
Total............................................................ 2,500,000
=========
</TABLE>
The Company is obligated to sell, and the Underwriters are obligated to
purchase, all of the shares of Common Stock offered hereby if any are
purchased.
The Underwriters, through their Representatives, have advised the Company
that they propose to offer the Common Stock initially at the public offering
price set forth on the cover page of this Prospectus; that the Underwriters
may allow to selected dealers a concession of $ per share; and that such
dealers may reallow a concession of $ per share to certain other dealers.
After the initial public offering, the offering price and the concessions may
be changed by the Representatives.
The Selling Stockholders have granted the Underwriters options, exercisable
for 30 days from the date of this Prospectus, to purchase, in the aggregate,
up to 375,000 additional shares of Common Stock at the initial public offering
price, less underwriting discounts and commissions, as set forth on the cover
page of this Prospectus. The Underwriters may exercise such options solely for
the purpose of covering any over-allotments incurred in the sale of the shares
of Common Stock offered hereby. To the extent such options to purchase are
exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number set forth next to such Underwriters' name in the
preceding table bears to 2,500,000.
The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against or contribute to losses arising out of certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Company, its officers and directors, the Selling Stockholders and
certain other stockholders of the Company, who in the aggregate will hold
approximately 5,334,300 restricted shares of Common Stock upon completion of
this offering, have agreed that they will not, directly or indirectly, offer,
sell, offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose (or announce any offer, sale, offer to sale,
contract of sale, pledge, grant any option to purchase or other sale or
disposition) of any shares of Common
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Stock or other capital stock of the Company, or any securities convertible
into, or exercisable or exchangeable for, any shares of Common Stock or other
capital stock of the Company without the prior written consent of Prudential
Securities Incorporated, on behalf of the Underwriters, for a period of 180
days after the date of this Prospectus, other than pursuant to the exercise of
currently outstanding stock options. The Company is continuing to seek 180-day
lock-up agreements from certain of its current stockholders and option holders
who have not yet entered into such agreements.
The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.
Prior to this offering, there has been no public market for the Common Stock
of the Company. Consequently, the initial offering price will be determined
through negotiations between the Company and the Representatives. Among the
factors to be considered in making such determination were the prevailing
market conditions, the Company's financial and operating history and
condition, its prospects and the prospects for its industry in general, the
management of the Company and the market prices of securities for companies in
businesses similar to that of the Company.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by its counsel, Venture Law Group, A Professional Corporation, 2800
Sand Hill Road, Menlo Park, California 94025. Certain legal matters will be
passed upon for the Underwriters by Cooley Godward Castro Huddleson & Tatum,
3000 El Camino Real, Palo Alto, California 94306.
EXPERTS
The consolidated financial statements and schedule of Adeza Biomedical
Corporation, as of December 31, 1994 and 1995 and for each of the three years
in the period ended December 31, 1995, and for the period from inception
(January 1985) to December 31, 1995 appearing in this Prospectus and
Registration Statement, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein and
in the Registration Statement, have been included in reliance upon such report
given on the authority of that firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement, of which this Prospectus constitutes a
part, under the Securities Act with respect to the shares of Common Stock
offered hereby. This Prospectus omits certain information contained in the
Registration Statement, and reference is made to the Registration Statement
and the exhibits and schedules thereto for further information with respect to
the Company and the Common Stock offered hereby. Statements contained herein
concerning the provisions of any documents are not necessarily complete, and
in each instance reference is made to the copy of such document filed as an
exhibit to the Registration Statement. Each such statement is qualified in its
entirety by such reference. The Registration Statement, including exhibits and
schedules filed therewith, may be inspected without charge at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at Room 1228, 75 Park Place, New York, New
York, 10007, and Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials may be obtained from the
Public Reference Section of the Commission, Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and its public reference
facilities in New York, New York and Chicago, Illinois, at prescribed rates.
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GLOSSARY OF TERMS
AMNION: A single layer of epithelial cells which, when paired with the
chorion, forms the amniotic sac of pregnancy.
AMNIOTIC FLUID: A fluid contained within the amniotic sac that provides
nutrients and protection to the developing fetus.
ASSISTED REPRODUCTIVE TECHNOLOGIES (ART): Methods involving removing eggs
from the woman's ovaries, combining them with sperm and either placing the
eggs and sperm into the fallopian tube for fertilization or placing fertilized
eggs into the fallopian or uterus. See IVF.
CELLULAR FIBRONECTIN (CFN): A protein produced by the endothelial cells that
line the vascular system that is related to but distinct from fFN. The Company
has determined that cFN may be useful as a confirmatory marker for
preeclampsia.
CERVIX: The lower part of the uterus that opens into the vagina.
CESAREAN SECTION: Surgical delivery of an infant through the maternal
abdomen. It is also commonly referred to as an abdominal or operative delivery
or C-section.
CHEMOTAXIS: A response involving movement of cells toward or away from a
chemical stimulus.
CHORION: The outer layer of the amniotic sac consisting of trophoblasts and
extracellular matrix. The chorion is fetal in origin and is in contact with
maternal tissue called the decidua.
CLIA: Abbreviation for Clinical Laboratory Improvement Amendments of 1988
intended to ensure the quality and reliability of United States medical
testing.
DECIDUA: Maternal endometrial tissue lining the uterus during pregnancy. It
covers the amniotic sac and placenta during gestation and is shed at birth. It
is also shed periodically during menstruation.
ENDOMETRIOSIS: The presence of tissue resembling the normal lining of the
uterus in abnormal locations such as the ovaries, fallopian tubes and pelvic
cavity.
ENDOMETRIUM: The mucous membrane lining of the uterus. It changes in
thickness and in structure with the menstrual cycle.
ECLAMPSIA: One or more seizures or convulsions occurring as a consequence of
untreated preeclampsia and not attributable to other conditions, e.g.,
epilepsy or cerebral hemorrhage.
EDEMA: A symptom of preeclampsia characterized by swelling which results
from accumulation of fluid in the tissues of body.
FDA: Abbreviation for Food and Drug Administration of the United States
Department of Health and Human Services.
FALLOPIAN TUBES: A pair of organs attached to the uterus and the ovaries
through which eggs travel to the uterus.
FETAL FIBRONECTIN (FFN): Extracellular matrix protein of pregnancy which
facilitates the attachment of the placenta and amniotic sac to the uterine
wall. The Company has determined that abnormal levels of fFN in vaginal
secretions during certain gestational ages is closely correlated to the onset
of labor and subsequent delivery.
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GESTATION: Having to do with pregnancy and usually refers to the length of
time from conception to birth. A fully developed or term gestation is 37 to 42
weeks.
HLA-G: Human leukocyte antigen type G. Human leukocyte antigens are genetic
markers identified by a specific position (loci) on chromosome 6. The HLA
system is used to assess tissue compatibility. HLA-G is a fetal specific HLA
marker expressed on trophoblast cells as they invade the maternal endometrial
tissue.
IN VITRO FERTILIZATION (IVF): A method of assisted reproduction that
involves removing eggs from the woman's ovaries, combining them with sperm in
the laboratory and, if fertilized, replacing the fertilized egg into the
woman's uterus. See ART.
INDUCTION: Stimulation of labor via the applications of drugs to the cervix
to prepare it for delivery and/or the administration of systemic intravenous
drugs to increase the frequency and strength of uterine contractions.
LAPAROSCOPE: A narrow invasive viewing device with a light and a telescopic
lens used to evaluate the abdominal and pelvic contents.
LAPAROSCOPY: A diagnostic procedure involving the insertion of a laparoscope
through a small incision below the navel to visually inspect the uterus,
uterine ligaments, fallopian tubes, ovaries and abdominal organs.
LATE BIRTH: Delivery of an infant after week 42 of gestation.
MONOCLONAL ANTIBODY: An immune protein made against a foreign antigen and
produced by a genetically homogeneous population of cells.
NEURAL NETWORK: Computer-based form of artificial intelligence capable of
identifying and learning direct and indirect relationships between sets of
data and outcome. The Company is developing a neural network software program
to aid in the diagnosis of endometriosis.
OVARY: One of the paired female reproductive glands that produce eggs,
estrogen and progesterone.
OVULATION: The release of a mature egg from the ovary usually occurring on
day 14 or 15 of a 28 day cycle.
PMA SUPPLEMENT: An amendment process involving the submission of additional
information to the FDA with respect to an existing PMA to allow the marketing
of the approved product for an indication or in a format different from that
specified in the approved PMA application.
PLACENTA: Specialized tissue in the uterus through which the mother delivers
nutrients and oxygen to the baby.
PREECLAMPSIA: Pregnancy-related development of hypertension, proteinuria and
edema.
PRE-MARKET APPROVAL (PMA): Approval by the FDA to market a new device after
submission to the FDA of results of prototype tests, laboratory and animal
studies.
PREMATURE BIRTH: Delivery of an infant between 20 and 37 weeks of gestation.
PROTEINURIA: The presence in the urine of abnormally large quantities of
protein, predominantly albumin.
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RUPTURE OF AMNIOTIC MEMBRANES (ROM): Rupture of amniotic membranes in which
the membranes tear and amniotic fluid escapes into the vagina.
TERM BIRTH: Deliver of an infant from week 37 through week 42 of gestation.
TOCOLYSIS: The use of a therapeutic drug such as ritodrine, terbutaline,
magnesium sulfate, indocin, nifedipine, etc., to suppress or stop the
contractions of the uterus.
TROPHOBLAST: The cell type that forms the outer wall of the fertilized
embryo in early fetal development. In later development it is the primary cell
type involved in the establishment of the placenta and chorion.
UTERUS: The hollow muscular organ in which the fetus develops during
pregnancy.
510(k): Clearance to market a product that is substantially equivalent to a
product that was in commercial distribution prior to May 28, 1976.
801(e): Clearance to export a product not yet approved by the FDA.
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ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........................... F-2
Consolidated Financial Statements
Consolidated Balance Sheets................................................. F-3
Consolidated Statements of Operations....................................... F-4
Consolidated Statement of Stockholders' Equity (Deficit).................... F-5
Consolidated Statements of Cash Flows....................................... F-7
Notes to Consolidated Financial Statements.................................. F-8
</TABLE>
F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Adeza Biomedical Corporation
We have audited the accompanying consolidated balance sheets of Adeza
Biomedical Corporation (a development stage company) as of December 31, 1994
and 1995, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for each of the three years in the period
ended December 31, 1995 and for the period from inception (January 1985) to
December 31, 1995. 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 generally accepted auditing
standards. 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 consolidated financial position of Adeza
Biomedical Corporation at December 31, 1994 and 1995, and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1995 and for the period from inception (January
1985) to December 31, 1995, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Palo Alto, California
April 30, 1996,
except for Note 9 as to
which the date is
, 1996
- -------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon completion of
the one-for-2.4 reverse stock split and reincorporation into Delaware
described in Note 9 to the consolidated financial statements.
Palo Alto, California
May 9, 1996
F-2
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
UNAUDITED
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY AT
------------------ MARCH 31, MARCH 31,
1994 1995 1996 1996 (NOTE 9)
-------- -------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....... $ 2,895 $ 2,136 $ 1,027
Accounts receivable, net of
allowance for doubtful accounts
of $115, $71 and $35 at
December 31, 1994 and 1995 and
March 31, 1996, respectively... 1,255 61 63
Inventories..................... 207 179 225
Other current assets............ 119 31 75
-------- -------- --------
Total current assets............. 4,476 2,407 1,390
Property and equipment, net...... 556 337 281
Notes receivable from officer.... 60 115 125
Other assets..................... 83 64 64
-------- -------- --------
$ 5,175 $ 2,923 $ 1,860
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQ-
UITY
Current liabilities:
Accounts payable................ $ 1,076 $ 664 $ 729
Accrued compensation............ 161 205 155
Accrued warranty................ 32 109 110
Other accrued liabilities....... 23 5 48
Deferred revenue................ 666 -- --
Current portion of capital lease
obligations.................... 200 151 113
-------- -------- --------
Total current liabilities........ 2,158 1,134 1,155
Noncurrent portion of capital
lease obligations............... 144 49 36
Commitments
Stockholders' equity:
Preferred stock, $0.001 par
value, issuable in series;
5,471,659 shares authorized,
5,203,465 shares issued and
outstanding at December 31,
1994 and 1995 and March 31,
1996; aggregate liquidation
preference at December 31, 1995
of $20,463 (10,000,000 shares
authorized, none issued and
outstanding, pro forma)........ 5 5 5 $ --
Common stock, $0.001 par value;
8,333,333 shares authorized,
157,416, 158,402 and 160,204
shares issued and outstanding
at December 31, 1994 and 1995
and March 31, 1996,
respectively (22,462,220 shares
authorized, 5,363,669 shares
issued and outstanding, pro
forma)......................... -- -- -- 5
Additional paid-in capital...... 24,374 24,452 24,455 24,455
Deferred compensation........... -- (67) (64) (64)
Deficit accumulated during the
development stage.............. (21,506) (22,650) (23,727) (23,727)
-------- -------- -------- --------
Total stockholders' equity....... 2,873 1,740 669 $ 669
-------- -------- -------- ========
$ 5,175 $ 2,923 $ 1,860
======== ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JANUARY 1985) THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, TO MARCH 31,
------------------------- DECEMBER 31, --------------------
1993 1994 1995 1995 1995 1996
------- ------- ------- -------------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Contract revenues..... $ 967 $ 1,977 $ 3,416 $ 15,300 $ 167 $ --
Product sales......... 504 316 541 1,948 99 152
------- ------- ------- -------- --------- ---------
Total revenues.......... 1,471 2,293 3,957 17,248 266 152
Operating costs and
expenses:
Research and
development,
including
manufacturing start-
up costs and costs of
product sales........ 4,320 3,635 3,460 24,997 785 830
Selling, general and
administrative....... 3,128 1,928 1,725 14,682 371 418
Charge for purchase of
in-process research
and development...... -- -- -- 553 -- --
------- ------- ------- -------- --------- ---------
Total operating costs
and expenses........... 7,448 5,563 5,185 40,232 1,156 1,248
------- ------- ------- -------- --------- ---------
Loss from operations.... (5,977) (3,270) (1,228) (22,984) (890) (1,096)
Interest and other
income................. 50 25 150 1,094 50 24
Interest and other
expense................ (182) (415) (66) (730) (34) (5)
------- ------- ------- -------- --------- ---------
Loss before taxes....... (6,109) (3,660) (1,144) (22,620) (874) (1,077)
Provision for income
taxes.................. -- -- -- (82) -- --
------- ------- ------- -------- --------- ---------
Loss before
extraordinary credit... (6,109) (3,660) (1,144) (22,702) (874) (1,077)
Extraordinary credit.... -- -- -- 52 -- --
------- ------- ------- -------- --------- ---------
Net loss................ $(6,109) $(3,660) $(1,144) $(22,650) $ (874) $(1,077)
======= ======= ======= ======== ========= =========
Pro forma net loss per
share.................. $ (0.21) $ (0.16) $ (0.20)
======= ========= =========
Shares used in computing
pro forma net loss per
share.................. 5,446 5,446 5,448
======= ========= =========
</TABLE>
See accompanying notes.
F-4
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
DEFICIT
NOTES ACCUMULATED
PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE DURING THE TOTAL
----------------- -------------- PAID-IN FROM DEFERRED DEVELOPMENT STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL STOCKHOLDERS COMPENSATION STAGE EQUITY (DEFICIT)
---------- ------ ------- ------ ---------- ------------ ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common
stock to founders,
officers and
employees at $0.74
to $1.51 per share
in the period
February 1985 to
December 31, 1992,
net of repurchases.. -- $ -- 74,988 $ -- $ 104 $(45) $ -- $ -- $ 59
Issuance of Series
A, B, C, D and E
convertible
preferred stock to
investors at prices
ranging from $0.60
to $4.20 per share
for cash and
cancellation of
notes payable in the
period from July
1985 to April 1992,
net of issuance
costs............... 9,112,832 9 -- -- 12,539 -- -- -- 12,548
Issuance of stock
for the purchase of
Yellowstone
Diagnostics
Corporation in
October 1988:
Series B
convertible
preferred stock.... 145,832 -- -- -- 105 -- -- -- 105
Series C
convertible
preferred stock.... 217,389 -- -- -- 300 -- -- -- 300
Common stock....... -- -- 12,420 -- 19 -- -- -- 19
Exercise of stock
options at $1.51 to
$7.54 per share for
cash and notes from
March 1989 through
December 1992....... -- -- 27,361 -- 69 -- -- -- 69
Cancellation of note
from stockholder for
services in August
1992................ -- -- -- -- -- 14 -- -- 14
Repayment of note
from stockholder in
October 1992 ....... -- -- -- -- -- 31 -- -- 31
Net loss from
inception through
December 31, 1992... -- -- -- -- -- -- -- (11,737) (11,737)
---------- ----- ------- ----- ------- ---- ----- -------- --------
Balance at December
31, 1992............ 9,476,053 9 114,769 -- 13,136 -- -- (11,737) 1,408
Exercise of warrants
to purchase Series B
convertible
preferred stock at
$0.72 per share for
cash in March 1993.. 259,112 -- -- -- 186 -- -- -- 186
Exercise of stock
options at $3.20 to
$7.54 per share for
cash in February
through August
1993................ -- -- 5,391 -- 19 -- -- -- 19
Issuance of Series F
convertible
preferred stock to
investors at $3.12
per share for cash
in March 1993 (net
of issuance costs of
$259)............... 961,535 1 -- -- 2,740 -- -- -- 2,741
Net loss............ -- -- -- -- -- -- -- (6,109) (6,109)
---------- ----- ------- ----- ------- ---- ----- -------- --------
Balance at December
31, 1993 (carried
forward)............ 10,696,700 $ 10 120,160 $ -- $16,081 $-- $ -- $(17,846) $ (1,755)
</TABLE>
See accompanying notes.
F-5
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)--(CONTINUED)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
DEFICIT
NOTES ACCUMULATED
PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE DURING THE TOTAL
------------------ -------------- PAID-IN FROM DEFERRED DEVELOPMENT STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL STOCKHOLDERS COMPENSATION STAGE EQUITY (DEFICIT)
---------- ------ ------- ------ ---------- ------------ ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December
31, 1993 (brought
forward)........... 10,696,700 $10 120,160 $ -- $16,081 $ -- $ -- $(17,846) $ (1,755)
Exercise of stock
options at
approximately
$7.54 per share
for cash in
January through
December 1994..... -- -- 164 -- 1 -- -- -- 1
Issuance of Series
F convertible
preferred stock to
corporate partner
at $3.12 per share
in exchange for
cash.............. 240,384 -- -- -- 750 -- -- -- 750
Conversion of
shares from
convertible
preferred stock to
common stock in
December 1994..... (582,025) -- 37,092 -- -- -- -- -- --
Recapitalization
and related
transactions:
Net change in
shares of
preferred stock
outstanding and
cancellation of
fractional
shares............ (8,474,487) (8) -- -- 8 -- -- -- --
Issuance of Series
2 convertible
preferred stock to
investors at $2.40
per share for cash
and cancellation
of notes of $4,459
and interest
payable of $325
(net of issuance
costs of $438) in
December 1994..... 3,322,893 3 -- -- 7,534 -- -- -- 7,537
Net loss.......... -- -- -- -- -- -- -- (3,660) (3,660)
---------- --- ------- ----- ------- ----- ----- -------- --------
Balance at December
31, 1994........... 5,203,465 5 157,416 -- 24,374 -- -- (21,506) 2,873
Exercise of stock
options at $0.24
per share for cash
in July through
November 1995..... -- -- 986 -- -- -- -- -- --
Deferred
compensation
related to
issuance of
certain stock
options........... -- -- -- -- 78 -- (78) -- --
Amortization of
deferred
compensation...... -- -- -- -- -- -- 11 -- 11
Net loss.......... -- -- -- -- -- -- -- (1,144) (1,144)
---------- --- ------- ----- ------- ----- ----- -------- --------
Balance at December
31, 1995........... 5,203,465 5 158,402 -- 24,452 -- (67) (22,650) 1,740
Exercise of stock
options at $0.24
per share for cash
(unaudited)....... -- -- 1,802 -- -- -- -- -- --
Deferred
compensation
related to
issuance of
certain stock
options
(unaudited)....... -- -- -- -- 3 -- (3) -- --
Amortization of
deferred
compensation
(unaudited)....... -- -- -- -- -- -- 6 -- 6
Net loss
(unaudited)....... -- -- -- -- -- -- -- (1,077) (1,077)
---------- --- ------- ----- ------- ----- ----- -------- --------
Balance at March
31, 1996
(unaudited)........ 5,203,465 $ 5 160,204 $ -- $24,455 $ -- $ (64) $(23,727) $ 669
========== === ======= ===== ======= ===== ===== ======== ========
</TABLE>
See accompanying notes.
F-6
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(In thousands)
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION THREE MONTHS
(JANUARY 1985) ENDED
YEAR ENDED DECEMBER 31, TO MARCH 31,
------------------------- DECEMBER 31, ---------------
1993 1994 1995 1995 1995 1996
------- ------- ------- -------------- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss................ $(6,109) $(3,660) $(1,144) $(22,650) $ (874) $(1,077)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Charge for purchase of
in-process research
and development....... -- -- -- 553 -- --
Depreciation and
amortization.......... 270 264 248 1,423 66 58
Issuance of common
stock for intellectual
property rights and
consulting services... -- -- -- 5 -- --
(Gain) loss on
disposals and
retirements of
equipment............. -- -- 7 89 19 (2)
Note receivable from
stockholder canceled
in exchange for
services.............. -- -- -- 14 -- --
Changes in assets and
liabilities, net of
acquisition of
Yellowstone
Diagnostics
Corporation:
Accounts receivable,
inventories and other
current assets........ (135) (1,046) 1,310 (271) 1,137 (92)
Accounts payable and
accrued liabilities... (188) 764 (309) 834 (402) 59
Deferred revenue....... 334 332 (666) -- (166) --
------- ------- ------- -------- ------ -------
Net cash used in
operating activities... (5,828) (3,346) (554) (20,003) (220) (1,054)
------- ------- ------- -------- ------ -------
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of property and
equipment.............. -- (67) (43) (1,057) -- --
Proceeds from the sale
of property and
equipment.............. -- -- 18 18 2 6
Sale (purchases) of
other assets........... 4 81 (36) (180) (29) (10)
------- ------- ------- -------- ------ -------
Net cash provided by
(used in) investing
activities............. 4 14 (61) (1,219) (27) (4)
------- ------- ------- -------- ------ -------
CASH FLOWS FROM
FINANCING ACTIVITIES
Payments on capital
lease obligations...... (146) (203) (144) (666) (56) (51)
Proceeds from sale and
leaseback of previously
acquired equipment..... 88 -- -- 88 -- --
Issuance of convertible
notes payable to
related parties,
including accrued
interest............... 2,262 2,522 -- 5,609 -- --
Issuance of convertible
preferred stock, net of
issuance costs......... 2,928 2,753 -- 18,153 -- --
Issuance of common
stock, net of
repurchases............ 19 1 -- 143 1 --
Payments of notes
receivable from
stockholders........... -- -- -- 31 -- --
------- ------- ------- -------- ------ -------
Net cash provided by
(used in) financing
activities............. 5,151 5,073 (144) 23,358 (55) (51)
------- ------- ------- -------- ------ -------
Net increase (decrease)
in cash and cash
equivalents............ (673) 1,741 (759) 2,136 (302) (1,109)
Cash and cash
equivalents at
beginning of period.... 1,827 1,154 2,895 -- 2,895 2,136
------- ------- ------- -------- ------ -------
Cash and cash
equivalents at end of
period................. $ 1,154 $ 2,895 $ 2,136 $ 2,136 $2,593 $ 1,027
======= ======= ======= ======== ====== =======
</TABLE>
See accompanying notes.
F-7
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AT MARCH 31, 1996 AND FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS
Adeza Biomedical Corporation ("Adeza" or the "Company") is a California
corporation and the successor to Aspen Diagnostics Corporation ("Aspen"),
which was originally incorporated in the State of California in January 1985.
Since inception, the Company has been engaged in the development of products
for the obstetrics and gynecology market. The Company's principal activities
to date have been recruiting personnel, raising capital, acquiring operating
assets, performing research and development and clinical trials and obtaining
regulatory approval of its first product. The Company has made no significant
product sales to date. Accordingly, it is classified as a development stage
company.
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary. All significant intercompany balances and
transactions have been eliminated.
CONCENTRATIONS OF CREDIT RISK
Cash and cash equivalents and trade receivables are financial instruments
which potentially subject the Company to concentrations of credit risk. The
estimated fair value of financial instruments approximates the carrying value
based on available market information. The Company primarily invests in notes
and bills issued by the United States government and its agencies, and by
policy, limits the amount of credit exposure to any one issuer and to any one
type of investment, other than securities issued or guaranteed by the United
States government. The Company has not experienced any credit losses and does
not generally require collateral on receivables.
In 1993, two customers accounted for 45% and 20% of total revenues. In 1994,
two customers accounted for 54% and 35% of total revenues. In 1995, two
customers accounted for 69% and 24% of total revenues. In the three months
ended March 31, 1996, three customers accounted for 56%, 19% and 15% of total
revenues. For the period from inception (January 1985) to December 31, 1995,
two customers accounted for 46% and 38% of total revenues. The Company sells
its product primarily to international distributors in Europe and Japan and
all product sales are export sales.
OPERATIONS AND FINANCING
The Company is substantially dependent upon external financing to pursue its
intended business activities. Except for brief periods, the Company has not
been profitable since inception and has incurred a cumulative net loss of
approximately $23,700,000 through March 31, 1996. Losses have resulted
principally from costs incurred in research and development activities,
clinical trials, marketing and product introduction expenses and from general
and administrative costs. The Company expects to incur additional operating
losses at least through 1997. The Company's ability to achieve profitability
is dependent on its ability to obtain regulatory approval for its products, to
successfully market and sell its products, to enter into agreements for
product development and commercialization with corporate partners and to cost-
effectively manufacture its products. There can be no assurance that the
Company will successfully develop, commercialize, patent, manufacture and
market its products, obtain required regulatory approvals, or ever achieve
profitability. In September 1995, the Company received regulatory approval to
begin producing and marketing its primary product in the United States, which
management expects its marketing partner to introduce in the second half of
1996.
F-8
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In April 1996, the Company entered into a $2,000,000 line of credit with
certain of its investors that expires in April 1997 (see Note 9). The Company
expects that available cash resources, together with this line of credit, will
be adequate to fund operations at current levels through the remainder of
1996. The Company also plans to continue to finance its operations with sales
of its equity securities such as the initial public offering currently being
pursued. Should management's plans not be consummated, the Company will have
to seek alternative sources of capital and reevaluate its operating plans.
INTERIM FINANCIAL INFORMATION
The financial information at March 31, 1996 and for the three months ended
March 31, 1995 and 1996, is unaudited but includes all adjustments (consisting
only of normal recurring adjustments) which the Company considers necessary
for a fair presentation of the financial position at such date and of the
operating results and cash flows for those periods. Results of the 1996 period
are not necessarily indicative of results expected for the entire year.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities from
date of purchase of three months or less to be cash equivalents. The Company
maintains its cash and cash equivalents in several different money market
accounts with various banks and brokerage houses. This diversification of risk
is consistent with Company policy to maintain liquidity and ensure the safety
of principal.
INVENTORIES
Inventories are recorded at the lower of cost (first-in, first-out basis) or
market and consist of the following, net of reserves:
<TABLE>
<CAPTION>
DECEMBER 31,
------------- MARCH 31,
1994 1995 1996
------ ------ ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Raw materials........................................... $ 169 $ 100 $101
Work in process......................................... 34 64 72
Finished goods.......................................... 4 15 52
------ ------ ----
$ 207 $ 179 $225
====== ====== ====
</TABLE>
F-9
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost and consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- MARCH 31,
1994 1995 1996
------- ------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Laboratory and other equipment..................... $ 1,498 $ 1,462 $ 1,438
Furniture and fixtures............................. 119 119 119
Leasehold improvements............................. 114 114 114
------- ------- -------
1,731 1,695 1,671
Less accumulated depreciation and amortization..... (1,175) (1,358) (1,390)
------- ------- -------
$ 556 $ 337 $ 281
======= ======= =======
</TABLE>
Laboratory equipment and furniture and fixtures are depreciated using the
straight-line method over the estimated useful lives of the assets (generally
five years). Leasehold improvements are amortized over their useful lives or
the term of the lease, whichever is shorter.
Included in equipment at December 31, 1994 and 1995 and March 31, 1996 are
assets with a cost of $865,000, $781,000 and $781,000 acquired pursuant to
capital lease obligations and related accumulated amortization of
approximately $479,000, $532,000 and $547,000, respectively.
REVENUE RECOGNITION
Collaborative research agreements provide support for the Company's research
activities. Revenue from research support payments is recognized during the
period in which work is performed and related costs are expensed as research
and development. Research support payments received in advance of work
performed are recorded as deferred revenue. Milestone payments are included in
contract revenues in the period in which the applicable milestone is achieved
and collection is deemed probable (see Note 2).
The Company recognizes revenues on product sales to international
distributors when units are shipped. Net revenues include primarily
international product sales of diagnostic tests in the women's reproductive
health care market. The Company's limited product sales to date have all been
made to worldwide distributors in this market. The Company performs ongoing
credit evaluations of these customers and generally does not require
collateral. The Company maintains reserves for potential credit losses. Such
losses have been within management's expectations.
ACCOUNTING FOR STOCK-BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No.123, "Accounting for Stock-Based
Compensation" ("SFAS123"), which is effective for the Company's December 31,
1996 financial statements. SFAS123 allows companies to either account for
stock-based compensation under the new provisions of SFAS123 or under the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB25"), but requires pro forma disclosure in the
footnotes to the financial statements as if the measurement provisions of
SFAS123 had been adopted. The Company intends to continue accounting for its
stock-based compensation in accordance with the provisions of APB25. As such,
the adoption of SFAS123 will not impact the financial position or the results
of operations of the Company.
F-10
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DEFERRED COMPENSATION
The Company recorded deferred compensation expense for the difference
between the exercise price and the deemed fair value for financial statement
presentation purposes of the Company's common stock for certain options
granted from July 1995 through March 1996. Such options were granted at an
exercise price of $0.24 per share with deemed fair values ranging from $1.80
to $7.92 per share. This deferred compensation expense totaled approximately
$81,000, which is being amortized over the vesting period of the options.
Amortization of deferred compensation expense of approximately $11,000 and
$6,000 was recorded in the year ended December 31, 1995 and the three months
ended March 31, 1996, respectively.
NET LOSS PER SHARE
Except as noted below, historical net loss per share is computed using the
weighted average number of common shares outstanding. Common equivalent shares
from stock options, convertible preferred stock and warrants are excluded from
the computation as their effect is antidilutive, except that, pursuant to the
Securities and Exchange Commission ("SEC") Staff Accounting Bulletins, common
and common equivalent shares issued during the period beginning 12 months
prior to the initial filing of the proposed public offering at prices
substantially below the assumed public offering price have been included in
the calculation as if they were outstanding for all periods presented (using
the treasury stock method and the assumed public offering price for stock
options and warrants and the if-converted method for convertible preferred
stock).
Historical net loss per share information is as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------- ----------------
1993 1994 1995 1995 1996
-------- -------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net loss per share............. $(30.17) $(16.36) $(4.72) $(3.61) $(4.41)
======== ======== ======= ======= =======
Shares used in computing
historical net loss per share
(in thousands)................ 202 224 243 243 244
======== ======== ======= ======= =======
</TABLE>
Pro forma net loss per share has been computed as described above and also
gives effect, pursuant to SEC Staff policy, to the conversion of convertible
preferred shares that will automatically convert upon completion of the
Company's initial public offering (using the if-converted method) from the
original date of issuance. The preferred shares have been restated to give
retroactive effect to the recapitalization of the Company in December 1994.
2. RESEARCH AND DEVELOPMENT ARRANGEMENTS
In December 1990, the Company and Daiichi Pure Chemicals Co., Ltd.
("Daiichi"), a subsidiary of Daiichi Pharmaceutical Co., Ltd., entered into
agreements to co-develop and market diagnostic products. The agreements call
for Daiichi to market Adeza's proprietary diagnostic products in Japan. Under
these agreements, the Company received nonrefundable payments for research
performed. The Company recognized approximately $667,000 in research contract
revenue under these agreements during each of the years ended December 31,
1993, 1994 and 1995.
In July 1991, Rohto Pharmaceutical Company, Ltd. ("Rohto") entered into a
distribution and product development agreement with the Company. The Company
received a cash payment of $750,000 upon execution of the agreement, which was
recorded as a deferred liability. The Company also received periodic
nonrefundable
F-11
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
payments for research performed. In 1994, the agreement was terminated. In
consideration for termination of the agreement, the Company issued Rohto
240,385 shares of Series F convertible preferred stock (converted into 84,697
shares of Series 1 convertible preferred stock) and eliminated the deferred
liability. In April 1992, the Company sold 178,571 shares of Series E
convertible preferred stock (converted into 84,695 shares of Series 1
convertible preferred stock in 1994) to Rohto for $750,000.
In December 1991, Tokos Medical Corporation, now Matria Healthcare, Inc.
("Matria"), entered into a marketing and distribution agreement with the
Company. Under this agreement, the Company received an up front fee in
exchange for marketing and distribution rights in the United States, Canada
and Puerto Rico. This fee of approximately $3,000,000 was recognized as
revenue in 1991. The Company received and recognized $1,000,000 in 1992 for
attaining a certain milestone. In December 1994, the Company attained another
milestone entitling it to receive $4,000,000. The Company recognized as
revenue $1,250,000 and $2,750,000 in 1994 and 1995, respectively, in
accordance with its revenue recognition policy. Matria also purchased 476,191
shares of Series E convertible preferred stock (converted into 225,854 shares
of Series 1 convertible preferred stock in 1994) for gross cash proceeds of
$2,000,000 concurrent with entering into this agreement.
The Company has also entered into license, clinical trial, supply agreements
and sponsored research and development agreements with universities, research
organizations and commercial companies. Certain of these agreements require
payments of royalties on future sales of products resulting from such
agreements and may subject the Company to minimal annual payments to such
contract partners. To date, payments under these agreements have not been
significant and, at December 31, 1995 and at March 31, 1996, related
noncancelable commitments are immaterial.
3. COMMITMENTS
The Company has a $250,000 lease line of credit of which $190,000 was unused
at December 31, 1995.
Future minimum lease obligations under noncancelable capital and operating
leases at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
--------- -------
(IN THOUSANDS)
<S> <C> <C>
Years ending December 31,
1996......................................................... $213 $ 169
1997......................................................... 27 33
1998......................................................... -- 19
---- -----
Total minimum lease payments.................................. $240 221
====
Amount representing interest.................................. (21)
-----
Present value of future lease payments........................ 200
Current portion of capital lease obligations.................. (151)
-----
Noncurrent portion of capital lease obligations............... $ 49
=====
</TABLE>
Rent expense under noncancelable operating leases was approximately
$219,000, $200,000, $257,000, $59,000 and $64,000 for the years ended December
31, 1993, 1994 and 1995 and the three months ended March 31, 1995 and 1996,
respectively ($1,426,000 for the period from inception (January 1985) to
December 31, 1995).
F-12
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. RECAPITALIZATION AND RELATED TRANSACTIONS
PREFERRED STOCK AND WARRANTS
Convertible preferred stock as of December 31, 1995 consists of the
following ($0.001 par value):
<TABLE>
<CAPTION>
SHARES SHARES ISSUED LIQUIDATION
AUTHORIZED AND OUTSTANDING PREFERENCE
---------- --------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Series 1.............................. 1,880,572 1,880,572 $ 4,513
Series 2.............................. 3,322,893 3,322,893 15,950
--------- --------- -------
Total................................. 5,203,465 5,203,465 $20,463
========= =======
Undesignated.......................... 268,194
---------
5,471,659
=========
</TABLE>
In December 1994, stockholders approved an amendment to the Articles of
Incorporation to change the Company's capital structure. This amendment
effected a conversion of the then outstanding Series A through F preferred
stock into a new Series 1 preferred stock and a reverse split of the common
stock. These changes reduced the number of outstanding shares of preferred and
common stock, reduced the aggregate liquidation preference of outstanding
preferred shares, and authorized a new class of preferred shares to be issued
in a private equity financing to new and existing stockholders.
The conversion reduced the number of the previously outstanding preferred
shares by 8,474,493 and reduced the aggregate liquidation preference of the
previously outstanding preferred shares from $16,653,000 to $4,513,000 ($2.40
per share for Series 1 preferred shares).
Concurrent with the conversion of the previously outstanding Series A
through F preferred stock into Series 1 convertible preferred stock, the
Company sold to existing and new investors a total of 3,322,893 shares of
Series 2 convertible preferred stock at $2.40 per share and issued to the
holders of certain promissory notes (now exchanged for Series 2 preferred
shares) warrants to purchase an additional 268,194 shares of Series 2
convertible preferred stock for $2.40 per share, exercisable through December
1999. All of these warrants were unexercised and outstanding at December 31,
1995. In connection with the closing of the Series 2 preferred stock
financing, the Company issued an additional warrant to purchase 91,666 shares
of common stock with an exercise price of $2.88 per share for $100. This
warrant will expire in December 1999.
Each share of Series 1 and 2 preferred stock entitles the holder to receive
noncumulative dividends of $0.24 per share, annually, if declared by the board
of directors. If dividends are declared on either series of preferred stock,
both series of preferred stock must receive dividends. No dividends have been
declared to date. The Series 1 and 2 preferred stock is convertible into an
equal number of common shares (subject to certain antidilution provisions) at
the option of the holder, or automatically upon a public offering with a price
per share of at least $10.80 and aggregate proceeds greater than $10,000,000,
or the affirmative vote or written consent of the holders of at least 66 2/3%
of the preferred stock then outstanding, as a single class on an if-converted
basis. The holders of these shares are entitled to one vote for each share of
common stock into which such shares can be converted.
Upon liquidation of the Company prior to September 30, 1997, the holders of
Series 2 preferred stock shall have a liquidation preference, prior and in
preference to any distribution to the holders of Series 1 preferred stock, of
$4.80 per share plus any declared but unpaid dividends. After such payment,
the holders of Series 1 preferred stock shall have a liquidation preference of
$2.40 per share plus any declared but unpaid dividends. Upon liquidation of
the Company on or after September 30, 1997, the two series of preferred stock
shall have an equal liquidation preference of $2.40 per share plus all
declared but unpaid dividends.
F-13
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
After the payments to holders of preferred stock as described above, the
holders of common shares are entitled to receive $0.24 per share. Any
remaining assets of the Company available for distribution shall be
distributed ratably among the holders of common stock and preferred stock on
an if-converted basis.
COMMON STOCK
The Company has reserved as of December 31, 1995 a total of 6,079,609 shares
of common stock in the event of conversion of the outstanding convertible
preferred stock and the exercise of outstanding common stock options and
warrants.
5. STOCK OPTIONS
In 1995, the board adopted the 1995 Stock Option and Restricted Stock Plan
(the "Plan") to succeed the 1988 Employee Stock Plan and the 1992 Key
Executive Stock Plan (together, the "Plans"), whereby options for 683,333
shares of common stock can be issued to employees, officers, directors,
consultants and promotional representatives of the Company. As of December 31,
1995, 166,063 shares remain available for option grants under the Plan
(166,593 shares as of March 31, 1996).
The Plan provides that the exercise price for incentive stock options will
be no less than 100% of the fair value of the Company's common stock (no less
than 85% of the fair value for nonqualified stock options), as determined by
the board on the date of grant. All options are immediately exercisable,
subject to repurchase at the original grant price. Generally options vest
ratably over four years.
Option activity under the Plans is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-----------------------
NUMBER OF PRICE PER
SHARES SHARE
--------- ------------
<S> <C> <C>
Balance at December 31, 1993........................... 96,502 $1.51-$37.66
Options granted....................................... 19,395 $7.54
Options exercised..................................... (164) $1.51-$7.54
Options canceled...................................... (16,564) $1.51-$37.66
-------- ------------
Balance at December 31, 1994........................... 99,169 $1.51-$37.66
Options granted....................................... 521,525 $0.24
Options exercised..................................... (986) $0.24
Options canceled...................................... (103,424) $1.51-$37.66
-------- ------------
Balance at December 31, 1995........................... 516,284 $0.24
Options granted (Unaudited)........................... -- $0.24
Options exercised (Unaudited)......................... (1,802) $0.24
Options canceled (Unaudited).......................... (530) $0.24
-------- ------------
Balance at March 31, 1996 (Unaudited).................. 513,952 $0.24
======== ============
</TABLE>
During May 1995, options to purchase 96,428 shares of common stock were
reissued at $0.24 per share and a further options to purchase 382,945 shares
of common stock were granted at $0.24 per share in connection with the
recapitalization of the Company. The reissuances are included as cancellations
(at the original price) and grants (at the $0.24 per share price). As of March
31, 1996, all options are exercisable and 228,994 options have vested under
the Plan.
6. INCOME TAXES
As of December 31, 1995, the Company had federal and state net operating
loss carryforwards of approximately $18,800,000 and $5,100,000, respectively.
The federal net operating loss carryforwards will
F-14
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
expire at various dates beginning on 2000 through 2010, if not utilized. The
state net operating loss carryforwards will expire beginning on 1996 through
2000, if not utilized.
Utilization of the net operating losses and credits may be subject to a
substantial annual limitation due to the ownership change provisions of the
Internal Revenue Code of 1986 and similar state provisions. The annual
limitation may result in the expiration of net operating losses and credits
before utilization.
The accumulated deficit at December 31, 1995 differs from the federal net
operating loss carryforwards due to losses of the Company's foreign subsidiary
and temporary differences consisting primarily of certain expenses not
currently deductible for tax reporting purposes.
Significant components of the Company's deferred tax assets as of December
31, 1994 and December 31, 1995 are as follows :
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Net operating loss carryforwards.......................... $ 5,100 $ 6,700
Research credits (expiring 2000-2010)..................... 700 700
Capitalized research and development...................... 300 300
Other, net................................................ 1,100 300
------- -------
Total deferred tax assets................................. 7,200 8,000
Valuation allowance for deferred tax assets............... (7,200) (8,000)
------- -------
Net deferred tax assets................................... $ -- $ --
======= =======
</TABLE>
Because of the Company's lack of earnings history, the deferred tax assets
have been fully offset by a valuation allowance. The valuation allowance
increased by $2,210,000 and $990,000 during the years ended December 31, 1993
and 1994, respectively.
7. PROMISSORY NOTE WITH OFFICER
In December 1992, the Company entered into a promissory note agreement with
an officer which allowed the officer to borrow up to $140,000. Interest on the
note accrues at a rate of 6.15% per annum. The note and accrued interest is due
upon the earlier of (i) voluntary termination, (ii) 12 months after involuntary
termination, (iii) closing of an initial underwritten public offering of the
Company's common stock, (iv) merger of the Company, (v) sale of all the assets
of the Company or (vi) July 19, 1997. The outstanding principal balance at
December 31, 1994 and 1995 and March 31, 1996 was $60,000, $90,000 and $97,500,
respectively.
F-15
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. STATEMENT OF CASH FLOW DATA
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, INCEPTION TO ENDED MARCH 31,
------------------------- DECEMBER 31, ---------------
1993 1994 1995 1995 1995 1996
------- --------- ------- ------------ ------- -------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
SUPPLEMENTAL SCHEDULE OF
NONCASH INVESTING AND
FINANCING ACTIVITIES
Acquisition of equipment
under capital leases... $ 108 $ -- $ 60 $ 837 $ -- $ --
======= ========= ======= ====== ======= =======
Purchase of Yellowstone
Diagnostics
Corporation:
Issuance of preferred
and common stock...... $ -- $ -- $ -- $ 424 $ -- $ --
======= ========= ======= ====== ======= =======
Issuance of preferred
stock for cancellation
of notes payable and
accrued interest...... $ -- $ 4,552 $ -- $5,377 $ -- $ --
======= ========= ======= ====== ======= =======
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW
INFORMATION
Interest paid........... $ 73 $ 167 $ 35 $ 414 $ 12 $ 3
======= ========= ======= ====== ======= =======
</TABLE>
9. SUBSEQUENT EVENTS
In April 1996, the Company obtained a committed line of funding (the
"Committed Line of Funding") from certain of the Company's investors,
specifically Aeneas Venture Corporation, Aspen Ventures, Asset Management
Associates, B.G. Services Limited, Charter Venture Capital, Enterprise
Partners and a fund affiliated with Indosuez Partners (the "Committed
Investors"), whereby such investors agreed to lend the Company up to
$2,000,000 in cash in exchange for convertible secured promissory notes (the
"Notes") that must be repaid upon the earlier of (i) 30 days following the
closing of an initial public offering (the "Offering") or (ii) April 1997. In
addition, the Company issued warrants to purchase common stock, exercisable at
85% of the offering price, to the Committed Investors in an amount equal to
10% of their respective commitments under the Committed Line of Funding plus
an additional 5% of the outstanding principal amount of their respective Notes
issued under the Committed Line of Funding for each full or partial calendar
month that such principal amount remains outstanding. The aggregate warrant
coverage that the Company is entitled to provide to each Committed Investor
pursuant to the Committed Line of Funding is capped at 50% of such Committed
Investor's contribution to the aggregate amount of the Notes issued under the
Committed Line of Funding. The warrants issued in connection with the
Committed Line of Funding are not exercisable for a period of one year
following the closing of the Offering and expire in April 1997 or earlier upon
the sale of all or substantially all of the assets of the Company or upon the
acquisition of the Company by another entity pursuant to which the
stockholders of the Company immediately prior to such acquisition possess a
minority of the voting power of the acquiring entity immediately following
such acquisition.
In April 1996, the board of directors of the Company granted 65,318 options
to purchase common stock at an exercise price of $8.88 per share.
On May 6, 1996, the board of directors authorized management of the Company
to file a registration statement with the Securities and Exchange Commission
permitting the Company to sell shares of its common stock to the public. If
the initial public offering is consummated under the terms presently
anticipated, all of the preferred stock outstanding will automatically convert
into 5,203,465 shares of common stock. Unaudited pro
F-16
<PAGE>
ADEZA BIOMEDICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
forma stockholders' equity, as adjusted for the assumed conversion of the
preferred stock into shares of common stock, is set forth on the accompanying
balance sheet.
On May 6, 1996, the board of directors of the Company authorized the
reincorporation of the Company in the State of Delaware to be effective
immediately prior to the effectiveness of the Offering and a one-for-2.4
reverse stock split, subject to stockholder approval, in which each 2.4 shares
of preferred stock and common stock are split into one share of preferred stock
and common stock, respectively. In addition the Company increased the number of
authorized common and preferred shares to 22,462,220 shares and 10,00,000
shares, respectively. All the share and per share data in the accompanying
financial statements has been adjusted retroactively to give effect to the
reverse stock split.
On May 6, 1996, the Company adopted, subject to stockholder approval, the
1996 Employee Stock Purchase Plan under which 250,000 shares of common stock
are reserved for issuance and the 1996 Directors' Stock Option Plan under which
200,000 shares of common stock have been reserved for issuance. No shares have
been issued under either plan. The Company also increased the number of shares
available under the 1995 Stock Option and Restricted Stock Plan by 560,750
shares.
On May 9, 1996 and in connection with the Company's market launch of the fFN
ELISA Test, the Company granted a warrant to purchase 25,000 shares of common
stock at an exercise price of $0.01 per share to a research institution from
which Adeza licenses the fetal fibronectin patent. The warrant is not
exercisable for a period of one year from the date of this Offering and expires
in May 2001. The Company expects to report a non-cash charge of approximately
$250,000 in the second quarter of 1996 in connection with the issuance of this
warrant.
F-17
<PAGE>
CAN YOU IDENTIFY THE WOMEN AT RISK?
[PHOTO OF WOMEN OF REPRODUCTIVE AGE AND ONE LITTLE GIRL]
fFN ELISA TEST fFN DIPSTICK TEST
FDA Approved Test For Women At Point-of-Care Rapid Assay
Risk For Premature Birth For Premature Birth
- ------------------------------------- ---------------------------------------
[PHOTO OF PRODUCT] [PHOTO OF PRODUCT]
Adeza received FDA approval for an The fFN Dipstick Assay uses the same
ELISA (Enzyme-Linked Immunosorbent biochemical indicator as the ELISA
Assay) test to aid in the diagnosis format. This one-step test can be used
of premature birth in symptomatic at point-of-care for immediate results.
women. Adeza is preparing a PMA United States clinical trials have been
supplement for the use of the assay initiated.
in asymptomatic women.
fFN VERTICAL FLOW TEST cFN ELISA TEST
Rapid Assay For Rupture of Amniotic Immunodiagnostic Test For
Membranes Preeclampsia
- ------------------------------------- ---------------------------------------
[PHOTO OF PRODUCT] [PHOTO OF PRODUCT]
Adeza has developed a rapid assay to Adeza has developed an ELISA diagnostic
detect ruptured amniotic membranes. to confirm severe preeclampsia in
This event usually occurs with the symptomatic women. Preclinical
onset of labor. This product is evaluations are in progress the United
available in Japan only. States, Europe and Australia.
- --------------------------------------------------------------------------------
THE fFN DIPSTICK TEST, fFN VERTICAL FLOW TEST AND THE cFN ELISA TEST HAVE NOT
BEEN APPROVED BY THE FDA FOR MARKETING IN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, ANY OF THE SELLING STOCKHOLDERS OR ANY
OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF
COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
UNTIL , 1996 ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 6
The Company.............................................................. 17
Use of Proceeds.......................................................... 17
Dividend Policy.......................................................... 17
Capitalization........................................................... 18
Dilution................................................................. 19
Selected Consolidated Financial Data..................................... 20
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 21
Business................................................................. 24
Management............................................................... 46
Certain Transactions..................................................... 54
Principal and Selling Stockholders....................................... 56
Description of Capital Stock............................................. 59
Shares Eligible for Future Sale.......................................... 61
Underwriting............................................................. 63
Legal Matters............................................................ 64
Experts.................................................................. 64
Additional Information................................................... 64
Glossary of Terms........................................................ 65
Index to Consolidated Financial Statements............................... F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2,500,000 Shares
[LOGO OF ADEZA BIOMEDICAL CORPORATION]
Common Stock
---------------
PROSPECTUS
---------------
PRUDENTIAL SECURITIES INCORPORATED
NEEDHAM & COMPANY, INC.
TUCKER ANTHONY INCORPORATED
, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<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
underwriting discounts and commissions, payable by the Company in connection
with the sale of Common Stock being registered. All amounts are estimates
except the registration fee, the NASD filing fee and the Nasdaq National
Market listing fee.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
Registration Fee..................................................... $ 12,888
NASD Filing Fee...................................................... 4,238
Nasdaq National Market Listing Fee................................... 41,000
Printing and Engraving Expenses...................................... 150,000
Legal Fees and Expenses.............................................. 375,000
Accounting Fees and Expenses......................................... 125,000
Blue Sky Qualification Fees and Expenses............................. 15,000
Directors and Officers' Liability Insurance.......................... *
Transfer Agent and Registrar Fees.................................... 14,000
Miscellaneous Fees and Expenses...................................... 12,874
--------
Total.............................................................. $750,000
========
</TABLE>
- --------
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Act").
Article X of the Registrant's Amended and Restated Certificate of
Incorporation (Exhibit 3.3 hereto) provides for indemnification of its
directors and officers to the maximum extent permitted by the Delaware General
Corporation Law and Section 6 of Article VII of the Registrant's Bylaws
(Exhibit 3.2 hereto) provides for indemnification of its directors, officers,
employees and other agents to the maximum extent permitted by the Delaware
General Corporation Law. In addition, the Registrant has entered into
Indemnification Agreements (Exhibit 10.1 hereto) with its directors and
officers containing provisions which are in some respects broader than the
specific indemnification provisions contained in the Delaware General
Corporation Law. The indemnification agreements may require the Company, among
other things, to indemnify its directors against certain liabilities that may
arise by reason of their status or service as directors (other than
liabilities arising from willful misconduct of culpable nature), to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified, and to obtain directors' insurance if available on
reasonable terms. Reference is also made to Section of the Underwriting
Agreement contained in Exhibit 1.1 hereto, indemnifying officers and directors
of the Company against certain liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) Since April 30, 1993, the Company has sold and issued the following
unregistered securities (without payment of any selling commission to any
person), as adjusted to give effect to the Company's reincorporation in
Delaware pursuant to which one share of Common Stock of the Delaware
corporation will be issued for each 2.4 shares of Common Stock of the
California corporation:
(1) The Company has sold and issued 35,693 shares of its Common Stock to
directors, officers, employees and consultants pursuant to the exercise of
options under the Company's Plan and the Predecessor Plans.
II-1
<PAGE>
(2) On September 30, 1994, the Company sold and issued 240,384 shares of
its Series F Preferred Stock for an aggregate of $749,999.50 in cash.
(3) On December 20, 1994, the Company effected a recapitalization,
whereby all outstanding shares of its Preferred Stock were converted into
and exchanged for shares of a newly created Series 1 Preferred Stock based
upon the outstanding series' respective liquidation preferences, and all
outstanding shares of Common Stock were subject to a reverse stock split.
(4) On December 20, 1994, the Company also sold and issued 3,322,893
shares of its Series 2 Preferred Stock for an aggregate of $7,974,943.20 in
cash.
(5) On April 30, 1996, the Company issued warrants to purchase 19,608
shares of its Common Stock in connection with a committed line of funding
totalling $2,000,000 in cash to the Company from certain investors.
(6) In July 1996, the Company's predecessor California corporation will
be reincorporated in Delaware by means of a merger with and into the
Delaware corporation, pursuant to which one share of the Common Stock of
the Delaware corporation will be issued for each 2.4 shares of Common Stock
of the California corporation.
The sales and issuances of securities in the transaction described in
paragraph 1 were deemed to be exempt from registration under the Securities
Act by virtue of Rule 701 promulgated thereunder in that they were offered and
sold either pursuant to written compensatory benefit plans or pursuant to a
written contract relating to compensation, as provided by Rule 701.
The sales and issuances of securities in the transactions described in
paragraphs 2, 3, 4 and 5 above were deemed to be exempt from registration
under the Act in reliance on Section 4(2) of such Act as transactions by an
issuer not involving any public offering.
The transaction described in paragraph 6 was exempt under the Act because no
"sale" occurred in connection with such transaction pursuant to Section 2(3)
of the Securities Act and Rule 145 thereunder.
Appropriate legends are affixed to the stock certificates issued in the
aforementioned transactions. Similar legends were imposed in connection with
any subsequent sales of any such securities. In all such transactions, all
recipients of securities represented their intention to acquire the securities
for investment only and not with a view to or for sale in connection with any
distribution thereof and all recipients either received adequate information
about the Registrant or had access, through employment or other relationships,
to such information.
(b) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 15(a).
II-2
<PAGE>
The issuances of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of such Act
as transactions by an issuer not involving any public offering. The recipients
of securities in each such transaction represented their intentions to acquire
the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends where affixed
to the securities issued in such transactions. All recipients had adequate
access, through their relationships with the Company, to information about the
Registrant. In addition, certain issuances described in Item 15(a)(1) and (2)
were deemed to be exempt from registration under the Securities Act in reliance
upon Rule 701 promulgated under such Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation of Registrant.
3.2 Bylaws of Registrant.
3.3* Form of Amended and Restated Certificate of Incorporation to be filed
with the Delaware Secretary of State upon the Company's
reincorporation in Delaware.
4.1* Form of Common Stock Certificate.
5.1* Opinion of Venture Law Group, A Professional Corporation.
10.1 Form of Indemnification Agreement.
10.2 1995 Stock Option and Restricted Stock Plan and form of Option
Agreement.
10.3 1996 Employee Stock Purchase Plan and form of Subscription Agreement.
10.4 1996 Directors' Stock Option Plan and form of Option Agreement.
10.5+ Exclusive Marketing Agreement, dated December 31, 1991, by and between
the Company and Tokos Medical Corporation, together with Letter
Agreements dated December 20, 1994, January 13, 1995 and May 8, 1996.
10.6+ Exclusive License Agreement, dated August 12, 1992, between the
Company and the Fred Hutchinson Cancer Research Center, together with
the First Amendment to Exclusive License Agreement and Consent dated
May 9, 1996.
10.7 Investors' Rights Agreement, dated December 21, 1994, between the
Company and certain Shareholders of the Company, together with the
First Amendment to the Investors' Rights Agreement dated April 30,
1996.
10.8+ Distribution Agreement, dated December 17, 1990, between the Company
and Daiichi Pure Chemicals Co., Ltd., as amended.
10.9+ Master Equipment Lease, dated September 29, 1995, between the Company
and Phoenix Leasing Incorporated.
10.10 Industrial Space Lease, dated July 1, 1988, between the Company and
James R. Bancroft, together with Addenda Nos. 1, 2, 3, 4 and 5.
10.11 Leastec Master Lease Agreement, dated June 1, 1991, between the
Company and Leastec Corporation, together with Rental Schedules Nos.
1, 2, 3, 4 and 5.
10.12 Security Agreement, dated April 30, 1996, between the Company and the
Secured Parties thereto.
10.13 Note and Warrant Purchase Agreement, dated April 30, 1996, between the
Company and the Purchasers thereto.
10.14 Form of Convertible Secured Promissory Note.
10.15 Form of Stock Purchase Warrant issued April 30, 1996.
11.1 Calculation of earnings per share.
21.1 Subsidiaries of the Company.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-5).
</TABLE>
II-3
<PAGE>
- --------
* To be supplied by amendment.
+ Certain portions of this Exhibit have been omitted (blacked out) for which
confidential treatment has been requested and filed separately with the
Securities and Exchange Commission.
(B) FINANCIAL STATEMENT SCHEDULES
The following Schedule has been filed:
Schedule II--Valuation and Qualifying Accounts.
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 Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions referenced in Item 14 of this Registration
Statement or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than 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
hereunder, 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 that:
(1) 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 this 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, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-1 TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
SUNNYVALE, STATE OF CALIFORNIA, ON THIS 10TH DAY OF MAY 1996.
Adeza Biomedical Corporation
/s/ Daniel O. Wilds
By: _________________________________
DANIEL O. WILDS (PRESIDENT AND
CHIEF EXECUTIVE OFFICER)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Daniel O. Wilds and Emory V. Anderson,
and each of them acting individually, as his attorney-in-fact, each with full
power of substitution, for him in any and all capacities, to sign any and all
amendments to this Registration Statement (including post-effective
amendments), and to file the same, with exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming our signatures as they may be signed by our said
attorney to any and all amendments to said Registration Statement. Pursuant to
the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated:
SIGNATURE TITLE DATE
/s/ Daniel O. Wilds President and Chief May 10, 1996
- ------------------------------------- Executive Officer,
(DANIEL O. WILDS) and Director
(Principal
Executive Officer
and Director)
/s/ Emory V. Anderson Vice President and May 10, 1996
- ------------------------------------- Chief Financial
(EMORY V. ANDERSON) Officer (Principal
Financial and
Accounting Officer)
/s/ Nancy S. Amer Director May 10, 1996
- -------------------------------------
(NANCY S. AMER)
/s/ Nancy D. Burrus Director May 10, 1996
- -------------------------------------
(NANCY D. BURRUS)
/s/ Andrew E. Senyei Director May 10, 1996
- -------------------------------------
(ANDREW E. SENYEI)
/s/ Craig C. Taylor Director May 10, 1996
- -------------------------------------
(CRAIG C. TAYLOR)
/s/ Nelson H. Teng Director May 10, 1996
- -------------------------------------
(NELSON H. TENG)
II-5
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE CHARGE BALANCE
AT TO COSTS AT END
BEGINNING AND OF
OF PERIOD EXPENSES DEDUCTIONS PERIOD
--------- -------- ---------- -------
<S> <C> <C> <C> <C>
Year ended December 31, 1993............ $ 40 $ 25 $-- $ 65
Year ended December 31, 1994............ $ 65 $ 50 $-- $115
Year ended December 31, 1995............ $115 $-- $ 44 $ 71
Three months ended March 31, 1996
(Unaudited)............................ $ 71 $-- $ 36 $ 35
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
-------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation of Registrant.
3.2 Bylaws of Registrant.
3.3* Form of Amended and Restated Certificate of Incorporation to be filed
with the Delaware Secretary of State upon the Company's
reincorporation in Delaware.
4.1* Form of Common Stock Certificate.
5.1* Opinion of Venture Law Group, A Professional Corporation.
10.1 Form of Indemnification Agreement.
10.2 1995 Stock Option and Restricted Stock Plan and form of Option
Agreement.
10.3 1996 Employee Stock Purchase Plan and form of Subscription Agreement.
10.4 1996 Directors' Stock Option Plan and form of Option Agreement.
10.5+ Exclusive Marketing Agreement, dated December 31, 1991, by and between
the Company and Tokos Medical Corporation, together with Letter
Agreements dated December 20, 1994, January 13, 1995 and May 8, 1996.
10.6+ Exclusive License Agreement, dated August 12, 1992, between the
Company and the Fred Hutchinson Cancer Research Center, together with
the First Amendment to Exclusive License Agreement and Consent dated
May 9, 1996.
10.7 Investors' Rights Agreement, dated December 21, 1994, between the
Company and certain Shareholders of the Company, together with the
First Amendment to the Investors' Rights Agreement dated April 30,
1996.
10.8+ Distribution Agreement, dated December 17, 1990, between the Company
and Daiichi Pure Chemicals Co., Ltd., as amended.
10.9+ Master Equipment Lease, dated September 29, 1995, between the Company
and Phoenix Leasing Incorporated.
10.10 Industrial Space Lease, dated July 1, 1988, between the Company and
James R. Bancroft, together with Addenda Nos. 1, 2, 3, 4 and 5.
10.11 Leastec Master Lease Agreement, dated June 1, 1991, between the
Company and Leastec Corporation, together with Rental Schedules Nos.
1, 2, 3, 4 and 5.
10.12 Security Agreement, dated April 30, 1996, between the Company and the
Secured Parties thereto.
10.13 Note and Warrant Purchase Agreement, dated April 30, 1996, between the
Company and the Purchasers thereto.
10.14 Form of Convertible Secured Promissory Note.
10.15 Form of Stock Purchase Warrant issued April 30, 1996.
11.1 Calculation of net loss per share.
21.1 Subsidiaries of the Company.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-5).
</TABLE>
- --------
* To be supplied by amendment.
+ Certain portions of this Exhibit have been omitted (blacked out) for which
confidential treatment has been requested and filed separately with the
Securities and Exchange Commission.
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
ADEZA BIOMEDICAL CORPORATION
ARTICLE I
The name of the corporation is Adeza Biomedical Corporation (the
"Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 15 East North Street, P.O. Box 899, Dover, Delaware,County of Kent. The name
of its registered agent at such address is Incorporating Services, Ltd.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
The aggregate number of shares which this Corporation shall have authority
to issue is One Million (1,000,000) shares of capital stock all of which shall
be designated "Common Stock" and have a par value of $.001 per share.
ARTICLE V
The name and mailing address of the incorporator are as follows:
Susan Hoban
c/o Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
ARTICLE VI
The Board of Directors of the Corporation is expressly authorized to make,
alter or repeal Bylaws of the Corporation, but the stockholders may make
additional Bylaws and may alter or repeal any Bylaw whether adopted by them or
otherwise.
<PAGE>
ARTICLE VII
Elections of directors need not be by written ballot unless otherwise
provided in the Bylaws of the Corporation.
ARTICLE VIII
(A) To the fullest extent permitted by the Delaware General Corporation
Law, as the same exists or as may hereafter be amended, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
(B) The Corporation shall indemnify to the fullest extent permitted by law
any person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he, his testator or intestate is or was a director, officer or employee of
the Corporation or any predecessor of the Corporation, or serves or served at
any other enterprise as a director, officer or employee at the request of the
Corporation or any predecessor to the Corporation.
(C) Neither any amendment nor repeal of this Article VIII, nor the adoption
of any provision of this Corporation's Certificate of Incorporation inconsistent
with this Article VIII, shall eliminate or reduce the effect of this Article
VIII in respect of any matter occurring, or any action or proceeding accruing or
arising or that, but for this Article VIII, would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision.
ARTICLE IX
The Corporation is to have perpetual existence.
ARTICLE X
The number of directors which will constitute the whole Board of Directors
of the Corporation shall be designated in the Bylaws of the Corporation.
ARTICLE XI
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any statutory provision) outside the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors in
the Bylaws of the Corporation.
-2-
<PAGE>
Executed this 7th day of May, 1996.
/s/ Susan Hoban
-------------------------
Susan Hoban, Incorporator
-3-
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
ADEZA BIOMEDICAL CORPORATION
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Dover, County of
---------
Kent, State of Delaware.
Section 2. The corporation may also have offices at such other places both
---------
within and without the State of Delaware as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
---------
shall be held at such place as may be fixed from time to time by the Board of
Directors, or at such other place either within or without the State of Delaware
as shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting. Meetings of stockholders for any other purpose may be
held at such time and place, within or without the State of Delaware, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual meetings of stockholders, commencing with the year 1996,
---------
shall be held at such date and time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which they
shall elect by a plurality vote a board of directors, and transact such other
business as may properly be brought before the meeting.
<PAGE>
Section 3. Written notice of the annual meeting stating the place, date and
---------
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten (10) nor more than sixty (60) days before the date of
the meeting.
Section 4. The officer who has charge of the stock ledger of the
---------
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
---------
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning not less than ten
percent (10%) of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
---------
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not fewer than ten (10) nor more than sixty (60) days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders shall
---------
be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
---------
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all
-2-
<PAGE>
meetings of the stockholders for the transaction of business except as otherwise
provided by statute or by the certificate of incorporation. If, however, such
quorum shall not be present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted that might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the holders
---------
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required, in which case such
express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation
----------
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three (3)
years from its date, unless the proxy provides for a longer period.
Section 11. Nominations for election to the Board of Directors must be made
----------
by the Board of Directors or by any stockholder of any outstanding class of
capital stock of the corporation entitled to vote for the election of directors.
Nominations, other than those made by the Board of Directors of the corporation,
must be preceded by notification in writing received by the Secretary of the
corporation not less than twenty (20) days nor more than sixty (60) days prior
to any meeting of stockholders called for the election of directors. Such
notification shall contain the written consent of each proposed nominee to serve
as a director if so elected and the
-3-
<PAGE>
following information as to each proposed nominee and as to each person, acting
alone or in conjunction with one or more other persons as a partnership, limited
partnership, syndicate or other group, who participates or is expected to
participate in making such nomination or in organizing, directing or financing
such nomination or solicitation of proxies to vote for the nominee:
(a) the name, age, residence, address, and business address of each
proposed nominee and of each such person;
(b) the principal occupation or employment, the name, type of business
and address of the corporation or other organization in which such employment is
carried on of each proposed nominee and of each such person;
(c) the amount of stock of the corporation owned beneficially, either
directly or indirectly, by each proposed nominee and each such person; and
(d) a description of any arrangement or understanding of each proposed
nominee and of each such person with each other or any other person regarding
future employment or any future transaction to which the corporation will or may
be a party.
The presiding officer of the meeting shall have the authority to determine
and declare to the meeting that a nomination not preceded by notification made
in accordance with the foregoing procedure shall be disregarded.
Section 12. At any meeting of the stockholders, only such business shall be
----------
conducted as shall have been brought before the meeting (a) pursuant to the
corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the corporation who is a stockholder of
record at the time of giving of the notice provided for in this Bylaw, who shall
be entitled to vote at such meeting and who complies with the notice procedures
set forth in this Bylaw.
For business to be properly brought before any meeting by a stockholder
pursuant to clause (c) of this Section 12, the stockholder must have given
timely notice thereof in writing to the Secretary of the corporation. To be
timely, a stockholder's notice must be delivered to or
-4-
<PAGE>
mailed and received at the principal executive offices of the corporation not
less than twenty (20) days nor more than sixty (60) days prior to the date of
the meeting. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the meeting (a) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (b) the name and address,
as they appear on the corporation's books, of the stockholder proposing such
business, and the name and address of the beneficial owner, if any, on whose
behalf the proposal is made, (c) the class and number of shares of the
corporation which are owned beneficially and of record by such stockholder of
record and by the beneficial owner, if any, on whose behalf of the proposal is
made and (d) any material interest of such stockholder of record and the
beneficial owner, if any, on whose behalf the proposal is made in such business.
Notwithstanding anything in these Bylaws to the contrary, no business shall
be conducted at a meeting except in accordance with the procedures set forth in
this Section 12. The presiding officer of the meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting and in accordance with the procedures prescribed by
this Section 12, and if such person should so determine, such person shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted. Notwithstanding the foregoing provisions of
this Section 12, a stockholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder with respect to the matters set forth in this Section
12.
Section 13. Effective upon the closing of the corporation's initial public
----------
offering of securities pursuant to a registration statement filed under the
Securities Act of 1933, as amended, the stockholders of the Corporation may not
take action by written consent without a meeting but must take any such actions
at a duly called annual or special meeting.
-5-
<PAGE>
ARTICLE III
DIRECTORS
Section 1. The number of directors of this corporation that shall
---------
constitute the whole board shall be determined by resolution of the Board of
Directors or by the stockholders at the annual meeting of the stockholders;
provided, however, that no decrease in the number of directors shall have the
effect of shortening the term of an incumbent director. Except as provided in
Section 2 of this Article, the directors shall be elected at the annual meeting
of the stockholders, in accordance with the certificate of incorporation, and
each director elected shall hold office until his/her successor is elected and
qualified, unless he/she shall resign, become disqualified, disabled or
otherwise removed. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
---------
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and qualified or until his
earlier resignation or removal. If there are no directors in office, then an
election of directors may be held in the manner provided by statute.
Section 3. The business of the corporation shall be managed by or under the
---------
direction of its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these bylaws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The Board of Directors of the corporation may hold meetings,
---------
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected Board of Directors shall
---------
be held at such time and place as shall be fixed by the vote of the stockholders
at the annual meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the
-6-
<PAGE>
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the Board of Directors may be held without
---------
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the President on
---------
four (4) days' notice to each director by mail or forty-eight (48) hours notice
to each director either personally, or by telephone, telegram or facsimile;
special meetings shall be called by the President or Secretary in like manner
and on like notice on the written request of two directors unless the board
consists of only one director, in which case special meetings shall be called by
the President or Secretary in like manner and on like notice on the written
request of the sole director. A written waiver of notice, signed by the person
entitled thereto, whether before or after the time of the meeting stated
therein, shall be deemed equivalent to notice.
Section 8. At all meetings of the board a majority of the directors shall
---------
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
---------
of these bylaws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
-7-
<PAGE>
Section 10. Unless otherwise restricted by the certificate of incorporation
----------
or these bylaws, members of the Board of Directors, or any committee designated
by the Board of Directors, may participate in a meeting of the Board of
Directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The Board of Directors may, by resolution passed by a majority
----------
of the whole board, designate one (1) or more committees, each committee to
consist of one (1) or more of the directors of the corporation. The board may
designate one (1) or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the committee.
In the absence of disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board
of Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers that may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
-8-
<PAGE>
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
Section 12. Each committee shall keep regular minutes of its meetings and
----------
report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of incorporation
----------
or these bylaws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of incorporation
----------
or bylaw, any director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of shares entitled to vote at an
election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
---------
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice (except as provided in Section 7 of Article III of these Bylaws), but
such notice may be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telephone, telegram or facsimile.
-9-
<PAGE>
Section 2. Whenever any notice is required to be given under the provisions
---------
of the statutes or of the certificate of incorporation or of these bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board of
---------
Directors and shall be a President, Treasurer and a Secretary. The Board of
Directors may elect from among its members a Chairman of the Board and a Vice
Chairman of the Board. The Board of Directors may also choose one or more Vice-
Presidents, Assistant Secretaries and Assistant Treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these bylaws otherwise provide.
Section 2. The Board of Directors at its first meeting after each annual
---------
meeting of stockholders shall choose a President, a Treasurer, and a Secretary
and may choose Vice Presidents.
Section 3. The Board of Directors may appoint such other officers and
---------
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers of the corporation shall be fixed
---------
by the Board of Directors. The salaries of agents of the corporation shall,
unless fixed by the Board of Directors, be fixed by the President or any Vice-
President of the corporation.
Section 5. The officers of the corporation shall hold office until their
---------
successors are chosen and qualify. Any officer elected or appointed by the Board
of Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the corporation
shall be filled by the Board of Directors.
-10-
<PAGE>
THE CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board, if any, shall preside at all meetings
---------
of the Board of Directors and of the stockholders at which he shall be present.
He/she shall have and may exercise such powers as are, from time to time,
assigned to him by the Board and as may be provided by law.
Section 7. In the absence of the Chairman of the Board, the Vice Chairman
---------
of the Board, if any, shall preside at all meetings of the Board of Directors
and of the stockholders at which he shall be present. He shall have and may
exercise such powers as are, from time to time, assigned to him by the Board and
as may be provided by law.
THE PRESIDENT AND VICE-PRESIDENTS
Section 8. The President shall be the chief executive officer of the
---------
corporation; and in the absence of the Chairman and Vice Chairman of the Board
he/she shall preside at all meetings of the stockholders and the Board of
Directors; he/she shall have general and active management of the business of
the corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect.
Section 9. The President or any Vice President shall execute bonds,
---------
mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the corporation.
Section 10. In the absence of the President or in the event of his
----------
inability or refusal to act, the Vice-President, if any, (or in the event there
be more than one Vice-President, the Vice-Presidents in the order designated by
the directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice-Presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
-11-
<PAGE>
THE SECRETARY AND ASSISTANT SECRETARY
Section 11. The Secretary shall attend all meetings of the Board of
----------
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He/she shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision he/she shall be. He/she shall have custody of
the corporate seal of the corporation and he/she, or an Assistant Secretary,
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by his signature or by the signature of such
Assistant Secretary. The Board of Directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
his signature.
Section 12. The Assistant Secretary, or if there be more than one, the
----------
Assistant secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 13. The Treasurer shall be the chief financial officer of the
----------
corporation, shall have the custody of the corporate funds and securities and
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such depositories as
may be designated by the Board of Directors.
Section 14. He/she shall disburse the funds of the corporation as may be
----------
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so
-12-
<PAGE>
requires, an account of all his transactions as Treasurer and of the financial
condition of the corporation.
Section 15. If required by the Board of Directors, he/she shall give the
----------
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his/her office and for the restoration
to the corporation, in case of his/her death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his/her control belonging to the
corporation.
Section 16. The Assistant Treasurer, or if there shall be more than one,
----------
the Assistant Treasurers in the order determined by the Board of Directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the Treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
---------
have a certificate, signed by, or in the name of the corporation by, the
Chairman or Vice-Chairman of the Board of Directors, or the President or a Vice-
President and the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the corporation, certifying the number of shares owned by
him/her in the corporation.
Certificates may be issued for partly paid shares and in such case upon the
face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification,
-13-
<PAGE>
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate that the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in section 202 of the General Corporation Law
of Delaware, in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate that the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 2. Any of or all the signatures on the certificate may be
---------
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he/she
were such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate or
---------
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his/her
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
-14-
<PAGE>
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
---------
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
---------
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
----------
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
-15-
<PAGE>
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
---------
the provisions of the certificate of incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
---------
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
---------
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
---------
of the Board of Directors.
SEAL
Section 5. The Board of Directors may adopt a corporate seal having
---------
inscribed thereon the name of the corporation, the year of its organization and
the words "Corporate Seal, Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
-16-
<PAGE>
INDEMNIFICATION
Section 6. The corporation shall, to the fullest extent authorized under
---------
the laws of the State of Delaware, as those laws may be amended and supplemented
from time to time, indemnify any director made, or threatened to be made, a
party to an action or proceeding, whether criminal, civil, administrative or
investigative, by reason of being a director of the corporation or a predecessor
corporation or, at the corporation's request, a director or officer of another
corporation, provided, however, that the corporation shall indemnify any such
agent in connection with a proceeding initiated by such agent only if such
proceeding was authorized by the Board of Directors of the corporation. The
indemnification provided for in this Section 6 shall: (i) not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaw, agreement or vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as to action in
another capacity while holding such office, (ii) continue as to a person who has
ceased to be a director, and (iii) inure to the benefit of the heirs, executors
and administrators of such a person. The corporation's obligation to provide
indemnification under this Section 6 shall be offset to the extent of any other
source of indemnification or any otherwise applicable insurance coverage under a
policy maintained by the corporation or any other person.
Expenses incurred by a director of the corporation in defending a civil or
criminal action, suit or proceeding by reason of the fact that he is or was a
director of the corporation (or was serving at the corporation's request as a
director or officer of another corporation) shall be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized by relevant sections of the General Corporation Law of
Delaware. Notwithstanding the foregoing, the corporation shall not be required
to advance such expenses to an agent who is a party to an action, suit or
proceeding brought by the corporation and approved by a majority of the Board of
Directors of the corporation which alleges willful misappropriation of corporate
-17-
<PAGE>
assets by such agent, disclosure of confidential information in violation of
such agent's fiduciary or contractual obligations to the corporation or any
other willful and deliberate breach in bad faith of such agent's duty to the
corporation or its stockholders.
The foregoing provisions of this Section 6 shall be deemed to be a contract
between the corporation and each director who serves in such capacity at any
time while this bylaw is in effect, and any repeal or modification thereof shall
not affect any rights or obligations then existing with respect to any state of
facts then or theretofore existing or any action, suit or proceeding theretofore
or thereafter brought based in whole or in part upon any such state of facts.
The Board of Directors in its discretion shall have power on behalf of the
corporation to indemnify any person, other than a director, made a party to any
action, suit or proceeding by reason of the fact that he, his testator or
intestate, is or was an officer or employee of the corporation.
To assure indemnification under this Section 6 of all directors, officers
and employees who are determined by the corporation or otherwise to be or to
have been "fiduciaries" of any employee benefit plan of the corporation which
may exist from time to time, Section 145 of the General Corporation Law of
Delaware shall, for the purposes of this Section 6, be interpreted as follows:
an "other enterprise" shall be deemed to include such an employee benefit plan,
including without limitation, any plan of the corporation which is governed by
the Act of Congress entitled "Employee Retirement Income Security Act of 1974,"
as amended from time to time; the corporation shall be deemed to have requested
a person to serve an employee benefit plan where the performance by such person
of his duties to the corporation also imposes duties on, or otherwise involves
services by, such person to the plan or participants or beneficiaries of the
plan; excise taxes assessed on a person with respect to an employee benefit plan
pursuant to such Act of Congress shall be deemed "fines."
-18-
<PAGE>
ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or new bylaws
---------
may be adopted by the stockholders or by the Board of Directors, when such power
is conferred upon the Board of Directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the Board of Directors or at any
special meeting of the stockholders or of the Board of Directors if notice of
such alteration, amendment, repeal or adoption of new bylaws be contained in the
notice of such special meeting. If the power to adopt, amend or repeal bylaws is
conferred upon the Board of Directors by the certificate or incorporation it
shall not divest or limit the power of the stockholders to adopt, amend or
repeal bylaws.
-19-
<PAGE>
EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into this ___ day
of __________, 1996 by and between Adeza Biomedical Corporation, a Delaware
corporation (the "Company") and [NAME] ("Indemnitee").
WITNESSETH THAT:
WHEREAS, Indemnitee performs a valuable service for the Company; and
WHEREAS, the Board of Directors of the Company have adopted Bylaws
(the "Bylaws") providing for the indemnification of the directors of the Company
to the maximum extent authorized by Section 145 of the Delaware General
Corporation Law, as amended (the "Law"); and
WHEREAS, the Bylaws and the Law, by their nonexclusive nature, permit
contracts between the Company and the officers and directors of the Company with
respect to indemnification of such officers and directors; and
WHEREAS, in accordance with the authorization as provided by the Law,
the Company may purchase and maintain a policy or policies of director's and
officer's liability insurance ("D & O Insurance"), covering certain liabilities
which may be incurred by its officers or directors in the performance of their
obligations to the Company; and
WHEREAS, as a result of recent developments affecting the terms, scope
and availability of D&O Insurance there exists general uncertainty as to the
extent of protection afforded Company officers and directors by such D & O
Insurance and said uncertainty also exists under statutory and bylaw
indemnification provisions; and
WHEREAS, in recognition of past services and in order to induce
Indemnitee to continue to serve as an officer or director of the Company, the
Company has determined and agreed to enter into this contract with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's continued service as
an officer or director after the date hereof, the parties hereto agree as
follows:
1. INDEMNITY OF INDEMNITEE. The Company hereby agrees to hold
-----------------------
harmless and indemnify Indemnitee to the fullest extent authorized or permitted
by the provisions of the Law, as such may be amended from time to time, and
Article VII, Section 6 of the Bylaws, as such may be amended. In furtherance of
the foregoing indemnification, and without limiting the generality thereof:
1
<PAGE>
(a) Proceedings Other Than Proceedings by or in the Right of the
------------------------------------------------------------
Company. Indemnitee shall be entitled to the rights of indemnification provided
- -------
in this Section 1(a) if, by reason of his Corporate Status (as defined in
Section 13 below), he is, or is threatened to be made, a party to or participant
in any Proceeding (as defined in Section 13 below) other than a Proceeding by or
in the right of the Company. Pursuant to this Section 1(a), Indemnitee shall be
indemnified against all Expenses (as defined in Section 13 below), judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by him or on his behalf in connection with such Proceeding or any claim, issue
or matter therein, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company and, with
respect to any criminal Proceeding, had no reasonable cause to believe his
conduct was unlawful.
(b) Proceedings by or in the Right of the Company. Indemnitee shall
---------------------------------------------
be entitled to the rights of indemnification provided in this Section 1(b) if,
by reason of his Corporate Status, he is, or is threatened to be made, a party
to or participant in any Proceeding brought by or in the right of the Company to
procure a judgment in its favor. Pursuant to this Section 1(b), Indemnitee
shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection with such Proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company; provided, however, that if applicable law so provides,
no indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company, unless and to the extent that the Court of
Chancery of the State of Delaware shall determine that such indemnification may
be made.
(c) Indemnification for Expenses of a Party Who is Wholly or Partly
---------------------------------------------------------------
Successful. Notwithstanding any other provision of this Agreement, to the
- ----------
extent that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified to the maximum extent permitted by law against all Expenses actually
and reasonably incurred by him or on his behalf in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or on his behalf in connection
with each successfully resolved claim, issue or matter. For purposes of this
Section 1(c) and without limitation, the termination of any claim, issue or
matter in such a Proceeding by dismissal, with or without prejudice, shall be
deemed to be a successful result as to such claim, issue or matter.
2. ADDITIONAL INDEMNITY. In addition to, and without regard to any
--------------------
limitations on, the indemnification provided for in Section 1, the Company shall
and hereby does indemnify and hold harmless Indemnitee against all Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf if, by reason of his Corporate
Status he is, or is threatened to be made, a party to or participant in any
Pro-
2
<PAGE>
ceeding (including a Proceeding by or in the right of the Company), including,
without limitation, all liability arising out of the negligence or active or
passive wrongdoing of Indemnitee. The only limitation that shall exist upon the
Company's obligations pursuant to this Agreement shall be that the Company shall
not be obligated to make any payment to Indemnitee that is finally determined
(under the procedures, and subject to the presumptions, set forth in Sections 6
and 7 hereof) to be unlawful under Delaware law.
3. CONTRIBUTION IN THE EVENT OF JOINT LIABILITY.
--------------------------------------------
(a) Whether or not the indemnification provided in Sections 1 and 2
hereof is available, in respect of any Proceeding in which the Company is
jointly liable with Indemnitee (or would be if joined in such Proceeding), the
Company shall pay, in the first instance, the entire amount of any judgment or
settlement of such Proceeding without requiring Indemnitee to contribute to such
payment and the Company hereby waives and relinquishes any right of contribution
it may have against Indemnitee. The Company shall not enter into any settlement
of any Proceeding in which the Company is jointly liable with Indemnitee (or
would be if joined in such Proceeding) unless such settlement provides for a
full and final release of all claims asserted against Indemnitee.
(b) Without diminishing or impairing the obligations of the Company
set forth in the preceding subparagraph, if, for any reason, Indemnitee shall
elect or be required to pay all or any portion of any judgment or settlement in
any Proceeding in which the Company is jointly liable with Indemnitee (or would
be if joined in such Proceeding), the Company shall contribute to the amount of
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Indemnitee in
proportion to the relative benefits received by the Company and all officers,
directors or employees of the Company other than Indemnitee who are jointly
liable with Indemnitee (or would be if joined in such Proceeding), on the one
hand, and Indemnitee, on the other hand, from the transaction from which such
Proceeding arose; provided, however, that the proportion determined on the basis
of relative benefit may, to the extent necessary to conform to law, be further
adjusted by reference to the relative fault of Company and all officers,
directors or employees of the Company other than Indemnitee who are jointly
liable with Indemnitee (or would be if joined in such Proceeding), on the one
hand, and Indemnitee, on the other hand, in connection with the events that
resulted in such expenses, judgments, fines or settlement amounts, as well as
any other equitable considerations which the law may require to be considered.
The relative fault of the Company and all officers, directors or employees of
the Company other than Indemnitee who are jointly liable with Indemnitee (or
would be if joined in such Proceeding), on the one hand, and Indemnitee, on the
other hand, shall be determined by reference to, among other things, the degree
to which their actions were motivated by intent to gain personal profit or
advantage, the degree to which their liability is primary or secondary, and the
degree to which their conduct is active or passive.
3
<PAGE>
(c) The Company hereby agrees to fully indemnify and hold Indemnitee
harmless from any claims of contribution which may be brought by officers,
directors or employees of the Company other than Indemnitee who may be jointly
liable with Indemnitee.
4. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding any
-----------------------------------------
other provision of this Agreement, to the extent that Indemnitee is, by reason
of his Corporate Status, a witness in any Proceeding to which Indemnitee is not
a party, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.
5. ADVANCEMENT OF EXPENSES. Notwithstanding any other provision of
-----------------------
this Agreement, the Company shall advance all reasonable Expenses incurred by or
on behalf of Indemnitee in connection with any Proceeding by reason of
Indemnitee's Corporate Status within ten (10) days after the receipt by the
Company of a statement or statements from Indemnitee requesting such advance or
advances from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the Expenses
incurred by Indemnitee and shall include or be preceded or accompanied by an
undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it
shall ultimately be determined that Indemnitee is not entitled to be indemnified
against such Expenses. Any advances and undertakings to repay pursuant to this
Section 5 shall be unsecured and interest free. Notwithstanding the foregoing,
the obligation of the Company to advance Expenses pursuant to this Section 5
shall be subject to the condition that, if, when and to the extent that the
Company determines that Indemnitee would not be permitted to be indemnified
under applicable law, the Company shall be entitled to be reimbursed, within
thirty (30) days of such determination, by Indemnitee (who hereby agrees to
reimburse the Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced or thereafter commences legal proceedings in a
court of competent jurisdiction to secure a determination that Indemnitee should
be indemnified under applicable law, any determination made by the Company that
Indemnitee would not be permitted to be indemnified under applicable law shall
not be binding and Indemnitee shall not be required to reimburse the Company for
any advance of Expenses until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been exhausted
or lapsed).
6. PROCEDURES AND PRESUMPTIONS FOR DETERMINATION OF ENTITLEMENT TO
---------------------------------------------------------------
INDEMNIFICATION. It is the intent of this Agreement to secure for Indemnitee
- ---------------
rights of indemnity that are as favorable as may be permitted under the law and
public policy of the State of Delaware. Accordingly, the parties agree that the
following procedures and presumptions shall apply in the event of any question
as to whether Indemnitee is entitled to indemnification under this Agreement:
(a) To obtain indemnification (including, but not limited to, the
advancement of Expenses and contribution by the Company) under this Agreement,
Indemnitee shall submit to the Company a written request, including therein or
therewith such documentation
4
<PAGE>
and information as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is entitled to
indemnification. The Secretary of the Company shall, promptly upon receipt of
such a request for indemnification, advise the Board of Directors in writing
that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to
the first sentence of Section 6(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall be made
in the specific case by one of the following three methods, which shall be at
the election of Indemnitee: (i) by a majority vote of the Disinterested
Directors (as defined in Section 13 below), even though less than a quorum, or
(ii) by Independent Counsel (as defined in Section 13 below) in a written
opinion, or (iii) by the stockholders.
(c) If the determination of entitlement to indemnification is to be
made by Independent Counsel pursuant to Section 6(b) hereof, the Independent
Counsel shall be selected as provided in this Section 6(c). The Independent
Counsel shall be selected by Indemnitee (unless Indemnitee shall request that
such selection be made by the Board of Directors). Indemnitee or the Company,
as the case may be, may, within ten (10) days after such written notice of
selection shall have been given, deliver to the Company or to Indemnitee, as the
case may be, a written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so
selected does not meet the requirements of "Independent Counsel" set forth in
this Agreement, and the objection shall state with particularity the factual
basis of such assertion. Absent a proper and timely objection, the person so
selected shall act as Independent Counsel. If a written objection is made and
substantiated, the Independent Counsel selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court has determined
that such objection is without merit. If, within twenty (20) days after
submission by Indemnitee of a written request for indemnification pursuant to
Section 6(a) hereof, no Independent Counsel shall have been selected and not
objected to, either the Company or Indemnitee may petition the Court of Chancery
of the State of Delaware or other court of competent jurisdiction for resolution
of any objection which shall have been made by the Company or Indemnitee to the
other's selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the court or by such other person as
the court shall designate, and the person with respect to whom all objections
are so resolved or the person so appointed shall act as Independent Counsel
under Section 6(b) hereof. The Company shall pay any and all reasonable fees
and expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 6(b) hereof, and the Company shall
pay all reasonable fees and expenses incident to the procedures of this Section
6(c), regardless of the manner in which such Independent Counsel was selected or
appointed.
5
<PAGE>
(d) In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 6(a) of this Agreement. Anyone seeking to overcome this
presumption shall have the burden of proof and the burden of persuasion, by
clear and convincing evidence.
(e) Indemnitee shall be deemed to have acted in good faith if
Indemnitee's action is based on the records or books of account of the
Enterprise (as defined in Section 13 below), including financial statements, or
on information supplied to Indemnitee by the officers of the Enterprise in the
course of their duties, or on the advice of legal counsel for the Enterprise or
on information or records given or reports made to the Enterprise by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Enterprise. In addition, the knowledge
and/or actions, or failure to act, of any director, officer, agent or employee
of the Enterprise shall not be imputed to Indemnitee for purposes of determining
the right to indemnification under this Agreement. Whether or not the foregoing
provisions of this Section 6(e) are satisfied, it shall in any event be presumed
that Indemnitee has at all times acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company. Anyone seeking to overcome this presumption shall have the burden of
proof and the burden of persuasion, by clear and convincing evidence.
(f) The Company acknowledges that a settlement or other disposition
short of final judgment may be successful if it permits a party to avoid
expense, delay, distraction, disruption and uncertainty. In the event that any
Proceeding to which Indemnitee is a party is resolved in any manner other than
by adverse judgment against Indemnitee (including, without limitation,
settlement of such Proceeding with or without payment of money or other
consideration) it shall be presumed that Indemnitee has been successful on the
merits or otherwise in such Proceeding. Anyone seeking to overcome this
presumption shall have the burden of proof and the burden of persuasion, by
clear and convincing evidence.
(g) If the person, persons or entity empowered or selected under
Section 6(b) to determine whether Indemnitee is entitled to indemnification
shall not have made a determination within thirty (30) days after receipt by the
Company of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable
law; provided, however, that such thirty (30) day period may be extended for a
reasonable time, not to exceed an additional fifteen (15) days, if the person,
persons or entity making the determination with respect to entitlement to
indemnification in good faith requires such additional time for the obtaining or
evaluating documentation and/or information relating thereto; and provided
further, that the foregoing provisions of this Section
6
<PAGE>
6(g) shall not apply if the determination of entitlement to indemnification is
to be made by the stockholders pursuant to Section 6(b) of this Agreement and if
(A) within fifteen (15) days after receipt by the Company of the request for
such determination the Board of Directors or the Disinterested Directors, if
appropriate, resolve to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within seventy-five (75)
days after such receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within fifteen (15) days after such receipt
for the purpose of making such determination, such meeting is held for such
purpose within sixty (60) days after having been so called and such
determination is made thereat.
(h) Indemnitee shall cooperate with the person, persons or entity
making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
Independent Counsel, member of the Board of Directors, or stockholder of the
Company shall act reasonably and in good faith in making a determination under
the Agreement of the Indemnitee's entitlement to indemnification. Any costs or
expenses (including attorneys' fees and disbursements) incurred by Indemnitee in
so cooperating with the person, persons or entity making such determination
shall be borne by the Company (irrespective of the determination as to
Indemnitee's entitlement to indemnification) and the Company hereby indemnifies
and agrees to hold Indemnitee harmless therefrom.
7. REMEDIES OF INDEMNITEE.
----------------------
(a) In the event that (i) a determination is made pursuant to Section
6 of this Agreement that Indemnitee is not entitled to indemnification under
this Agreement, (ii) advancement of Expenses is not timely made pursuant to
Section 5 of this Agreement, (iii) no determination of entitlement to
indemnification shall have been made pursuant to Section 6(b) of this Agreement
within ninety (90) days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made pursuant to this
Agreement within ten (10) days after receipt by the Company of a written request
therefor, or (v) payment of indemnification is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in
an appropriate court of the State of Delaware, or in any other court of
competent jurisdiction, of his entitlement to such indemnification. Indemnitee
shall commence such proceeding seeking an adjudication within one hundred eighty
(180) days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 7(a). The Company shall not
oppose Indemnitee's right to seek any such adjudication.
7
<PAGE>
(b) In the event that a determination shall have been made pursuant to
Section 6(b) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding commenced pursuant to this Section 7
shall be conducted in all respects as a de novo trial, on the merits, and
Indemnitee shall not be prejudiced by reason of that adverse determination.
(c) If a determination shall have been made pursuant to Section 6(b)
of this Agreement that Indemnitee is entitled to indemnification, the Company
shall be bound by such determination in any judicial proceeding commenced
pursuant to this Section 7, absent a prohibition of such indemnification under
applicable law.
(d) In the event that Indemnitee, pursuant to this Section 7, seeks a
judicial adjudication of his rights under, or to recover damages for breach of,
this Agreement, or to recover under any D&O Insurance maintained by the Company,
the Company shall pay on his behalf, in advance, any and all expenses (of the
types described in the definition of Expenses in Section 13 of this Agreement)
actually and reasonably incurred by him in such judicial adjudication,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advancement of expenses or insurance recovery.
(e) The Company shall be precluded from asserting in any judicial
proceeding commenced pursuant to this Section 7 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court that the Company is bound by all the provisions of
this Agreement.
8. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
-----------------------------------------------------------
(a) The rights of indemnification as provided by this Agreement shall
not be deemed exclusive of any other rights to which Indemnitee may at any time
be entitled under applicable law, the certificate of incorporation of the
Company, the Bylaws, any agreement, a vote of stockholders or a resolution of
directors, or otherwise. No amendment, alteration or repeal of this Agreement
or of any provision hereof shall limit or restrict any right of Indemnitee under
this Agreement in respect of any action taken or omitted by such Indemnitee in
his Corporate Status prior to such amendment, alteration or repeal. To the
extent that a change in the Law, whether by statute or judicial decision,
permits greater indemnification than would be afforded currently under the
Bylaws and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change. No right or remedy herein conferred is intended to be exclusive of
any other right or remedy, and every other right and remedy shall be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other right or remedy.
8
<PAGE>
(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees, or
agents or fiduciaries of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise which such
person serves at the request of the Company, Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, employee or agent
under such policy or policies.
(c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
9. EXCEPTION TO RIGHT OF INDEMNIFICATION. Notwithstanding any other
-------------------------------------
provision of this Agreement, Indemnitee shall not be entitled to indemnification
under this Agreement with respect to any Proceeding brought by Indemnitee, or
any claim therein, unless (i) the bringing of such Proceeding or making of such
claim shall have been approved by the Board of Directors or (ii) such Proceeding
is being brought by the Indemnitee to assert his rights under this Agreement.
10. DURATION OF AGREEMENT. All agreements and obligations of the
---------------------
Company contained herein shall continue during the period Indemnitee is an
officer or director of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Indemnitee shall be subject to any Proceeding (or any
proceeding commenced under Section 7 hereof) by reason of his Corporate Status,
whether or not he is acting or serving in any such capacity at the time any
liability or expense is incurred for which indemnification can be provided under
this Agreement. This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the parties hereto and their respective successors
(including any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business or assets of the
Company), assigns, spouses, heirs, executors and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the Company or any
other enterprise at the Company's request.
9
<PAGE>
11. SECURITY. To the extent requested by Indemnitee and approved by
--------
the Board of Directors, the Company may at any time and from time to time
provide security to Indemnitee for the Company's obligations hereunder through
an irrevocable bank line of credit, funded trust or other collateral. Any such
security, once provided to Indemnitee, may not be revoked or released without
the prior written consent of Indemnitee.
12. ENFORCEMENT.
-----------
(a) The Company expressly confirms and agrees that it has entered into
this Agreement and assumed the obligations imposed on it hereby in order to
induce Indemnitee to serve as an officer or director of the Company, and the
Company acknowledges that Indemnitee is relying upon this Agreement in serving
as an officer or director of the Company.
(b) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral, written and implied, between the
parties hereto with respect to the subject matter hereof.
13. DEFINITIONS. For purposes of this Agreement:
-----------
(a) "Corporate Status" describes the status of a person who is or was
a director, officer, employee or agent or fiduciary of the Company or of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which such person is or was serving at the express written
request of the Company.
(b) "Disinterested Director" means a director of the Company who is
not and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.
(c) "Enterprise" shall mean the Company and any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise of
which Indemnitee is or was serving at the express written request of the Company
as a director, officer, employee, agent or fiduciary.
(d) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, participating, or being or preparing to
be a witness in a Proceeding.
10
<PAGE>
(e) "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five (5) years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party (other than with respect
to matters concerning Indemnitee under this Agreement, or of other indemnitees
under similar indemnification agreements), or (ii) any other party to the
Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement. The Company agrees to pay the reasonable fees of the Independent
Counsel referred to above and to fully indemnify such counsel against any and
all Expenses, claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
(f) "Proceeding" includes any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed
proceeding, whether brought by or in the right of the Company or otherwise and
whether civil, criminal, administrative or investigative, in which Indemnitee
was, is or will be involved as a party or otherwise, by reason of the fact that
Indemnitee is or was a director of the Company, by reason of any action taken by
him or of any inaction on his part while acting as an officer or director of the
Company, or by reason of the fact that he is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; in each case whether or
not he is acting or serving in any such capacity at the time any liability or
expense is incurred for which indemnification can be provided under this
Agreement; including one pending on or before the date of this Agreement; and
excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement
to enforce his rights under this Agreement.
14. SEVERABILITY. If any provision or provisions of this Agreement
------------
shall be held by a court of competent jurisdiction to be invalid, void, illegal
or otherwise unenforceable for any reason whatsoever: (i) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including without limitation, each portion of any section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and shall remain enforceable to the fullest extent
permitted by law; and (ii) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, each portion of any section of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested thereby.
11
<PAGE>
15. MODIFICATION AND WAIVER. No supplement, modification,
-----------------------
termination or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
16. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify the
--------------------
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification covered hereunder. The
failure to so notify the Company shall not relieve the Company of any obligation
which it may have to the Indemnitee under this Agreement or otherwise.
17. NOTICES. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Indemnitee, to the address set forth below Indemnitee
signature hereto.
(b) If to the Company, to:
Adeza Biomedical Corporation
1240 Elko Drive
Sunnyvale, CA 94089
Attention: Chief Executive Officer
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
18. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
----------------------
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
19. HEADINGS. The headings of the paragraphs of this Agreement are
--------
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
12
<PAGE>
20. GOVERNING LAW. The parties agree that this Agreement shall be
-------------
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware without application of the conflict of laws principles
thereof.
21. GENDER. Use of the masculine pronoun shall be deemed to
------
include usage of the feminine pronoun where appropriate.
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement on and as of the day and year first above written.
ADEZA BIOMEDICAL CORPORATION
By:
---------------------------------------
Daniel O. Wilds
President and Chief Executive Officer
, Indemnitee
---------------------------------
(Name)
Address:
(Address)
13
<PAGE>
EXHIBIT 10.2
ADEZA BIOMEDICAL CORPORATION
1995 STOCK OPTION AND STOCK ISSUANCE PLAN
-----------------------------------------
(AS AMENDED AND RESTATED THROUGH MAY 6, 1996)
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 1995 Stock Option and Restricted Stock Plan is adopted to serve as the
successor to the 1992 Key Executive Stock Plan and 1988 Employee Stock Plan.
The Plan is intended to promote the interests of Adeza Biomedical Corporation, a
California corporation, by providing eligible persons with the opportunity to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in the service
of the Corporation.
Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into two (2) separate equity programs:
(i) the Option Grant Program under which eligible persons may, at the
discretion of the Plan Administrator, be granted options to purchase shares of
Common Stock, and
(ii) the Stock Issuance Program under which eligible persons may, at
the discretion of the Plan Administrator, be issued shares of Common Stock
directly, either through the immediate purchase of such shares or as a bonus for
services rendered the Corporation (or any Parent or Subsidiary).
B. The provisions of Articles One and Four shall apply to both the equity
programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.
III. ADMINISTRATION OF THE PLAN
A. The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders. No non-employee Board member shall be eligible
to serve on the Primary Committee if such individual has, during the twelve
(12)-month period immediately preceding the date of his or her appointment to
the Committee or (if shorter) the period commencing with the Section 12(g)
Registration Date and ending with the date of his or her appointment to the
Primary Committee, received an option grant or direct stock issuance under the
Plan or any stock option, stock appreciation, stock bonus
-1-
<PAGE>
or other stock plan of the Corporation (or any Parent or Subsidiary), other than
pursuant to the Corporation's 1996 Directors' Stock Option Plan.
B. Administration of the Discretionary Option Grant and Stock
Issuance Programs with respect to all other persons eligible to participate in
these programs may, at the Board's discretion, be vested in the Primary
Committee or a Secondary Committee, or the Board may retain the power to
administer these programs with respect to all such persons. The members of the
Secondary Committee may be individuals who are Employees eligible to receive
discretionary option grants or direct stock issuances under the plan or any
stock option, stock appreciation, stock bonus or other stock plan of the
Corporation (or any Parent or Subsidiary).
C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions
of any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
D. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Discretionary Option Grant and
Stock Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of such programs and any outstanding options
or stock issuances thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Discretionary Option Grant or Stock Issuance Program under its jurisdiction or
any option or stock issuance thereunder.
E. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any grants or stock issuances under the Plan.
IV. ELIGIBILITY
A. The persons eligible to participate in the Plan are as follows:
(i) Employees, and
(ii) Consultants who provide services to the Corporation (or any
Parent or Subsidiary), provided, however, that after the Section 12(g)
Registration Date, the term Consultant shall thereafter not include directors
who are not compensated for their services or are paid only a director's fee by
the Corporation.
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<PAGE>
B. Each plan administrator shall, within the scope of its administrative
jurisdiction under the plan, have full authority to determine, (i) with respect
to the option grants under the option grant program, which eligible persons are
to receive option grants, the time or times when such option grants are to be
made, the number of shares to be covered by each such grant, the status of the
granted option as either an incentive option or a non-statutory option, the time
or times at which each option is to become exercisable, the vesting schedule (if
any) applicable to the option shares and the maximum term for which the option
is to remain outstanding, and (ii) with respect to stock issuances under the
stock issuance program, which eligible persons are to receive stock issuances,
the time or times when such issuances are to be made, the number of shares to be
issued to each participant, the vesting schedule (if any) applicable to the
issued shares and the consideration to be paid by the participant for such
shares.
C. The Plan Administrator shall have the absolute discretion either to
grant options in accordance with the Option Grant Program or to effect stock
issuances in accordance with the Stock Issuance Program.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed 1,244,083/1/
shares.
B. The number of shares of Common Stock available for issuance under the
Plan shall automatically increase on the first trading day of the 1997, 1998,
1999, 2000 and 2001 calendar years by an amount equal to three and one-half
percent (3.5%) of the shares of Common Stock outstanding on December 31 of the
immediately preceding calendar year; but in no event shall any such annual
increase exceed 500,000 shares.
C. No one person participating in the Plan may receive options and direct
stock issuances for more than 1,000,000 shares of Common Stock per calendar
year, beginning with the 1996 calendar year.
D. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of article
two. All shares issued under the Plan, whether or not those shares are
subsequently repurchased by the Corporation pursuant to its repurchase rights
under the Plan, shall reduce on a share-for-share basis the number of shares of
Common Stock available for subsequent issuance under the plan. In addition,
should the exercise price of an option under the Plan be paid
- -------------------------
/1/ This number is adjusted for the 1-for-2.4 share reverse stock split approved
by the Board on May 6, 1996 and includes the 560,750 share increase approved by
the Board on May 6, 1996, which increase is subject to shareholder approval
within twelve (12) months of that date.
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<PAGE>
with shares of Common Stock, then the number of shares of Common Stock available
for issuance under the Plan shall be reduced by the gross number of shares for
which the option is exercised and not by the net number of shares of Common
Stock issued to the holder of such option.
F. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the maximum number and/or class of securities for which the share
receive is to increase automatically each year, and (iii) the number and/or
class of securities and the exercise price per share in effect under each
outstanding option in order to prevent the dilution or enlargement of benefits
thereunder and (iv) the number and/or class of securities for which any one
person may be granted options and direct stock issuances per calendar year. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive. In no event shall any such adjustments be made in connection with
the conversion of one or more outstanding shares of the Corporation's preferred
stock into shares of Common Stock.
ARTICLE TWO
OPTION GRANT PROGRAM
--------------------
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
--------
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. EXERCISE PRICE.
---------------
1. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due upon exercise of
the option and shall, subject to the provisions of Section I of Article Four and
the documents evidencing the option, be payable in one or more of the forms
specified below:
(i) cash or check made payable to the Corporation,
(ii) shares of Common Stock held for the requisite period necessary to
avoid a charge to the Corporation's earnings for financial reporting purposes
and valued at Fair Market Value on the Exercise Date, or
-4-
<PAGE>
(iii) to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the Optionee
shall concurrently provide irrevocable written instructions (a) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale transaction.
Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at such
----------------------------
time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option. However, no option shall have a term in excess of ten (10) years
measured from the option grant date.
C. EFFECT OF TERMINATION OF SERVICE. The following provisions shall
--------------------------------
govern the exercise of any options held by the Optionee at the time of cessation
of Service or Death:
(i) Should the Optionee who has rendered fewer than forty-eight
continuous months of Service cease to remain in Service for any reason (other
than death or Disability) while this option is outstanding, then such Optionee
shall have a period of three (3) months (commencing with the date of such
cessation of Service) during which to exercise each outstanding option held by
such Optionee.
(ii) Should the Optionee who has rendered forty-eight (48) or more
continuous months of Service cease to remain in Service for any reason (other
than death or Disability) while this option is outstanding, then such Optionee
shall have a period of six (6) months (commencing with the date of such
cessation of Service) during which to exercise each outstanding option held by
such Optionee.
(iii) Should such Service terminate by reason of Disability, then the
Optionee shall have a period of six (6) months following the date of such
cessation of Service during which to exercise each outstanding option held by
such Optionee. However, should such Disability be deemed to constitute
Permanent Disability, then the period during which each outstanding option held
by the Optionee is to remain exercisable may be extended by an additional six
(6) months so that the exercise period shall be the twelve (12)-month period
following the date of the Optionee's cessation of Service by reason of such
Permanent Disability.
(iv) Should the Optionee die while holding one or more outstanding
options, then the personal representative of the Optionee's estate or the person
or persons to whom the option is transferred pursuant to the Optionee's will or
in accordance with the laws of descent and
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<PAGE>
distribution shall have a period of twelve (12) months following the date of the
Optionee's death during which to exercise each such option.
(v) Should the Optionee be terminated from Service for misconduct
(including, but not limited to, any act of dishonesty, willful misconduct, fraud
or embezzlement) or should the Optionee make or attempt to make any unauthorized
use or disclosure of the confidential information or trade secrets of the
Corporation or any parent or subsidiary corporations, then the Optionee shall
have a thirty (30)-day period commencing with the date of cessation of Service
or such unauthorized disclosure or use of confidential or secret information or
attempt thereat during which to exercise each outstanding option.
(vi) Under no circumstances, however, shall any such option be
exercisable after the specified expiration of the option term.
(vii) During the applicable post-Service exercise period, the option
may not be exercised in the aggregate for more than the number of vested shares
for which the option is exercisable on the date of the Optionee's cessation of
Service. Upon the expiration of the applicable exercise period or (if earlier)
upon the expiration of the option term, the option shall terminate and cease to
be outstanding for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the Optionee's cessation
of Service, terminate and cease to be outstanding to the extent it is not
exercisable for vested shares on the date of such cessation of Service.
(viii) In the event of an Involuntary Termination following a
Corporate Transaction, the provisions of Section III of this Article Two shall
govern the period for which the outstanding options are to remain exercisable
following the Optionee's cessation of service and shall supersede any provisions
to the contrary in this section.
D. SHAREHOLDER RIGHTS. The holder of an option shall have no shareholder
------------------
rights with respect to the shares subject to the option until such person shall
have exercised the option, paid the exercise price and become a holder of record
of the purchased shares.
E. UNVESTED SHARES. The Plan Administrator shall have the discretion to
---------------
grant options which are exercisable for unvested shares of Common Stock. Should
the Optionee cease Service while holding such unvested shares, the Corporation
shall have the right to repurchase, at the exercise price paid per share, all or
(at the discretion of the Corporation and with the consent of the Optionee) any
of those unvested shares. The terms upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right.
F. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
----------------------------------
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death. However, a
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<PAGE>
Non-Statutory Option may be assigned in accordance with the terms of a Qualified
Domestic Relations Order. The assigned option may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
such Qualified Domestic Relations Order. The terms applicable to the assigned
option (or portion thereof) shall be the same as those in effect for the option
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Plan Administrator may deem appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
Articles One, Two and Four shall be applicable to Incentive Options. Options
which are specifically designated as Non-Statutory Options shall not be subject
to the terms of this Section II.
A. ELIGIBILITY. Incentive Options may only be granted to Employees.
-----------
B. EXERCISE PRICE. The exercise price per share shall not be less than
--------------
one hundred percent (100%) of the Fair Market value per share of Common Stock on
the option grant date.
C. DOLLAR LIMITATION. The aggregate Fair Market Value of the shares of
-----------------
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one (1) calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent
the Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% SHAREHOLDER. If any Employee to whom an Incentive Option is
---------------
granted is a 10% Shareholder, then the option term shall not exceed five (5)
years measured from the option grant date.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each outstanding option
shall automatically accelerate so that each such option shall, immediately prior
to the effective date of the Corporate Transaction, become fully exercisable for
all of the shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
However, an outstanding option shall not so accelerate if and to the extent: (i)
such option is, in connection with the Corporate Transaction, either to be
assumed by the successor corporation (or parent thereof) or to be replaced with
a comparable option to purchase shares of the capital stock of the successor
corporation (or parent thereof), (ii) such option is to be replaced with a cash
incentive program of the successor corporation which preserves the spread
existing on the unvested option shares at the time of the Corporate Transaction
and provides for
-7-
<PAGE>
subsequent payout in accordance with the same vesting schedule applicable to
such option or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant.
The determination of option comparability under clause (i) above shall be made
by the Plan Administrator, and its determination shall be final, binding and
conclusive.
B. All outstanding repurchase rights shall also terminate automatically,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent: (i) those repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate Transaction,
all outstanding options shall terminate and cease to be outstanding, except to
the extend assumed by the successor corporation (or parent thereof).
D. Each option which is assumed in connection with a Corporate Transaction
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply to the number and class of securities which would have been issuable to
the Optionee in consummation of such Corporate Transaction had the option been
exercised immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to (i) the number and class of securities
available for issuance under the plan on both an aggregate and per Optionee
basis following the consummation of such Corporate Transaction and (ii) the
exercise price payable per share under each outstanding option, provided the
--------
aggregate exercise price payable for such securities shall remain the same.
E. Any options which are assumed or replaced in the Corporate Transaction
and do not otherwise accelerate at that time shall automatically accelerate (and
any of the Corporation's outstanding repurchase rights which do not otherwise
terminate at the time of the Corporate Transaction shall automatically terminate
and the shares of Common Stock subject to those terminate rights shall
immediately vest in full) in the event the Optionee's Service should
subsequently terminate by reason of an Involuntary Termination within eighteen
(18) months following the effective date of such Corporate Transaction. Any
options so accelerated shall remain exercisable for fully-vested shares until
the earlier of (i) the expiration of the option term or (ii) the expiration of
-------
the one (1)-year period measured from the effective date of the Involuntary
Termination.
F. The Plan Administrator shall have the discretion, exercisable either at
the time the option is granted or at any time while the option remains
outstanding, to (i) provide for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with the immediate vesting of the shares of Common Stock
subject to these rights) upon the occurrence of a Change in Control or (ii)
condition any such option acceleration (and the termination of any outstanding
repurchase rights) upon the subsequent
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<PAGE>
Involuntary Termination of the Optionee's Service within a specified period
following the effective date of such Change in Control. Any options accelerated
in connection with a Change in Control shall remain fully exercisable until the
expiration or sooner termination of the option term.
G. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.
H. The grant of options under the Option Grant Program shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time and
from time to time, with the consent of the affected option holders, the
cancellation, of any or all outstanding options under the Option Grant Program
and to grant in substitution therefor new options covering the same or different
number of shares of Common Stock but with an exercise price per share based on
the Fair Market Value per share of Common Stock on the new option grant date.
V. ADDITIONAL AUTHORITY
The Plan Administrator shall have the discretion, exercisable either at the
time an option is granted or at any time while the option remains outstanding,
to:
(i) extend the period of time for which the option is to remain
exercisable following the Optionee's cessation of Service or death from the
limited period otherwise in effect for that option to such greater period of
time as the Plan Administrator shall deem appropriate, but in no event beyond
the expiration of the option term, and/or
(ii) permit the option to be exercised, during the applicable post-
Service exercise period, not only with respect to the number of vested shares of
Common Stock for which such option is exercisable at the time of the Optionee's
cessation of Service or death but also with respect to one or more additional
installments in which the Optionee would have vested under the option had the
Optionee continued in Service.
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<PAGE>
ARTICLE THREE
STOCK ISSUANCE PROGRAM
----------------------
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below.
A. PURCHASE PRICE.
--------------
1. The purchase price per share shall be fixed by the Plan
administrator but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the stock issuance date.
2. Subject to the provisions of Section I of Article Four, shares of
Common Stock may be issued under the Stock Issuance Program for one or both of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any Parent or
Subsidiary).
B. VESTING PROVISIONS.
------------------
1. Shares of Common Stock issued under the Stock Issuance Program
may, in the discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the
Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program, namely:
(i) the Service period to be completed by the Participant or the
performance objectives to be attained,
(ii) the number of installments in which the shares are to vest,
(iii) the interval or intervals (if any) which are to lapse between
installments, and
(iv) the effect which death, Disability or other event designated by
the Plan Administrator is to have upon the vesting schedule, shall be determined
by the Plan Administrator and incorporated into the Stock Issuance Agreement.
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<PAGE>
2. Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
3. The Participant shall have full shareholder rights with respect to
any shares of Common Stock issued to the Participant under the Stock Issuance
Program, whether or not the Participant's interest in those shares is vested.
Accordingly, the Participant shall have the right to vote such shares and to
receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock issued under the Stock Issuance
Program or should the performance objectives not be attained with respect to one
or more such unvested shares of Common Stock, then those shares shall be
immediately surrendered to the Corporation for cancellation, and the Participant
shall have no further shareholder rights with respect to those shares. To the
extent the surrendered shares were previously issued to the Participant for
consideration paid in cash or cash equivalent (including the Participant's
purchase-money indebtedness), the Corporation shall repay to the Participant the
cash consideration paid for the surrendered shares and shall cancel the unpaid
principal balance of any outstanding purchase-money note of the Participant
attributable to such surrendered shares.
5. The Plan Administrator may in its discretion waive the surrender
and cancellation of one or more unvested shares of Common Stock (or other assets
attributable thereto) which would otherwise occur upon the non-completion of the
vesting schedule applicable to such shares. Such waiver shall result in the
immediate vesting of the Participant's interest in the shares of Common Stock as
to which the waiver applies. Such waiver may be effected at any time, whether
before or after the Participant's cessation of Service or the attainment or non-
attainment of the applicable performance objectives.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. All of the outstanding repurchase rights under the Stock Issuance
Program shall terminate automatically, and all the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
of any Corporate Transaction, except to the extent (i) those repurchase rights
are assigned to the successor corporation (or parent thereof) in connection with
such Corporate Transaction or (ii) such accelerated vesting is precluded by
other limitations imposed in the Stock Issuance Agreement.
B. Any repurchase rights that are assigned in the Corporate Transaction
shall automatically terminate, and all the shares of Common Stock subject to
those terminated rights
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<PAGE>
shall immediately vest in full, in the event the Participant's Service should
subsequently terminate by reason of an Involuntary Termination within eighteen
(18) months following the effective date of such Corporate Transaction.
C. The Plan Administrator shall have the discretion, exercisable either at
the time the unvested shares are issued or at any time while the Corporation's
repurchase right remains outstanding, to (i) provide for the automatic
termination of one or more outstanding repurchase rights and the immediate
vesting of the shares of Common Stock subject to those rights upon the
occurrence of a Change in Control or (ii) condition any such accelerated vesting
upon the subsequent Involuntary Termination of the Participant's Service within
a specified period following the effective date of such Change in Control.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Corporation until the Participant's interest in such shares vests
or may be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.
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<PAGE>
ARTICLE FOUR
MISCELLANEOUS
-------------
I. FINANCING
The Plan Administrator may permit any Optionee or Participant to pay the
option exercise price or the purchase price for shares issued to such person
under the Plan by delivering a promissory note payable in one or more
installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion. Promissory notes may be authorized with or without
security or collateral. However, any promissory notes delivered by a consultant
must be secured by property other than the purchased shares of Common Stock. In
all events, the maximum credit available to the Optionee or Participant may not
exceed the sum of (i) the aggregate option exercise price or purchase price
---
payable for the purchased shares plus (ii) any Federal, state and local income
and employment tax liability incurred by the Optionee or the Participant in
connection with the option exercise or share purchase.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options or stock appreciation rights or upon the issuance
or vesting of such shares under the Plan shall be subject to the satisfaction of
all applicable Federal, state and local income and employment tax withholding
requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan with the right to use shares of Common Stock in satisfaction of all or part
of the Taxes incurred by such holders in connection with the exercise of their
options or the vesting of their shares. Such right may be provided to any such
holder in either or both of the following formats:
(i) Stock Withholding. The election to have the Corporation withhold,
-----------------
from the shares of Common Stock otherwise issuable upon the exercise of such
Non-Statutory Option or the vesting of such shares, a portion of those shares
with an aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
(ii) Stock Delivery. The election to deliver to the Corporation, at
--------------
the time the Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
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<PAGE>
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan shall become effective when adopted by the board, but no
option granted under the Plan may be exercised, and no shares shall be issued
under the Plan, until the Plan is approved by the Corporation's shareholders.
If such shareholder approval is not obtained within twelve (12) months after the
date of the Board's adoption of the Plan, then all options previously granted
under the Plan shall terminate and cease to be outstanding, and no further
options shall be granted and no shares shall be issued under the Plan. Subject
to such limitation, the Plan Administrator may grant options and issue shares
under the Plan at any time after the effective date of the plan and before the
date fixed herein for termination of the Plan.
B. The Plan shall serve as the successor to the Predecessor Plans, and no
further option grants shall be made under the Predecessor Plans after the Plan
Effective Date.
C. The Plan shall terminate upon the earliest of (i) the expiration of the
--------
ten (10)-year period measured from the date the Plan is adopted by the board,
(ii) the date on which all shares available for issuance under the Plan shall
have been issued pursuant to the exercise of options or the issuance of shares
(whether vested or unvested) under the Plan or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. Upon such Plan
termination, all options and unvested stock issuances outstanding under the Plan
shall continue to have full force and effect in accordance with the provisions
of the documents evidencing such options or issuances.
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
options or unvested stock issuances at the time outstanding under the Plan,
unless the Optionee or the Participant consents to such amendment or
modification. In addition, the Board shall not, without the approval of the
Corporation's shareholders, (i) increase the maximum number of shares issuable
under the Plan or the maximum number of shares for which any person may be
granted options and direct stock issuances, per calendar year, except for
permissible adjustments in the event of certain changes in the Corporation's
capitalization, (ii) materially modify the eligibility requirements for Plan
participation or (iii) materially increase the benefits accruing to Plan
participants.
B. Options to purchase shares of Common Stock may be granted under the
Plan and shares of Common Stock may be issued under the Plan that are in each
instance in excess of the number of shares then available for issuance under the
Plan, provided any excess shares actually issued under the Plan are held in
escrow until there is obtained shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock available for issuance under the
Plan. If such shareholder approval is not obtained within twelve (12) months
after the date the first such excess issuances are made, then (i) any
unexercised options granted on the basis of such excess shares shall terminate
and cease to be outstanding and (ii) the Corporation shall
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<PAGE>
promptly refund to the Optionees and the Participants the exercise or purchase
price paid for any excess shares issued under the Plan and held in escrow,
together with interest (at the applicable Short-Term Federal Rate) for the
period the shares were held in escrow, and such shares shall thereupon be
automatically cancelled and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.
VI. WITHHOLDING
The Corporation's obligation to deliver shares of Common Stock upon the
exercise of any options or upon the issuance or vesting of any shares issued
under the Plan shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding requirements.
VII. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any options under the
plan and the issuance of any shares of Common Stock (i) upon the exercise of any
option or (ii) under the Stock Issuance Program shall be subject to the
Corporation's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted under it and
the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of Federal and State securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
VIII. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the Participant any
right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
Parent or Subsidiary employing or retaining such person) or of the Optionee or
the Participant, which rights are hereby expressly reserved by each, to
terminate such person's Service at any time for any reason, with or without
cause.
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<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
-----
B. CHANGE IN CONTROL shall mean a change in ownership or control of the
-----------------
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders which the Board does not recommend such
stockholder to accept, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
----
D. COMMON STOCK shall mean the Corporation's common stock.
------------
E. CORPORATE TRANSACTION shall mean either of the following shareholder-
---------------------
approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of the
Corporation.
F. CORPORATION shall mean Adeza Biomedical Corporation, a California
-----------
corporation.
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<PAGE>
G. DISABILITY shall mean the inability of the Optionee or the Participant
----------
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment and shall be determined by the Plan
Administrator on the basis of such medical evidence as the Plan Administrator
deems warranted under the circumstances. Disability shall be deemed to
constitute PERMANENT DISABILITY in the event that such Disability is expected to
result in death or has lasted or can be expected to last for a continuous period
of twelve (12) months or more.
H. DOMESTIC RELATIONS ORDER shall mean any judgment, decree or order
------------------------
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of the Optionee.
I. EMPLOYEE shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
J. EXERCISE DATE shall mean the date on which the Corporation shall have
-------------
received written notice of the option exercise.
K. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per share
of Common Stock on the date in question, as such price is reported by the
National Association of Securities Dealers on the Nasdaq National Market or any
successor system. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the Stock Exchange determined by the
Plan Administrator to be the primary market for the Common Stock, as such price
is officially quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any Stock
Exchange nor traded on the Nasdaq National Market, then the Fair Market Value
shall be determined by the Plan Administrator after taking into account such
factors as the Plan Administrator shall deem appropriate.
L. INCENTIVE OPTION shall mean an option which satisfies the requirements
----------------
of Code Section 422.
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<PAGE>
M. INVOLUNTARY TERMINATION shall mean the termination of the Service of
-----------------------
any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a change in
his or her position with the Corporation which material reduces his or her level
responsibility, (B) a reduction in his or her level of compensation (including
base salary, fringe benefits and any non-discretionary and objective-standard
incentive payment or bonus award) by more than fifteen percent (15%) or (C) a
relocation of such individual's place of employment by more than fifty (50)
miles, provided and only if such change, reduction or relocation is effected by
the Corporation without the individual's consent.
N. MISCONDUCT shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by the Optionee or Participant, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional misconduct by such
person adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or discharge
or any Optionee, Participant or other person in the Service of the Corporation
(or any Parent or Subsidiary).
O. 1934 ACT shall mean the Securities Exchange act of 1934, as amended.
--------
P. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
Q. OPTION GRANT PROGRAM shall mean the option grant program in effect
--------------------
under the Plan.
R. OPTIONEE shall mean any person to whom an option is granted under the
--------
Option Grant Program.
S. PARENT shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other Corporations
in such chain.
T. PARTICIPANT shall mean any person who is issued shares of Common Stock
-----------
under the Stock Issuance Program.
-18-
<PAGE>
U. PLAN shall mean the Corporation's 1995 Stock Option/Stock Issuance
----
Plan, as set forth in this document.
V. PLAN ADMINISTRATOR shall mean the particular entity, whether the
------------------
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Option Grant and Stock Issuance Programs with respect to one or
more classes of eligible persons, to the extent such entity is carrying out its
administrative functions under those programs with respect to the persons under
its jurisdiction.
W. PREDECESSOR PLANS shall mean the Corporation's 1992 Key Executive Stock
-----------------
Plan and 1988 Employee Stock Plan.
X. PRIMARY COMMITTEE shall mean the committee of two (2) or more non-
-----------------
employee Board members appointed by the board to administer the plan with
respect to Section 16 Insiders.
Y. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a Domestic Relations
----------------------------------
Order which substantially complies with the requirements of Code Section 414(p).
the Plan Administrator shall have the sole discretion to determine whether a
Domestic Relations order is a Qualified Domestic Relations Order.
Z. SECONDARY COMMITTEE shall mean a committee of two (2) or more Board
-------------------
members appointed by the Board to administer the plan with respect to eligible
persons other than Section 16 Insiders.
AA. SECTION 16 INSIDER shall mean an officer or director of the
------------------
Corporation subject to the short-swing profit liability provisions of Section 16
of the 1934 Act.
AB. SECTION 12(G) REGISTRATION DATE shall mean the first date on which the
-------------------------------
Common Stock is registered under Section 12(g) of the 1934 Act.
AC SERVICE shall mean the provision of services to the Corporation (or any
-------
Parent or Subsidiary) by a person in the capacity of an Employee or a
Consultant.
AD. STOCK EXCHANGE shall mean either the American Stock Exchange or the
--------------
New York Stock Exchange.
AE. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by the
------------------------
Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.
AF. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in effect
----------------------
under the Plan.
-19-
<PAGE>
AG. SUBSIDIARY shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
AH. TAKE-OVER PRICE shall mean the greater of (i) the Fair Market Value
---------------
per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.
AI. TAXES shall mean the Federal, state and local income and employment
-----
tax liabilities incurred by the holder of Non-Statutory Options or unvested
shares of Common Stock in connection with the exercise of such holder's options
or the vesting of his or her shares.
AJ. 10% SHAREHOLDER shall mean the owner of stock (as determined under
---------------
Code Section 424(d)) possessing ten percent (10%) or more of the total combined
voting power of all classes of stock of the Corporation (or any Parent or
Subsidiary).
-20-
<PAGE>
ADEZA BIOMEDICAL CORPORATION
STOCK OPTION AGREEMENT
------------ ---------
RECITALS
- --------
A. The Board has adopted the Plan for the purpose of retaining the services
of selected Employees, non-employee members of the Board or the board of
directors of any Parent or Subsidiary and consultants who provide services to
the Corporation (or any Parent or Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a Parent
or Subsidiary), and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Corporation's grant
of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning assigned
to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as of the
---------------
Grant Date, an option to purchase up to the number of Option Shares specified in
the Grant Notice. The Option Shares shall be purchasable from time to time
during the option term specified in Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a term of ten (10) years measured
-----------
from the Grant Date and shall accordingly expire at the close of business on the
Expiration Date, unless sooner terminated in accordance with Paragraph 5, 6 or
17.
3. LIMITED TRANSFERABILITY. This option shall be neither transferable nor
-----------------------
assignable by Optionee other than by will or by the laws of descent and
distribution following Optionee's death and may be exercised, during Optionee's
lifetime, only by Optionee. However, if this option is designated a Non-
Statutory Option in the Grant Notice, then this option may also be assigned in
accordance with the terms of a Qualified Domestic Relations Order. If so
assigned, the assigned option shall be exercisable only by the person or persons
who acquire a proprietary interest in the option pursuant to such Qualified
Domestic Relations Order. The terms applicable to the assigned option (or
portion thereof) shall be the same as those in effect for this option
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Plan Administrator may deem appropriate.
4. DATES OF EXERCISE. This option shall become exercisable for the Option
----------------
Shares in one or more installments as specified in the Grant Notice. As the
option becomes exercisable for such installments, those installments shall
accumulate and the option shall
<PAGE>
remain exercisable for the accumulated instalments until the Expiration Date or
sooner termination of the option term under Paragraph 5, 6 or 17. Solely for
purposes of this Paragraph 4, the option shall continue to become exercisable
for the first 9O days of a leave of absence (or, if shorter, the period for
which the leave has been authorized by statute or by the Plan Administrator in
writing) but from and after the 91st day (or, if earlier, the day the authorized
leave ends) shall not become exercisable for any additional Option Shares until
Optionee returns to active Service.
5. CESSATION OF SERVICE. The option term specified in Paragraph 2 shall
--------------------
terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(a) Should Optionee cease to remain in Service for any reason (other
than death or Disability) while this option is outstanding, but prior to
rendering forty-eight (48) continuous months of Service, then Optionee shall
have a period of three (3) months (commencing with the date of cessation of
Service) during which to exercise this option, but in no event shall this option
be exercisable at any time after the Expiration Date.
(b) Should Optionee cease to remain in Service for any reason (other
than death or Disability) while this option is outstanding, but after rendering
forty-eight (48) or more continuous months of Service, then Optionee shall have
a period of six (6) months (commencing with the date of cessation of Service)
during which to exercise this option, but in no event shall this option be
exercisable at any time after the Expiration Date.
(c) Should Optionee die while this option is outstanding, then the
personal representative of Optionee's estate or the person or persons to whom
the option is transferred pursuant to Optionee's will or in accordance with the
laws of descent and distribution shall have the right to exercise this option.
Such right shall lapse and this option shall cease to be outstanding upon the
earlier of (i) the expiration of the twelve (12)-month period measured from the
- -------
date of Optionee's death or (ii) the Expiration Date.
(d) Should Optionee cease Service by reason of Disability while this
option is outstanding, then Optionee shall have a period of six (6) months
(commencing with the date of such cessation of Service) during which to exercise
this option. In no event shall this option be exercisable at any time after the
Expiration Date.
Note: Exercise of this option on a date later than three (3) months
----
following cessation of Service due to Disability will result in loss of
favorable Incentive Option treatment, unless such Disability constitutes
------
Permanent Disability. In the event that Incentive Option treatment is
not available, this option will be taxed as a Non-Statutory Option upon
exercise.
<PAGE>
(e) Should Optionee's Service be terminated due to misconduct
(including, but not limited to, any act of dishonesty, willful misconduct, fraud
or embezzlement) or should Optionee make or attempt to make any unauthorized use
or disclosure of the confidential information or trade secrets of the
Corporation or any parent or subsidiary corporations, then the period for
exercising this Option shall be reduced to a thirty (3O)-day period commencing
with the date of cessation of Service or such unauthorized disclosure or use of
confidential or secret information or attempt thereat, but in no event shall
this option be exercisable at any time after tile Expiration Date.
(f) During the limited period of post-Service exercisability, this
option may not be exercised in the aggregate for more than the number of vested
Option Shares for which the option is exercisable at the time of Optionee's
cessation of Service. Upon the expiration of such limited exercise period or (if
earlier) upon the Expiration Date, this option shall terminate and cease to be
outstanding for any vested Option Shares for which the option has not been
exercised. To the extent Optionee is not vested in the Option Shares at the time
of Optionee's cessation of Service, this option shall immediately terminate and
cease to be outstanding with respect to those shares.
6. SPECIAL TERMINATION OF OPTION.
-----------------------------
(a) In the event of a Corporate Transaction, this option shall terminate
and cease to be outstanding, except to the extent assumed by the successor
corporation or parent thereof in connection with such Corporate Transaction.
(b) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
--------
(c) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the Common
---------------------------
Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
<PAGE>
8. SHAREHOLDER RIGHTS. The holder of this option shall not have any
------------------
shareholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. MANNER OF EXERCISING OPTION.
---------------------------
(a) In order to exercise this option with respect to all or any part of
the Option Shares for which this option is at the time exercisable, Optionee (or
any other person or persons exercising the option) must take the following
actions:
(i) Execute and deliver to the Corporation a Purchase Agreement
for the Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased shares
in one or more of the following forms:
(A) cash or check made payable to the Corporation; or
(B) a promissory note payable to the Corporation, but only to
the extent approved by the Plan Administrator in accordance with Paragraph 14.
Should the Common Stock be registered under Section 12(g) of the 1934
Act at the time the option is exercised, then the Exercise Price may also be
paid as follows:
(C) in shares of Common Stock held by Optionee (or any other
person or persons exercising the option) for the requisite period necessary to
avoid a charge to the Corporation's earnings for financial reporting purposes
and valued at Fair Market Value on the Exercise Date; or
(D) to the extent the option is exercised for vested Option
Shares, through a special sale and remittance procedure pursuant to which
Optionee (or any other person or persons exercising the option) shall
concurrently provide irrevocable written instructions (a) to a
Corporation-designed at brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise
<PAGE>
and (b) to the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale.
Except to the extent the sale and remittance procedure is utilized in
connection with the option exercise, payment of the Exercise Price must
accompany the Purchase Agreement delivered to the Corporation in connection with
the option exercise.
(iii) Furnish to the Corporation appropriate documentation that
the person or persons exercising the option (if other than Optionee) have the
right to exercise this option.
(iv) Execute and deliver to the Corporation such written
representations as may be requested by the Corporation in order for it to comply
with the applicable requirements of Federal and state securities laws.
(v) Make appropriate arrangements with the Corporation (or Parent
or Subsidiary employing or retaining Optionee) for the satisfaction of all
Federal, state and local income and employment tax withholding requirements
applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the Corporation shall
issue to or on behalf of Optionee (or any other person or persons exercising
this option) a certificate for the purchased Option Shares, with the appropriate
legends affixed thereto.
(c) In no event may this option be exercised for any fractional shares.
10. REPURCHASE RIGHTS. ALL OPTION SHARES ACQUIRED UPON
-----------------
THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF
THE CORPORATION AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN
ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE AGREEMENT.
11. COMPLIANCE WITH LAWS AND REGULATIONS.
------------------------------------
(a) The exercise of this option and the issuance of the Option Shares
upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful
<PAGE>
issuance and sale of any Common Stock pursuant to this option shall relieve the
Corporation of any liability with respect to tile non-issuance or sale of the
Common Stock as to which such approval shall not have been obtained. The
Corporation, however, shall use its best efforts to obtain all such approvals.
12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in
----------------------
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.
13. NOTICES. Any notice required to be given or delivered to tile
-------
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
tile address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
14. FINANCING. The Plan Administrator may, in its absolute discretion and
---------
without any obligation to do so, permit Optionee to pay the Exercise Price for
the purchased Option Shares by delivering a promissory note. The terms of any
such promissory note (including the interest rate, tile requirements for
collateral and the terms of repayment) shall be established by the Plan
Administrator in its sole discretion./1/
15. CONSTRUCTION. This Agreement and the option evidenced hereby are made
------------
and granted pursuant to the Plan and are in all respects limited by and subject
to the terms of the Plan. All decisions of the Plan Administrator with respect
to any question or issue arising under the Plan or this Agreement shall be
conclusive and binding on all persons having an interest in this option.
16. GOVERNING LAW. The interpretation, performance and enforcement of this
-------------
Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
17. Shareholder Approval.
--------------------
(a) The grant of this option is subject to approval of the Plan by the
Corporation's shareholders within twelve (12) months after the adoption of the
Plan by the Board. Notwithstanding any provision of this Agreement to the
------------------------------------------------------
contrary, this option may not be exercised in whole or in part until such
- --------------------------------------------------------- ---------------
shareholder approval is obtained. In the
- --------------------------------
- ----------------------
/1/ Authorization of payment of the Exercise Price by a promissory note under
such provisions may, under currency proposed Treasury Regulations, result in the
loss of incentive stock option treatment under the Federal tax laws.
<PAGE>
event that such shareholder approval is not obtained, then this option shall
termin ate in its entirety and Optionee shall have no further rights to acquire
any Option Shares hereunder.
(b) If the Option Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without shareholder
approval be issued under the Plan, then this option shall be void with respect
to such excess shares, unless shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under the Plan is
obtained in accordance with the provisions of the Plan.
18. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the event this
--------------------------------------------------
option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
(a) This option shall cease to qualify for favorable tax treatment as an
Incentive Option if (and to the extent) this option is exercised for one or more
Option Shares: (i) more than three (3) months after the date Optionee ceases to
be an Employee for any reason other than death or Permanent Disability or (ii)
more than twelve (12) months after the date Optionee ceases to be an Employee by
reason of Permanent Disability.
(b) This option shall not become exercisable in the calendar year in
which granted if (and to the extent) the aggregate Fair Market Value (determined
at the Grant Date) of the Common Stock for which this option would otherwise
first become exercisable in such calendar year would, when added to the
aggregate value (determined as of the respective date or dates of grant) of the
Common Stock and any other securities for which one or more other Incentive
Options granted to Optionee prior to the Grant Date (whether under the Plan or
any other option plan of the Corporation or any Parent or Subsidiary) first
become exercisable during the same calendar year, exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. To the extent the exercisability of this
option is deferred by reason of the foregoing limitation, the deferred portion
shall become exercisable in the first calendar year or years thereafter in which
the One Hundred Thousand Dollar ($100,000) limitation of this Paragraph 18(b)
would not be contravened, but such deferral shall in all events end immediately
prior to the effective date of a Corporate Transaction in which this option is
not to be assumed, whereupon the option shall become immediately exercisable as
a Non-Statutory Option for the deferred portion of the Option Shares.
(c) Should Optionee hold, in addition to this option, one or more other
options to purchase Common Stock which become exercisable for the first time in
the same calendar year as this option, then the foregoing limitations on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Stock Option Agreement.
---------
B. BOARD shall mean the Corporation's Board of Directors.
-----
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
----
D. COMMON StOCK shall mean the Corporation's common stock.
------------
E. CORPORATE TRANSACTION shall mean either of the following shareholder-
---------------------
approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of the
Corporation.
F. CORPORATION shall mean Adeza Biomedical Corporation, a California
-----------
corporation.
G. DISABILITY shall mean the inability of Optionee to engage in any
----------
substantial gainful activity by reason of any medically determinable physical or
mental impairment and shall be determined by the Plan Administrator on the basis
of such medical evidence as the Plan Administrator deems warranted under the
circumstances. Disability shall be deemed to constitute PERMANENT DISABILITY in
the event that such Disability is expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or more.
H. DOMESTIC RELATIONS ORDER shall mean any judgment, decree or order
------------------------
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of the Optionee.
<PAGE>
I. EMPLOYEE shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
J. EXERCISE DATE shall mean the date on which the option shall have been
-------------
exercised in accordance with Paragraph 9 of the Agreement.
K. EXERCISE PRICE shall mean the exercise price per share as specified
--------------
in the Grant Notice.
L. EXPIRATION DATE shall mean the date on which the option expires as
---------------
specified in the Grant Notice.
M. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per share
of Common Stock on the date in question, as the price is reported by the
National Association of Securities Dealers on the Nasdaq National Market or any
successor system. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the Stock Exchange determined by the
Plan Administrator to be the primary market for the Common Stock, as such price
is officially quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any Stock
Exchange nor traded on the Nasdaq National Market, then the Fair Market Value
shall be determined by the Plan Administrator after taking into account such
factors as the Plan Administrator shall deem appropriate.
N. GRANT DATE shall mean the date of grant of the option as specified in
----------
the Grant Notice.
<PAGE>
O. GRANT NOTICE shall mean the Notice of Grant of Stock Option
------------
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
P. INCENTIVE OPTION shall mean an option which satisfies the requirements
----------------
of Code Section 422.
Q. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
--------
R. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
S. OPTION SHARES shall mean the number of shares of Common Stock subject
-------------
to the option.
T. OPTIONEE shall mean the person to whom the option is granted as
--------
specified in the Grant Notice.
U. PARENT shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. PLAN shall mean the Corporation's 1995 Stock Option and Restricted
----
Stock Plan.
W. PLAN ADMINISTRATOR shall mean either the Board or a committee of Board
------------------
members, to the extent the committee is at the time responsible for the
administration of the Plan.
X. PURCHASE AGEEMENT shall mean the stock purchase agreement in
-----------------
substantially the form of Exhibit B to the Grant Notice.
Y. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a Domestic Relations
----------------------------------
Order which substantially complies with the requirements of Code Section 414(p).
The Plan Administrator shall have the sole discretion to determine whether a
Domestic Relations Order is a Qualified Domestic Relations Order.
Z. SERVICE shall mean the provision of services to the Corporation (or any
-------
Parent or Subsidiary) by a person in the capacity of an Employee, a non-employee
member of the board of directors or a consultant. For all purposes under this
Agreement, except as set forth in Paragraph 4, a leave of absence which has been
authorized by statue or by the Plan Administrator in writing shall not constitue
a cessation of Optionee's Service, provided
<PAGE>
Optionee recommences Service on or prior to the thirtieth day following the
authorized expiration date of such leave.
AA. STOCK EXCHANGE shall mean the American Stock Exchange or the
--------------
New York Stock Exchange.
AB. SUBSIDIARY shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
<PAGE>
EXHIBIT 10.3
ADEZA BIOMEDICAL CORPORATION
1996 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1996 Employee Stock Purchase
Plan of Adeza Biomedical Corporation.
1. Purpose. The purpose of the Plan is to provide employees of the
-------
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company. It is the intention of the Company to have the Plan
qualify as an "Employee Stock Purchase Plan" under Section 423 of the Internal
Revenue Code of 1986, as amended. The provisions of the Plan shall,
accordingly, be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.
2. Definitions.
-----------
(a) "Board" shall mean the Board of Directors of the Company.
-----
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(c) "Common Stock" shall mean the Common Stock of the Company.
------------
(d) "Company" shall mean Adeza Biomedical Corporation, a California
-------
corporation.
(e) "Compensation" shall mean all regular straight time gross
------------
earnings, overtime and shift premium and shall not include payments for
incentive compensation, incentive payments, bonuses, commissions and other
compensation.
(f) "Continuous Status as an Employee" shall mean the absence of any
--------------------------------
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Company, provided that such leave is for a period of
not more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.
(g) "Contributions" shall mean all amounts credited to the account of
-------------
a participant pursuant to the Plan.
(h) "Designated Subsidiaries" shall mean the Subsidiaries which have
-----------------------
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(i) "Employee" shall mean any person, including an Officer, who is
--------
customarily employed for at least twenty (20) hours per week and more than five
(5) months in a calendar year by the Company or one of its Designated
Subsidiaries.
<PAGE>
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
(k) "Purchase Date" shall mean the last day of each Purchase Period of
-------------
the Plan.
(l) "Offering Date" shall mean the first business day of each Offering
-------------
Period of the Plan.
(m) "Offering Period" shall mean a period of twelve (12) months
---------------
commencing on January 1 and July 1 of each year, except for the first Offering
Period as set forth in Section 4(a).
(n) "Officer" shall mean 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.
(o) "Plan" shall mean this Employee Stock Purchase Plan.
----
(p) "Purchase Period" shall mean a period of six (6) months within an
---------------
Offering Period, except for the first Purchase Period as set forth in Section
4(b).
(q) "Subsidiary" shall mean a corporation, domestic or foreign, of
----------
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
3. Eligibility.
------------
(a) Any person who is an Employee as of the Offering Date of a given
Offering Period shall be eligible to participate in such Offering Period under
the Plan, subject to the requirements of Section 5(a) and the limitations
imposed by Section 423(b) of the Code.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own stock and/or
hold outstanding options to purchase stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Company or of any subsidiary of the Company, or (ii) if such option would permit
his or her rights to purchase stock under all employee stock purchase plans
(described in Section 423 of the Code) of the Company and its Subsidiaries to
accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of fair
market value of such stock (determined at the time such option is granted) for
each calendar year in which such option is outstanding at any time.
4. Offering Periods and Purchase Periods.
-------------------------------------
(a) Offering Periods. The Plan shall be implemented by a series of
----------------
Offering Periods of twelve (12) months duration, with new Offering Periods
commencing on or about January 1 and July 1 of each year (or at such other time
or times as may be determined by the
-2-
<PAGE>
Board of Directors). The first Offering Period shall commence on the beginning
of the effective date of the Registration Statement on Form S-1 for the initial
public offering of the Company's Common Stock (the "IPO Date") and continue
until June 30, 1997. The Plan shall continue until terminated in accordance with
Section 19 hereof. The Board of Directors of the Company shall have the power to
change the duration and/or the frequency of Offering Periods with respect to
future offerings without shareholder approval if such change is announced at
least fifteen (15) days prior to the scheduled beginning of the first Offering
Period to be affected. Eligible employees may not participate in more than one
Offering Period at a time.
(b) Purchase Periods. Each Offering Period shall consist of two (2)
----------------
consecutive purchase periods of six (6) months duration. The last day of each
Purchase Period shall be the "Purchase Date" for such Purchase Period. A
Purchase Period commencing on January 1 shall end on the next June 30. A
Purchase Period commencing on July 1 shall end on the next December 31. The
first Purchase Period shall commence on the IPO Date and shall end on December
31, 1996. The Board of Directors of the Company shall have the power to change
the duration and/or frequency of Purchase Periods with respect to future
purchases without shareholder approval if such change is announced at least
fifteen (15) days prior to the scheduled beginning of the first Purchase Period
to be affected.
5. Participation.
-------------
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement on the form provided by the Company and
filing it with the Company's payroll office prior to the applicable Offering
Date, unless a later time for filing the subscription agreement is set by the
Board for all eligible Employees with respect to a given offering. The
subscription agreement shall set forth the percentage of the participant's
Compensation (which shall be not less than 1% and not more than 15%) to be paid
as Contributions pursuant to the Plan.
(b) Payroll deductions shall commence on the first payroll following
the Offering Date and shall end on the last payroll paid on or prior to the last
Purchase Period of the Offering Period to which the subscription agreement is
applicable, unless sooner terminated by the participant as provided in Section
10.
6. Method of Payment of Contributions.
----------------------------------
(a) The participant shall elect to have payroll deductions made on
each payday during the Offering Period in an amount not less than one percent
(1%) and not more than fifteen percent (15%) of such participant's Compensation
on each such payday. All payroll deductions made by a participant shall be
credited to his or her account under the Plan. A participant may not make any
additional payments into such account.
(b) A participant may discontinue his or her participation in the Plan
as provided in Section 10, or, on one occasion only during the Offering Period,
may decrease the rate of his or her Contributions during the Offering Period by
completing and filing with the
-3-
<PAGE>
Company a new subscription agreement. The change in rate shall be effective as
of the beginning of the next calendar month following the date of filing of the
new subscription agreement, if the agreement is filed at least ten (10) business
days prior to such date and, if not, as of the beginning of the next succeeding
calendar month.
(c) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) herein, a participant's
payroll deductions may be decreased to 0% at such time during any Offering
Period which is scheduled to end during the current calendar year that the
aggregate of all payroll deductions accumulated with respect to such Offering
Period and any other Offering Period ending within the same calendar year equal
$21,250. Payroll deductions shall re-commence at the rate provided in such
participant's subscription Agreement at the beginning of the first Offering
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10.
7. Grant of Option.
----------------
(a) On the Offering Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted an option to
purchase on each Purchase Date a number of shares of the Company's Common Stock
determined by dividing such Employee's Contributions accumulated prior to such
Purchase Date and retained in the participant's account as of the Purchase Date
by the lower of (i) eighty-five percent (85%) of the fair market value of a
share of the Company's Common Stock on the Offering Date, or (ii) eighty-five
percent (85%) of the fair market value of a share of the Company's Common Stock
on the Purchase Date; provided however, that the maximum number of shares an
Employee may purchase during each Offering Period shall be determined at the
Offering Date by dividing $25,000 by the fair market value of a share of the
Company's Common Stock on the Offering Date, and provided further that such
purchase shall be subject to the limitations set forth in Sections 3(b) and 13.
The fair market value of a share of the Company's Common Stock shall be
determined as provided in Section 7(b).
(b) The option price per share of the shares offered in a given
Offering Period shall be the lower of: (i) 85% of the fair market value of a
share of the Common Stock of the Company on the Offering Date; or (ii) 85% of
the fair market value of a share of the Common Stock of the Company on the
Purchase Date. The fair market value of the Company's Common Stock on a given
date shall be determined by the Board in its discretion based on the closing
price of the Common Stock for such date (or, in the event that the Common Stock
is not traded on such date, on the immediately preceding trading date), as
reported by the National Association of Securities Dealers Automated Quotation
(Nasdaq) National Market or, if such price is not reported, the mean of the bid
and asked prices per share of the Common Stock as reported by Nasdaq or, in the
event the Common Stock is listed on a stock exchange, the fair market value per
share shall be the closing price on such exchange on such date (or, in the event
that the Common Stock is not traded on such date, on the immediately preceding
trading date), as reported in The Wall Street Journal. For purposes of the
Offering Date under the first Offering Period under the Plan, the fair market
value of a share of the Common Stock of the Company shall be the Price to Public
as set forth in the final prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424 under the Securities Act of 1933, as amended.
-4-
<PAGE>
8. Exercise of Option. Unless a participant withdraws from the Plan as
------------------
provided in paragraph 10, his or her option for the purchase of shares will be
exercised automatically on each Purchase Date of an Offering Period, and the
maximum number of full shares subject to the option will be purchased at the
applicable option price with the accumulated Contributions in his or her
account. The shares purchased upon exercise of an option hereunder shall be
deemed to be transferred to the participant on the Purchase Date. During his or
her lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.
9. Delivery. As promptly as practicable after each Purchase Date of each
--------
Offering Period, the Company shall arrange the delivery to each participant, as
appropriate, of a certificate representing the shares purchased upon exercise of
his or her option or the deposit of such number of shares with the broker
selected by the Company for administration of Plan stock purchases, as
determined by the Company. Any cash remaining to the credit of a participant's
account under the Plan after a purchase by him or her of shares at the
termination of each Purchase Period, or which is insufficient to purchase a full
share of Common Stock of the Company, shall be carried over to the next Purchase
Period if the Employee continues to participate in the Plan, or if the Employee
does not continue to participate, shall be returned to said participant.
10. Voluntary Withdrawal; Termination of Employment.
-----------------------------------------------
(a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time prior to
each Purchase Date by giving written notice to the Company. All of the
participant's Contributions credited to his or her account will be paid to him
or her promptly after receipt of his or her notice of withdrawal and his or her
option for the current period will be automatically terminated, and no further
Contributions for the purchase of shares will be made during the Offering
Period.
(b) Upon termination of the participant's Continuous Status as an
Employee prior to the Purchase Date of an Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under Section 14, and his or her option will
be automatically terminated.
(c) In the event an Employee fails to remain in Continuous Status as
an Employee of the Company for at least twenty (20) hours per week during the
Offering Period in which the employee is a participant, he or she will be deemed
to have elected to withdraw from the Plan and the Contributions credited to his
or her account will be returned to him or her and his or her option terminated.
(d) A participant's withdrawal from an offering will not have any
effect upon his or her eligibility to participate in a succeeding offering or in
any similar plan which may hereafter be adopted by the Company.
11. Automatic Withdrawal. If the fair market value of the shares on the
--------------------
first Purchase Date of an Offering Period is less than the fair market value of
the shares on the Offering Date for
-5-
<PAGE>
such Offering Period, then every participant shall automatically (i) be
withdrawn from such Offering Period at the close of such Purchase Date and after
the acquisition of shares for such Purchase Period, and (ii) be enrolled in the
Offering Period commencing on the first business day subsequent to such Purchase
Period.
12. Interest. No interest shall accrue on the Contributions of a
--------
participant in the Plan.
13. Stock.
-----
(a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be 250,000 shares, subject
to adjustment upon changes in capitalization of the Company as provided in
Section 18. If the total number of shares which would otherwise be subject to
options granted pursuant to Section 7(a) on the Offering Date of an Offering
Period exceeds the number of shares then available under the Plan (after
deduction of all shares for which options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of the shares
remaining available for option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable. In such event, the
Company shall give written notice of such reduction of the number of shares
subject to the option to each Employee affected thereby and shall similarly
reduce the rate of Contributions, if necessary.
(b) The participant will have no interest or voting right in shares
covered by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.
14. Administration. The Board, or a committee named by the Board, shall
--------------
supervise and administer the Plan and shall have full power to adopt, amend and
rescind any rules deemed desirable and appropriate for the administration of the
Plan and not inconsistent with the Plan, to construe and interpret the Plan, and
to make all other determinations necessary or advisable for the administration
of the Plan. The composition of the committee shall be in accordance with the
requirements to obtain or retain any available exemption from the operation of
Section 16(b) of the Exchange Act pursuant to Rule 16b-3 promulgated thereunder.
15. Designation of Beneficiary.
--------------------------
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of a
Purchase Period but prior to delivery to him or her of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to the Purchase Date of an Offering Period.
If a participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.
-6-
<PAGE>
(b) Such designation of beneficiary may be changed by the participant
(and his or her spouse, if any) at any time by written notice. In the event of
the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant's death,
the Company shall deliver such shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its discretion, may deliver such shares and/or cash to the spouse or to any
one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.
16. Transferability. Neither Contributions credited to a participant's
---------------
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 14) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds in accordance with Section 10.
17. Use of Funds. All Contributions received or held by the Company under
------------
the Plan may be used by the Company for any corporate purpose, and the Company
shall not be obligated to segregate such Contributions.
18. Reports. Individual accounts will be maintained for each participant
-------
in the Plan. Statements of account will be given to participating Employees
promptly following the Purchase Date, which statements will set forth the
amounts of Contributions, the per share purchase price, the number of shares
purchased and the remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization; Corporate Transactions.
------------------------------------------------------------------
(a) Adjustment. Subject to any required action by the shareholders of
----------
the Company, the number of shares of Common Stock covered by each option under
the Plan which has not yet been exercised and the number of shares of Common
Stock which have been authorized for issuance under the Plan but have not yet
been placed under option (collectively, the "Reserves"), as well as the price
per share of Common Stock covered by each option under the Plan which has not
yet been exercised, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration". Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an option.
-7-
<PAGE>
(b) Corporate Transactions. In the event of the proposed dissolution
----------------------
or liquidation of the Company, the Offering Period will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Board. In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, each option under the Plan shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation, unless the Board determines, in the exercise of its
sole discretion and in lieu of such assumption or substitution, to shorten the
Offering Period then in progress by setting a new Purchase Date (the "New
Purchase Date"). If the Board shortens the Offering Period then in progress in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Board shall notify each participant in writing, at least ten (10) days prior
to the New Purchase Date, that the Purchase Date for his or her option has been
changed to the New Purchase Date and that his or her option will be exercised
automatically on the New Purchase Date, unless prior to such date he or she has
withdrawn from the Offering Period as provided in Section 10. For purposes of
this paragraph, an option granted under the Plan shall be deemed to be assumed
if, following the sale of assets or merger, the option confers the right to
purchase, for each share of option stock subject to the option immediately prior
to the sale of assets or merger, the consideration (whether stock, cash or other
securities or property) received in the sale of assets or merger by holders of
Common Stock for each share of Common Stock held on the effective date of the
transaction (and if such holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
shares of Common Stock); provided, however, that if such consideration received
in the sale of assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the Board
may, with the consent of the successor corporation and the participant, provide
for the consideration to be received upon exercise of the option to be solely
common stock of the successor corporation or its parent equal in fair market
value to the per share consideration received by holders of Common Stock and the
sale of assets or merger.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per share
of Common Stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.
20. Amendment or Termination.
-------------------------
(a) The Board of Directors of the Company may at any time terminate or
amend the Plan. Except as provided in Section 19, no such termination may
affect options previously granted, nor may an amendment make any change in any
option theretofore granted which adversely affects the rights of any
participant. In addition, to the extent necessary to comply with Rule 16b-3
under the Exchange Act, or under Section 423 of the Code (or any successor rule
or provision or any applicable law or regulation), the Company shall obtain
shareholder approval in such a manner and to such a degree as so required.
-8-
<PAGE>
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been adversely affected, the Board
(or its committee) shall be entitled to change the Offering Periods and Purchase
Periods, limit the frequency and/or number of changes in the amount withheld
during an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a participant in order to adjust for delays
or mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from
the participant's Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable which are consistent with the Plan.
21. Notices. All notices or other communications by a participant to the
-------
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
----------------------------------
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan; Effective Date. The Plan shall become effective upon
----------------------------
the earlier to occur of its adoption by the Board of Directors or its approval
by the shareholders of the Company. It shall continue in effect for a term of
twenty (20) years unless sooner terminated under Section 20.
24. Additional Restrictions of Rule 16b-3. The terms and conditions of
-------------------------------------
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
-9-
<PAGE>
ADEZA BIOMEDICAL CORPORATION
1996 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
New Election ______
Change of Election ______
1. I, , hereby elect to participate in the ADEZA
---------------------------
BIOMEDICAL CORPORATION 1996 Employee Stock Purchase Plan (the "Plan") for the
Offering Period , 19 to , 19 , and subscribe to
-------------- -- --------------- --
purchase shares of the Company's Common Stock in accordance with this
Subscription Agreement and the Plan.
2. I elect to have Contributions in the amount of % of my
----
Compensation, as those terms are defined in the Plan, applied to this purchase.
I understand that this amount must not be less than 1% and not more than 15% of
my Compensation during the Offering Period. (Please note that no fractional
percentages are permitted).
3. I hereby authorize payroll deductions from each paycheck during the
Offering Period at the rate stated in Item 2 of this Subscription Agreement. I
understand that all payroll deductions made by me shall be credited to my
account under the Plan and that I may not make any additional payments into such
account. I understand that all payments made by me shall be accumulated for the
purchase of shares of Common Stock at the applicable purchase price determined
in accordance with the Plan. I further understand that, except as otherwise set
forth in the Plan, shares will be purchased for me automatically on the Purchase
Date of each Offering Period unless I otherwise withdraw from the Plan by giving
written notice to the Company for such purpose.
4. I understand that I may discontinue at any time prior to the Purchase
Date my participation in the Plan as provided in Section 10 of the Plan. I also
understand that I can decrease the rate of my Contributions on one occasion only
during any Offering Period by completing and filing a new Subscription Agreement
with such decrease taking effect as of the beginning of the calendar month
following the date of filing of the new Subscription Agreement, if filed at
least ten (10) business days prior to the beginning of such month. Further, I
may change the rate of deductions for future Offering Periods by filing a new
Subscription Agreement, and any such change will be effective as of the
beginning of the next Offering Period. In addition, I acknowledge that, unless
I discontinue my participation in the Plan as provided in Section 10 of the
Plan, my election will continue to be effective for each successive Offering
Period.
5. I have received a copy of the Company's most recent description of the
Plan and a copy of the complete "ADEZA BIOMEDICAL CORPORATION 1996 Employee
Stock
<PAGE>
Purchase Plan." I understand that my participation in the Plan is in all
respects subject to the terms of the Plan.
6. Shares purchased for me under the Plan should be issued in the name(s)
of (name of employee or employee and spouse only):
------------------------------------
------------------------------------
7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the Plan:
NAME: (Please print) ------------------------------------
(First) (Middle) (Last)
- -------------------------- ------------------------------------
(Relationship) (Address)
------------------------------------
8. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Offering Date (the first day of the Offering
Period during which I purchased such shares) or within 1 year after the Purchase
Date, I will be treated for federal income tax purposes as having received
ordinary compensation income at the time of such disposition in an amount equal
to the excess of the fair market value of the shares on the Purchase Date over
the price which I paid for the shares, regardless of whether I disposed of the
shares at a price less than their fair market value at the Purchase Date. The
remainder of the gain or loss, if any, recognized on such disposition will be
treated as capital gain or loss.
I hereby agree to notify the Company in writing within 30 days after
--------------------------------------------------------------------
the date of any such disposition, and I will make adequate provision for
- ------------------------------------------------------------------------
federal, state or other tax withholding obligations, if any, which arise upon
- -----------------------------------------------------------------------------
the disposition of the Common Stock. The Company may, but will not be obligated
- -----------------------------------
to, withhold from my compensation the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make available to
the Company any tax deductions or benefits attributable to the sale or early
disposition of Common Stock by me.
9. If I dispose of such shares at any time after expiration of the 2-year
and 1-year holding periods, I understand that I will be treated for federal
income tax purposes as having received compensation income only to the extent of
an amount equal to the lesser of (1) the excess of the fair market value of the
shares at the time of such disposition over the purchase price which I paid for
the shares under the option, or (2) 15% of the fair market value of the
<PAGE>
shares on the Offering Date. The remainder of the gain or loss, if any,
recognized on such disposition will be treated as capital gain or loss.
I understand that this tax summary is only a summary and is subject to
----------------------------------------------------------------------
change. I further understand that I should consult a tax advisor concerning the
- ------
tax implications of the purchase and sale of stock under the Plan.
10. I hereby agree to be bound by the terms of the Plan. The
effectiveness of this Subscription Agreement is dependent upon my eligibility to
participate in the Plan.
SIGNATURE:
_________________________________
SOCIAL SECURITY #:
__________________________
DATE:
_______________________________________
SPOUSE'S SIGNATURE (necessary
if beneficiary is not spouse):
____________________________________________
(Signature)
____________________________________________
(Print name)
<PAGE>
ADEZA BIOMEDICAL CORPORATION
1996 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
I, , hereby elect to withdraw my participation in
--------------------------
the ADEZA BIOMEDICAL CORPORATION 1996 Employee Stock Purchase Plan (the "Plan")
for the Offering Period . This withdrawal covers all Contributions
---------
credited to my account and is effective on the date designated below.
I understand that all Contributions credited to my account will be paid to
me within ten (10) business days of receipt by the Company of this Notice of
Withdrawal and that my option for the current period will automatically
terminate, and that no further Contributions for the purchase of shares can be
made by me during the Offering Period.
The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to the
Company a new Subscription Agreement.
If the undersigned is an Officer or Director of ADEZA BIOMEDICAL
CORPORATION or other person subject to Section 16 of the Securities Exchange Act
of 1934, the undersigned further understands that under rules promulgated by the
U.S. Securities and Exchange Commission he or she may not re-enroll in the Plan
for a period of six (6) months after withdrawal.
Dated:
______________________
--------------------------------
Signature of Employee
--------------------------------
Social Security Number
<PAGE>
EXHIBIT 10.4
ADEZA BIOMEDICAL CORPORATION
1996 DIRECTORS' STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Directors' Stock Option
--------------------
Plan are to attract and retain the best available personnel for service as
Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued
service on the Board.
All options granted hereunder shall be "nonstatutory stock options".
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Board" shall mean the Board of Directors of the Company.
-----
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
-----
(c) "Common Stock" shall mean the Common Stock of the Company.
------------
(d) "Company" shall mean Adeza Biomedical Corporation, a California
-------
corporation.
(e) "Continuous Status as a Director" shall mean the absence of any
-------------------------------
interruption or termination of service as a Director.
(f) "Director" shall mean a member of the Board.
--------
(g) "Employee" shall mean any person, including officers and
--------
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
(i) "Option" shall mean a stock option granted pursuant to the Plan.
------
All options shall be nonstatutory stock options (i.e., options that are not
intended to qualify as incentive stock options under Section 422 of the Code).
(j) "Optioned Stock" shall mean the Common Stock subject to an
--------------
Option.
(k) "Optionee" shall mean an Outside Director who receives an Option.
--------
(l) "Outside Director" shall mean a Director who is not an Employee.
----------------
(m) "Parent" shall mean a "parent corporation", whether now or
------
hereafter existing, as defined in Section 424(e) of the Code.
<PAGE>
(n) "Plan" shall mean this 1996 Directors' Stock Option Plan.
----
(o) "Share" shall mean a share of the Common Stock, as adjusted in
-----
accordance with Section 11 of the Plan.
(p) "Subsidiary" shall mean a "subsidiary corporation", whether now
----------
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
-------------------------
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 200,000 Shares (the "Pool") of Common Stock. The Shares may
be authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. If Shares which were acquired upon exercise of an
Option are subsequently repurchased by the Company, such Shares shall not in any
event be returned to the Plan and shall not become available for future grant
under the Plan.
4. Administration of and Grants of Options under the Plan.
------------------------------------------------------
(a) Administrator. Except as otherwise required herein, the Plan
-------------
shall be administered by the Board.
(b) Procedure for Grants. All grants of Options hereunder shall be
--------------------
automatic and non discretionary and shall be made strictly in accordance with
the following provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically granted an
Option to purchase Shares (the "First Option") as follows: (A) with respect to
persons who are Outside Directors on the effective date of this Plan, as
determined in accordance with Section 6 hereof, 10,000 shares on such effective
date, and (B) with respect to any other person, 10,000 shares on the date on
which such person first becomes an Outside Director, whether through election by
the shareholders of the Company or appointment by the Board of Directors to fill
a vacancy.
(iii) After the First Option has been granted to an Outside
Director, such Outside Director shall thereafter be automatically granted an
Option to purchase 5,000 Shares (a "Subsequent Option") on the date of each
Annual Meeting of the Company's shareholders following which such Outside
Director is serving on the Board, provided that, on such date, he or she shall
have served on the Board for at least six (6) months prior to the date of such
Annual Meeting.
-2-
<PAGE>
(iv) Notwithstanding the provisions of subsections (ii) and (iii)
hereof, in the event that a grant would cause the number of Shares subject to
outstanding Options plus the number of Shares previously purchased upon exercise
of Options to exceed the Pool, then each such automatic grant shall be for that
number of Shares determined by dividing the total number of Shares remaining
available for grant by the number of Outside Directors receiving an Option on
such date on the automatic grant date. Any further grants shall then be deferred
until such time, if any, as additional Shares become available for grant under
the Plan through action of the shareholders to increase the number of Shares
which may be issued under the Plan or through cancellation or expiration of
Options previously granted hereunder.
(v) Notwithstanding the provisions of subsections (ii) and (iii)
hereof, any grant of an Option made before the Company has obtained shareholder
approval of the Plan in accordance with Section 17 hereof shall be conditioned
upon obtaining such shareholder approval of the Plan in accordance with Section
17 hereof.
(vi) The terms of each First Option granted hereunder shall be as
follows:
(1) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Section 9 hereof.
(2) the exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the First Option, determined in
accordance with Section 8 hereof.
(3) the First Option shall become exercisable in
installments cumulatively as to 25% of the Shares subject to the First Option on
each of the first, second, third and fourth anniversaries of the date of grant
of the Option.
(vii) The terms of each Subsequent Option granted hereunder shall
be as follows:
(1) the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Section 9 hereof.
(2) the exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the Subsequent Option, determined
in accordance with Section 8 hereof.
(3) the Subsequent Option shall become exercisable as to one
hundred percent 100% of the Shares subject to the Subsequent Option on the
fourth anniversary of the date of grant of the Subsequent Option.
(c) Powers of the Board. Subject to the provisions and restrictions
-------------------
of the Plan, the Board shall have the authority, in its discretion: (i) to
determine, upon review of relevant information and in accordance with Section
8(b) of the Plan, the fair market value of the Common Stock; (ii) to determine
the exercise price per share of Options to be granted, which exercise price
shall be determined in accordance with Section 8(a) of the Plan; (iii) to
interpret the Plan; (iv) to
-3-
<PAGE>
prescribe, amend and rescind rules and regulations relating to the Plan; (v) to
authorize any person to execute on behalf of the Company any instrument required
to effectuate the grant of an Option previously granted hereunder; and (vi) to
make all other determinations deemed necessary or advisable for the
administration of the Plan.
(d) Effect of Board's Decision. All decisions, determinations and
--------------------------
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
(e) Suspension or Termination of Option. If the President or his or
-----------------------------------
her designee reasonably believes that an Optionee has committed an act of
misconduct, the President may suspend the Optionee's right to exercise any
option pending a determination by the Board of Directors (excluding the Outside
Director accused of such misconduct). If the Board of Directors (excluding the
Outside Director accused of such misconduct) determines an Optionee has
committed an act of embezzlement, fraud, dishonesty, nonpayment of an obligation
owed to the Company, breach of fiduciary duty or deliberate disregard of the
Company rules resulting in loss, damage or injury to the Company, or if an
Optionee makes an unauthorized disclosure of any Company trade secret or
confidential information, engages in any conduct constituting unfair
competition, induces any Company customer to breach a contract with the Company
or induces any principal for whom the Company acts as agent to terminate such
agency relationship, neither the Optionee nor his or her estate shall be
entitled to exercise any option whatsoever. In making such determination, the
Board of Directors (excluding the Outside Director accused of such misconduct)
shall act fairly and shall give the Optionee an opportunity to appear and
present evidence on Optionee's behalf at a hearing before the Board or a
committee of the Board.
5. Eligibility. Options may be granted only to Outside Directors. All
-----------
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) hereof. An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
6. Term of Plan; Effective Date. The Plan shall become effective on the
----------------------------
effectiveness of the registration statement under the Securities Act of 1933
relating to the Company's initial public offering of securities. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan.
7. Term of Options. The term of each Option shall be ten (10) years from
---------------
the date of grant thereof.
-4-
<PAGE>
8. Exercise Price and Consideration.
---------------------------------
(a) Exercise Price. The per Share exercise price for the Shares to be
--------------
issued pursuant to exercise of an Option shall be 100% of the fair market value
per Share on the date of grant of the Option.
(b) Fair Market Value. The fair market value shall be determined by
-----------------
the Board; provided, however, that where there is a public market for the Common
Stock, the fair market value per Share shall be the mean of the bid and asked
prices of the Common Stock in the over-the-counter market on the date of grant,
as reported in The Wall Street Journal (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated Quotation
("Nasdaq") System) or, in the event the Common Stock is traded on the Nasdaq
National Market or listed on a stock exchange, the fair market value per Share
shall be the closing price on such system or exchange on the date of grant of
the Option, as reported in The Wall Street Journal. With respect to any Options
granted hereunder concurrently with the initial effectiveness of the Plan, the
fair market value shall be the Price to Public as set forth in the final
prospectus relating to such initial public offering.
(c) Form of Consideration. The consideration to be paid for the
---------------------
Shares to be issued upon exercise of an Option shall consist entirely of cash,
check, other Shares of Common Stock having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised (which, if acquired from the Company, shall have been
held for at least six months), or any combination of such methods of payment
and/or any other consideration or method of payment as shall be permitted under
applicable corporate law.
9. Exercise of Option.
-------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable at such times as are set forth in Section
4(b) hereof; provided, however, that no Options shall be exercisable prior to
shareholder approval of the Plan in accordance with Section 17 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 8(c) of the Plan. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. A share certificate for the number of Shares so acquired shall be issued
to the Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
-5-
<PAGE>
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as a Director. If an Outside Director
-----------------------------------
ceases to serve as a Director, he or she may, but only within ninety (90) days
after the date he or she ceases to be a Director of the Company, exercise his or
her Option to the extent that he or she was entitled to exercise it at the date
of such termination. Notwithstanding the foregoing, in no event may the Option
be exercised after its term set forth in Section 7 has expired. To the extent
that such Outside Director was not entitled to exercise an Option at the date of
such termination, or does not exercise such Option (which he or she was entitled
to exercise) within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. Notwithstanding Section 9(b) above, in
----------------------
the event a Director is unable to continue his or her service as a Director with
the Company as a result of his or her total and permanent disability (as defined
in Section 22(e)(3) of the Internal Revenue Code), he or she may, but only
within six (6) months (or such other period of time not exceeding twelve (12)
months as is determined by the Board) from the date of such termination,
exercise his or her Option to the extent he or she was entitled to exercise it
at the date of such termination. Notwithstanding the foregoing, in no event may
the Option be exercised after its term set forth in Section 7 has expired. To
the extent that he or she was not entitled to exercise the Option at the date of
termination, or if he or she does not exercise such Option (which he or she was
entitled to exercise) within the time specified herein, the Option shall
terminate.
(d) Death of Optionee. In the event of the death of an Optionee:
-----------------
(i) During the term of the Option who is, at the time of his or
her death, a Director of the Company and who shall have been in Continuous
Status as a Director since the date of grant of the Option, the Option may be
exercised, at any time within six (6) months following the date of death, by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
would have accrued had the Optionee continued living and remained in Continuous
Status as Director for twelve (12) months (or such lesser period of time as is
determined by the Board) after the date of death. Notwithstanding the foregoing,
in no event may the Option be exercised after its term set forth in Section 7
has expired.
(ii) Within three (3) months after the termination of Continuous
Status as a Director, the Option may be exercised, at any time within six (6)
months following the date of death, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued at the date of termination.
Notwithstanding the foregoing, in no event may the option be exercised after its
term set forth in Section 7 has expired.
10. Nontransferability of Options. The Option may not be sold, pledged,
-----------------------------
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution or pursuant to a qualified
domestic relations order (as defined by the Code or the rules thereunder). The
designation of a beneficiary by an Optionee does not constitute a transfer.
-6-
<PAGE>
An Option may be exercised during the lifetime of an Optionee only by the
Optionee or a transferee permitted by this Section.
11. Adjustments Upon Changes in Capitalization; Corporate Transactions.
-------------------------------------------------------------------
(a) Adjustment. Subject to any required action by the shareholders
----------
of the Company, the number of shares of Common Stock covered by each outstanding
Option, the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, and the number of shares of Common Stock issuable pursuant to the
automatic grant provisions of Section 4 hereof, as well as the price per share
of Common Stock covered by each such outstanding Option shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Corporate Transactions. In the event of (i) a dissolution or
----------------------
liquidation of the Company, (ii) a sale of all or substantially all of the
Company's assets, (iii) a merger or consolidation in which the Company is not
the surviving corporation, or (iv) any other capital reorganization in which
more than fifty percent (50%) of the shares of the Company entitled to vote are
exchanged, the Company shall give to the Eligible Director, at the time of
adoption of the plan for liquidation, dissolution, sale, merger, consolidation
or reorganization, either a reasonable time thereafter within which to exercise
the Option, including Shares as to which the Option would not be otherwise
exercisable, prior to the effectiveness of such liquidation, dissolution, sale,
merger, consolidation or reorganization, at the end of which time the Option
shall terminate, or the right to exercise the Option, including Shares as to
which the Option would not be otherwise exercisable (or receive a substitute
option with comparable terms), as to an equivalent number of shares of stock of
the corporation succeeding the Company or acquiring its business by reason of
such liquidation, dissolution, sale, merger, consolidation or reorganization.
12. Time of Granting Options. The date of grant of an Option shall, for
------------------------
all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
--------------------------------------
(a) Amendment and Termination. The Board may amend or terminate the
-------------------------
Plan from time to time in such respects as the Board may deem advisable;
provided that, to the extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act (or any other
-7-
<PAGE>
applicable law or regulation), the Company shall obtain approval of the
shareholders of the Company to Plan amendments to the extent and in the manner
required by such law or regulation. Notwithstanding the foregoing, the
provisions set forth in Section 4 of this Plan (and any other Sections of this
Plan that affect the formula award terms required to be specified in this Plan
by Rule 16b-3) shall not be amended more than once every six months, other than
to comport with changes in the Code, the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.
(b) Effect of Amendment or Termination. Any such amendment or
----------------------------------
termination of the Plan that would impair the rights of any Optionee shall not
affect Options already granted to such Optionee and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
----------------------------------
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. As a
condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.
15. Reservation of Shares. The Company, during the term of this Plan,
---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. Inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
16. Option Agreement. Options shall be evidenced by written option
----------------
agreements in such form as the Board shall approve.
17. Shareholder Approval. Continuance of the Plan shall be subject to
--------------------
approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders held subsequent to the granting of an Option hereunder.
If such shareholder approval is obtained at a duly held shareholders' meeting,
it may be obtained by the affirmative vote of the holders of a majority of the
outstanding shares of the Company present or represented and entitled to vote
thereon. If such shareholder approval is obtained by written consent, it may be
obtained by the written consent of the holders of a majority of the outstanding
shares of the Company. Options may be granted, but not exercised, before such
shareholder approval.
-8-
<PAGE>
ADEZA BIOMEDICAL CORPORATION
1996 DIRECTORS' STOCK OPTION PLAN
DIRECTOR NONSTATUTORY STOCK OPTION AGREEMENT
--------------------------------------------
Optionee:
Address:
Total Shares Subject to Option:
Exercise Price Per Share:
Date of Grant:
Expiration Date:
Type of Stock Option: Nonstatutory Stock Option
1. Grant of Option. Adeza Biomedical Corporation (the "Company"), a
---------------
California corporation, hereby grants to the Optionee named above ("Optionee")
an option (the "Option") to purchase a total of up to
------------------
( ) shares of Common Stock of the Company (the "Shares") at the exercise
--------
price per share set forth above (the "Exercise Price"), subject to all of the
terms and conditions of this Director Nonstatutory Stock Option Agreement
("Agreement") and the Company's 1996 Directors' Stock Option Plan (the "Plan").
The terms defined in the Plan shall have the same defined meanings herein.
A. Nature of the Option. This Option is a nonstatutory stock option
--------------------
and is not intended to qualify for any special tax benefits to the Optionee.
B. Exercise Price. The exercise price is for each
-------------- ---------------
share of Common Stock, which is 100% of the Fair Market Value of the Common
Stock as determined on the date of grant of this Option.
2. Exercise Period of Option. Subject to the terms and conditions of the
-------------------------
Plan and this Grant, this Option shall become exercisable as follows:
3. Restrictions on Exercise. Exercise of this Option is subject to the
------------------------
following limitations:
A. This Option may not be exercised unless such exercise is in
compliance with the Securities Act of 1933, as amended, and all applicable state
securities laws, as they are in effect on the date of exercise.
<PAGE>
B. If, at the time of the exercise of this Option, the Optionee is
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), then the Optionee must comply with Rule 16b-3 under the
Exchange Act and such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
4. Termination of Status as a Director. If an Outside Director ceases to
-----------------------------------
serve as a Director for any reason other than death or disability, he or she
may, but only within ninety (90) days after the date he or she ceases to be a
Director of the Company, exercise his or her Option to the extent that he or she
was entitled to exercise it at the date of such termination. To the extent that
he or she was not entitled to exercise an Option at the date of such
termination, or if he or she does not exercise such Option (which he or she was
entitled to exercise) within the time specified herein, the Option shall
terminate.
5. Disability of Director. Notwithstanding Section 4 above, in the event
----------------------
an Outside Director is unable to continue his or her service as a Director with
the Company as a result of total and permanent disability (as defined in Section
22(e)(3) of the Code), he or she may, but only within six (6) months from the
date of termination of such service (but in no event later than the date of
expiration of the term of this Option as set forth in the Notice of Stock Option
Grant), exercise the Option to the extent otherwise so entitled at the date of
such termination. To the extent that he or she was not entitled to exercise the
Option at the date of termination, or if he or she does not exercise such Option
(to the extent otherwise so entitled) within the time specified in this
Agreement, the Option shall terminate.
6. Death of Director. Notwithstanding Section 4 above, in the event of
-----------------
the death an Outside Director while serving as a Director of the Company or
within three (3) months of terminating such service, the Option may be
exercised, at any time within six (6) months following the date of death (but in
no event later than the date of expiration of the term of this Option as set
forth in the Notice of Stock Option Grant), by Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance to the
extent the Optionee was entitled to exercise such Option on the date of death,
provided, however, that if the Director dies while serving as a Director, the
Option will be exercisable to the extent of the right to exercise that would
have accrued had the Director continued living and serving as a Director for six
(6) months after the date of death.
7. Manner of Exercise.
-------------------
A. This Option shall be exercisable by delivery to the Company of an
executed written Director Stock Option Exercise Notice and Agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
Company, which shall set forth Optionee's election to exercise this Option, the
number of Shares being purchased, any restrictions imposed on the Shares and
such other representations and agreements regarding Optionee's investment intent
and access to information as may be required by the Company to comply with
applicable securities laws.
<PAGE>
B. The Director Stock Option Exercise Notice and Agreement shall be
accompanied by full payment of the Exercise Price for the Shares being purchased
(i) in cash, (ii) by check, (iii) by delivery of other shares of Common Stock
having a fair market value on the date of surrender equal to the aggregate
exercise price of the Shares being purchased (which, if acquired from the
Company, shall have been held for at least six months) or (iv) by any
combination of the foregoing methods of payment.
C. Prior to the issuance of the Shares upon exercise of this Option,
Optionee must pay or make adequate provision for any applicable federal or state
withholding obligations of the Company.
D. Provided that such notice and payment are in form and substance
satisfactory to counsel for the Company, the Company shall issue the Shares
registered in the name of Optionee or Optionee's legal representative.
8. Compliance with Laws and Regulations. The issuance and transfer of
------------------------------------
Shares shall be subject to compliance by the Company and the Optionee with all
applicable requirements of federal and state securities laws and with all
applicable requirements of any stock exchange on which the Company's Common
Stock may be listed at the time of such issuance or transfer. Optionee
understands that the Company is under no obligation to register or qualify the
Shares with the Securities and Exchange Commission, any state securities
commission or any stock exchange to effect such compliance.
9. Nontransferability of Option. This Option may not be transferred in
----------------------------
any manner other than by will or by the laws of descent and distribution or
pursuant to a domestic relations order (as defined by the Code or the rules
thereunder) and may be exercised during the lifetime of the Optionee only by the
Optionee or a transferee permitted by Section 10 of the Plan. The terms of this
option shall be binding upon the executors, administrators, successors and
assigns of the Optionee.
10. Federal Tax Consequences. Set forth below is a brief summary as of
------------------------
the date of this Option of some of the federal tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT HIS OR HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES. THIS SUMMARY DOES NOT DISCUSS STATE OR LOCAL TAX
CONSEQUENCES OF EXERCISE OF THIS OPTION AND DISPOSITION OF THE SHARES.
A. Taxation Upon Exercise of Option. Optionee understands that, upon
--------------------------------
exercise of this Option, he or she will recognize income for tax purposes in an
amount equal to the excess of the then fair market value of the Shares purchased
over the exercise price paid for such Shares. Since the Optionee is likely to
be subject to Section 16(b) of the Securities Exchange Act of 1934, as amended,
the measurement and timing of such income may be deferred, and the Optionee is
advised to contact a tax adviser concerning the desirability of filing an 83(b)
election in connection with the exercise of the Option. Upon a resale of such
Shares by the
<PAGE>
Optionee, any difference between the sale price and the exercise price of the
Shares, to the extent not included in income as described above, will be treated
as capital gain or loss, which will be long-term if the shares have been held
for more than one year.
11. Interpretation. Any dispute regarding the interpretation of this
--------------
agreement shall be submitted by Optionee or the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.
12. Entire Agreement. The Plan and the Director Stock Option Exercise
----------------
Notice and Agreement attached as Exhibit A are incorporated herein by reference.
This Grant, the Plan and the Director Stock Option Exercise Notice and Agreement
constitute the entire agreement of the parties regarding the Option and
supersede all prior undertakings and agreements with respect to the subject
matter hereof.
ADEZA BIOMEDICAL CORPORATION
By:
--------------------------
Its:
-------------------------
<PAGE>
ACCEPTANCE
Optionee hereby acknowledges receipt of a copy of the Plan, represents that
Optionee has read and understands the terms and provisions thereof, and accepts
this Option subject to all the terms and conditions of the Plan and this Grant.
Optionee acknowledges that there may be adverse tax consequences upon exercise
of this Option or disposition of the Shares and that Optionee should consult a
tax adviser prior to such exercise or disposition.
----------------------------
<PAGE>
EXHIBIT A
---------
DIRECTOR NONSTATUTORY STOCK OPTION EXERCISE NOTICE AND AGREEMENT
----------------------------------------------------------------
Adeza Biomedical Corporation
1240 Elko Drive
Sunnyvale, CA 94089
Attention: Chief Financial Officer
1. Exercise of Option. The undersigned ("Optionee") hereby elects to
------------------
exercise Optionee's option to purchase ______ shares of the Common Stock (the
"Shares") of Adeza Biomedical Corporation (the "Company") under and pursuant to
the Company's 1996 Directors' Stock Option Plan and the Director Nonstatutory
Stock Option Agreement dated (the "Grant Agreement").
-----------
2. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Grant Agreement.
3. Federal Restrictions on Transfer. Optionee understands that the Shares
--------------------------------
must be held indefinitely unless they are registered under the Securities Act of
1933, as amended (the "1933 Act") or unless an exemption from such registration
is available and that the certificate(s) representing the Shares may bear a
legend to that effect. Optionee understands that the Company is under no
obligation to register the Shares and that an exemption may not be available or
may not permit Optionee to transfer Shares in the amounts or at the times
proposed by Optionee.
4. Tax Consequences. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultant(s) Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
5. Delivery of Payment. Optionee herewith delivers to the Company the
-------------------
aggregate purchase price for the Shares that Optionee has elected to purchase
and has made provision for the payment of any federal or state withholding taxes
required to be paid or withheld by the Company.
<PAGE>
6. Entire Agreement. The Grant Agreement is incorporated herein by
----------------
reference. This Agreement and the Grant Agreement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof. This Agreement and the Grant Agreement are governed by California law
except for that body of law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: ADEZA BIOMEDICAL CORPORATION
By:
- --------------------------- -----------------------------
Its:
----------------------------
Address:
Dated: Dated:
-------------------- --------------------------
<PAGE>
EXHIBIT 10.5
EXCLUSIVE MARKETING AGREEMENT
THIS AGREEMENT, is entered into the 31st day of December, 1991, by and
between ADEZA BIOMEDICAL CORPORATION, a California corporation, ("Adeza"), with
its principal place of business located at 1240 Elko Drive, Sunnyvale,
California 94089 and TOKOS MEDICAL CORPORATION, a California corporation,
("Tokos"), with its principal place of business located at 1821 East Dyer Road,
Santa Ana, California 92705.
W I T N E S S E T H :
WHEREAS, Adeza has developed and is developing certain fetal fibronectin
Tests which it believes may be useful in the diagnosis of pre-term delivery
("PTD"); and
WHEREAS, Tokos desires to acquire certain rights including, but not limited
to exclusive rights to purchase, market and sell the Tests within certain
geographic areas herein described; and
WHEREAS, in reliance on the promises contained in this Agreement, Tokos
intends to risk a substantial investment in money and reputation to market such
Tests; and
WHEREAS, Adeza is willing to grant to Tokos such rights herein described;
NOW, THEREFORE, for and in consideration of the mutual observance of the
covenants hereinafter set forth, the parties hereto agree as follows:
I. DEFINITIONS
1.1 "ELISA TEST(S)" means the Elisa based fetal fibronectin Test described
on Exhibit A hereto.
1.2 "EXCLUSIVE" means directly as well as indirectly, and without
exception.
1.3 "Membrane Test(s)" means the membrane based fetal fibronectin Test
described on Exhibit A hereto.
1.4 "TECHNICAL INFORMATION" means all information, clinical data, know-
how, proprietary information (important know-how that is considered
confidential that is used in manufacturing and Testing the products,
whether or not patentable) and technology relating to as well as the
Technology.
1.5 "TECHNOLOGY" means the fetal fibronectin technology owned or
controlled by Adeza, as well as all products now or hereafter
developed by Adeza, whether or not pursuant to this Agreement, which
could replace the fetal fibronectin Test for similar applications.
<PAGE>
1.6 "TESTS" means the fetal fibronectin PTD tests described on Exhibit A
hereto, including both the "Membrane Test" and the "Elisa Test".
1.7 "TERRITORY" means the United States of America, its territories and
possessions, the Commonwealth of Puerto Rico, and Canada.
II. MARKETING RIGHTS
2.1 Marketing Rights. Adeza hereby grants to Tokos the exclusive right to
----------------
purchase, market, sell, use, and otherwise dispose of the Tests in the
Territory ("Marketing Rights"). So long as Tokos' Marketing Rights
hereunder remain Exclusive, Adeza shall not sell Tests to anyone for
utilization, sale, distribution or other disposition within the
Territory. To that end, Adeza shall use its best efforts to require
Tests, other than those sold to Tokos to be used solely outside of the
Territory and to prohibit any Tests other than those sold to Tokos
from being utilized, sold, distributed or otherwise disposed of within
the Territory. Adeza's best efforts shall include, by way of example
and not as limitation, and to the extent Adeza is legally permitted to
do so, communicating such requirements and prohibition to all
resellers of Tests, and, if ongoing significant sales continue within
the Territory, to terminate sales to such parties.
2.2 Promotion of Tests. Tokos shall use its best efforts to promote,
------------------
market and sell the Tests in the Territory. Except as hereinafter
provided in Section 6.2.5, Tokos shall bear all costs incurred by it
in connection with the promotion, marketing and sale of the Tests. So
long as Tokos' Marketing rights remain Exclusive, Tokos shall not sell
Tests to anyone for utilization, sale, distribution or other
disposition outside the Territory. To that end, Tokos shall use its
best efforts to require all Tests to be used solely within the
Territory and to prohibit any Tests from being in any way utilized,
sold, distributed, or otherwise disposed of outside of the Territory.
Tokos' best efforts shall include, by way of example and not as
limitation, and to the extent Tokos has the legal right to do so,
communicating such requirements and prohibition to all resellers of
Tests, and, if ongoing significant sales continue outside of the
Territory, to terminate sales to such parties. Tokos agrees that it
shall only market the Tests in a manner which is consistent with the
United States Food and Drug Administration ("FDA") or other applicable
regulatory approvals which are then in effect with respect to the
Tests. Prior to receipt of such approvals. Tokos' marketing program
shall be agreed upon jointly by the parties.
-2-
<PAGE>
2.3 Utilization. So long as Tokos' Marketing Rights remain Exclusive,
-----------
Tokos shall utilize the Tests for all of its PTD in vitro immunoassay
diagnostic tests, within the Territory, and shall not sell tests,
within the Territory, which compete with the Tests. To the extent
that additional products are added to this Agreement, such additional
products may replace or be added to the Tests for purposes of this
Section 2.3. To the extent that Tokos uses such Tests for its own
clinical research studies, Tokos' purchase price for each such Test
shall be limited to the amount specified in Section 6.2.1.1 or
6.2.2.1, as the case may be.
III. REPRESENTATIONS OF ADEZA
3.1 Authority. Adeza represents and warrants that, to the best of its
---------
knowledge, (a) with the possible exception of United States patent No.
4,313,734, the Tests do not infringe upon any patent or trade secret
right of any person or entity, with respect to the Territory and are
not subject to any adverse claims; (b) it is the sole owner of all
right, title and interest in and to the patents listed on Schedule 3.1
hereto; (c) all patents listed on Schedule 3.1 hereto are valid; (d)
all patent applications listed on Schedule 3.1 are properly filed, and
Adeza has no reason to believe such patent applications will not be
issued as applied for; and (e) it has the right and authority to enter
into and perform the terms of this Agreement.
3.2 Performance. Adeza further represents and warrants that it has, or
-----------
will acquire, the physical capacity as well as the technical
capability to, and shall, manufacture all Tests and produce all
results required hereunder in full compliance with all applicable
federal, state, and local laws, regulations and guidelines, as well as
Good Manufacturing Practices as outlined by the FDA.
3.2.1 Without regard to capacity, Adeza shall be deemed to have
materially breached this Agreement and otherwise not performed
in the event that any of the following occurs:
3.2.1.1 Adeza fails, for any reason, other than as set forth
in Section 13.11 hereof, to furnish within a month
virtually all of the Membrane Tests ordered by Tokos
pursuant to this Agreement for delivery in such month
in any 4 out of 12 months during the term hereof,
PROVIDED that such order was included for such month
in the rolling 12 month forecast provided by Tokos not
less than 90 days prior to such month. Tokos shall
provide Adeza with a rolling twelve month forecast
which it shall update quarterly. Such forecast shall
order Membrane Tests for delivery in a specified
month, and orders indicated in such rolling 12 month
forecast shall be firm noncancellable orders unless a
revised forecast is submitted not less than 90 days
prior to the month for which such order is placed. In
addition, all such orders shall be placed by Tokos in
-3-
<PAGE>
good faith and in the ordinary course of business
established between the parties.
3.2.1.2 Adeza fails, for any reason, other than as set forth
in Section 13.11 hereof, after FDA approval of the PMA
application described in Section 6.1.2 hereof, to [*]
PROVIDED that such order was included for such month
in the rolling 12 month forecast provided by Tokos not
less than 90 days prior to such month. Tokos shall
provide Adeza with a rolling twelve month forecast
which it shall update quarterly. Such forecast shall
order Specimen Collection Kits for delivery in a
specified month, and orders indicated in such rolling
12 month forecast shall be firm, non-cancelable orders
unless a revised forecast is submitted not less than
90 days prior to the month for which such order is
placed. In addition, all such orders shall be placed
by Tokos in good faith and in the ordinary course of
business established between the parties.
3.2.1.3 Adeza agrees that it will establish and adhere to
quality assurance and quality control programs,
including audit, consistent with industry standards.
IV. LICENSE
4.1 License. In addition to all other rights herein granted to Tokos, and
-------
subject to the Condition Precedent set forth in Section 4.2 below,
Adeza hereby grants to Tokos an absolute license for the manufacture
of Tests as set forth below, consistent with Tokos' Marketing Rights
hereunder ("License"). Tokos may subcontract with any third party
acceptable to it for the actual manufacturing of Tests and producing
of results therefrom. Upon the Condition Precedent occurring, Tokos
may, but thereafter shall have no obligation whatsoever to, purchase
Tests from Adeza.
4.2 Condition Precedent. The License shall become immediately effective
-------------------
for all purposes as set forth below upon the occurrence of any one of
the following and Tokos' written notice given within 60 days following
the occurrence ("Condition Precedent"):
4.2.1 Adeza fails, for any reason, other than as set forth in Section
13.11 hereof, for purposes of the effectiveness of Tokos'
license with respect to the Membrane Test, to meet the
performance standards set forth in Section 3.2.1.1, or for
purposes of the effectiveness of Tokos' license with respect
* [CONFIDENTIAL TREATMENT REQUESTED]
-4-
<PAGE>
to the Elisa Test, to meet the performance standards set forth
in Section 3.2.1.2 hereof; or
4.2.2 Adeza materially breaches any provision of this Agreement, (a)
which shall continue without being cured within 30 days of
notice thereof unless the nature of such breach prohibits its
cure within thirty (30) days in which event the cure period
shall be such longer time as may be necessary provided the
process is commenced within thirty (30) days of notice and
continued efforts toward cure are maintained, or (b) which
shall be repeated four (4) times within the term of the
Agreement.
4.2.3 Adeza files for protection against creditors or bankruptcy
reorganization under the laws of the United States or of any
state as the same may exist from time to time, or fails to
vacate an involuntary petition which is filed against it within
30 days of the date of filing; or
4.2.4 Adeza, or substantially all of its assets are acquired by a
third party, which either at the time of acquisition is in or
thereafter enters the business of pre-term labor management,
which shall not include the pharmaceutical manufacture of
tocolytics, other than by the acquisition.
4.3 Delivery. Anytime after the License becomes effective, immediately
--------
upon the demand of Tokos, Adeza shall deliver to Tokos materials,
things, and Technical Information, in its possession necessary for
Tokos to exercise Tokos' rights under the License including, by way of
example and not as limitation, the clone cells, antibodies, and
buffers; and Adeza shall otherwise assist Tokos, or its designees, in
establishing and maintaining a capability for manufacturing Tests and
producing results. Any such materials, things and Technical
Information shall be disclosed to third parties only and used only to
the extent necessary to exercise the License.
4.4 Royalty. As consideration for the License granted to Tokos by Adeza,
-------
Tokos shall pay to Adeza an amount equal to [*] of the Average Net
Selling Price, as hereinafter defined in Section 6.2.6 of each Test
manufactured pursuant to the License ("Royalty"). Notwithstanding
anything herein to the contrary, Adeza shall not be entitled to any
payments other than the Royalty with regard to Tests manufactured
pursuant to this License.
4.5 Notwithstanding anything in this Agreement to the contrary, it is
agreed that Tokos' sole remedy, and Adeza's sole liability, with
respect to any failure by Adeza to deliver any Test when ordered by
Tokos, shall be the grant by Adeza to Tokos of the License described
in this Section IV.
V. TECHNICAL INFORMATION AND ASSISTANCE
* [CONFIDENTIAL TREATMENT REQUESTED]
-5-
<PAGE>
5.1 Technical Information. During the term of this Agreement Adeza shall
---------------------
provide to Tokos all such technical and marketing information
concerning the Tests as Adeza shall possess and Tokos shall reasonably
request or to which it may otherwise be entitled under this Agreement.
Except as utilized for marketing purposes as agreed to by Adeza, all
such disclosures shall be subject to the confidentiality obligations
set forth elsewhere in this Agreement.
5.2 On-Site Technical Assistance. Adeza shall, at its own expense, upon
----------------------------
the reasonable request of Tokos, dispatch a reasonable number of
qualified technical personnel to locations designated by Tokos for a
period of not more than 5 working days per year during the term hereof
for consultation, advice and technical discussion with Tokos'
personnel during the initial set up of a marketing plan for the Tests
as well as subsequent periodic training programs with respect to the
Tests.
5.3 Clinical Studies. All necessary studies with regard to Tests shall be
----------------
agreed to, designed and managed to successful conclusion by Adeza and
Tokos, jointly. Necessary studies shall include uses of Tests for
indications and applications without regard to any FDA requirement
including, but not limited to, symptomatic patients, high risk
asymptomatic patients, low risk asymptomatic patients for screening
purposes and intervention studies with current conventional
treatments. Except for home uterine activity monitoring ("HUAM"),
which may be a part of any study and the cost of which shall be borne
by Tokos and significant other tests or materials other than the
Tests, Adeza shall allocate from Marketing Rights Payments and Product
Purchase Payments all amounts necessary to undertake and successfully
complete all necessary studies. Any sales or use of the Tests prior
to FDA PMA approval shall only be pursuant to such clinical studies or
other programs as the parties shall jointly agree upon.
VI. PAYMENTS
6.1 Marketing Rights Payments. In consideration for the Marketing Rights
-------------------------
granted to Tokos by Adeza pursuant to this Agreement, Tokos shall pay
to Adeza the following amounts:
6.1.1 Upon the execution of this Agreement [*].
6.1.2 Upon submission to the FDA of a PMA application by Adeza for
the Membrane Test, which application the parties shall jointly
and reasonably agree upon, [*]. If there is disagreement
between the parties as to condition of the application for
filing, the parties agree to abide by the recommendation of a
committee composed of the Chairman of Tokos, the Chairman of
Adeza and one outside party jointly appointed.
* [CONFIDENTIAL TREATMENT REQUESTED]
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<PAGE>
6.1.3 On January 1, 1993, [*]; provided, however, that in the
event the PMA application described in Section 6.1.2 has not
yet been submitted to the FDA as of January 1, 1993, such
payment shall be delayed until such submission.
6.2 Product Purchase Payments. In consideration for the sale of Tests to
-------------------------
Tokos hereunder, Tokos shall, except as hereinafter provided in
Section 6.2.5, pay to Adeza the following amounts:
6.2.1 With respect to each Membrane Test purchased:
6.2.1.1 [*] per Test; and
6.2.1.2 An amount equal to [*] of the greater of all amounts
collected by Tokos or the Average Net Selling Price as
defined in Section 6.2.6 from the sale of each
Membrane Test above [*] per Membrane Test.
6.2.2 With respect to each Elisa Test purchased:
6.2.2.1 [*] per Test for the first 50,000 Tests purchased in a
calendar year hereunder; and [*] per Test after the
first 50,000 Tests purchased in a calendar year and
for so long thereafter as Tokos maintains an
uninterrupted purchase level above 50,000 units per
year hereunder; and
6.2.2.2 An amount equal to [*] of the greater of
all amounts collected by Tokos or the Average Net
Selling Price as defined in Section 6.2.6 from the
sale of each Elisa Test above: [*] per Test for the
first 50,000 Tests purchased each calendar year
hereunder; and [*] per Test after the first 50,000
Tests purchased each calendar year hereunder.
6.2.3 All such purchases of Tests by Tokos shall be F.O.B. Sunnyvale,
California. Payment of the amounts described in Section 6.2.1.1
and 6.2.2.1 shall be due sixty (60) days after the date the
invoice is received by Tokos, which shall be on or shortly
after the date of shipment with respect to the Membrane Test
and Shall be on or shortly after the Test is performed with
respect to the Elisa Test.
6.2.4 Payment of any amounts owing pursuant to Section 6.2.1.2 and
Section 6.2.2.2 shall be made not later than fifteen (15) days
after the end of the month in which such amounts are collected.
6.2.5 Tokos shall, each calendar year, be entitled to an allowance of
Tests for marketing purposes equal to [*] of the number of
Tests which Tokos actually gives away during such year for
marketing purposes for
* [CONFIDENTIAL TREATMENT REQUESTED]
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<PAGE>
which Adeza shall receive no Product Purchases Payments. In
addition, with respect to those Tests which compose [*] of the
number of Tests which Tokos actually gives away during such
year for marketing purposes, Adeza shall be paid only the
amount specified in Section 6.2.1.1 or 6.2.2.1, as the case may
be. Any Tests, within such allowance, not used by Tokos for
marketing purposes within that year, shall not accrue to a
subsequent year. The Tests used for such marketing purposes, in
year one after FDA approval, shall not exceed [*] of the total
number of Tests sold and, in year two and thereafter, shall not
exceed [*] of the total number of Tests sold.
6.2.6 Tokos shall maintain, at its discretion, a current volume
discount program, which will constitute Tokos' targeted selling
price at each identified volume level. In the event that Tokos
chooses to market Tests at an amount more than [*] below the
targeted selling price, Adeza shall be paid as though Tokos had
collected its targeted selling price for each such Test. Each
month, Tokos shall calculate its weighted average selling price
from all sales at each identified volume level which, subject
to Tokos' actual collection experience, shall constitute Tokos'
Average Net Selling Price ("Average Net Selling Price"). Tokos'
deduction for bad debts shall not exceed [*] of the targeted
selling price. See Exhibit 6.2.6 for an example of such
calculation.
6.2.7 In each calendar year after FDA approval of a PMA for PTD
Testing during which this Agreement is Exclusive, Tokos shall
purchase not less than [*] of the number of Tests sold by Adeza
during the immediately preceding calendar year directly or [*]
for use during the calendar year of sale (the "Minimum Annual
Purchase") and, except as provided in Section 6.2.5, shall pay
Adeza not leas than the amount which Adeza would have received
if Tokos had sold that year's Minimum Annual Purchase at Tokos'
Average Net Selling Price (the "Minimum Annual Payment"). As of
the end of the first calendar quarter during each such calendar
year, Tokos shall have purchased not less than [*] of one
quarter of the Minimum Annual Purchase, as of the end of the
second calendar quarter during such calendar year, Tokos shall
have purchased not less than [*] of one half of the Minimum
Annual Purchase and as of the end of the third calendar
quarter, Tokos shall have purchased not less than [*] of three
quarters of the Minimum Annual Purchase. Tokos shall pay Adeza
any amount not paid with respect to the Minimum Annual Payment
on the later of January 15th of the year following the calendar
year for which such Minimum Annual Payment is due or the dates
such payments are otherwise due under this Agreement.
* [CONFIDENTIAL TREATMENT REQUESTED]
-8-
<PAGE>
6.2.8 Tokos shall have the right by written notice delivered to Adeza
on or before July 1 of any calendar year to convert this
Agreement to non-exclusive commencing with such calendar year
by terminating Adeza's obligation not to sell Tests in the
Territory and not to sell to distributors or resellers
authorized to solicit sales of Tests in the Territory. In the
event that Tokos so elects, such obligations of Adeza shall be
so terminated for the remaining term of this Agreement and the
obligation to Tokos to make the Minimum Annual Purchase shall
be terminated for the remaining term of this Agreement. In the
event that Tokos elects to convert the Agreement to non-
Exclusive, Adeza shall sell Tests to Tokos pursuant to this
Agreement at prices which are not in excess of those which it
charges to any commercial distributor of the Tests, or the
general public, in the Territory for comparable quantities
under comparable terms and conditions, whichever is less.
6.2.9 To the extent that Adeza's [*] are used for a Testing purpose
for which the Tests have not been approved by the FDA, then the
Annual Minimum Purchase described in Section 6.2.7 shall be
equitably adjusted to reflect the amount by which the [*]
attributable to such non-FDA approved Testing purpose exceeds
Tests sold in the Territory which are used for such non-FDA
approved Testing purpose.
6.2.10 All sales of Tests by Tokos to an at least 50% owned affiliate,
subsidiary or joint venture (an "Affiliate") shall be
disregarded for purposes of determining the amounts due to
Adeza hereunder and such amounts shall be calculated on the
basis of the amounts received by such entity when the Tests are
resold to an entity which is not an Affiliate of Tokos. To the
extent that Tokos sells 50% or more of the Elisa Tests or the
Membrane Tests bundled together with any other product or
service, Tokos and Adeza shall agree in writing as to the
portion of such bundled price which shall be treated as
applicable to the Tests for purposes of calculating the amounts
due to Adeza pursuant to Sections 6.2.1 and 6.2.2 hereof.
6.2.11 The dollar figures set forth in Sections 6.2.1 and 6.2.2 hereof
shall be adjusted annually beginning twelve months after FDA
approval of the PMA application referred to above by any
increase in the United States Consumer Price Index from the
date of such FDA approval to such date. Beginning with the
sixth such annual adjustment, in the event that the Average
Selling Price of the Tests does not exceed the total of the
dollar figures set forth in Section 6.2.1 and 6.2.2 hereof as
so adjusted pursuant to this Section 6.2.11, the parties hereto
agree that the total of any such subsequent adjustment shall
only be permitted when and to the extent that the Average
Selling Price does so exceed such dollar figures prior to such
adjustment and any such partial adjustment shall be allocated
between Tokos and Adeza in proportion to the respective dollar
figures for such
* [CONFIDENTIAL TREATMENT REQUESTED]
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<PAGE>
parties. Any such adjustment which is not permitted during a
year as a result of the fact that the Average Selling Price
does not exceed the total of the dollar figures set forth in
Section 6.2.1 and 6.2.2 hereof may be carried forward to
subsequent years to the extent that the Average Selling Price
exceeds the total of such dollar figures in the future. See
Exhibit 6.2.11 for an example of such calculation.
6.2.12 In the event that the United States government initiates a
catastrophic change in reimbursement for the Tests, if Tokos
reasonably determines in good faith that it can not reasonably
provide the Tests pursuant to such reimbursement policies given
the prices for the Tests set forth in Section 6.2 hereof, Tokos
shall have the right to propose an alternative price structure
to Adeza in order to allow Tokos to reasonably provide such
Tests pursuant to such reimbursement policy. If Adeza does not
agree to such proposal, and Adeza and Tokos are not otherwise
able to agree upon alternative pricing which will allow Tokos
to reasonably provide such Tests pursuant to such reimbursement
policy, Tokos shall be entitled to submit to arbitration the
question of whether alternative prices can be provided by
Adeza, which provide Adeza with recovery of its direct and
indirect costs related to such Tests; Tokos with recovery of
its direct and indirect costs related to such Tests, and a
reasonable profit which shall be split one third to Adeza and
two-thirds to Tokos. In such event Adeza and Tokos shall agree
to amend this Agreement to provide Tests upon such alternative
prices.
6.3 Records. Tokos shall at all times keep accurate financial accounts of
-------
the sales of Tests in accordance with reasonable business and
accounting practices, and shall render a full statement of the same in
writing to Adeza for each calendar quarter during the term of this
Agreement, within thirty (30) days of the end of such calendar
quarter. Adeza shall have the right, at its own expense, to examine
the books of Tokos for the purpose of verifying product payments due
under this Agreement. In the event that Tokos has understated the
amount owing to Adeza by 10% or more with respect to any period
examined by Adeza, Tokos shall reimburse Adeza for all reasonable
costs of such examination.
6.4 Past Due Amounts. Product Purchase Payments outstanding for more than
----------------
sixty (60) days will be subject to a monthly charge, commencing on the
61st day, at an annual rate equal to the average Prime Rate plus one
percent (1%), as published in the Wall Street Journal, for the period
-------------------
for which such charge is being applied. It is agreed that it would be
impractical or extremely difficult to fix the actual damages suffered
by Adeza as a result of Tokos' failure to make timely payment.
Accordingly, Tokos and Adeza agree that the late payment charge
provided for herein is a reasonable estimate of such damages and shall
serve as liquidated damages in the event of late payment by Tokos.
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<PAGE>
VII. DEVELOPMENTS
7.1 Joint Development. If during the term of this Agreement, Adeza
-----------------
determines after conducting research that development should be
undertaken with respect to subsequent generation PTD diagnostic
products, whether of fetal fibronectin or another protein which can be
used as a predictor of PTD, Tokos shall be provided the opportunity to
participate in such development. To that end, Tokos shall be kept
informed by Adeza with respect to any research it is conducting. Adeza
shall also provide Tokos with a development proposal providing Tokos
with an opportunity to participate in the development of such Test, as
set forth in such proposal, and in exchange therefor to receive rights
and obligations to market such Test pursuant to the marketing rights
and obligations which Tokos then has pursuant to this Agreement, or
such further terms and conditions as the parties shall agree. The cost
of such development efforts shall be funded [*] by Adeza and [*] by
Tokos, since the Territory is approximately [*] of the world market.
However, the parties shall negotiate in good faith to determine
whether such development costs should be shared on a different basis,
taking into consideration items such as the relative value of the
development to the parties, considering for example the importance of
the development for the Territory as compared with other markets in
the world and the relative importance of such development to the
marketing approaches used inside and outside the Territory and the
amount of funding Adeza has spent on research with respect to such
proposed Test prior to the time of such development proposal.
Notwithstanding the above, the costs of patent filing, prosecution and
maintenance in the Territory with respect to new product development
in which Tokos participates pursuant to this Section shall be
allocated in full to Tokos. If Tokos does not participate in the
funding for the development of such Test, Tokos shall have no rights
with respect to such Test as a result of this Section, and Adeza shall
be free to proceed with the development of such Test independently or
using other funding sources.
7.2 Tokos Information. To the extent that Tokos becomes aware of any
-----------------
research or technology, whether at academic, medical or commercial
institutions, which it believes might potentially lead to development
of a fetal fibronectin in vitro immunoassay product or an in vitro
immunoassay diagnostic test for PTD, Tokos shaft provide Adeza with
such information so as to allow Adeza to investigate whether Adeza
should license or otherwise acquire or duplicate such research or
technology for the development of a test. Any development of such a
test by Adeza would be subject to the provisions of Section 7.1
hereof. In the event that Adeza does not notify Tokos of its decision
whether or not to proceed to negotiate for the rights to such test
within ninety (90) days of Tokos' providing the information to Adeza,
Adeza shall have no rights with respect to such test as a result of
this Section, and Tokos shall be free to proceed with respect to such
test.
7.3 OBA Development. If Adeza has commercially developed its Optical
---------------
Bioassay System ("OBA"), then to the extent that Tokos wishes to have
Adeza format the
* [CONFIDENTIAL TREATMENT REQUESTED]
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<PAGE>
Tests on to OBA as development pursuant to the provisions of Section
7.1 hereof, Adeza shall fund such development to format the Tests onto
the OBA without contribution by Tokos pursuant to Section 7.1 hereof,
up to a maximum of such development expense for Adeza of [*].
VIII. PATENT LITIGATION
8.1 Indemnity. Adeza will defend at its own expense, any claim, suit or
---------
proceeding brought against Tokos to the extent it is based upon a
claim that any Test sold pursuant to this Agreement infringes on any
patent, copyright or trade secret of any third party. Tokos agrees
that it shall promptly notify Adeza in writing of any such claim or
action and give Adeza full information and assistance in connection
therewith. Provided Adeza can demonstrate to the reasonable
satisfaction of Tokos and Tokos' insurance carrier that Adeza is
financially capable of fulfilling its obligations under this Section,
Adeza shall have the sole right to control the defense of any such
claim or action and the sole right to settle or compromise any such
claim or action. In the alternative event that Adeza cannot so
demonstrate its financial capability, Tokos shall have the right, but
not the obligation, to so control the defense and Tokos' exercise of
such right shall not relieve Adeza of any liability hereunder. If
Tokos complies with the provisions hereof, Adeza will pay any damages,
costs and expenses, including attorney fees, finally awarded to third
parties against Tokos in such action. If a Test is, or in Adeza's
opinion might be, held to infringe as set forth above, Adeza may, at
its option, replace or modify such Test so as to avoid infringement,
or procure the right for Tokos to continue the use and resale of such
Test. If neither of such alternatives is, in Adeza's opinion,
reasonably possible, any infringing Tests shall be returned to Adeza
and Adeza's sole liability, in addition to its obligation to reimburse
awarded damages, costs and expenses set forth above, shall be to
refund the amounts paid for such returned Tests by Tokos; provided,
however, that if such determination occurs prior to Adeza's receipt of
FDA approval of the PMA described in Section 6.1.2 hereof, upon such
determination Adeza shall provide to Tokos warrants to purchase
capital stock of Adeza, exercisable for up to five years from the date
of issuance, having a total exercise price equal to the amount of all
payments made to Adeza by Tokos pursuant to Section 6.1 hereof and a
per share exercise price equal to the fair market value of such
capital stock on the date of the issuance of such warrants. To the
extent, however, that Adeza has conducted an initial public offering
of its capital stock prior to such determination, the total exercise
price of the warrants to be so issued shall be reduced to an amount
equal 50% of the difference between the total of all payments made by
Tokos to Adeza pursuant to Section 6.1 hereof and the amount by which
the value (on the date of the issuance of such warrants) of the
capital stock purchased by Tokos pursuant to that certain Series E
Preferred Stock Purchase Agreement of even date herewith exceeds the
purchase price which Tokos paid for such capital stock.
* [CONFIDENTIAL TREATMENT REQUESTED]
-12-
<PAGE>
8.2 Limitations. Adeza will have no liability for any claim of
-----------
infringement to the extent such infringement is a result of either
Tokos' use of a Test in combination with any items not supplied by
Adeza, and/or any modification of a Test by Tokos or third parties to
the extent such modification is responsible for such infringement.
8.3 Entire Liability. THE FOREGOING STATES THE ENTIRE LIABILITY OF ADEZA
----------------
TO TOKOS OR ANY PURCHASER OF TESTS CONCERNING INFRINGEMENT OF
INTELLECTUAL PROPERTY RIGHTS, INCLUDING BUT NOT LIMITED TO, PATENT,
COPYRIGHT AND TRADE SECRET RIGHTS.
8.4 Infringement. If either Adeza or Tokos shall become aware of any
------------
significant infringement of Adeza's patent rights in the Territory
with respect to the Tests, Adeza or Tokos shall notify the other with
respect to such infringement and the parties shall attempt to agree
upon a course of action with respect to such infringement, including
whether an infringement action shall be undertaken, and if so, whether
by one party or the other or jointly, and how the costs of such
infringement action should be borne and how any potential recovery
from such infringement action should be divided.
8.4.1 In the event that Tokos and Adeza fail to agree on a joint
course of action with respect to an infringement action, Tokos
shall have the first right to prosecute such infringement
action in the Territory. If Tokos so elects to prosecute any
such infringement action, Tokos may commence such prosecution
in Adeza's name after giving Adeza ninety (90) days notice of
its intent to do so, unless compliance with any applicable
statute of limitations would require a shorter notice period.
Such prosecution shall be funded and conducted by Tokos, and
Adeza shall cooperate fully with Tokos in such prosecution,
supplying all information and assistance determined by Tokos,
in its sole discretion, to be necessary. In the event Tokos is
successful in such prosecution, any award to the extent that it
exceeds Tokos' out of pocket costs in such infringement action
shall be shared two-thirds to Tokos and one- third to Adeza.
8.4.2 In the event that Tokos elects not to prosecute such
infringement action, Adeza shall have the right to do so. Such
prosecution shall be funded and conducted by Adeza, and Tokos
shall cooperate fully with Adeza in such prosecution, supplying
all information and assistance determined by Adeza, in its sole
discretion, to be necessary, in the event Adeza is successful
in such prosecution, any award to the extent that it exceeds
Adeza's out of pocket costs in such infringement action shall
be shared two-thirds to Adeza and one-third to Tokos.
-13-
<PAGE>
8.5 Patent Maintenance. Adeza shall make all filings, pay all filing fees
------------------
and pay all license fees necessary to maintain in force and maintain
their position in all of the patents and patent applications listed on
Schedule 3.1 as well as patents issued thereon.
IX. TERM AND TERMINATION
9.1 Term. This Agreement shall become effective on the date hereof, and
----
unless earlier terminated under this Article, shall remain in force
until [*]
9.2 Breaches. Either party may terminate this Agreement upon written
--------
notice to the other party in the event that the other party is in
material breach of any of the provisions hereof and has failed to cure
such breach within 30 days of notice thereof unless the nature of such
breach prohibits its cure within thirty (30) days in which event the
cure period shall be such longer time as may be necessary provided the
process is commenced within thirty (30) days of notice and continued
efforts toward cure are maintained.
9.3 Termination If Test Can Not Be Legally Marketed. If someone other
-----------------------------------------------
than Adeza secures patent protection in the United States for the
Technology, or for another similar technology, so that Tokos cannot in
its judgment legally use or market the Tests, then Tokos shall have
the right to terminate this Agreement immediately upon written notice
to Adeza.
9.4 Termination for [*]. In the event that [*], Tokos shall be entitled to
terminate this Agreement effective immediately upon written notice to
Adeza. Alternatively, in such event, if Tokos reasonably determines in
good faith that [*]
9.5 Effect of Termination. Termination or expiration of this Agreement
---------------------
shall be without prejudice to the rights of Adeza to receive the
Product Purchase Payments
* [CONFIDENTIAL TREATMENT REQUESTED]
-14-
<PAGE>
and the reports due or arising under this Agreement as a result of
actions taken prior to such termination or expiration of this
Agreement. Termination or expiration of this Agreement shall similarly
be without prejudice to the rights of Tokos to cease any payments
which may otherwise be owing to Adeza or to recoup any payments
already made to Adeza. Termination of this Agreement shall not relieve
Tokos of the confidentiality obligations provided for in this
Agreement.
X. SUITABILITY/LIABILITY
10.1 Tokos understands that it is responsible for satisfying itself as to
the suitability of Tests for the purposes of entering into this
Agreement.
XI. WARRANTY
11.1 Adeza warrants that each of the Tests will be free from defects in
manufacturing and workmanship and perform in accordance with Adeza's
published specifications for such Test. In the event that any such
Test contains a defect in manufacturing or workmanship or does not
perform in accordance with such published specifications, Adeza will
replace such Test or at Adeza's discretion refund the purchase price
of such Test.
XII. INDEMNIFICATION
12.1 Adeza. As additional consideration for Tokos entering into this
-----
Agreement, Adeza hereby covenants and agrees to indemnify, defend and
hold Tokos (together with its officers, directors, agents,
contractors, employees and representatives) harmless from and against
all claims, demands, causes of action, judgments, damages, costs and
expenses (including without limitation, reasonable attorneys' fees and
court costs), deficiencies, settlements and investigations which
relate to matters, actions or omissions arising or occurring as a
result of any activity (or lack thereof) under this Agreement to the
extent that Adeza is solely and directly responsible for or the cause
of such activity (or lack thereof).
12.2 Tokos. As additional consideration for Adeza entering into this
-----
Agreement, Tokos hereby covenants and agrees to indemnify, defend and
hold Adeza (together with its officers, directors, agents,
contractors, employees and representatives) harmless from and against
all claims, demands, causes of action, judgments, damages, costs and
expenses (including without limitation, reasonable attorneys' fees and
court costs), deficiencies, settlements and investigations which
relate to matters, actions or omissions arising or occurring as a
result of any activity (or lack thereof) under this Agreement to the
extent that Tokos is solely and directly responsible for or the cause
of such activity (or lack thereof).
XIII. MISCELLANEOUS
-15-
<PAGE>
13.1 Assignment. Neither party shall have the right to assign, pledge or
----------
otherwise encumber this Agreement or its rights hereunder, in whole or
in part, without the prior written consent of the other, which consent
shall not be unreasonably withheld, other than to a wholly owned
subsidiary of the party or pursuant to a corporate reorganization or
an acquisition of the parry, whether by merger or by sale of
substantially all of the assets of the party. Adeza shall have the
right, upon written notice to Tokos, to assign the collection of
amounts due hereunder; in no event, however, shall Tokos be obligated
to deal with more than one party in payment of said amounts.
13.2 Confidentiality. Tokos shall maintain confidential and shall not use
---------------
for any purpose other than that stipulated herein any part of the
technical information, proprietary information or trade secrets
received from Adeza in connection With this Agreement; provided,
however, that the obligations of this Section 13.2 shall not apply to
information which:
(a) is in the possession of Tokos prior to its receipt from Adeza as
evidenced by written documents;
(b) is or hereafter becomes publicly known through no fault of Tokos;
or
(c) is disclosed to Tokos by a third party entitled to disclose it.
13.3 Governing Law. All matters affecting the interpretation, form,
-------------
validity, enforcement and performance of this Agreement shall be
decided under the laws of the State of California. No provisions of
this Agreement shall be applied or construed in a manner inconsistent
with applicable federal or California laws and regulations.
13.4 Waiver. The failure of either party hereto to enforce, or the delay
------
by either party in enforcing, any of its rights under this Agreement
shall not be deemed a continuing waiver or a modification thereof and
either party may, within the time provided by applicable law, commence
appropriate legal proceeding to enforce any or all of such rights.
13.5 Notices. Any notice required or permitted under this Agreement shall
-------
be in writing and shall be deemed to have been given for all purposes
hereof if hand delivered or sent via a reputable air courier service
(such as Federal Express, DHL, or Emery) offering delivery in not more
than three (3) working days, with courier charges prepaid, and
addressed to the party at the address below:
If to Tokos:
Chief Executive Officer
Tokos Medical Corporation
1821 East Dyer Road
-16-
<PAGE>
Santa Ana, California 92705
If to Adeza:
Adeza Biomedical Corporation
1240 Elko Drive
Sunnyvale, California 94089
Notice will be deemed served on the fourth business day following
the date of delivery of the notice, properly addressed, into the
hands of such air courier. The addresses may be changed by either
party by notice confirming with the notice provisions.
13.6 Successors. This Agreement shall be binding upon, and inure to the
----------
benefit of, the respective representatives, successors, and assigns
of the parties hereto.
13.7 Attorney's Fees. In the event any action, suit, arbitration or
---------------
other proceeding is instituted to remedy, prevent, or obtain relief
from a breach of this Agreement, or arising out of a breach of this
Agreement, the prevailing party shall recover reasonable attorney's
fees incurred in each and every such action, suit, arbitration or
other proceeding, including any and all appeals or petitions
therefrom from the losing party, unless awarded differently in the
proceedings.
13.8 Severability. In the event that any provision of this Agreement
------------
(other than a provision which involves the essence of the
consideration for this Agreement) is declared invalid, unenforceable
or void to any extent by a court of competent jurisdiction, such
provision shall be modified, if possible, by reducing its duration
and scope to allow enforcement of the maximum permissible duration
and scope. In any event, such declaration shall not affect the
remaining provisions and this Agreement shall be enforced as
modified, or if no modification is enforceable, as if such invalid
clause had not been included.
13.9 Legal Relationship of the Parties. The relationship between Adeza
---------------------------------
and Tokos hereunder is that of independent contractors. Nothing in
this Agreement or otherwise shall be interpreted to give either
party an interest in the other or its business. Neither party is,
nor shall they be, the agent, legal representative, joint venturer,
partner or employee of the other for any purpose. Except as
expressly sat forth in this Agreement, neither party has the right
or authority to make any representation, promise, guaranty or
warranty on the other's behalf; or in any other way to assign or
create any obligation of any kind expressed or implied, on behalf of
the other or to bind it in any way; to accept any service of process
upon it; or to receive any notices relative to the other of any
nature whatsoever.
13.10 Entire Agreement. This Agreement constitutes the entire Agreement
----------------
between the parties on the subject matter hereof and supersedes all
previous discussions,
-17-
<PAGE>
promises or representations. No alteration or modification of this
Agreement shall be valid unless agreed to in writing and duly signed
by both parties. This Agreement was drafted by representatives of
both parties and shall not be construed against either party on the
basis of the party being the drafter of the Agreement.
13.11 Force Majeure. Neither party shall be liable for any failure to
-------------
perform any of its obligations hereunder (other than the payment of
money) which results from an act of God, the elements, fire, flood,
component shortages, force majeure, riot, insurrection, industrial
dispute, accident, war, embargoes, legal restrictions or any other
cause beyond the control of the party. Adeza agrees to take all
necessary steps to return to normal business activities as soon as
possible following one of the events listed above.
13.11 Counterparts. This Agreement may be executed in counterparts, and
------------
when each party has signed and delivered at least one such
counterpart, each counterpart shall be deemed an original, and, when
taken together with other signed counterparts, shall constitute one
Agreement, which shall be binding upon and effective as to all
parties.
-18-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties through
their duly authorized officers effective as of the day and year first above
written.
TOKOS MEDICAL CORPORATION ADEZA BIOMEDICAL CORPORATION
By: /s/ Robert F. Byrnes By: /s/ Andrew E. Senyei
-------------------------- ----------------------------
Robert F. Byrnes Andrew E. Senyei, M.D.
Its: Chairman Its: Chairman
-19-
<PAGE>
SCHEDULE 3.1
Preterm Delivery Tests and Reagents
-----------------------------------
M-1726-1P U.S. Patent Application Serial No. 07/244,969
Filed September 15, 1988
Title: PRETERM LABOR AND MEMBRANE RUPTURE TEST
AND REAGENTS
Status: Allowed - Issue Fee paid December 5, 1991
Relation: CIP of 07/121,893 and 07/121,899, both filed
November 17, 1987 (69.0016 and 69.0020)
Inventors: Andrew E. Senyei and Nelson N.H. Teng
Foreign counterparts: See M-1724 FF
--------------------
M-1724 FF Combination of applications M-1656-2P, M-1726-1P,
M-1658-1P, M-1657-1P, and 69.0038 (now abandoned)
Title: VAGINAL SAMPLE TEST AND REAGENTS
Status: Pending
Inventors: Nelson N.H. Teng and Andrew E. Senyei
Foreign counterparts:
--------------------
M-1724 Australia 25177/88 November, 1988
M-1724 Canada 583,160 November 15, 1988
M-1724 EPO 88119147.2 November 17, 1988
Pub. # 0316919. May 24, 1989
M-1724 Japan 289007/88 November 17, 1988
M-1741 U.S. Patent 4,919,889
U.S. Patent Application Serial No. 07/244,984
Filed September 15, 1988
Title: SAMPLE COLLECTION AND TRANSPORT FLUID
COMPOSITION
Status: Patent Granted April 24, 1990
Inventors: Lynn Jones, Lloyd H. Smith and Nelson N.H. Teng
M-1742 U.S. Patent Application Serial No. 07/628,282
Filed December 14, 1990
Title: REAGENTS AND KITS FOR DETERMINATION
OF FETAL RESTRICTED ANTIGENS
Status: Pending
Inventors: Andrew E. Senyei and Nelson N.H. Teng
Foreign Counterparts:
--------------------
M-1742 PCT PCT December 9, 1991
<PAGE>
Pregnancy Associated Tests
--------------------------
M-1656-3C U.S. Patent Application Serial No. 07/732,364
Filed July 18, 1991
Title: ECTOPIC PREGNANCY TEST
Status: Pending. Response mailed 10/16/91
Relation: Continuation of SN 274,268 Filed November 18, 1988
Inventors: Andrew E. Senyei and Nelson N.H. Teng
Foreign counterparts: See M-1724 FF
--------------------
M-1657-1P U.S. Patent Application Serial No. 07/282,426
Filed December 12, 1988
Title: FETAL RESTRICTED ANTIGEN PREGNANCY TEST
Status: Pending - Response mailed 10/15/91
Relation: CIP of Serial No. 212,900 (M-1657)
Filed November 17, 1987
Inventors: Andrew E. Senyei and Nelson N.H. Teng
Foreign counterparts: See M-1724 FF
--------------------
M-1658-1P U.S. Patent Application Serial No. 07/274,267
Filed November 18, 1988
Title: EX VIVO PRODUCT OF CONCEPTION TEST
Status: Pending - Response mailed 10/15/91
Relation: CIP of Serial No. 121,894 (M-1658)
Filed November 17, 1987
Inventors: Nelson N.H. Teng and Andrew E. Senyei
Foreign counterparts: See M-1724 FF
--------------------
Licensed Patent
---------------
U.S. Patent Application Serial No. 4,894,326
Filed April 9, 1986
Title: MONOCLONAL ANTIBODY DEFINING ONCOFETAL
STRUCTURE OF FIBRONECTIN
Status: Patent granted January 16, 1990
Inventors: Hidemitsu Matsuura and Sen-itiroh Hakomori
-2-
<PAGE>
SCHEDULE 6.2.7
[*]
- ------------------
[*]
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
EXHIBIT A
The Fetal Fibronectin Enzyme Immunoassay is a quantitative solid-phase,
enzyme-linked immunoabsorbent assay (ELISA) performed by Adeza Diagnostic
Services. Samples are collected from the vagina utilizing the Adeza Specimen
Collection Kit. Specimens are forwarded to Adeza [*]. The sample results are
provided in a summary report upon completion.
The Fetal Fibronectin Membrane Immunoassay is a solid-phase, immunogold
assay. Specimens obtained from the vagina are [*] producing a visible spot. A
visible ring around the perimeter of the device after a sample is run provides
an assay control. A positive sample will result in a single spot within the
ring.
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
December 20, 1994
Mr. Daniel O. Wilds
President and Chief Executive Officer
ADEZA Biomedical Corporation
12411 Elko Drive
Sunnyvale, CA 94089
Re: Exclusive Marketing Rights Agreement between Tokos Medical Corporation
----------------------------------------------------------------------
and ADEZA Biomedical Corporation dated December 31, 1991 (the
-------------------------------------------------------------
"Agreement")
------------
Dear Dan:
This letter shall document our mutual understanding with regard to the
payment by Tokos to ADEZA of [*] pursuant to Sections 6.1.2 and 6.1.3 of the
Agreement (as you know, [*] has already been paid). Tokos acknowledges the
obligation and agrees to pay ADEZA upon FDA acceptance of ADEZA's PMA applicaton
notwithstanding the fact that ADEZA has submitted a PMA application for the
"Eliza Test" rather than the "Membrane Test." As you know, Section 5.3 of the
Agreement requires ADEZA to ". . .allocate from Marketing Rights Payments and
Product Purchase Payments all amounts necessary to undertake and successfully
complete all necessary studies."
To indicate your agreement please execute this letter and return it to me.
The other copy is for your files.
Very truly yours,
/s/ ROBERT F. BYRNES
----------------------
Robert F. Byrnes
Agreed and accepted:
ADEZA
By: /s/ Daniel O. Wilds
-------------------------------------
Daniel O. Wilds
President and Chief Executive Officer
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
January 13, 1995
VIA FACSIMILE (714) 474-9658
Mr. Robert F. Byrnes
Chairman of the Board
Chief Executive Officer
Tokos Medical Corporation
1821 East Dyer Road
Santa Ana, California 92705
Dear Bob:
Relative to our discussions concerning an acceptable payment schedule for
the remaining [*] milestone obligation due Adeza as a result of the December,
1994 filing of its Fetal Fibronectin Enzyme Immunoassay PMA, Adeza can accept
the payment schedule outlined below in appreciation for Tokos' advancement of
[*] dollars in October, 1992 prior to the attainment of the milestone:
Schedule:
=======================================================
<TABLE>
<CAPTION>
Payment Date Amount
=======================================================
<S> <C> <C>
First Payment January 18, 1995
[*]
=======================================================
Second Payment July 1, 1995
[*]
=======================================================
Third Payment/1/ October 1, 1995
[*]
=======================================================
Fourth Payment/2/ January 1, 1996
[*]
=======================================================
</TABLE>
Notes: /1/ The Third Payment will be delayed until January 1, 1996 if Adeza is
successful in increasing its available cash, a minimum of an
equivalent amount of the Third payment via some other major funding
event prior to October 1, 1995.
/2/ The Fourth Payment will be delayed until March 1, 1996 if the Adeza
is successful in increasing its available cash a minimum of an
equivalent amount of the Third and the Fourth payment via some other
major funding event before January 1, 1996.
/3/ Tokos will pay Adeza the balance of the unpaid [*] milestone
obligation within 15 days following the completion of sublicensing
its marketing rights to any third party acceptable to Adeza under
the terms of the existing agreement between Tokos and Adeza or if
Adeza receives PMA approval prior to the completion of the Fourth
Payment.
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
Providing that the payment schedule is acceptable to Tokos, please make the
necessary arrangements to have the first payment of [*] forwarded to Adeza as
soon as possible and indicate your agreement by executing this letter and
returning it to me.
Very truly yours,
/s/ DANIEL O. WILDS
- -------------------------------------
Daniel O. Wilds
President and Chief Executive Officer
cc: D. Senyei, M.D., Chairman
C. Taylor, Finance Committee
Officers
Agreed and accepted:
TOKOS MEDICAL CORPORATION
By: /s/ Robert F. Byrnes
-----------------------
Robert F. Byrnes
Chairman of the Board
Chief Executive Officer
* [CONFIDENTIAL TREATMENT REQUESTED]
-2-
<PAGE>
May 8, 1996
Mr. Daniel O. Wilds
President and Chief Executive Officer
Adeza Biomedical Corporation
1240 Elko Drive
Sunnyvale, CA 94089
Re: Exclusive Marketing Agreement, dated December 31, 1991, between
Adeza Biomedical Corporation and Tokos Medical Corporation (the
"Agreement")
---------------------------------------------------------------
Dear Dan:
This letter agreement (this "Letter") sets forth the additional
understanding and agreements that have been reached between Adeza Biomedical
Corporation, a California corporation ("Adeza"), and Matria Healthcare, Inc.
("Matria"), a Delaware corporation and the successor by merger to Tokos Medical
Corporation ("Tokos") concerning the Agreement. This Letter shall serve as an
amendment to the Agreement pursuant to Section 13.10 of the Agreement. If there
is any conflict between the provisions of this Letter and the Agreement, the
terms of this Letter shall control. Capitalized terms used herein which are not
otherwise defined in this Letter shall have the meaning ascribed to them in the
Agreement.
1. Marketing Plans. Matria agrees to refine and expand the marketing plan
---------------
provided to Adeza in August and September, 1995 (the "Marketing Plan")
to cover a [*] period of time extending through [*] and to include
forecasts for Canada and Puerto Rico in addition to the United States
on the express condition and agreement that (i) the Marketing Plan is
acceptable to Adeza for the time periods and locations currently set
forth therein and is hereby approved pursuant to Section 2.2 of the
Agreement, (ii) nothing contained in the Marketing Plan itself shall
be deemed to extend or otherwise limit in any way the rights and
obligations of the parties under Articles IV and VI of the Agreement,
and (iii) the Marketing Plan will be revised as promptly as
practicable to reflect the introduction of the Tests into Canada and
Puerto Rico after the market for the Tests and the retail price
thereof and reimbursement therefor have been generally established in
the United States, and such market will be deemed established upon the
cumulative sale by Matria of [*] Tests in the United States; provided,
however, that
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
Mr. Daniel O. Wilds
May 8, 1996
Page 2
such revision shall be completed no later than 90 days after such
market has been established.
2. Clinical Trials. Matria agrees to work with Adeza to establish a
---------------
"Research Committee" composed of two representatives of each of Adeza
and Matria for the purpose of establishing the general framework,
protocols and timeliness of any additional clinical study deemed
necessary under Section 5.3 of the Agreement. The Research Committee
will meet no less often than once per calendar quarter, either by
telephone conference call or in person, with any in person meetings to
be convened at alternating sites between Matria and Adeza. The
Research Committee will also determine any additional clinical studies
which may be reasonably appropriate with respect to the Tests and the
timing of such additional studies. Notwithstanding the foregoing,
subject to agreement between Adeza and Matria with respect to
appropriate protocols and process of obtaining IRB approval at various
clinical sites, the following clinical trials are the only clinical
trials considered by the parties to be necessary within the meaning of
Section 5.3 of the Agreement, and such clinical trials shall be
undertaken and completed as expeditiously as practicable, unless
otherwise mutually agreed by the parties in writing:
(i) One (1) National Institute of Health ("NIH") Intervention Study
seeking to demonstrate [*] shall be supported by Adeza with Test
kits, specimen collection kits and laboratory analysis work in
such amounts as Adeza normally provides or pays for in
connection with supporting an NIH clinical study.
(ii) One (1) Induction Trial of a size and scope which, if
successful, is designed to demonstrate [*],and is designed to be
sufficient for submission with a PMA Application or PMA
Supplement to the FDA.
(iii) One (1) Intervention Study seeking to demonstrate [*].
(iv) All such clinical studies as shall be required for (a) the
maintenance of the existing FDA approval to market the ELISA
Test to symptomatic
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
Mr. Daniel O. Wilds
May 8, 1996
Page 3
patients, (b) obtaining the initial FDA approval of the
Dipstick Assay (as defined below) for any purpose, and (c)
obtaining FDA approval to market the ELISA Test to low-risk
asymptomatic patients.
As provided in Section 5.3 of the Agreement, completion of the
clinical studies (except to the extent that they involve the efforts
of the NIH) described in subsections (i) through (iv) of this
Section 2 shall be the responsibility of and shall be paid for by
Adeza; provided, however, that the amounts Adeza will be required to
spend on such studies either individually or in the aggregate will be
limited as the Research Committee may agree. Any additional clinical
studies approved by the Research Committee shall be undertaken by
Adeza, and all expenses related to such additional studies shall be
shared by Adeza and Matria in such proportion as unanimously
determined by the Research Committee. In the event the Research
Committee is unable to reach unanimous consent as to the appropriate
allocation of such expenses, the parties hereby agree to enter into
limited, binding mediation solely with respect to such allocation.
Each of Adeza and Matria will appoint one (1) representative, and
these representatives will jointly select one (1) additional,
independent representative. The appropriate allocation of expenses
shall be determined by these three representatives within thirty (30)
days after the selection of the independent third representative. Any
amounts which Adeza is required to expend as a result of the
foregoing or Section 5.3 of the Agreement may be paid from any
source, whether or not such amounts are derived from Marketing Rights
Payments or Product Purchase Payments.
3. Rapid Assay Test. The parties acknowledge and agree that the
----------------
so-called Rapid Assay Test or Dipstick Assay (both such terms
representing one and the same Test which is described below and which
is hereinafter referred to as the "Dipstick Assay") currently under
development by Adeza is a Fetal Fibronectin Membrane Immunoassay Test
and, as such, is a type of Membrane Test encompassed by and subject
to the terms of the Agreement, as amended hereby, to its fullest
extent; provided, however, that the Dipstick Assay shall not be
considered to be a Membrane Test for purposes of Sections 6.1.2 and
6.1.3 of the Agreement. The parties agree Sections 6.1.2 and 6.1.3 of
the Agreement refer to the ELISA Test and not the Dipstick Assay and
that no additional marketing payments shall be due pursuant to
Sections 6.1.1, 6.1.2 and 6.1.3 of the Agreement.
<PAGE>
Mr. Daniel O. Wilds
May 8, 1996
Page 4
Adeza and Matria agree that the Dipstick Assay is not a
subsequent generation PTD diagnostic product within the meaning of
Section 7.1 of the Agreement. The existing paragraph 2 of Exhibit A to
the Agreement is hereby deleted and replaced in its entirety with the
following:
"Dipstick Assay". The Fetal Fibronectin Dipstick Immunoassay is a
--------------
solid-phase immunochromatographic colloidal gold assay for the
qualitative detection of fetal fibronectin in vaginal secretions. A
vaginal specimen, obtained from either the posterior fornix of the
vagina or the external cervical os using a sterile Dacron swab
provided in the kit, is immersed in a special buffer prior to
performance of the assay. The assay is initiated by immersing the
dipstick into the buffer containing the patient specimen. The buffer
is absorbed by an absorbent pad [*] produces a visible pinkish-red
line across the device signifying a "positive" test result. When there
is no fetal fibronectin in the patient specimen, no line appears in
the center of the device signifying a "negative" test result. A
visible line at the top of the reaction zone of the dipstick develops
as the assay is run and serves as an assay procedural control,
regardless of the presence or absence of fetal fibronectin in the
patient specimen."
4. ELISA Kit Prices. In order to clarify Section 6.2.2 of the Agreement
----------------
insofar as it relates to an ELISA Kit as opposed to an ELISA Test,
the parties agree that an ELISA Kit shall be comprised of one
microtitre plate, one control kit and the equivalent of twenty-four
(24) single sample specimen collection kits. The existing Section
6.2.2 of the Agreement is hereby amended to add the following:
"6.2.2.3 With respect to each ELISA Kit purchased by Matria:
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
Mr. Daniel O. Wilds
May 8, 1996
Page 5
6.2.2.3.1 In the years ending December 31, 1996 and 1997, an
amount equal to [*] provided, however, that in non event will
Adeza receive less that [*] per ELISA Kit from Matria; and
6.2.2.3.2 In year ending December 31, 1998 [*], an amount equal
to [*]; provided, however, that in no event will Adeza receive
less than [*] per ELISA Kit from Matria."
5. Individual Specimen Collection Kits ("SCKs"). SCKs shall be packaged
--------------------------------------------
by Adeza for one patient sample and delivered to Matria in packages of
not less than [*] per package, or such other number of SCKs as may be
reasonably requested by Matria with no less than sixty (60) days prior
written notice to Adeza; provided, however, Adeza, at its election,
may utilize all of its then existing inventories of its then-existing
packages before accommodating the new requested number of SCKs per
package. Adeza shall not be required to make more than one (1) package
change each year and Adeza shall not be required to maintain more than
one (1) type of packaging at any time. Adeza shall provide Matria at
Adeza's expense, with the following quantities of SCKs during the
following periods:
(i) [*]
(ii) [*]
(ii) [*]
(iii) [*]
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
Mr. Daniel O. Wilds
May 8, 1996
Page 6
(iv) [*]
(v) [*]
Matria agrees to pay Adeza [*] for each SCK ordered by Matria
during each period set forth above in excess of the applicable
quantity for such period within thirty (30) days of the close of each
period.
On or before [*] the parties agree to meet to determine the
number of SCKs deemed reasonably necessary and appropriate to be
provided by Adeza on an ongoing basis in order to fulfill Matria's
reasonable requirements for SCKs under the Agreement and the price of
the SCKs. The parties agree that their goal is to reduce the number of
SCKs Adeza is required to provide to Matria without interrupting the
business of either Matria or Adeza; provided, however, that in no
event shall the number of SCKs provided at Adeza's expense be less
than one (1) times the number of ELISA Tests sold to Matria without
the prior written approval of Matria.
For the purposes of the Agreement and the Letter, the term
SCK shall not include any specimen collection kits included as part of
an ELISA Kit.
6. Freight Expense. As part of this Letter and in an effort to expedite
---------------
the commercial introduction of the Tests, Matria hereby agrees to
reimburse Adeza by no later than 15 days after the date of written
confirmation by Matria of Adeza's accounting of such expenses, and
Matria agrees to issue such confirmation as soon as practicable after
receipt of such accounting, but in no event shall such confirmation
occur later than April 30 of any particular year unless Matria
reasonably and in good faith raises specific written objections to
such Adeza accounting for all freight charges associated with the
transportation of a Test from any clinician, hospital or health care
facility to Adeza for laboratory analysis ("Freight Expense");
provided, however, that such reimbursement shall be only to the extent
and in the amount, if any, by which the average transportation cost
per Test of all such charges during the year specified below
(calculated by dividing (x) the applicable Freight Expense by (y) the
number of Tests which are received by Adeza, whether or not
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
Mr. Daniel O. Wilds
May 8, 1996
Page 7
analysis is completed, during such period) exceeds the following
amounts ("Threshold Freight Price"):
[*]
In no event shall any Freight Expense or Test be included in (x)
or (y) above if the laboratory analysis is demonstrated by Matria to
not be completed with regard to a particular Test as a result of the
action of Adeza.
In each succeeding [*] thereafter beginning on [*], the Threshold
Freight Price in effect for the next succeeding [*] period shall be
adjusted up or down from the Threshold Freight Price in effect for the
immediately preceding [*] period by an amount equal to the annual
percentage increase or decrease in the Consumer Price Index for all
Urban Wage Earners as published by the Bureau of Labor Statistics for
the preceding calendar year over the calendar year prior thereto.
Adeza shall determine from time to time the method or methods of
appropriate overnight delivery from the designated type or types of
carriers. Adeza shall provide Matria, included as part as of the cost
of the Test, with shipping containers suitable for delivery of the
Test from clinicians, hospitals or health care facilities to Adeza for
laboratory analysis in conformity with the specifications for such
Test.
No later than ninety (90) days after the end of any particular
[*] period specified above, Adeza shall provide Matria with a detailed
accounting of the average transportation expense per Test during the
prior [*] period. Upon seven (7) days prior written notice to Adeza,
Matria shall have the opportunity during reasonable business hours to
inspect
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
Mr. Daniel O. Wilds
May 8, 1996
Page 8
the books and records of Adeza for the purpose of confirming the
calculation in question, if Matria so desires.
Both parties shall utilize reasonable business efforts to reduce
the amount of freight expenses per Test consistent with their
respective duties and obligations to the referring clinician and the
need for prompt overnight delivery. Adeza and Matria agree that during
1997, they will discuss in good faith various actions by either or
both of them which are designed to lower freight expenses per Test
between them, including sharing in appropriate proportions any savings
resulting from such lower freight expenses.
It is agreed by Matria and Adeza that any items delivered to
Matria pursuant to this Letter and the Agreement, including, without
limitation, ELISA Test Kits, SCKs and shipping containers, shall be
F.O.B. Adeza's headquarters in Sunnyvale, California and Matria will
bear all expense and risk of delivery from the F.O.B. point.
7. Clarification of Rights and Responsibilities. It is also agreed
--------------------------------------------
between Adeza and Matria that certain provisions in the Agreement
should be amended as set forth below in order to clearly state the
parties' intent:
(a) Section 2.2 Delete the phrase "So long as Tokos' Marketing rights
-----------
remain exclusive..." from the beginning of the third sentence
because such phrase creates ambiguity as to what the parties'
respective rights are if such exclusivity terminates.
(b) Section 6.2.10 Add the following to the end of the first
--------------
sentence: ";provided, however, this provison shall not apply if
the Affiliate is the end user of the Tests." Add the following to
the end of this Section: "The calculation of 50% set forth in the
preceding sentence will be based on sales of the ELISA Tests or
the Rapid Assay Tests during any particular calendar year. In the
event that less than 50% of such Tests are sold by Matria in a
bundled product offering, the price for stand-alone sales of such
Tests shall be used to determine the price for the applicable
portion of such bundled products."
<PAGE>
Mr. Daniel O. Wilds
May 8, 1996
Page 9
(c) Section 7.1: The parties agree to discuss in good faith
-----------
appropriate modifications to this provision to clarify the
procedures thereunder as possible after the date of the Letter.
(d) Section 9.5. Add the following to the end of this Section: "The
-----------
foregoing is intended to specify certain of the remedies
available to the parties, but it is not intended to be exclusive
and shall not prejudice or otherwise effect the rights of either
party with respect to any remedies available to either of them
at law or in equity."
(e) Sections 12.1 and 12.2. In order to clarify the procedures in
----------------------
the event of indemnification, and the following:
"12.3 Procedures If either party (the "Indemnified Party") receives a
----------
written claim which it believes is the subject of indemnity by the
other party (the "Indemnifying Party"), the Indemnified Party will
give the Indemnifying Party prompt notice of such claim and the
Indemnifying Party will have the right to assume the defense of such
claim with legal counsel of its choice at its expense. The Indemnified
Party may participate through its own legal counsel at its own
expense. The party not defending the claim will render all reasonable
assistance, and all out-of-pocket costs of such assistance will be
paid by the Indemnifying Party. The consent of both parties shall be
required to settle any claim, and such consent shall not be
unreasonably withheld."
8. Release. Upon execution of this Letter and in consideration of the
-------
mutual covenants an agreements set forth herein, Matria, and its
predecessors and successors and assigns, including, without
limitation, Tokos, hereby fully and forever releases and discharges
Adeza and its officers, directors, agents, employees, affiliates,
representatives, successors, stockholders and assigns from and against
any and all claims or causes of action, whether based on contract,
tort or otherwise, arising out of or relating in any way to any delay
incurred to date associated with the approval by Adeza of the
Marketing Plan. Matria and Adeza agree and understand that this Letter
is a full complete waiver of all claims with respect to such delay,
and Matria further agrees not to assist, encourage, institute or cause
to be instituted the filing of any suit or action in any jurisdiction
or the taking of any action relating to any claim described above.
<PAGE>
Mr. Daniel O. Wilds
May 8, 1996
Page 10
9. Acknowledgment. It is acknowledged and agreed by Adeza and Matria that
--------------
the Agreement and this Letter constitute a grant of exclusive
marketing rights to sell and distribute Tests, all as provided for in
this Letter and the Agreement, but do not constitute any license or
sublicense to intellectual property of Adeza, including, without
limitation, any and all intellectual property covered by the Agreement
between Adeza and the Fred Hutchinson Cancer Research Center dated May
10, 1988, as amended August 1, 1989 and August 12, 1992 ("Hutchinson
Agreement") and United States Patent No. 4,894,326, except as
otherwise provided in Article IV relating to manufacturing rights.
10. Governing Law. This Letter shall be governed in all respects by the
-------------
laws of the State of Georgia.
<PAGE>
Mr. Daniel O. Wilds
May 8, 1996
Page 11
If this Letter accurately sets forth your understanding of the agreements
and understandings that have been reached between Adeza and Matria, as written
and as amended hereby, please execute two (2) copies of this Letter in the space
provided below and return one copy to me.
Very truly yours,
/s/ Robert F. Byrnes
-------------------------------------
Robert F. Byrnes
President and Chief Executive Officer
Accepted and agreed to
as of this 8th day of
May, 1996.
ADEZA BIOMEDICAL CORPORATION
By: /s/ Daniel O. Wilds
-------------------------
Daniel O. Wilds
President and Chief Executive Officer
<PAGE>
EXHIBIT 10.6
EXCLUSIVE LICENSE AGREEMENT
This Agreement is entered into as of the 12th day of August, 1992, between
the Fred Hutchinson Cancer Research Center, a Washington non-profit corporation
("FHCRC") and Adeza Biomedical Corporation (formerly Aspen Diagnostics
Corporation), a California corporation ("LICENSEE").
This Agreement shall be effective immediately upon execution thereof by
qualified representatives of both parties and will cause the Restated Aspen
License Agreement dated August 1, 1989, the original License Agreement dated May
10, 1988, the original Non-Disclosure Agreement dated February 26, 1987 (between
Charter Venture Capital and FHCRC), and the Amended Non-Disclosure Agreement
dated September 17, 1987 to be superseded.
RECITALS
WHEREAS, FHCRC has developed and owns a valuable cell line (HB 9018) and is
the owner by assignment from Drs. Sen-itiroh Hakomori and Hidemitsu Matsuura of
the PATENT RIGHTS as defined in this Agreement together with all confidential
information currently in the possession of FHCRC and/or LICENSEE, or to be
provided to LICENSEE under the terms of this Agreement; and
Whereas FHCRC is committed to a policy that ideas or creative works
produced at FHCRC should be used for the greatest possible public benefit and
believes that every reasonable incentive should be provided for the prompt
introduction of such ideas into public use, all in a manner consistent with the
public interest; and
Whereas FHCRC has previously granted to LICENSEE (previously known as Aspen
Diagnostics Corporation) a nonexclusive license to use, possess, culture and
employ HB 9018 and other LICENSED CELL LINES, and an exclusive license to make,
have made, use, sell and have sold LICENSED PRODUCTS solely for in vitro
diagnostic use solely in non-cancer related fields, including the field of
differentiating between maternal and fetal cells in amniotic fluid, all pursuant
to that certain Restated Aspen License Agreement dated August 1, 1989 (the
"First License Agreement"); and
Whereas LICENSEE now desires to obtain an exclusive worldwide license under
the discoveries and inventions in the PATENT RIGHTS to make, have made, use and
sell products made in accordance therewith; and
Whereas FHCRC is willing to grant such a license to LICENSEE, subject to
the terms and conditions of this Agreement.
<PAGE>
Now therefore, in consideration of the foregoing premises, the parties
agree as follows:
ARTICLE 1. - DEFINITIONS
1.1. "AFFILIATES" shall mean any company, corporation, or business in
which LICENSEE owns or controls at least a fifty percent (50%) ownership
interest or which owns or controls such an interest in LICENSEE.
1.2. "HB 9018" means the hybridoma cell line designated as ATCC (American
Type Culture Collection) No. HB 9018 developed at FHCRC by or under the
direction of Dr. Sen-itiroh Hakomori, which secretes an IgG1 monoclonal antibody
identified as FDC-6 and characterized by specifically binding with oncofetal
fibronectin but not with normal fibronectin.
1.3. "LICENSED CELL LINES" means any cell lines, other than HB 9018,
included in the PATENT RIGHTS which are capable of producing monoclonal
antibodies that specifically bind with oncofetal fibronectin but not with normal
fibronectin.
1.4. "LICENSED PRODUCTS" means any product, including kits, devices,
packages, processes, reagents or otherwise, which result from the use of, or
combination with, or contain monoclonal antibodies, including the monoclonal
antibody designated FDC-6 or antigem binding fragments thereof, which are
produced by use of or by a process employing HB 9018 or LICENSED CELL LINES
which at the time of manufacture, use or sale is covered in the country of such
manufacture, use or sale, by any pending or issued valid claim of the PATENT
RIGHTS. For purposes of this Agreement, an "issued valid claim" shall mean a
claim of an unexpired patent which shall not have been withdrawn, canceled, or
disclaimed, nor held invalid by a court of competent jurisdiction in any
unappealed or unappealable decision in the country where the LICENSED PRODUCT is
made, used or sold by LICENSEE or its AFFILIATES.
1.5. As used herein, the term "NET SALES" shall mean the invoice price of
LICENSED PRODUCTS less the following deductions actually paid or allowed by
LICENSEE or its sublicensee: quantity and cash discounts normal and customary in
the trade; sales, use, and other similar taxes; sales related fees or
commissions paid to a non-affiliated third party to compensate such third party
for efforts in arranging actual sales of LICENSED PRODUCTS; amounts repaid or
credited by reason of rejection or return, and transportation or delivery
charges. In the event an invoice price is determined in a foreign currency, NET
SALES shall be the equivalent in U.S. Dollars in accordance with the official
foreign currency rate of exchange on the date the invoice is actually paid,
i.e., the day the foreign currency is converted into U.S. Dollars for payment
of the invoice.
-2-
<PAGE>
1.6. "PATENT RIGHTS" shall mean rights and claims in and to the inventions
described in, and rights covered by, issued United States patents and patent
applications listed in Appendix A attached to this Agreement and made a part
hereof, as well as all continuations, continuations-in-part, divisions and
renewals thereof, and foreign counterparts thereof, which will automatically be
deemed incorporated in and added to this Agreement and shall periodically be
added to Appendix A.
1.7. "TECHNOLOGY" shall mean any and all information, LICENSED CELL LINES,
LICENSED MONOCLONAL ANTIBODIES, or PATENT RIGHTS supplied by FHCRC to LICENSEE.
ARTICLE 2. - GRANT
2.1. FHCRC hereby grants to LICENSEE and LICENSEE accepts, subject to the
terms and conditions hereof, an exclusive worldwide license, under PATENT
RIGHTS, to make or have made, to use, and/or to sell the LICENSED PRODUCTS, for
the Term permitted in Article 4.1 of this Agreement (the "License"). LICENSEE
agrees during the period of exclusivity of this license that any LICENSED
PRODUCT produced for sale in the United States will be manufactured
substantially in the United States.
2.2. The License is subject to the following policies, obligations and/or
conditions:
(a) FHCRC's Patents and Inventions Policy adopted September 30,
1983, Public Law 98-620 and FHCRC's obligations under agreement
with other sponsors of research. Any right granted in this
Agreement greater than that permitted under Public Law 98-620
shall be subject to modification as may be required to conform
to the provisions of the statute.
(b) For research purposes only and not for any commercial purpose,
FHCRC shall have the right to make and to use the Technology.
(c) LICENSEE shall use reasonable effort to introduce the LICENSED
PRODUCTS into the commercial market as soon as practicable,
consistent with sound and reasonable business practices and
judgment, and thereafter endeavor to keep LICENSED PRODUCTS
reasonably available to the public.
(d) FHCRC shall have the right to terminate or render this Agreement
non-exclusive at any time after three (3) years from the date
hereof if, in FHCRC's reasonable judgment, LICENSEE:
-3-
<PAGE>
(i) has not put the licensed subject matter into commercial
use in the country or countries where licensed, directly
or through a sublicense, and is not keeping the licensed
subject matter reasonably available to the public, or
(ii) is not demonstrably engaged in research, development,
manufacturing, marketing or licensing program, as
appropriate, directed toward these ends.
In making this determination FHCRC shall take into account the
normal course of such programs conducted with sound and
reasonable business practices and judgment, including obtaining
appropriate government approvals, and shall take into account
the reports provided hereunder by LICENSEE. FHCRC shall notify
Licensee in writing before making any such determination and
LICENSEE shall have sixty (60) days from such notice to provide
FHCRC with any reasonable additional information FHCRC should
consider in its decision making process.
(e) Notwithstanding any provision of the License Agreement to the
contrary, for research purposes only and not for any commercial
purpose, LICENSEE shall comply with all reasonable requests to
supply, at a reasonable price, to the general research community
any of the monoclonal antibodies produced by the LICENSED CELL
LINES, subject to the execution by the party requesting the
material of a written agreement restricting use of the material
to noncommercial purposes, prohibiting further transfer of the
material, and containing such other terms as LICENSEE may
reasonably require. Provided, however, that the sole remedy of
FHCRC in the event of breach of this Article 2.2(e) by LICENSEE
shall be the conversion of LICENSEE's license hereunder from
exclusive to non-exclusive.
2.3. This Agreement shall have no effect upon any and all rights reserved
to the United States Government and others under Public Law 98-620.
-4-
<PAGE>
ARTICLE 3. - RIGHT TO SUBLICENSE AND ASSIGNMENT
3.1. LICENSEE shall have the right to grant sublicenses under the PATENT
RIGHTS, subject to submission by LICENSEE to and prior written consent by FHCRC
of the proposed sublicense, which consent will not be unreasonably withheld.
Each such sublicense shall include a requirement that the sublicensee use its
best efforts to bring the subject matter of the sublicense into commercial use
as quickly as is reasonably possible and shall expressly bind the sublicensee to
meet LICENSEE's obligations to FHCRC under this Agreement.
A copy of each sublicense shall be furnished to FHCRC promptly after its
execution. LICENSEE shall not be relieved of any obligation to FHCRC by virtue
of entering into any sublicense as provided herein.
3.2. Notwithstanding the foregoing provisions of Article 3, LICENSEE shall
have the right to assign the license granted under Article 2 to an AFFILIATE
subject to the terms and conditions hereof.
ARTICLE 4. - TERM OF AGREEMENT
4.1. Unless terminated or modified earlier in accordance with Article 8 of
this Agreement, the license granted hereunder shall extend until [*].
ARTICLE 5. - ROYALTIES
5.1. In consideration for the granting of the License, LICENSEE shall pay
to FHCRC a non-refundable license fee in the sum of [*], payable in three
installments; a first payment of [*] upon execution of this Agreement,
a second payment of [*] on January 1, l993, and a third payment of [*] upon the
first approval by the U.S. Food and Drug Administration ("FDA") for commercial
sale of a LICENSED PRODUCT in the United States.
5.2. During the Term, LICENSEE shall pay to FHCRC a royalty in the amount
of [*] of the NET SELLING PRICE of all LICENSED PRODUCTS sold by LICENSEE and
its AFFILIATES or sublicensees. In the case of sublicenses, LICENSEE shall pay
to FHCRC [*] of non-royalty sublicense income (e.g., license issue fees, license
maintenance fees, etc.). On sales between LICENSEE and its AFFILIATES for
resale, the royalty shall be paid on the resale.
* [CONFIDENTIAL TREATMENT REQUESTED]
-5-
<PAGE>
5.3 LICENSEE shall pay to FHCRC pursuant to this Article 5 a "Minimum
Royalty" of [*] per year for the year beginning July 1, 1992 and ending June 30,
1993 and for each subsequent year thereafter until the first approval by the FDA
for commercial sale of a LICENSED PRODUCT in the United States whereupon
LICENSEE shall pay to FHCRC an increased Minimum Royalty of [*] per year
throughout the term of this Agreement. The full Minimum Royalty to FHCRC shall
accrue as of the first day of each year described in this subparagraph and shall
be paid to FHCRC within the earlier of 30 days after the end of the fourth
quarter for the year in which the Minimum Royalty accrued or 30 days after any
termination of this Agreement. At FHCRC's option, FHCRC may terminate this
Agreement effective sixty (60) days after giving written notice in the event
LICENSEE fails to pay the Minimum Royalty scheduled above.
ARTICLE 6. - REPORTING AND ROYALTY PAYMENT TERMS
6.1. Upon or before execution of this Agreement, LICENSEE shall provide to
FHCRC a written research and development plan pursuant to which LICENSEE intends
to bring the subject matter of the license granted hereunder into commercial
use, including projections of sales and proposed marketing efforts.
6.2. LICENSEE shall provide written annual reports within sixty (60) days
after June 30 of each calendar year which shall include the following
information: reports of progress on research and development, regulatory
approvals, manufacturing, sublicensing, marketing and sales during the preceding
twelve (12) months as plans for the coming year. If LICENSEE's progress differs
from that anticipated in the plan provided to FHCRC under Article 6.1, LICENSEE
shall explain the reasons for the difference and propose a modified plan for
FHCRC's review and approval. LICENSEE shall also provide any reasonable
additional data FHCRC requires to evaluate LICENSEE's performance.
6.3. LICENSEE shall report to FHCRC the date of first commercial sale of
LICENSED PRODUCTS (or results of LICENSED PROCESSES) in each country within
thirty (30) days of occurrence.
6.4. LICENSEE shall submit to FHCRC within sixty (60) days after June 30
and December 31 of each calendar year during the term of this Agreement, and
upon the effective termination of this Agreement, reports for the preceding six
(6) month period identifying the amount of the LICENSED PRODUCTS sold by
LICENSEE, its AFFILIATES and sublicensees in each country, the sales volume and
NET SALES, and the amount of royalty due to FHCRC together with payment of such
royalty amount. Such report shall be certified as correct by an officer of
LICENSEE and shall include a detailed listing of all deductions from NET SALES,
sublicensee income or from royalties as specified herein. If no royalties are
due to FHCRC for any reporting period, the written
* [CONFIDENTIAL TREATMENT REQUESTED]
-6-
<PAGE>
report shall so state. If royalties for any calendar year do not equal or exceed
the Minimum Royalty established in Article 5.3, LICENSEE shall include the
balance of the Minimum Royalties for each year with the payment for the half
year ending December 31. All royalties due hereunder shall be payable in United
States dollars. Conversion of foreign currency to U.S. dollars shall be made at
the conversion rate existing in the United States on the date of royalty
payments by LICENSEE.
6.5 All such reports shall be maintained in confidence by FHCRC, except
as required by law, including Public Law 98-620.
ARTICLE 7. - RECORD KEEPING
7.1. LICENSEE shall maintain complete and accurate books of account and
records showing all sales of LICENSED PRODUCTS and all NET SALES (broken down by
gross sales and allowable deductions) attributable to such sales. For purposes
of verifying the accuracy of the royalties paid by LICENSEE pursuant to this
Agreement or verifying performance of LICENSEE of any other obligation to FHCRC
hereunder, such books and records shall be open to inspection and copying, upon
reasonable notice to LICENSEE, during usual business hours, by an independent
certified public accountant at FHCRC's expense. Such accountant shall not
disclose to FHCRC any information other than information relating to accuracy of
reports and calculations of amounts due to FHCRC made under this Agreement. In
the event that any such inspection shows any underreporting and underpayment by
LICENSEE in excess of five percent (5%) for any twelve (12) month period, then
LICENSEE shall pay the cost of such examination. Such books and records shall
be maintained for at least two (2) full years after the termination of this
Agreement.
ARTICLE 8. - TERMINATION OF AGREEMENT
8.1. Unless terminated earlier in accordance with the terms hereof, this
Agreement will expire upon the expiration of the Term as provided in Article
4.1. Upon termination, a final report shall promptly be submitted in accordance
with the provisions of section 6.4, together with any royalty payments and
unreimbursed patent expenses due to FHCRC.
8.2. LICENSEE shall have the right to terminate this Agreement effective
thirty (30) days after giving written notice to FHCRC of termination under this
Article.
-7-
<PAGE>
8.3. This Agreement may be terminated by either party upon breach of
material obligation or condition by the other, effective ninety (90) days after
giving written notice to the other of such termination under this Section and
specifying such breach, provided, however, that if the default or breach is
cured or shown to be nonexistent within the ninety (90) day period, the notice
shall be deemed automatically withdrawn and of no effect. If the parties do not
agree on whether a default or breach is "material," the dispute shall be
resolved through arbitration under Article 13.
8.4. Upon termination of this Agreement, LICENSEE or LICENSEE's
sublicensees shall have the right to sell all LICENSED PRODUCTS on hand at the
time of notification of termination if the royalties from such sales and any and
all other payments due FHCRC are paid to and statements are rendered to FHCRC
with respect to such LICENSED PRODUCTS when due in accordance with this
Agreement. To the extent permitted by applicable law, this Agreement will
automatically terminate (a) if LICENSEE files for protection under the federal
bankruptcy laws, or any similar state laws, becomes insolvent, is unable to pay
its debts as they become due or appoints a receiver over its property or (b) has
filed against it an involuntary bankruptcy petition under the federal bankruptcy
laws or similar state laws or LICENSEE suffers the appointment of a receiver or
trustee over its property, unless the involuntary petition or the involuntary
appointment of the receiver or trustee is dismissed within ninety (90) days.
8.5. Upon termination of this Agreement for any reason, and subject to
LICENSEE's rights under Article 8.4, LICENSEE shall return to FHCRC all HB 9018
and thereafter continue to maintain the confidentiality thereof, and refrain
from use thereof or the disclosure thereof to any third party as required by
Article 15. All other rights under this Agreement, including rights in HB 9018
granted to LICENSEE under Article 2 or to any of LICENSEE's sublicensees under
their sublicense agreement with LICENSEE, shall revert to FHCRC.
8.6. Should either party terminate this Agreement as provided herein, the
other party shall not be able to claim from the terminating party, solely on
account of such termination, any damages or compensation for losses or expenses
incurred or for lost profits.
8.7. Provisions of this Agreement and accrued rights under this Agreement
which by their terms or nature survive the termination or expiration of this
Agreement shall so survive such termination or expiration. Without limiting the
foregoing, obligations arising under Article 8 and Articles 9, 11, 12, 13, 14,
15, and 18 of this Agreement will survive termination of this Agreement.
-8-
<PAGE>
ARTICLES 9. - REPRESENTATIONS AND COVENANTS
9.1. FHCRC represents and warrants that the entire right, title, and
interest in the patent applications or patents comprising the PATENT RIGHTS have
been assigned to it and that FHCRC has the authority to issue licenses under
said PATENT RIGHTS. FHCRC does not warrant the validity of the PATENT RIGHTS
licensed hereunder and makes no representations whatsoever with regard to the
scope of the licensed PATENT RIGHTS or that such PATENT RIGHTS may be exploited
by LICENSEE, an AFFILIATE, or sublicensee without infringing other patents.
9.2. FHCRC represents and warrants to LICENSEE that FHCRC has the
authority to issue licenses to LICENSED CELL LINES. FHCRC further represents
and warrants that it has no relationship with any other entity which would
preclude it from carrying out its obligations under this Agreement. No claim
has been asserted against FHCRC concerning commercial or non-commercial use of
LICENSED CELL LINES and FHCRC has not received notice that any such claim may be
made against it. Notwithstanding the foregoing, FHCRC does not warrant that
anything covered by this Agreement is or will be free from any claims of third
parties.
9.3. FHCRC EXPRESSLY DISCLAIMS ANY AND ALL EXPRESS WARRANTIES, EXCEPT AS
PROVIDED IN THIS ARTICLE 9, AND FURTHER DISCLAIMS ANY AND ALL IMPLIED WARRANTIES
OF MERCHANTABILITY OR FITNESS OF THE TECHNOLOGY, LICENSED CELL LINES, LICENSED
MONOCLONAL ANTIBODIES, OR LICENSED PRODUCTS FOR ANY PARTICULAR USE OR PURPOSE.
9.4. LICENSEE represents and warrants to FHCRC that it has obtained and
will at all times during the term of this Agreement, hold and comply with all
licenses, permits and authorizations necessary to carry out this Agreement as
may be required under any applicable statutes, laws, ordinances, rules and
regulations of the United States as well as those of all applicable foreign
governmental bodies, agencies and subdivisions, having, asserting or claiming
jurisdiction over LICENSEE or LICENSEE's performance of the terms of this
Agreement. In particular, LICENSEE:
(a) will be responsible for obtaining all necessary United States
Food and Drug Administration approvals and all approvals
required by similar governmental bodies or agencies of all
applicable foreign countries; and
(b) understands and acknowledges that the transfer of certain
commodities and technical data is subject to United States laws
and regulations controlling the export of such commodities and
technical data, including all Export Administration Regulations
of the United States Department of Commerce. These laws and
regulations, among other things, prohibit or require a license
for the export of certain types of technical data to certain
specified countries. LICENSEE hereby
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<PAGE>
agrees and gives written assurance that it will comply with all
United States laws and regulations controlling the export of
commodities and technical data, that it will be solely
responsible for any violation of such by LICENSEE or its
AFFILIATES or sublicensees, and that it will defend and hold
FHCRC harmless in the event of any legal action of any nature
occasioned by such violation.
ARTICLE 10. - INFRINGEMENT
10.1. Each party agrees to notify the other promptly of any infringement
of the PATENT RIGHTS of which such party becomes aware. LICENSEE shall have the
right to commence and prosecute a patent infringement action ("an Action"),
however, before LICENSEE commences legal proceedings with respect to any
infringement of such patents, LICENSEE shall give careful consideration to the
views of FHCRC and to potential effects of the public interest in making its
decision whether or not to commence such an Action.
10.2. If LICENSEE elects to commence an Action as described above and
FHCRC is a legally indispensable party to such Action, FHCRC shall have the
right, at its sole option and upon such terms as FHCRC and LICENSEE may agree,
to assign to LICENSEE all of FHCRC's right, title and interest in each patent
which is part of the PATENT RIGHTS and is the subject of such Action (subject to
all FHCRC's obligations to the government and others having rights in such
patent). In the event that FHCRC makes such an assignment, such assignment
shall be irrevocable, and such Action by LICENSEE on that patent or other
patents shall thereafter be brought or continue without FHCRC as a party, if
FHCRC is no longer an indispensable party. Notwithstanding any such assignment
to LICENSEE by FHCRC and regardless of whether FHCRC is or is not an
indispensable party, FHCRC shall cooperate fully with LICENSEE in connection
with such Action. In the event that any patent is assigned to LICENSEE by
FHCRC, pursuant to this paragraph, such assignment shall require LICENSEE to
continue to meet its obligations under this Agreement as if the assigned patent
or patent application were still licensed to LICENSEE.
10.3. If LICENSEE elects to commence an Action as described above,
LICENSEE may reduce, by up to fifty percent (50%), the royalty due to FHCRC
earned under the patent subject to suit by the amount of the expenses and costs
of such Action, including attorney fees. In the event such expenses and costs
exceed the amount of royalties withheld by LICENSEE for any calendar year,
LICENSEE may to that extent reduce the royalties due to FHCRC from LICENSEE in
succeeding calendar years, but never by more than f(Pounds) fry percent (50%) of
the royalty due in any one year.
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<PAGE>
10.4. Recoveries or reimbursements from such Action shall first be applied
to reimburse LICENSEE and FHCRC for litigation costs not paid from royalties (if
any) and then to reimburse FHCRC for royalties withheld. Any remaining
recoveries or reimbursements shall be shared equally by LICENSEE and FHCRC.
10.5. In the event that LICENSEE elects not to exercise its right to
prosecute an infringement of the PATENT RIGHTS pursuant to the above paragraphs,
FHCRC may do so at its own expense, controlling such Action and retaining all
recoveries therefrom.
ARTICLE 11. - LEGAL ACTION
11.1. In the event any legal action is commenced against LICENSEE involving
TECHNOLOGY or a LICENSED PRODUCT or otherwise relating to this Agreement,
whether or not FHCRC is named as a party to the legal action, LICENSEE shall
have the right to defend any such action and LICENSEE shall keep FHCRC or its
attorney nominee fully advised of the progress of the legal action and shall
reimburse FHCRC for its reasonable legal costs when FHCRC is named as a party to
the legal action or when FHCRC's employees or agents are witnesses in the legal
action. LICENSEE shall have the right to settle or otherwise resolve any claims
against it without the consent of FHCRC, so long as such settlement or other
resolution does not bind FHCRC. In the event of such settlement or other
resolution by LICENSEE, LICENSEE's other obligations under this Article 11.1
shall terminate.
11.2. FHCRC agrees to cooperate with LICENSEE, to the extent reasonably
possible, in any legal action brought pursuant to this Article 11.
ARTICLE 12. - HOLD HARMLESS
12.1. LICENSEE assumes responsibility for and shall defend, indemnify and
hold FHCRC, its directors, officers, managers, agents, students, doctors and
employees harmless from any and all liability, losses, expenses, damages,
assessments and claims arising out of or resulting from the exercise of any
rights under this Agreement or the use, sale and/or any disposition, by LICENSEE
or others receiving LICENSED PRODUCTS directly or indirectly from LICENSEE, its
AFFILIATES, agents or representatives, of LICENSED PRODUCTS, TECHNOLOGY, or
anything else covered by or related to this Agreement.
-11-
<PAGE>
ARTICLE 13. - ARBITRATION
13.1. Any dispute, other than a question relating to patent validity,
between the parties hereunder which cannot be resolved by good faith negotiation
between the parties over a period of at least sixty (60) days shall be resolved
by arbitration before a panel of three arbitrators under the then current rules
and procedures of the American Arbitration Association (the "AAA"), or other
rules and procedures as the parties may agree. Each party shall bear its own
costs incurred in connection with such arbitration and the fees, expenses and
costs of the AAA, the arbitrator(s) and the arbitration proceeding not incurred
solely by one party shall be divided equally between the parties. The arbitral
award shall be binding and conclusive on both parties and may be enforced in any
court of competent jurisdiction.
ARTICLE 14. - NOTICES
14.1. Any notice or report required or permitted under this Agreement
shall be in writing and shall be deemed given when delivered in person or
transmitted via facsimile or five (5) days after being sent by registered or
certified mall, postage prepaid, return receipt requested, to the following
addresses or such different addresses as the parties may designate by notice
given in accordance with this Article 14.
If to FHCRC: Fred Hutchinson Cancer Research Center
1124 Columbia Street, M115
Seattle, Washington 98104
Attention: Catherine J. Hennings,
Manager Technology Transfer
Facsimile: (206) 667-4732
with copies to: Douglas J. Shaeffer, Esq.
General Counsel
Fred Hutchinson Cancer Research Center
1124 Columbia Street, LY-301
Seattle, Washington 98104
Facsimile: (206) 667-5268
If to LICENSEE: Adeza Biomedical Corporation
1240 Elko Drive
Sunnyvale, California 94089
Attention: President
Facsimile: (408) 745-0968
With copies to: Paul R. De Stefano, Esq.
2730 Sand Hill Road, Suite 300
Menlo Park, California 94025
Facsimile: (415) 854-3694
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ARTICLE 15. - CONFIDENTIALITY AND NON-DISCLOSURE
15.1. Any and all information relating to the TECHNOLOGY furnished to
either party (or its agents or employees) by the other party (or its
laboratories or agents or employees), including but not limited to information
regarding or relating to devices, cell lines, monoclonal antibodies, methods,
processes, data regarding testing and experiments, drawings, documentation,
patent applications and patents (when issued) and product development plans, is
confidential, proprietary, trade secret information and any and all such
information is hereinafter referred to as "Proprietary Information."
(a) As used herein. "Proprietary Information" includes the
following;
(i) written material which is clearly designated on its face
as confidential and patent applications;
(ii) oral disclosures, the content of which is within thirty
(30) days after communication designated in writing as
confidential, or which is so designated as confidential
orally during oral disclosures or in contemporaneous
written memoranda, and
(iii) specimens, samples, and other physical materials which
are prior to or at the time of disclosure designated in
writing as confidential.
(b) As used herein, "Proprietary information" does not include:
(i) information which at the time of disclosure to the
receiving party is generally available to the public, or
which after such disclosure becomes generally available
to the public by publication or otherwise;
(ii) information that is demonstrated to have been in the
receiving party's possession prior to the time of
disclosure by the disclosing party;
(iii) Information that is demonstrated by a preponderance of
the evidence to have been independently developed by the
receiving party's personnel without reference to
Proprietary Information disclosed by the disclosing
party; and
(iv) information received from a third party unless such
information is obtained subject to a confidential
disclosure agreement.
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<PAGE>
15.2. During the Term and for a period of five (5) years from the
termination date of this Agreement, each party agrees: (a) to hold in strict
confidence and trust and maintain as confidential all Proprietary Information
disclosed by the other party and any information derived therefrom; (b) not to
disclose any such Proprietary Information or any information derived therefrom
to any person, except to those employees or legal counsel of the receiving party
who are required to receive the Proprietary Information for the purposes
described in this Agreement and who are bound by the provisions of this
Agreement; (c) not to export or otherwise disclose any such Proprietary
Information to any person who is, or who the receiving party believes may be,
located or may use the Proprietary Information outside the United States; and
(d) to use the Proprietary Information only for the purposes described in this
Agreement.
15.3. Each party agrees that: all Proprietary Information disclosed by
the other party will at all times be and remain the sole property of the
disclosing party and the disclosing party is the sole owner of all patents,
copyrights and other intellectual property rights and other proprietary rights
related to the Proprietary Information disclosed by it. Nothing in this
Agreement shall be construed as granting to or permitting to the receiving party
any implied license in, or right or option to, license or use any intellectual
property right (including but not limited to any patent right obtained by the
disclosing party) relating to the Proprietary Information disclosed by it or any
other right to use such Proprietary Information except as expressly provided
herein and for any reason other than for the purposes described in this
Agreement.
15.4. Immediately upon the termination of this Agreement, or upon either
disclosing party's request, the receiving party will deliver to the disclosing
party all Proprietary Information disclosed by the disclosing party and all
documents and data storage media containing any such Proprietary Information and
any and all copies thereof, and will delete all such Proprietary Information
from its documents and data storage media.
15.5. The obligations of confidentiality provided herein shall continue in
force and effect for five (5) years from the date of termination of this
Agreement, whether by lapse of the Term hereof or otherwise, unless extended or
limited by mutual agreement executed in writing by an officer of each party.
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<PAGE>
ARTICLE I6. - PATENT MARKING
16.1. Subsequent to the issuance of any patent based on the application(s)
covered by PATENT RIGHTS and provided LICENSEE has actual notice of the patent
number or numbers of any such issued patents, LICENSEE agrees to mark and to
have marked by its sublicensees every LICENSED PRODUCT manufactured, used or
sold by LICENSEE or its sublicensees in accordance with the statutes of the
United States relating to the marking of patented articles.
ARTICLE 17. - RIGHT TO PUBLISH
17.1. Nothing in this Agreement shall be construed as prohibiting FHCRC or
its researchers from publishing any of the results of FHCRC's research on
TECHNOLOGY in reputable scientific Journals.
ARTICLE 18.- MISCELLANEOUS
18.1. The rights and obligations of the parties under this Agreement shall
be governed by and construed in accordance with the laws of the State of
Washington.
18.2. This Agreement may not be amended except by an instrument in writing
signed by both parties.
18.3. The Agreement shall. be binding on the parties hereto and upon
their respective heirs, administrators, successors and assigns. This Agreement
may be assigned or sublicensed only in accordance with the terms hereof.
18.4. LICENSEE acknowledges that FHCRC is a non-profit organization
qualifying for and holding the status of an exempt organization under Section
501(c) (3) of the United States Internal Revenue Code. If the Internal Revenue
Service determines, or a determination by FHCRC based on advice of legal or tax
counsel is reasonably made, that any part or all of this Agreement will
jeopardize FHCRC's Section 501(c) (3) status, the parties agree to meet and
confer in good faith to amend this Agreement to the extent necessary to satisfy
Internal Revenue Service requirements for retention of FHCRC'S Section 501(c)
(3) status. If FHCRC and LICENSEE cannot agree within 30 days after commencing
negotiations regarding the amendments to be made to this Agreement in order for
FHCRC to retain its Section 501(c) (3) status, either party shall be free to
initiate arbitration pursuant hereto to determine such amendment as may be
necessary to preserve the intent of this Agreement without jeopardizing FHCRC's
tax-exempt status.
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<PAGE>
18.5. LICENSEE understands and acknowledges that agreements between FHCRC
and agencies of the United States Government funding FHCRC's programs may
contain clauses granting patent and/or other rights to the agencies or the U.S.
Government; LICENSEE agrees that the rights granted to it under this Agreement
shall be subject to any rights of the agencies and the U.S. Government. In the
event of a conflict between any of the provisions of this Agreement and the
Adeza Biomedical Corporation Second License Agreement, the provisions of any
U.S. Government agency funding agreement and/or regulation shall prevail and
FHCRC will have no liability to LICENSEE as a result of such conflict.
18.6. LICENSEE will not use FHCRC's name in any advertising or promotion
of its products. LICENSEE will not use FHCRC's name for any commercial purpose
nor in conjunction with the sale of its securities, nor in any prospectus or
disclosure document, unless authorized in writing by FHCRC.
18.7. Prior to any sale of a LICENSED PRODUCT, LICENSEE will have FHCRC
named as an additional insured on LICENSEE's insurance policies, with limits of
at least $1,000,000 per claim and $5,000,000 annual aggregate. Such policies
shall not be terminated by LICENSEE without sixty (60) days written notice to
FHCRC. LICENSEE will notify FHCRC immediately upon receiving notice of
termination of insurance coverage by the Insurance company. If FHCRC's insurance
costs can be shown to have increased solely because of this Agreement, and such
increases are verified by an independent certified public accountant, the
parties shall attempt to agree to changes and revisions of this Agreement. If
they fail to arrive at agreement within a reasonable time the dispute shall be
resolved by arbitration as provided under Article 13.
18.8. All letters, documents, or other materials of a written or physical
nature, required by or relating to this Agreement shall be in English and sent
to the party at the address given in Article 14.
18.9. The parties to this Agreement recognize and agree that each is
operating as an independent contractor and not as an agent of the other. This
Agreement shall not constitute a partnership or joint venture, and neither party
may be bound by the other to any contract, arrangement or understanding except
as specifically stated herein.
18.10. Should a court of competent jurisdiction later consider any
provision of this Agreement to be invalid, illegal, or unenforceable, it shall
be considered severed from this Agreement. All other provisions, rights and
obligations shall continue without regard to the severed provision, provided
that the remaining provisions of this Agreement are in accord with the intention
of the parties.
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<PAGE>
18.11. In the event any party to this Agreement commences any action or
proceeding, including an appeal of an action or proceeding, against the other,
including arbitration proceedings under Article 14 of this Agreement, or
otherwise retains an attorney, by reason of any breach or claimed breach of any
provision of this Agreement, or to seek a judicial declaration of rights
hereunder or judicial or equitable relief, the prevailing party in such action
or proceeding shall be entitled to recover its reasonable attorneys' fees and
costs. At the option of FHCRC, venue of any such legal or equitable action
shall lie in Seattle, Washington. LICENSEE hereby submits to the jurisdiction
of the Federal District Court of Western Washington located in Seattle,
Washington, and hereby agrees to accept service of process by certified mail,
return receipt requested, effective upon delivery to LICENSEE.
IN WITNESS WHEREOF, the parties have executed this Agreement through duly
authorized representatives as of the date first above written.
FRED HUTCHINSON CANCER ADEZA BIOMEDICAL CORPORATION
RESEARCH CENTER
Fred Hutchinson Cancer
By /s/ Research Center By /s/ Adeza Biomedical Corporation
------------------------------- ----------------------------------------
Printed Printed
Name_____________________________ Name______________________________________
Date_____________________________ Date______________________________________
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APPENDIX A
----------
United States Patent No. 4,894,326.
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<PAGE>
FIRST AMENDMENT TO EXCLUSIVE LICENSE AGREEMENT
AND
CONSENT
This First Amendment to Exclusive License Agreement and Consent (the
"Amendment and Consent") is entered into as of the 9th day of May, 1996, between
the Fred Hutchinson Cancer Research Center, a Washington non-profit corporation
("FHCRC") and Adeza Biomedical Corporation, a California corporation
("Licensee").
This Amendment and Consent shall be effective immediately upon execution
thereof by qualified representatives of both parties.
RECITALS
--------
WHEREAS, FHCRC and Licensee have entered into an Exclusive License
Agreement dated as of August 12, 1992 (the "License Agreement"), pursuant to
which FHCRC has licensed to Licensee certain Technology, as such term is defined
in the License Agreement.
WHEREAS, the parties disagree as to the interpretation of Section 5.2 of
the License Agreement and desire to resolve such disagreement by entering into
this Amendment and Consent and through the issuance to FHCRC of the FHCRC
Warrant, as defined below.
NOW THEREFORE, in consideration of the foregoing premises, the parties agree
as follows:
A. Amendments of the License Agreement
-----------------------------------
1. Section 5.2
-----------
The first sentence of Section 5.2 of the License Agreement is hereby
amended to read in its entirety as follows:
"5.2. During the Term, Licensee shall pay to FHCRC a royalty in the amount
of [*] of NET SALES of all LICENSED PRODUCTS."
2. Section 1.5
-----------
That portion of the first sentence of section 1.5 that currently
reads, "As used herein, the term "NET SALES" shall mean the invoice price of
LICENSED PRODUCTS
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
..." is hereby amended to read as follows:
"As used herein, the term "NET SALES" shall mean all amounts
actually received by Licensee for sales of LICENSED PRODUCTS..."
3. No Amendment. Except as amended by this Amendment and Consent,
------------
the License Agreement shall remain in full force and effect.
B. Issuance of Warrant. Within thirty (30) days of execution of this
-------------------
Amendment and Consent, Licensee shall issue to FHCRC a warrant for the purchase
of 25,000 shares of Licensee's Common Stock (the "Warrant Shares") in the form
attached hereto as Exhibit A (the "FHCRC Warrant"), calculated assuming that
prior to the issuance of the FHCRC Warrant, Licensee shall undertake a 1:2.4
reverse split of its Common Stock (the "Reverse Split") and that the Company
shall consummate its planned reincorporation into Delaware (the
"Reincorporation"). In the event that the Reverse Split does not occur, or at a
different ratio, the number of Warrant Shares for which this Warrant may be
exercised shall be adjusted accordingly. The FHCRC Warrant shall be issued
regardless of whether the Reincorporation occurs.
C. Piggyback Registration Rights. Within thirty (30) days of execution
-----------------------------
of this Amendment and Consent, Licensee shall amend that certain Investors'
Rights Agreement dated as of December 21, 1994, as amended (the "Rights
Agreement") to provide the piggyback registration rights set forth in Section
2.3 of the Rights Agreement to FHCRC. Such Section 2.3 is attached hereto as
Exhibit B.
D. Exclusive Marketing Agreement: Acknowledgments.
----------------------------------------------
1. Consent.
-------
By execution hereof, FHCRC hereby consents, retroactive to December
31, 1991, to Licensee entering into that certain Exclusive Marketing Agreement
by and between Licensee and Tokos Medical Corporation dated as of December 31,
1991, as amended by that Letter Agreement dated may 9, 1996 (the "Marketing
Agreement"), including the contingent sublicense set forth in Section 4 thereof,
(the "Contingent License"); provided however that such consent shall not be
deemed to be a consent to Licensee's representation set forth in Section 3.1(b)
of the Marketing Agreement. FHCRC further acknowledges (i) that such consent
fully satisfies, with respect to the Marketing Agreement, Licensee's requirement
to obtain FHCRC's consent, as set forth in Section 3.1 of the License Agreement,
(ii) that no other sublicense or license is granted pursuant to the Marketing
Agreement and (iii) that no non-royalty sublicense income is due to FHCRC from
Licensee as a result of the provisions of the Marketing Agreement as in effect
as of the date hereof, including Section 6.1 thereof.
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<PAGE>
2. No Further Amendments. The parties agree that no further amendments
---------------------
shall be made to the Marketing Agreement without the prior written consent of
FHCRC, which consent will not be unreasonably withheld.
3. Certain Royalties Under Section 4. The parties agree that in the
---------------------------------
event Licensee receives payments under Section 4.4 of the Marketing Agreement
(the "Section 4.4 Payments"), in lieu of the amounts described in Sections A1
and A2 above, Adeza shall pay to FHCRC [*] of all such Section 4.4 Payments.
E. Further Agreements. The parties agree to use their good faith efforts to
take any and all steps necessary to effectuate the intent of this Amendment and
Consent.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed as original, but all of which together shall constitute one and
the same instrument.
* [CONFIDENTIAL TREATMENT REQUESTED]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to License Agreement and Consent as of the date first written above.
ADEZA BIOMEDICAL CORPORATION
By: /s/ Daniel O. Wilds
-------------------------------------------
Title: President & CEO
----------------------------------------
Address: 1240 Elko Drive
Sunnyvale, CA 94089
Attention: Daniel O. Wilds
FRED HUTCHINSON CANCER
RESEARCH CENTER
By: /s/ Fred Hutchinson Cancer Research Center
------------------------------------------
Title: Director, Technology Transfer
---------------------------------------
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EXHIBIT 10.7
INVESTORS' RIGHTS AGREEMENT
---------------------------
This Investors' Rights Agreement is made and entered into as of
December 21, 1994 by and among ADEZA BIOMEDICAL CORPORATION (the "Company"), the
undersigned holders of capital stock of the Company (the "Investors") and the
undersigned purchasers of Series 2 Preferred Stock of the Company (the
"Purchasers"). The Investors and the Purchasers are sometimes collectively
referred to as the "Shareholders".
RECITALS:
--------
A. The Company will issue to the Purchasers an aggregate of 7,974,965
shares of Series 2 Preferred Stock pursuant to a Series 2 Preferred Stock
Purchase Agreement of even date herewith (the "Series 2 Agreement").
B. The Purchasers have required that certain registration rights be
granted to them with respect to the securities of the Company to be acquired.
C. The Investors hold shares of Series 1 Preferred Stock issued as
part of a recapitalization of the Company in which all shares of Series A,
Series B, Series C, Series D, Series E and Series F Preferred Stock were
converted into shares of Series 1 Preferred Stock and in which all prior
contractual rights of such holders arising under their respective stock
purchase, investors' rights and registration rights agreements, including
without limitation the Registration Rights Agreement dated as of March 19, 1993
(the "Prior Agreements"), regarding receipt of information, registration of
securities, and participation in future financings were terminated, on the
condition that the Investors receive, with respect to their Series 1 Preferred,
rights substantially similar to those granted to the Purchasers.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, the parties agree as follows:
1. Integration. Effective upon the execution of this Agreement by Investors
-----------
holding the requisite number of shares of Preferred Stock necessary to terminate
all Prior Agreements and the closing of the sale and issuance of Series 2
Preferred Stock pursuant to the Series 2 Agreement, and subject only to the
conditions set forth therein, (a) all rights and covenants contained in the
Prior Agreements shall be terminated and replaced in their entirety by the
rights and covenants in this Agreement. The rights and covenants of this
Agreement set forth the sole and entire agreement among the Company, the
Investors and the Purchasers on the subject matter hereof and supersede any
prior agreements.
<PAGE>
2. Restrictions on Transfer: Registration Rights.
---------------------------------------------
2.1 Definitions. As used herein:
-----------
(a) The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
and the declaration or ordering of the effectiveness of such registration
statement.
(b) For the purposes hereof, the term "Registrable Securities" means
shares of (i) any and all Common Stock of the Company issued or issuable upon
conversion of shares of the Series 1 or Series 2 Preferred Stock of the Company,
which have not been previously resold to the public in a registered public
offering, and, for purposes of Section 2.3 hereof only, shares of Common Stock
issuable upon exercise of a warrant to purchase 220,000 shares of Common Stock
being issued to Tucker Anthony, (ii) stock issued with respect to or in any
exchange for or in replacement of stock included in subparagraph (i) above which
have not been previously resold to the public in a registered public offering,
and (iii) stock issued in respect of the stock referred to in (i) and (ii) above
as a result of a stock split, stock dividend or the like, which have not been
previously resold to the public in a registered public offering.
(c) The terms "Holder" or "Holders" mean any person or persons to
whom Registrable Securities were originally issued and who execute this
Agreement or qualifying transferees under Section 5 hereof who hold Registrable
Securities.
(d) The term "Initiating Holders" means any Holder or Holders of in
the aggregate at least 40% of the Registrable Securities which have not been
previously resold to the public in a registered public offering.
2.2 Requested Registration.
----------------------
(a) Request for Registration. In case the Company shall receive from
------------------------
the Initiating Holders a written request that the Company effect any
registration with respect to Registrable Securities the reasonably expected
aggregate offering price of which equals or exceeds $5,000,000 including
underwriting discounts and commissions, the Company will:
(i) within ten (10) days after its receipt thereof give
written notice of the proposed registration to all other Holders; and
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<PAGE>
(ii) as soon as practicable, use its best efforts to
effect such registration (including, without limitation, preparation of a
registration statement and prospectus complying as to form with the requirements
of the Securities Act, the execution of an undertaking to file post-effective
amendments, appropriate qualifications under the applicable blue sky or other
state securities laws and appropriate compliance with exemptive regulations
issued under the Securities Act and any other governmental requirements or
regulations) 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 is 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 20 days after receipt of such
written notice from the Company;
provided, that the Company shalt not be obligated to take any action to effect
such registration pursuant to this Section 2.2:
(A) Prior to the earlier of (1) December 21,
1996, or (2) one hundred and twenty (120) days following the effective date of
the Company's first registered offering to the general public of its securities
for its own account; or
(B) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act; or
(C) After the Company has effected two such
registrations pursuant to this subsection 2.2(a) and such registrations have
been declared or ordered effective.
Subject to the foregoing clauses (A) through (C), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practical, but in any event within seventy-five (75) days
after receipt of the request or requests of the Initiating Holders; provided,
however, that if the Company shall furnish to such Holders a certificate signed
by the President or Chief Executive Officer of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company for such registration statement to be filed at the date filing
would be required and it is therefore essential to defer the filing of such
registration statement, the Company shall be entitled to delay the filing of
such registration statement not more than once in any twelve month period for an
additional period of up to ninety (90) days.
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<PAGE>
(b) Underwriting. If the Initiating Holders intend to distribute the
------------
Registrable Securities covered by their request by means of an under-writing,
they shall so advise the Company as a part of their request made pursuant to
Section 2.2 and the Company shall include such information in the written notice
referred to in subsection 2.2(a)(i). The right of any Holder to registration
pursuant to Section 2.2 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting (unless otherwise mutually agreed by a majority in interest of
the initiating Holders and such Holder) to the extent provided herein. The
Company shall (together with all Holders proposing to distribute their
securities through such underwriting) 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, provided,
however, that the managing underwriter shall be approved by the Company, which
approval shall not be unreasonably withheld. Notwithstanding any other provision
of this Section 2.2, if the underwriter advises the Initiating Holders in
writing that marketing factors require a limitation of the number of shares to
be underwritten, the Initiating Holders shall so advise all Holders of
Registrable Securities who have elected to participate in such offering, and the
number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all such Holders thereof
in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders. If any Holder of Registrable
Securities disapproves of the terms of the underwriting, he may elect to
withdraw therefrom by written notice to the Company, the underwriter and the
Initiating Holders. Any Registrable Securities which are excluded from the
underwriting by reason of the underwriter's marketing limitation or withdrawn
from such underwriting shall be withdrawn from such registration. If the
underwriter has not limited the number of Registrable Securities to be
underwritten, the Company, employees of the Company and other holders of the
Company's Common Stock may include securities for its (or their) own account in
such registration if the underwriter so agrees and if the number of Registrable
Securities which would otherwise have been included in such registration and
underwriting will not thereby be limited by the underwriter.
2.3 Company Registration.
--------------------
(a) Right to Include. If at any time or from time to time, the
----------------
Company proposes to register any of its securities, for its own account or the
account of any of its shareholders other than the Holders, (other than a
registration relating solely to employee stock option or purchase plans, or a
registration relating solely to an SEC Rule 145 transaction, or a registration
on any other form, other than Form S-1, S-2 or S-3, or any successor to such
-4-
<PAGE>
form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of
Registrable Securities) the Company will:
(i) promptly give to each Holder written notice
thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance with applicable laws), and
in any underwriting involved therein, all the Registrable Securities specified
in a written request or requests, made within 20 days after receipt of such
written notice from the Company, by any Holder or Holders to be included in any
such registration, except as set forth in subsection 2.3(b) below.
(b) Underwriting. If the registration of which the Company gives
------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to subsection 2.3(a)(i). In such event the right of any Holder to
registration pursuant to Section 2.3 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
(together with the Company and the other holders distributing their securities
through such underwriting) 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 Section 2.3, if the
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the underwriter may limit the number of
Registrable Securities to be included in the registration and underwriting (i)
completely, in the case of the Company's initial public offering, or (ii) to not
less than 25% of the shares to be included in any other registration. ln the
event of a cutback by the underwriters of the number of Registrable Securities
to be included in the registration and underwriting, the Company shall advise
all Holders of Registrable Securities which would otherwise be registered and
underwritten pursuant hereto, and the number of shares of Registrable Securities
that may be included in the registration and underwriting shall be allocated
among all of such Holders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders. If any Holder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter. Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration. The Company may not include any securities other than
Registrable Securities held by Holders in a registration
-5-
<PAGE>
statement pursuant to Section 2.3 if, and to the extent that, the amount of
Registrable Securities held by Holders that is otherwise includable in such
registration statement would thereby be diminished.
2.4 Form S-3. After its initial public offering, the Company shall use
--------
its best efforts to qualify for registration on Form S-3 or any comparable or
successor form. After the Company has qualified for the use of Form S-3, Holders
of the outstanding Registrable Securities shall have the right to request an
unlimited number of registrations on Form S-3 (such requests shall be in writing
and shall state the number of shares of Registrable Securities to be disposed of
and the intended method of disposition of Shares by such Holders), subject only
to the following:
(a) The Company shall not be required to effect a registration
pursuant to this Section 2.4 within 120 days of the effective date of any
registration referred to in Sections 2.2 or 2.3 above.
(b) The Company shall not be required to effect a registration
pursuant to this Section 2.4 unless the Holder or Holders requesting
registration propose to dispose of shares of Registrable Securities having an
aggregate disposition price (before deduction of underwriting discounts and
expenses of sale) of at least $500,000.
(c) The Company shall not be required to effect more than one
registration pursuant to this Section 2.4 in any consecutive 12 month period.
The Company shall promptly give written notice to all Holders of
Registrable Securities of the receipt of a request for registration pursuant to
this Section 2.4 and shall provide a reasonable opportunity for other Holders to
participate in the registration, provided that if the registration is for an
under-written offering, the terms of subsection 2.2(b) shall apply to all
participants in such offering. Subject to the foregoing, the Company will use
its best efforts to effect promptly the registration of all shares of
Registrable Securities on Form S-3 to the extent requested by the Holder or
Holders thereof for purposes of disposition; provided, however, that if the
Company shall furnish to such Holders a certificate signed by the President or
Chief Executive Officer of the Company stating that in the good faith judgement
of the Board of Directors it would be seriously detrimental to the Company for
such registration statement to be filed at the date filing would be required and
it is therefore essential to defer the filing of such registration statement,
the Company shall be entitled to delay the filing of such registration statement
for an additional period of up to
-6-
<PAGE>
ninety (90) days. Any registration pursuant to this Section 2.4 shall not be
counted as a registration pursuant to Section 2.2.
2.5 Expenses of Registration. All expenses incurred in connection with
------------------------
any registration, qualification or compliance pursuant to this Section 2,
including without limitation, all registration, filing and qualification fees,
printing expenses, fees and disbursements of counsel for the Company and one
counsel for the selling Holders and expenses of any special audits incidental to
or required by such registration, shall be borne by the Company except as
follows:
(a) The Company shall not be required to pay for expenses of any
registration proceeding begun pursuant to Section 2.2 or 2.4, the request for
which has been subsequently withdrawn by the Initiating Holders, in which such
case, such expenses shall be borne by the Holders requesting such withdrawal;
provided, however, that in lieu of paying such expenses a majority in interest
of the Initiating Holders may elect to forfeit their right to request one
registration pursuant to Section 2.2; provided further, however, that if at the
time of such withdrawal the Holders have learned of a material adverse change in
the business, condition or prospects of the Company from that known to the
Holders at the time of their request and have withdrawn the request with
reasonable promptness following disclosure by the Company of such change, then
the Holders shall not be required to pay any such expenses and shall retain
their rights to such registration pursuant to Section 2.2.
(b) The Company shall not be required to pay for expenses of any
registration proceeding pursuant to Section 2.4 after the first three such
registrations pursuant to Section 2.4 have been effected by the Company and such
registrations have been declared or ordered effective.
(c) The Company shall not be required to pay fees of legal counsel
of a Holder except for a single counsel acting on behalf of all selling Holders.
(d) The Company shall not be required to pay underwriters' fees,
discounts or commissions relating to the Registrable Securities.
2.6 Registration Procedures. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder participating therein advised in writing as to
the initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense the Company will:
-7-
<PAGE>
(a) Keep such registration, qualification or compliance pursuant to
Sections 2.2, 2.3 or 2.4 effective for a period of 120 days or until the Holder
or Holders have completed the distribution described in the registration
statement relating thereto, whichever first occurs;
(b) Furnish to the Holders such numbers 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 the Registrable Securities owned by them;
(c) 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 or 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 in the light of the circumstances then
existing;
(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 United States 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, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(e) Cause all such Registrable Securities registered under this
Section 2 to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
(f) 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 of such offering, and each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;
(g) Provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration;
and
-8-
<PAGE>
(h) Furnish, at the request of any Holder requesting registration
of Registrable Securities pursuant to this Section 2, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with such registration, if such securities are being sold through underwriters
or, if such securities are not being sold through underwriters, on the date that
the registration statement with respect to such securities becomes effective,
(i) an opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities,
and (ii) a letter dated such date, from the Independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
2.7 Indemnification.
---------------
(a) The Company will indemnify and hold harmless each Holder of
Registrable Securities, each of its officers, directors and partners, and each
person controlling such Holder, with respect to which such registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter of
the Registrable Securities held by or issuable to such Holder, against all
claims, losses, expenses, damages and liabilities (or actions in respect
thereto) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any preliminary or final prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on 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, or any violation or alleged violation by
the Company relating to action or inaction required of the Company in connection
with the requirements of the Securities Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any rule or regulation promulgated
under the Securities Act or any state securities law applicable to the Company
and will reimburse each such Holder, each of its officers, directors and
partners, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any reasonable legal and any
other expenses incurred in connection with investigating, defending or settling
any such claim, loss, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage or liability arises out of or is based on any untrue statement or
omission based
-9-
<PAGE>
upon written information furnished to the Company in an instrument duly executed
by such Holder or underwriter specifically for use therein, and provided further
that the agreement of the Company to indemnify any underwriter and any person
who controls such underwriter contained herein with respect to any such
preliminary prospectus shall not inure to the benefit of any underwriter, from
whom the person asserting any such claimed loss, damage, liability or action
purchased the stock which is the subject thereof, if at or prior to the written
confirmation of the sale of such stock, a copy of the prospectus (or the
prospectus as amended or supplemented) was not sent or delivered to such person,
excluding the documents incorporated therein by reference, and the untrue
statement or omission of a material fact contained in such preliminary
prospectus was corrected in the prospectus (or the prospectus as amended or
supplemented).
(b) Each Holder will, if Registrable Securities held by or issuable
to such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify and hold harmless the
Company, each of its directors and officers, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company within the meaning of the Securities Act, and each other
such Holder, each of its officers, directors and partners and each person
controlling such Holder, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any preliminary or final prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance or based on 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, and
will reimburse the Company, such Holders, such directors, officers, partners,
persons or underwriters for any reasonable legal or any other expenses incurred
in connection with investigating, defending or settling any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document In reliance upon and in conformity with written information
furnished to the Company in an instrument duly executed by such Holder
specifically for use therein, and provided further that the agreement of the
Holder to Indemnify any underwriter and any person who controls such underwriter
(or to indemnify the Company and each person who controls the Company if the
Company is selling directly and not through an underwriter) contained herein
with respect to any such preliminary prospectus shall not inure to the benefit
of any underwriter, from whom the person asserting any
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<PAGE>
such claim, loss, damage, liability or action purchased the stock which is the
subject thereof (or the Company if such stock was purchased directly from the
Company), if at or prior to the written confirmation of the sale of such stock,
a copy of the prospectus (or the prospectus as amended or supplemented) was not
sent or delivered to such person, excluding the documents incorporated therein
by reference, and the untrue statement or omission of a material fact contained
in such preliminary prospectus was corrected in the prospectus (or the
prospectus as amended or supplemented). Notwithstanding the foregoing, in no
event shall the indemnification provided by any Holder hereunder exceed the net
proceeds received by such Holder for the sale of such Holder's securities
pursuant to such registration.
(c) Each party entitled to indemnification under this Section 2.7
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought. The
Indemnified Party shall promptly permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably be withheld). The Indemnified Party may participate in such
defense and hire counsel at such party's own expense; provided, however, that
the Indemnified Party shall have the right to retain its own counsel with the
fees and expenses to be paid by the Indemnifying Party if the Indemnifying Party
refuses to assume the defense thereof or if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between such Indemnified Party
and any other party represented by such counsel in such proceeding. The failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder, except to the extent that such
failure is materially prejudicial to an Indemnifying Party's ability to defend
such action. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of the 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. No Indemnified Party shall be entitled to indemnification hereunder
if such Indemnified Party consents to entry of any judgment or enters into any
settlement without the consent of the Indemnifying Party. Any Indemnified Party
shall cooperate with the Indemnifying Party in the defense of any claim or
litigation brought against such Indemnified Party.
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<PAGE>
2.8 Lock-Up Provision. Upon receipt of a written request by the
-----------------
Company or by its underwriters, the Holders shall not sell, sell short, grant an
option to buy, or otherwise dispose of shares of the Company's Common Stock or
other securities (except for any such shares included in the registration) for a
period of one hundred and eighty (180) days following the effective date of the
initial registration of the Company's securities; provided, however, that such
Holder shall have no obligation to enter into the agreement described in this
Section 2.8 unless all executive officers and directors enter into similar
agreements. The Company may impose stop-transfer instructions with respect to
the shares (or securities) subject to the foregoing restriction until the end of
said 180-day period.
2.9 Information by Holder. The Holder or Holders of Registrable
---------------------
Securities included in any registration shall promptly furnish to the Company
such information regarding such Holder or Holders and the distribution proposed
by such Holder or Holders as the Company may reasonably request in writing and
as shall be required in connection with any registration, qualification or
compliance referred to herein.
2.10 Rule 144A and Rule 144 Reporting.
--------------------------------
(a) If the Company receives a request for the information
required in Rule 144A(d)(4) from Initiating Holders on or after December 21,
1996, then the Company shall, within 30 days after the date of such request,
provide such information to such Initiating Holders and any person or persons
designated by an Initiating Holder as a prospective buyer in a transaction
pursuant to Rule 144A. The Company's obligations pursuant to this Section
2.10(a) shall extend to any permitted transferee of Registrable Securities under
Section 5.
(b) With a view to making available to Holders of Registrable
Securities the benefits of certain rules and regulations of the Securities and
Exchange Commission (the "SEC") which may permit the sale of the Registrable
Securities to the public without registration, 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 the Company agrees to:
(i) Make and keep public information available, as
those terms are understood and defined in SEC Rule 144 under the Securities Act;
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<PAGE>
(ii) File with the SEC in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act; and
(iii) So long as a Holder owns any Registrable
Securities, to furnish to such Holder forthwith upon such Holder's request a
written statement by the Company as to its compliance with the reporting
requirements of said Rule 144 (at any time after 90 days after the effective
date of the first registration statement filed by the Company for an offering of
its securities to the public), and of the Securities Act and 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 so filed by the Company as such Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing such
Holder to sell any such securities without registration.
2.11 Limitations on Subsequent Registration Rights. From and after the
---------------------------------------------
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the outstanding Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company which would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 2.2, 2.3 or 2.4 hereof,
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of its securities will not reduce the amount of the Registrable
Securities of the Holders which is included or (b) to make a demand registration
which could result in such registration statement being declared effective prior
to the earlier of either of the dates set forth in subsection 2.2(a)(ii)(A) or
within 120 days of the effective date of any registration effected pursuant to
Section 2.2 hereof.
2.12 Termination. The rights of a Holder under this Agreement (other
-----------
than rights under Section 2.7) shall terminate on the earlier to occur of (a)
the fifth anniversary of the closing of the Company's first registered public
offering of its securities, or (b) the date on which a Holder can sell all of
its Registrable Securities without registration pursuant to Rule 144 within a
three (3) month period, unless at the time the Holder's Registrable Securities
represent more than one percent (1%) of the outstanding capital stock of the
Company.
3. Covenants of the Company.
------------------------
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<PAGE>
3.1 Financial Information. So long as a Shareholder continues to hold at
---------------------
least 300,000 shares of Series 1 Preferred Stock or Series 2 Preferred Stock
(including shares of Series 2 Preferred Stock issued or issuable upon exercise
of warrants for Series 2 Preferred Stock ("Warrant Shares") and shares of Common
Stock issued upon conversion of Series 1 Preferred Stock or Series 2 Preferred
Stock) (collectively, the "Securities"), the Company will furnish the following
information to the Shareholder:
(a) Annual Financials. As soon as practicable after the end of each
-----------------
fiscal year, and in any event within 90 days thereafter, the Company will
provide the Shareholder with consolidated balance sheets of the Company and its
subsidiaries, if any, as at the end of such fiscal year, and consolidated income
statements and consolidated statements of cash flows of the Company and its
subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles, all in reasonable detail, certified by
independent public auditors of recognized national standing selected by the
Company and accompanied by a copy of such auditors' letter to management.
(b) Quarterly Financials. As soon as practicable after the end of
--------------------
each fiscal quarter (except the fourth fiscal quarter), and in any event within
45 days thereafter, the Company will provide the Shareholders with consolidated
balance sheets of the Company and its subsidiaries, if any, as at the end of
such fiscal quarter, and consolidated income statements of the Company and its
subsidiaries, if any, for such quarter, prepared in accordance with generally
accepted accounting principles (except for required footnotes and for minor
year-end adjustments), all in reasonable detail, certified by the chief
financial officer of the Company.
(c) Monthly Financials. As soon as practicable after the end of each
------------------
month (except the last month of the fiscal year), and in any event within 20
days thereafter, the Company will provide the Shareholders with consolidated
balance sheets and income statements of the Company and its subsidiaries, if
any, as of the end of such month, prepared in accordance with generally accepted
accounting principles (except for required footnotes and for minor year end
adjustments).
(d) Budget. As soon as practicable after its adoption or approval by
------
the Company's Board of Directors, but not later than the commencement of such
fiscal year, the Company will provide the Shareholders with a consolidated
annual plan for each fiscal year which shall include monthly capital and
operating expense budgets, cash flow statements, projected balance sheets and
profit and loss projections for each such month and for the
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<PAGE>
end of the year, itemized in such detail as the Board of Directors may
reasonably determine.
(e) Termination of Covenant. The Company's obligation to deliver the
-----------------------
information required under subsections (c) and (d) above shall terminate upon
the date on which the Company is required to file a report with the SEC pursuant
to Section 13(a) or 15(d) of the Exchange Act by reason of (i) the Company's
having registered any of its securities pursuant to Section 12 of the Exchange
Act or (ii) a registration statement filed by the Company under the Securities
Act having become effective.
3.2 Confidentiality of Information. All information obtained by a
------------------------------
Shareholder pursuant to Section 3.1 shall be deemed proprietary and confidential
to the Company and will not be disclosed by a Shareholder to any person or
entity without the prior written consent of the Company; provided, however, that
such consent shall not be unreasonably withheld. This restriction shall not
apply to information which becomes known to the public without fault of the
recipient or which is disclosed pursuant to a governmental regulation or order,
provided that prior to disclosure the disclosing party notifies the Company of
such proposed disclosure in order to permit the Company to seek confidential
treatment of such information.
3.3 Additional Issuances of Indebtedness or Equity. The Company shall
----------------------------------------------
not, without the prior approval of holders of a majority of the Series 2
Preferred Stock, (i) incur, in any one transaction or series of related
transactions, any indebtedness for money borrowed outside the ordinary course of
business in excess of $500,000 (it being understood and agreed that trade credit
incurred in the ordinary course of business and equipment financings do not
constitute indebtedness for money borrowed), or (ii) issue or agree to issue any
New Securities (as such term is defined in Section 4.1), other than New
Securities ranking junior to the Series 1 and Series 2 Preferred Stock. This
covenant shall terminate on the earlier of (i) the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act covering the offer and sale of Common Stock for the
account of the Company to the public at an aggregate offering price of not less
than $10,000,000 and at a public offering price per share (prior to underwriter
commissions and expenses) that is not less than $4.50 (as adjusted for stock
splits, stock combinations and the like), and (ii) December 21, 1998.
4. Right to Maintain.
-----------------
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<PAGE>
4.1 "New Securities". For purposes of this Section 4, the term "New
--------------
Securities" shall mean shares of Common Stock, Preferred Stock or any other
class of capital stock of the Company, whether or not now authorized, securities
of any type that are convertible into shares of such capital stock, and options,
warrants or rights to acquire shares of such capital stock. Notwithstanding the
foregoing, the term "New Securities" will not include (a) securities issuable
upon conversion of the Series 1 Preferred Stock or Series 2 Preferred Stock; (b)
securities issuable upon exercise of warrants to purchase up to an aggregate of
643,663 shares of Series 2 Preferred Stock and up to 220,000 shares of Common
Stock; (C) securities offered to the public pursuant to a registration statement
filed under the Securities Act; (d) securities issued pursuant to the
acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets, or other reorganization whereby the Company
owns not less than fifty-one percent (51%) of the voting power of such
corporation; (e) up to an aggregate of 1,640,526 shares of Common Stock (or
related options) issued or issuable at any time to officers, directors,
employees or consultants of the Company, pursuant to any stock grant, stock
option plan or stock purchase plan or other stock incentive agreement or
arrangement approved by the vote or written consent of not less than sixty-six
and two-thirds percent (66 2/3%) of the directors then in office (which figure
shall include any options outstanding on the date hereof); (f) securities issued
in connection with equipment lease or working capital debt financings, so long
as the number of securities so issued does not exceed one percent (1%) of the
then outstanding capital stock of the Company; (g) securities issued upon
exercise or conversion of options, warrants and other convertible securities
outstanding on the date hereof; and (h) shares of Common Stock or Preferred
Stock issued in connection with any stock split, stock dividend or
recapitalization by the Company.
4.2 Grant of Rights. Subject to the terms specified in this Section 4,
---------------
so long as a Shareholder holds not less than 300,000 shares of Securities, the
Company hereby grants to the Shareholders the right of first refusal to purchase
a portion of any issue of New Securities which the Company hereafter may from
time to time propose to issue and sell as shall maintain the Shareholders' pro
rata percentage ownership of the Company's capital stock. The "pro rata"
percentage ownership of a Shareholder is calculated by dividing (i) the number
of shares of Common Stock held by the Shareholder plus the total number of
shares of Common Stock issuable upon the conversion of all Preferred Stock then
held by the Shareholder (but excluding any Warrant Shares prior to the exercise
of such warrants) by (ii) the total number of shares of Common Stock then
outstanding, including shares issuable upon conversion of any Preferred Stock
(but excluding any Warrant Shares prior to the exercise of such warrants).
-16-
<PAGE>
4.3 Procedure.
---------
(a) In the event the Company proposes to undertake an issuance of
New Securities, it shall give the Shareholders written notice of its intention,
describing the type of New Securities, the price and material terms upon which
the Company proposes to issue the same. A Shareholder shall have 20 calendar
days from the date of receipt of any such notice to agree to purchase up to its
pro rata share of such New Securities for the price and upon the terms specified
in the Company's notice by giving written notice to the Company to such effect
and stating therein the quantity of New Securities to be purchased.
(b) The Company shall promptly, in writing, inform each Shareholder
electing to purchase its full pro rata share of such New Securities (a "Fully-
Exercising Shareholder") of any other Shareholder's failure to do likewise.
During the fifteen calendar day period commencing after receipt of such
information, each Fully-Exercising Shareholder shall be entitled to purchase
that portion of the New Securities for which Shareholders were entitled to
subscribe but which were not subscribed for by the Shareholders which is equal
to multiplying the total number of unsubscribed New Securities by a fraction,
the numerator of which is the number of shares of Common Stock held by such
Fully-Exercising Shareholder plus the total number of shares of Common Stock
issuable upon the conversion of all Preferred Stock then held by such Fully-
Exercising Shareholder (but excluding any Warrant Shares prior to the exercise
of such warrants), and the denominator of which is the total number of shares of
Common Stock owned by all Fully-Exercising Shareholders, including shares
issuable upon conversion of any Preferred Stock held by Fully-Exercising
Shareholders (but excluding any Warrant Shares prior to the exercise of such
warrants).
(c) If less than all of the New Securities are subscribed for after
the expiration of the 20 calendar day period referred to in Section 4.3(a), and
(so long as there is at least one Fully Exercising Shareholder) after the
expiration of the additional fifteen calendar day period referred to in Section
4.3(b), the Company shall have 90 days thereafter to sell or enter into an
agreement to sell any New Securities not purchased by Shareholders exercising
their rights at a price and upon terms no more favorable to the purchaser than
the terms specified in the Company's notice to the Shareholders, after which 90
day period the Company shall not thereafter sell such New Securities without
first offering a portion to the Shareholders in accordance with this Section 4.
-17-
<PAGE>
4.4 Termination of Rights. The rights granted under this Section 4 shall
---------------------
expire (a) as to all Shareholders, upon the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act covering the offer and sale of Common Stock for the
account of the Company to the public at an aggregate offering price of not less
than $10,000.000 and at a public offering price per share (prior to underwriter
commissions and expenses) that is not less than $4.50 (as adjusted for stock
splits, stock combinations and the like), and (b) as to any Shareholder if such
Shareholder fails to exercise its right to purchase its pro rata share of the
New Securities as provided in this Section 4, and such failure was not at the
written request of the Company; provided, however, that if a Shareholder is
prohibited from so purchasing its pro rata share of New Securities by reason of
the Investment Company Act of 1940. or the regulations promulgated thereunder,
such Shareholder's rights under Section 4 shall not expire by reason of clause
(6).
5. Assignment of Rights.
--------------------
The rights granted pursuant to this Agreement may be assigned by a
Shareholder or its transferee (i) upon sale or transfer (other than a sale to
the public) of at least 300,000 shares of Series 1 Preferred Stock and\or Series
2 Preferred Stock (including shares of Common Stock issued upon conversion
thereof) (as adjusted for stock dividends, stock splits, recapitalization and
the like) held by a Shareholder or (ii) in the case of a Shareholder that is a
registered investment company, to another registered investment company having
the same investment adviser as the transferring Shareholder, provided that the
rights under Sections 3 and 4 may not be assigned to a transferee which the
Company reasonably believes is a competitor or intends to become a competitor of
the Company and provided further that the Company is given prompt notice of such
transfer and any such transferee shall agree to become subject to the
obligations of the Shareholders under this Agreement.
6. Miscellaneous.
-------------
6.1 Amendment or Waiver. Any term of this Agreement may be amended and
-------------------
the observance of any such term may be waived (either generally or in a
particular instance and either retroactively or prospectively) with the written
consent of the Company and Shareholders holding at least a majority of the
outstanding Registrable Securities. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon all of the parties hereto
and their successors and assigns, even if such Shareholder did not consent in
writing to such amendment or waiver.
6.2 Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of California as such laws are applied to
-18-
<PAGE>
agreements between California residents entered into and to be performed
entirely within California.
6.3 Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties with respect to the subject
hereof and it supersedes, merges, and renders void any and all prior
understandings and/or agreements, written or oral, with respect to such subject
matter.
6.4 Notices. All notices and other communications required or permitted
-------
hereunder shall be in writing and shall be personally delivered, mailed by
certified or registered mail, postage prepaid, or delivered by overnight
delivery or express courier, addressed to the Holders at their addresses shown
on the records of the Company or, to the Company, at its principal executive
office, or at such other address as the Company or any Holder shall hereafter
furnish in writing. All notices that are mailed shall be deemed delivered five
(5) days after deposit in the United States mail.
6.5 Severability. In case any provision of this 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 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 and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
ADEZA BIOMEDICAL CORPORATION
BY: /s/ Daniel O. Wilds
--------------------------
TITLE: President
-----------------------
-19-
<PAGE>
INVESTORS AND PURCHASERS:
By: /s/ AENEAS VENTURE CORPORATION
---------------------------------
By:
---------------------------------
INVESTORS AND PURCHASERS:
THE GLOBAL HEALTH
By: /s/ SCIENCES FUND
---------------------------------
Title: Secretary
------------------------------
INVESTORS AND PURCHASERS:
By: /s/ STF II, L.P.
---------------------------------
Title: Investment Manager
------------------------------
INVESTORS AND PURCHASERS:
SUTRO INVESTMENT
By: /s/ PARTNERS III
---------------------------------
Title: President
------------------------------
INVESTORS AND PURCHASERS:
By: /s/ Aspen Venture Partners, L.P.
---------------------------------
Title: General Partner
------------------------------
INVESTORS AND PURCHASERS:
ASSET MANAGEMENT
By: /s/ ASSOCIATES 1984
---------------------------------
Title:
------------------------------
INVESTORS AND PURCHASERS:
ASSET MANAGEMENT
By: /s/ ASSOCIATES 1989, LP.
---------------------------------
Title:
------------------------------
INVESTORS AND PURCHASERS:
By: /s/ CHARTER VENTURES
---------------------------------
Title: General Partner
------------------------------
INVESTORS AND PURCHASERS:
By: /s/ Charter Venture II LP
---------------------------------
Title: General Partner
------------------------------
INVESTORS AND PURCHASERS:
By: /s/ Enterprise Partners
---------------------------------
Title: General Partner
------------------------------
INVESTORS AND PURCHASERS:
H&Q London Ventures
H&Q Ventures IV
The Hambrecht 1980 Revocable Trust
H&Q Ventures International C.V.
H&Q Life Science Ventures
By /s/ Jackie Berterretche
----------------------------------
Title: Attorney-in-Fact
------------------------------
INVESTORS AND PURCHASERS:
By: /s/ Robert J. Byrnes
---------------------------------
Title: CEO
------------------------------
-20-
<PAGE>
FIRST AMENDMENT TO ADEZA BIOMEDICAL CORPORATION
INVESTORS' RIGHTS AGREEMENT
DATED APRIL 30, 1996
Adeza Biomedical Corporation, a California corporation (the "Company") and
the holders of a majority of the outstanding Registrable Securities (as defined
in the Investors' Rights Agreement) of the Company as set forth on Schedule A
hereto (the "Shareholders") hereby agree, in consideration of the agreement by
the Shareholders to purchase certain principal amounts of the Company's
Convertible Secured Promissory Note (the "Note") as set forth in the Note and
Warrant Purchase Agreement dated April 30, 1996, by and between the Company and
the Shareholders (the "Purchase Agreement"), to amend the Investors' Rights
Agreement dated December 21, 1994, by and between the Company, on the one hand,
and the Investors and Purchasers (as defined therein) on the other hand (the
"Investors' Rights Agreement"), as of April 30, 1996, as follows:
1. SECTION 2.1(b).
--------------
Section 2.1(b) of the Investors' Rights Agreement is hereby amended to read
in its entirety as follows:
"(b) For the purposes hereof, the term "Registrable Securities" means
shares of (i) any and all Common Stock of the Company issued or issuable upon
conversion of shares of the Series 1 or Series 2 Preferred Stock of the Company,
which have not been previously resold to the public in a registered public
offering, and, for purposes of Section 2.3 hereof only, shares of Common Stock
issuable upon exercise of a warrant to purchase 220,000 shares of Common Stock
issued to Tucker Anthony, (ii) any Common Stock issuable upon conversion of the
Conversion Stock (as defined in that certain Note and Warrant Purchase Agreement
dated April 30, 1996, by and between the Company and the Shareholders set forth
on Exhibit A thereto (the "Purchase Agreement") issuable pursuant to the terms
of the Purchase Agreement and any of the Company's Common Stock issuable upon
exercise of the Warrants granted pursuant to the Purchase Agreement (or, in the
event the Warrants are exercised for Preferred Stock, the Common Stock issuable
upon conversion of Preferred Stock issued upon exercise of the Warrants granted
pursuant to the Purchase Agreement), (iii) stock issued with respect to or in
exchange for or in replacement of stock included in subparagraphs (i) or (ii)
above which have not been previously resold to the public in a registered public
offering, and (iv) stock issued in respect of the stock referred to in (i), (ii)
or (iii) above as a result of a stock split, stock dividend or the like, which
have not been previously resold to the public in a registered public offering.
<PAGE>
2. SECTION 3.3.
-----------
Section 3.3 of the Investors' Rights Agreement is hereby amended to read in
its entirety as follows:
"The Company shall not, without the prior approval of holders of a majority
of the Series 2 Preferred Stock, incur, in any one transaction or series of
related transactions, any indebtedness for money borrowed outside the ordinary
course of business in excess of $500,000, except that the Company may incur up
to $2,000,000 of debt pursuant to the terms of the Purchase Agreement (it being
understood and agreed that trade credit incurred in the ordinary course of
business and equipment financings do not constitute indebtedness for money
borrowed). This covenant shall terminate on the earlier of (i) the closing of a
firm commitment underwritten public offering pursuant to an effective
registration agreement under the Securities Act covering the offer and sale of
Common Stock for the account of the Company to the public at an aggregate
offering price of not less than $10,000,000 and at a public offering price per
share (prior to underwriter commissions and expenses) that is not less than
$2.50 (as adjusted for stock splits, stock combinations and the like), and (ii)
December 21, 1998.
3. INVESTORS' RIGHTS AGREEMENT.
---------------------------
Except as amended by this Agreement, the Investors' Rights Agreement shall
remain in full force and effect.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ADEZA BIOMEDICAL CORPORATION
By: /s/ Adeza Biomedical Corporation
--------------------------------
Title:
-----------------------------
Address: 1240 Elko Drive
Sunnyvale, CA 94089
Attention: Daniel O. Wilds
SHAREHOLDER
/s/ Shareholder
------------------------------------
By:
--------------------------------
Title:
-----------------------------
-3-
<PAGE>
SCHEDULE A
----------
Name and Address
- ----------------
Aeneas Venture Corporation
c/o Harvard Management Co., Inc.
600 Atlantic Avenue
Boston, MA 02210-2203
Attn: Nancy Amer
Aspen Venture Partners, L.P.
c/o Alliance Technology Ventures, L.P.
3343 Peachtree Road N.E.
Suite 1140
East Tower
Atlanta, GA 30326
Attn: Michael Henos
Asset Management Associates
2275 East Bayshore Road
Suite 150
Palo Alto, CA 94303
Attn: Craig C. Taylor
B.G. Services Limited
Minden House, 6 Minden Place
St. Heliar, Jersey, Channel Islands
Charter Ventures II, L.P.
525 University Avenue, Suite 1500
Palo Alto, CA 94301
Attn: A. Barr Dolan
Enterprise Partners
5000 Birch Street
Suite 6200
Newport Beach, CA 92660
Attn: Andrew E. Senyei
STF II, L.P.
c/o Indosuez Partners
2180 Sand Hill Road, Suite 450
Menlo Park, CA 94025
Attn: Nancy Burrus
-4-
<PAGE>
EXHIBIT 10.8
DISTRIBUTION AGREEMENT
This agreement (the "Agreement"), effective as of the 17th day of Dec.,
---- ----
1990, is entered into by and between Daiichi Pure Chemicals Co., Ltd., a
corporation organized and existing under the laws of Japan and having its office
at 13-5, Nihombashi 3-Chome, Chuo-ku, Tokyo 103, Japan ("Daiichi") and Adeza
Biomedical Corporation, a corporation organized and existing under the laws of
California, USA, and having its office at 1240 Elko Drive, Sunnyvale, CA 94089,
USA ("Adeza").
WHEREAS, Adeza has developed and expects to develop human diagnostic
- -----------------------------------------------------------------------------
products and wishes to grant distribution rights to market these products to
- ------------------------------------------------------------------------------
Daiichi in the Territory; and
- -----------------------------
WHEREAS, Daiichi wishes to obtain such distribution rights;
NOW, THEREFORE, the parties agree as follows;
1. Definitions
- ----------------
1.01 Affiliate means any corporation or business entity which is under
common control or owns or controls or is owned or controlled by, directly or
indirectly, either Adeza or Daiichi.
1.02 Product(s) means Rupture of Amniotic Membrane ("ROM") and/or Preterm
---------------------------------------------------------------------
Delivery ("PTD") diagnostic products formated on microtiter ELISA plate or
- ---------------------------------------------------------------------------
flow-through membrane test formats.
- ----------------------------------
1.03 Territory means the country of Japan.
------------------------------------
1.04 Ministry means the Japanese Ministry of Health and Welfare.
2. Marketing Rights
- ---------------------
2.01 Subject to the terms and conditions of this Agreement, for a period
of [*] with a continuation for an additional [*] at Daiich's.
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
option, Adeza grants to Daiichi in the Territory the exclusive right to market
and sell Products.
2.02 Daiichi may exercise the continuation options discussed in paragraph
2.01 by sending written notice to Adeza no later than [*] from the date of this
Agreement stating that Daiichi wishes to extend the period of this Agreement for
the products covered in 2.01 for an additional [*]. The period will then be
extended on the same terms and conditions as in this Agreement.
2.03 Extensions of this Agreement following the initial [*] will be
favorably considered and discussed by Daiichi and Adeza with the objective of
entering into a mutually agreeable extension. Such extension must be formally
agreed to no later than [*] from the date of this Agreement.
2.04 After the first [*] of this Agreement, should Daiichi at any
time decline interest in collaborating with Adeza to exert its best efforts to
obtain regulatory approval, if necessary, and to market a Product in the
Territory, then Daiichi's rights relating to such a Product under paragraph 2.01
shall revert to Adeza. Daiichi shall have six (6) months to inform Adeza
whether or not it has interest.
3. Clinical Trials and Regulatory Approval
- --------------------------------------------
3.01 Daiichi shall be responsible for obtaining the approval of the
Ministry, and all other regulatory approvals necessary for the importation,
manufacture, sale and marketing of the Products in the Territory (the
"Approvals"). Adeza shall provide to Daiichi a reasonable number of samples of
Products at no charge to be used solely for the purpose of obtaining regulatory
approval. Daiichi's efforts shall include the development of protocols, the
performance and monitoring of clinical trials, animal tests and laboratory
studies, the preparation of all other studies required by the regulatory
authorities and the preparation and filing of all applications for the
* [CONFIDENTIAL TREATMENT REQUESTED]
-2-
<PAGE>
Daiichi will share with Adeza all information and results regarding the
protocols, clinical trials, tests, studies and the like. Adeza, its Affiliates,
and its licensees shall have the right to use such information developed by
Daiichi. Adeza shall share with Daiichi relevant results of studies performed
outside the Territory, and Daiichi shall have the right to use this information.
Daiichi and Adeza shall work together, sharing all available information, to
ensure prompt approvals necessary to import, manufacture, market and sell
Products.
3.02 Nothing herein shall in anyway imply that Daiichi has the right to
produce the Products.
4. Product Registration, Trademarks, and Patents
- --------------------------------------------------
4.01 (a) Daiichi shall have responsibility for all Product registration
activities in the Territory. If requested by Daiichi and at Daiichi's expense,
Adeza shall assist Daiichi's efforts to obtain approval for the lawful sale of
the Products in the Territory, including making available to Daiichi any data
developed in the U.S. or other countries that would assist Daiichi to obtain
regulatory approval in the Territory. Adeza shall have the opportunity to
closely and extensively review materials developed by Daiichi during the
Japanese registration process and shall have the opportunity to offer its
comments and advise Daiichi during the registration process. Adeza shall
endeavor to ensure that its review will not materially delay the regulatory
submission process. A copy of each complete registration package, including
supporting data, will be given to Adeza at the time of submission to the
Ministry.
(b) Registration shall be made in the name of Daiichi. Daiichi shall
ensure that such registrations shall be effected for the benefit of Adeza, and
shall upon termination of this Agreement, either be assigned back to Adeza, or
to Adeza's designee, or surrendered for cancellation as Adeza shall direct in
-3-
<PAGE>
agencies a statement required in connection with this assignment, surrender, or
cancellation. Daiichi will supply Adeza with all necessary information to
successfully transfer the registrations as described in the Ministry of Health
and Welfare Ordinance No. 26 (dated June 29, 1985, effective July 31, 1985) and
Notification No. 658 "Implementation of the Ministerial Ordinance for Partial
Revision of the Enforcement Regulations, Pharmaceutical Affairs Law" (dated
June 29, 1985, effective July 31, 1985), No. 1(l) "Items Concerning Transfer of
Approvals."
4.02 (a) The labels and packaging of the Products shall identify Adeza as
the manufacturer and owner of the trademarks and patents and Daiichi as the
distributor. Adeza will use its best efforts to register its trademarks in the
Territory and Daiichi will co-operate in doing so, all at Adeza's expense.
(b) No license to use Adeza trademarks or patents is granted
hereunder nor is any property right or interest in Adeza trademarks or patents
granted other than the right to market and sell the Products under Adeza
trademarks and patents in accordance with the terms and conditions of this
Agreement.
(c) Daiichi agrees to recognize and not contest the validity of the
Adeza trademarks and patents and registrations thereof in the Territory and the
ownership thereof by Adeza.
(d) In the event of any infringement of the rights of Adeza to any of
the trademarks or patents in the Territory coming to the notice of Daiichi
during the term of this Agreement, Daiichi agrees to promptly notify Adeza in
writing and will join with Adeza, if required by Adeza and at Adeza's expense,
in taking such action as Adeza may deem advisable or otherwise for the
protection of Adeza's rights. The commencement, strategies, termination and
settlement of any action relating to the validity or infringement of Adeza's
trademarks and patents shall be decided by Adeza.
4.03 Adeza shall file and maintain at its own expense patents on Products
in the Territory and keep Daiichi advised of the status of such patents. Adeza
-4-
<PAGE>
barriers to competition provided by Adeza's patents.
5. Manufacture and Purchase of Products
- -----------------------------------------
5.01 Adeza or its Affiliates shall manufacture and sell the Product,
F.O.B. nearest international airport, to Daiichi and Daiichi or its Affiliates
shall buy all of Daiichi's and its Affiliates' requirements for the Products in
the Territory. Daiichi will be responsible for clearing customs, custom duties
and warehousing charges associated with the importation of Products.
5.02 The Transfer Price that Daiichi shall pay to Adeza for the Products
shall be discussed and mutually agreed upon. After [*] of sales experience
Daiichi and Adeza shall review the Transfer Price.
5.03 Payment terms, return of products and other terms and conditions of
sale of the Products shall be in accordance with Adeza's standard Additional
Terms and Conditions which is attached to this Agreement as Exhibit A.
6. Promotion
- --------------
6.01 Daiichi shall, at its own expense, use its best efforts to promote
the sales of Products in the Territory. Daiichi shall maintain a well-staffed
sales force consistent with its obligations under this Agreement, including
technically trained personnel, devoted to the sale and promotion of Products in
the Territory. Daiichi shall conduct active sales promotion and programs in
order to establish and expand sales, and shall periodically conduct market
research and shall keep Adeza advised of general market (including customer
trends and competitive activity), economic and regulatory conditions that may
affect sales.
6.02 At the end of each calendar quarter, Daiichi shall provide Adeza
with a quarterly report describing (i) all sales, specifying the Products sold
and (ii) estimated Product inventory status at Daiichi, as detailed as
reasonably
* [CONFIDENTIAL TREATMENT REQUESTED]
-5-
<PAGE>
6.03 Adeza will provide Daiichi with promotional literature and materials
(e.g., brochures, data sheet, sales bulletins, etc.) used for promoting the
Products in the United States. Daiichi shall prepare and produce promotional
material necessary to effectively promote the Products in the Territory
including translation, if necessary. Adeza will provide Daiichi with
transparencies or film separations of literature and materials produced in the
U.S. at no charge. All promotional literature prepared by Daiichi shall be
submitted to Adeza with an English synopsis.
6.04 Daiichi hereby agrees to limit its claims of effectiveness and safety
for the Products to those approved by the Ministry for marketing within the
Territory. Claims shall not be added or deleted unless such claims are agreed,
in writing, by both Daiichi and Adeza.
6.05 Daiichi shall do nothing intentionally which would jeopardize the
goodwill of Adeza or the reputation of the Products. The appointment of Daiichi
shall not create a joint venture or principal-agency relationship, and nothing
under this Distribution Agreement shall be deemed to authorize Daiichi to act
for, represent, or bind Adeza or any of its Affiliates.
6.06 Until such time that Daiichi and Adeza shall both agree that it is no
longer necessary, Daiichi and Adeza shall meet quarterly to discuss product
sales, market forecasts and plans, regulatory environment, competition, and
other matters relevant to the Agreement. Such meetings will alternate between
Japan and the United States. In addition, Daiichi and Adeza will maintain
regular, close communication by teleconference, telefax and mail.
7. Warranty and Liability
- ---------------------------
7.01 Adeza warrants that the Products to be supplied to Daiichi under this
Agreement shall conform to the standards and specifications of Adeza for the
Products and, in any event, that such standards and specifications shall be no
less than those required by the Ministry. Adeza makes no other warranties of
-6-
<PAGE>
any kind, express or implied, with respect to the Products.
7.02 Adeza shall not be responsible for any damages or losses suffered by
Daiichi arising out of the storage, use, or sale of the Products by Daiichi, or
storage of the Products by the registration authorities of the Territory, unless
such claims arise from and are proved to be caused by an act of gross negligence
by Adeza, in which case Adeza shall indemnify and hold Daiichi harmless from any
damages and losses including attorneys' fees. Daiichi shall indemnify and hold
Adeza harmless from such claims including attorneys' fee unless such claims
arise from and are proved to be caused by an act of gross negligence by Adeza.
In addition, Daiichi shall confer with Adeza prior to settlement of any such
claims against Daiichi.
7.03 Adeza makes no warranty that the sale of the Products shall not
infringe patents owned by a third party. Each party shall notify the other
immediately of any claim or notice that the Products infringe the rights of a
third party. After a court decision, arbitration decision, or business
judgement has been made that Adeza is infringing upon the patents of a third
party, then at any time after learning of that claim, Adeza can require that
Daiichi immediately suspend selling Products. In the event Daiichi is required
by Adeza to suspend selling Products in the Territory, Adeza shall repurchase
Daiichi's inventory of such Products at Daiichi's landed cost.
8. Recall
- -----------
8.01 Daiichi agrees throughout the duration of this Agreement and
thereafter for a period of two (2) years to report as soon as possible to Adeza
any time that a product defect or customer complaint becomes known either
through complaint from the field or from information which becomes known to
Daiichi. The decision to recall, to retrieve, or replace that quantity of
Products shall be made by Adeza. Daiichi agrees to follow such recall
procedures submitted to it by Adeza.
-7-
<PAGE>
9. English Language
- --------------------
9.01 All reports, notices, literature, materials, inquiries, or other
written materials required to be submitted by either party in accordance with
the terms of this Agreement, except those previously discussed in paragraphs
4.01 and 6.03, shall be submitted in the English language.
10. Term and Termination
- -------------------------
10.01 This Agreement shall be effective as of the date of execution and
shall continue in effect for [*] from the date of this Agreement, unless
extended pursuant to paragraph 2.02 or sooner terminated as provided in this
Article 10.
10.02 Either party shall have the right to cancel this Agreement, without
judicial resolution, upon one hundred twenty (120) days' written notice to the
other if the other party shall default or breach any material provision hereof
and such default or breach is not cured within sixty (60) days of such notice.
10.03 Either party shall have the right and option to terminate this
Agreement forthwith at any time, by notice in writing to the other party in the
event of the other party hereto:
(a) Passing any resolution for or permitting any proceedings leading
definitively to its ceasing business, or
(b) Filing a petition in bankruptcy or insolvency, or being declared
bankrupt or insolvent, or
(c) Receiving any court's order of reorganization, readjustment or
arrangement of the business, or
(d) Being merged with and/or acquired by an unfriendly or unfavorable
company.
10.04 Upon termination of this Agreement, neither party shall make any
claim or request compensation of any kind with respect to lost sales or profit,
goodwill or other damages arising from the termination.
* [CONFIDENTIAL TREATMENT REQUESTED]
-8-
<PAGE>
10.05 The termination of this Agreement shall not affect Daiichi's or
Adeza's obligation to pay any amount accruing to Adeza or Daiichi, respectively,
under the provisions of the Agreement while it was in effect.
10.06 Upon termination of this Agreement, Adeza will have no further
obligations to supply Products to Daiichi except that in accordance with the
terms of this Agreement it will supply to Daiichi those Products necessary for
Daiichi to fulfill its obligations under pending public offers about which
Daiichi has already notified Adeza.
10.07 In the event this Agreement is terminated by Daiichi pursuant to
10.02, Adeza shall repurchase at landed cost all of the inventories of Products
then held by Daiichi.
11. Miscellaneous Provisions including Force Majeure, Confidentiality, Good
- ----------------------------------------------------------------------------
Faith Negotiation, Governing Law, Etc.
- --------------------------------------
11.01 This Agreement shall survive the sale of controlling interest in
either Adeza or Daiichi to a third party.
11.02 Various miscellaneous provisions governing this Agreement, including
provisions discussing Force Majeure, Confidentiality, Good Faith Negotiation,
Governing Law, and other matters are contained in Exhibit B to this Agreement,
which Exhibit is to be considered a part of this Agreement.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
first written above.
DAIICHI PURE CHEMICALS CO., LTD.
By: /s/ Tomomichi Sato
----------------------
Print name: Tomomichi Sato
--------------
ADEZA BIOMEDICAL CORPORATION
By: /s/ Brian Frenzel
--------------------------
Print name: Brian Frenzel
------------------
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<PAGE>
EXHIBIT A
Additional Terms and Conditions
Payment Terms
- -------------
All payment shall be made in U.S. dollars via wire transfer to Adeza's bank
account. Payment in full is due sixty (60) days after the date of the invoice.
Orders and Forecasts
- --------------------
In order to assist Adeza in planning its production schedule, Daiichi shall
submit to Adeza forecasts for its requirements of Products as follows: Prior to
the end of each calendar quarter, Daiichi will supply Adeza with a
quarter-by-quarter estimate of its requirements for the Products for the next 12
months. Daiichi shall use reasonable efforts to furnish accurate estimates.
Daiichi shall submit binding purchase orders to Adeza setting forth the
quantities to be supplied, delivery dates and shipping instructions. Adeza
and/or its Affiliates shall exert reasonable efforts to deliver the quantities
requested in any purchase order on or before the delivery date specified by
Daiichi and in accordance with the shipping instructions set forth in such
purchase order. Normal delivery time for Adeza and/or Adeza's Affiliates will
be within thirty (30) days after receipt of any purchase order. If
circumstances develope which prevent a thirty (30) day delivery, Adeza will
promptly notify Daiichi.
Should Adeza fail consistently to meet Daiichi's orders or should Adeza's
production facilities be sufficiently disrupted by earthquake, fire of other
calamity, then Adeza and Daiichi shall consider and mutually agree to other
production alternatives.
-11-
<PAGE>
Direct Sales
- ------------
Adeza shall promptly refer to Daiichi direct orders or inquiries received
by Adeza from prospective purchasers of the Products in the Territory. Daiichi
shall use its best efforts to fill any such order referred to and accepted by
Daiichi. Daiichi shall advise Adeza promptly if it is not able for any reason
to fill any order so that Adeza may fill them directly. Such orders shall,
however, be filled through Daiichi to the extent practicable.
Adeza reserves the right to sell the Products directly, with the knowledge
of Daiichi that Products will be imported into the Territory, to the following
entities: (a) any international non-profit or welfare organization; or (b) any
organization or agency of the United States Government.
Claims
- ------
Claims on account of weight, quality, loss or damage to any of the Products
supplied which are detectable within sixty (60) days after delivery shall be
made in writing within the said sixty (60) day period. Adeza's liability for
damages for any such claims shall be limited to a refund of the landed costs of
such Products or to replacement with new Products meeting registration
specifications. Such refund or replacement shall constitute Adeza's sole and
exclusive liability for such claims. In no event shall Adeza be liable for lost
sales or profit or for other incidental or consequential damages. Daiichi must
contact Adeza prior to return and must request a return authorization number.
Adeza will use its best efforts to ship replacement product promptly and, in no
event later than thirty (30) days from receipt of returned product.
-12-
<PAGE>
EXHIBIT B
Force Majeure
- -------------
No failure or omission by the parties hereto in the performance of any
obligation of this Agreement shall be deemed a breach of this Agreement or
create any liability if the same shall arise from any cause or causes beyond the
control of the parties, including, but not limited to, the following: acts of
Gods, acts or omissions of any government; any rules, regulations or orders
issued by any governmental authority or by any officer, department, agency or
instrumentality thereof; fire; storm; flood; earthquake; accident; war;
rebellion; insurrection; riot; and invasion; and provided that such failure or
omission resulting from one of the above causes is cured as soon as practicable
after the occurrence of one or more of the above-mentioned causes.
Confidentiality
- ---------------
Any information which shall have been or will be communicated in confidence
to one party (the "Recipient") under this Agreement including all information,
whether conveyed in writing, orally or through other tangible materials,
designated by the other (the "Provider") to be confidential, (the "Confidential
Information") shall be governed by the provisions of this Section.
Recipient agrees not to use the Confidential Information disclosed to it
for its own benefit except for the purpose of performing its obligations under
this Agreement.
Recipient agrees not to disclose the Confidential Information disclosed to
it to any third party or to use such Confidential Information for benefit of any
third party without the express written permission of Provider, except that
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<PAGE>
Recipient shall not be prevented from using or disclosing information:
(a) which Recipient can demonstrate by written records was known to
Recipient prior to date of disclosure by Provider, provided such information was
not obtained by Recipient through disclosure by a third party receiving such
information in confidence from Provider.
(b) which is now public knowledge, or becomes public knowledge in the
future other than by breach of this Agreement by Recipient; or
(c) which, as can be established by written records, is independently
developed by Recipient without benefit of Confidential Information received from
Provider; or
(d) which is disclosed to Recipient, after the date of disclosure by
Provider by a third party having a right to make such disclosure; or
(e) which is included in any filing or action taken by Recipient to
obtain governmental approval to market the Products provided, however, that when
permitted by the provisions of local law, Recipient will take reasonable steps
to protect the confidentiality of Confidential Information submitted to
governmental agencies or authorities pursuant to this Agreement. Recipient
further agrees to use the same degree of care it uses to protect its own
confidential and proprietary technical information to prevent unauthorized
disclosure to any third party of the Confidential Information.
Recipient agrees that it shall acquire no rights with respect to
Confidential Information disclosed to it by Provider, except as expressly set
forth in this Agreement.
Recipient agrees that the Confidential Information disclosed to it will not
be disclosed to any third party or to any employees, officers or directors of
Recipient except to those employees, officers and directors of Recipient who
reasonably require such disclosure for purposes of performing Recipient's
obligations under this Agreement.
Upon termination of this Agreement, Recipient shall return to Provider or
destroy any tangible copies of any Confidential Information provided to it
-14-
<PAGE>
hereunder and any notes taken by employees of Recipient regarding Confidential
Information disclosed to it.
The confidentiality obligations under the terms of this Agreement shall
survive termination hereof, unless such obligations expire by their terms, and
shall remain in effect with respect to each portion of the Confidential
Information for a period equal to five (5) years from the date of termination of
this Agreement.
Recipient acknowledges that all Confidential Information is owned solely by
Provider and that unauthorized disclosure or use of such Confidential
Information could cause irreparable harm and significant injury might be
difficult to ascertain or for which money is inadequate compensation.
Accordingly, Provider will be entitled to seek injunctive and other preliminary
and equitable relief to enforce this Section, in addition to damages and other
available remedies.
Confidential Information relating to the subject matter of this Agreement
disclosed prior to the execution hereof shall be governed by the provisions of
this Section.
Good Faith Negotiation
- ----------------------
In the event of any controversy, claim or dispute, the party initiating the
controversy, claim or dispute shall provide to the other party a written notice
containing a brief and concise statement of the matter, together with relevant
supporting facts. During a period of sixty (60) days or such longer period as
mutually agreed, the parties shall attempt to settle the matter by good faith
negotiation. Such efforts shall include, but not be limited to, full
presentation of both parties claims, without counsel, to the President of
Daiichi and the President of Adeza.
In the event that efforts under the immediately preceding paragraph are not
successful, such dispute shall be resolved by arbitration. Failure to comply
with the procedures in the immediately preceding paragraph shall be an absolute
-15-
<PAGE>
bar to the institution of any arbitration proceeding with respect to the
controversy, claim or dispute. Any such arbitration shall proceed at Geneva,
Switzerland, in accordance with the rules of the International Chamber of
Commerce. In such event, Adeza and Daiichi shall each select an arbitrator and a
third shall be selected by the two arbitrators so chosen. The arbitration award
shall be final and binding regardless of whether one of the parties fails or
refuses to participate in the arbitration and shall be enforceable by any court
of competent jurisdiction. Any arbitration proceedings hereunder shall be
conducted in English.
Governing Law
- -------------
This Agreement shall be construed and the respective rights of the Parties
hereto determined according to the laws of the State of California
notwithstanding the provisions governing conflict of law under such law to the
contrary.
Ethical Business Practices
- --------------------------
Daiichi and Adeza hereby agree that in the performance of this Agreement,
no illegal payments of any kind or other consideration shall be made to any
local, state, or federal government officials of the Territory or any other
nation, at any time or under any circumstances.
Waiver, Assignment, Notice, Entire Agreement
- --------------------------------------------
No waiver by any party in one or more instances of any of the provisions of
this Agreement or the breach thereof shall establish a precedent for any other
instance with respect to this or any other provision. Furthermore, in case of
waiver of a particular provision, all other provisions of this Agreement will
continue in full force and effect.
<PAGE>
This Agreement may not be assigned by either party without the prior
written consent of the other party.
All notices or communications given hereunder by one party to the other
shall be addressed to such parties as follows:
To Adeza:
Adeza Biomedical Corporation
1240 Elko Drive
Sunnyvale, California 94089, USA
Attention : President
To Daiichi:
Daiichi Pure Chemicals Co., LTd.
13-5, Nihombashi 3-chome, Chuo-ku
Tokyo 103, Japan
Attention : President
or such other address as either party may hereafter designate in writing as its
address for the purpose hereof. Any notice required or provided for by the terms
of this Agreement shall be in writing and sent by DHL, or other comparable air
courier, or by registered or certified airmail, return receipt requested,
postage prepaid and properly addressed in accordance with this paragraph. The
effective date of notice shall be the actual date of receipt.
This Agreement constitutes the entire Agreement between the parties in
respect of the subject matter hereof and supersedes and cancels all previous
agreements, negotiations, commitments and writings in respect of the subject
matter hereof and may not be changed or modified in any manner or released,
discharged, abandoned or otherwise terminated unless in writing and signed by
the duly authorized officers or representatives of the parties.
If any provision of this Agreement is held to be invalid or unenforceable,
all other provisions shall nevertheless continue in full force and effect. In
<PAGE>
the event that the invalid or unenforceable provision is a material term of the
Agreement, the parties shall negotiate a substitute provision acceptable to
both parties that accomplishes, to the extent possible, the original business
purposes.
<PAGE>
In connection with the Distribution Agreement entered into on the 17th day of
----
Dec., 1990 by and between Daiichi Pure Chemicals Co., Ltd. ("Daiichi") and Adeza
- ----
Biomedical Corporation ("Adeza"), Daiichi and Adeza agree as follows;
Transfer Price
- --------------
The Transfer Price(s) for Rupture of Amniotic Membrane and/or Preterm
Delivery diagnostic products ("Product(s)") shall be [*].
[*]
[*]
Net Sales
- ---------
Net Sales shall mean Daiichi's gross sales of Products in the Territory
billed to unrelated third party customers less i) trade and cash discounts
allowed to unrelated third party customers (such discounts not recouped by
Daiichi in any way) ii) credits or refunds for goods returned to Daiichi by
customers, iii) sales, excise, turnover and similar taxes and duties imposed by
governments on the sales of Products and iv) transportation, insurance and
handling charges for Products. Net Sales shall not be reduced by any discounts,
price reductions or free goods granted in order to induce the purchase of other
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
Review of Transfer Price
- ------------------------
After [*] of sales experience, Daiichi and Adeza shall review the
Transfer Price formula. The result of this review could result in a new formula.
Agreed and accepted by:
DAIICHI PURE CHEMICALS CO., LTD.
By /s/ Tomomichi Sato
-----------------------
Print Name: Tomomichi Sato
--------------
Date:
--------------------
ADEZA BIOMEDICAL CORPORATION
By /s/ Brian Frenzel
-----------------------
Print Name: Brian Frenzel
---------------
Date: ----------------
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
AGREEMENT
At such time as either Daiichi or Adeza wishes to pursue marketing of Adeza
products in [*], then that party shall inform the other and Daiichi and Adeza
shall negotiate in good faith for a period up to six (6) months to determine
mutually agreeable terms for such marketing and distribution. There will be no
additional funds required for research and development of Products or for any
marketing rights granted in these territories.
Agreed and accepted by:
DAIICHI PURE CHEMICALS CO., LTD.
BY /s/ Tomomichi Sato
-----------------------
Print Name: Tomomichi Sato
--------------
Date: December 17, 1990
--------------------
ADEZA BIOMEDICAL CORPORATION
By /s/ Brian Frenzel
-----------------------
Print Name: Brian Frenzel
--------------
Date: December 17, 1990
--------------------
* [CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
EXHIBIT 10.9
MASTER EQUIPMENT LEASE
Under this Master Equipment Lease (the "Lease"), dated as of September 29,
1995, Phoenix Leasing Incorporated ("Lessor") hereby leases to Adeza Biomedical
Corporation ("Lessee"), and Lessee hereby leases from Lessor, the equipment
(herein called "Equipment") which is described on the schedule attached hereto
or any subsequently-executed schedule entered into by Lessor and Lessee and
which incorporates this Lease by reference. Any such schedules shall
hereinafter individually be referred to as a "Schedule" and collectively be
referred to as the "Schedules." Lessor hereby leases the Equipment to Lessee
upon the following terms and conditions:
1. TERM OF AGREEMENT. The term of this Lease begins on the date set
forth above and shall continue thereafter and be in effect so long as and at any
time any Schedule entered into pursuant to this Lease is in effect. The Initial
Term and rent payable with respect to each leased item of Equipment shall be as
set forth in and as stated in the respective Schedule(s). The terms of each
Schedule hereto are subject to all conditions and provisions of this Lease as it
may at any time be amended. Each Schedule shall constitute a separate and
independent lease and contractual obligation of Lessee and shall incorporate the
terms and conditions of this Master Equipment Lease and any additional
provisions contained in such Schedule. In the event of a conflict between the
terms and conditions of this Lease and any additional provisions of such
Schedule, the additional provisions of such Schedule shall prevail with respect
to such Schedule only.
2. NON-CANCELLABLE LEASE. This Lease and any Schedule cannot be
cancelled or terminated except as expressly provided herein. This Lease
(including all Schedules to this Lease) constitutes a net lease and Lessee
agrees that its obligations to pay all rent and other sums payable hereunder
(and under any Schedule) and the rights of Lessor and assignee in and to such
rent and other sums, are absolute and unconditional and are not subject to any
abatement, reduction, setoff, defense, counterclaim or recoupment due or alleged
to be due to, or by reason of, any past, present or future claims which Lessee
may have against Lessor, any assignee, the manufacturer or seller of the
Equipment, or against any person for any reason whatsoever. Nothing in this
section is intended to affect Lessee's right to bring a claim against Lessor for
any breach of its obligations hereunder.
3. LESSOR COMMITMENT. So long as no Event of Default or event which with
the giving of notice or passage of time, or both, could become an Event of
Default has occurred and is continuing, Lessor agrees to lease to Lessee the
groups of Equipment described on each Schedule, subject to the following
conditions: (i) that in no event shall Lessor be obligated to lease Equipment to
Lessee hereunder where the aggregate purchase price of all Equipment leased to
Lessee hereunder would exceed Two Hundred Fifty Thousand Dollars ($250,000);
(ii) the amount of Equipment purchased by Lessor at any one time shall be at
least equal to Fifty Thousand Dollars ($50,000), except for the final advance,
which may be less than Fifty Thousand Dollars ($50,000); (iii) Lessor shall not
be obligated to purchase Equipment hereunder after June 30, 1996; provided,
--------
however, that Lessor shall not be obligated to purchase Equipment hereunder on
- -------
or after May 1, 1996, unless and until Lessee has provided Lessor with financial
projections for the period commencing May 1, 1996, and terminating June 30,
1996, in form and
<PAGE>
substance acceptable to Lessor, which projections, if accepted by Lessor, shall
become part of the Business Plan, as defined herein; (iv) all Master Lease
documentation required by Lessor with respect to the Lease has been executed by
Lessee or provided by Lessee no later than November 30, 1995; (v) the equipment
described on the Schedule is acceptable to Lessor; (vi) with respect to each
funding Lessee has provided to Lessor each of the closing documents described in
Exhibit A hereto (which documents shall be in form and substance acceptable to
- ---------
Lessor) and which list may be modified for each subsequent funding; (vii) there
is no material adverse change in Lessee's business condition and performance to
its business plan referred to as "Cash Flow" Forecast as of 8/1/95 [labeled
"Cash FF.EA 8/2/95"] (the "Business Plan"), as may be amended from time to time
-------------
in form and substance acceptable to Lessor; (viii) Lessor or its agent has
inspected and placed identification labels on the Equipment; (ix) Lessee shall
offer to Lessor, on an exclusive basis, all lease transactions for Equipment
contemplated by Lessee during the commitment period of this Lease; however if
Lessor declines to finance any such transaction or Lessee and Lessor cannot
agree upon terms, then Lessee shall be free to seek such financing from any
other third party; (x) the value of Equipment sold by Lessee to Lessor in
connection with a funding which Lessee owned for more than 90 days prior to the
funding date shall be the original purchase price thereof, less an adequate
depreciation allowance, as determined by Lessor; and (xi) Lessor has received in
form and substance acceptable to Lessor: (a) evidence of Lessee's receipt of One
Million Two Hundred Fifty Thousand Dollars ($1,250,000) from Tokos Medical
Corp., scheduled for July 1, 1995; and (b) evidence of Lessee's One Million
Three Hundred Ninety-Two Thousand Dollars ($1,392,000) cash position as of June
30, 1995.
4. NO WARRANTIES BY LESSOR.
(a) Lessee has selected both (i) the Equipment and (ii) the suppliers
(herein called "Vendor") from whom Lessor is to purchase the Equipment. LESSOR
MAKES NO WARRANTY EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER, INCLUDING THE
CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY OR ITS FITNESS FOR ANY
PARTICULAR PURPOSE, AND AS TO LESSOR, LESSEE LEASES THE EQUIPMENT "AS IS" AND
WITH ALL FAULTS.
(b) If the Equipment is not properly installed, does not operate as
represented or warranted by Vendor or is unsatisfactory for any reason, Lessee
shall make any claim on account thereof solely against Vendor and shall,
nevertheless, pay Lessor all rent payable under this Lease, Lessee hereby
waiving any such claims as against Lessor. Lessor hereby agrees to assign to
Lessee solely for the purpose of making and prosecuting any said claim, to the
extent assignable, all of the rights which Lessor has against Vendor for breach
of warranty or other representation respecting the Equipment. Lessor shall have
no responsibility for delay or failure to fill the order.
(c) Lessee understands and agrees that neither the Vendor nor any
salesman or other agent of the Vendor is an agent of Lessor. No salesman or
agent of Vendor is authorized to waive or alter any term or condition of this
Lease, and no representations as to the Equipment or any other matter by the
Vendor shall in any way affect Lessee's duty to pay the rent and perform its
other obligations as set forth in this Lease.
-2-
<PAGE>
(d) Lessee may request Lessor to purchase Equipment from Vendor or
Lessee and to lease Equipment to Lessee on the terms and conditions of the Lease
set forth herein.
(e) Lessee hereby authorizes Lessor to insert in this Lease and each
Schedule hereto the serial numbers and other identification data of the
Equipment when determined by Lessor.
5. LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee represents and
warrants that (a) it is a corporation in good standing under the laws of the
state of its incorporation, and duly qualified to do business, and will remain
duly qualified during the term of this Lease, in each state where the Equipment
will be located, as specified in each Schedule hereto; (b) it has full authority
to execute and deliver this Lease and perform the terms hereof, and this Lease
has been duly authorized and constitutes valid and binding obligations of Lessee
enforceable in accordance with its terms; (c) this Lease will not contravene any
law, regulation or judgment affecting Lessee or result in any breach of any
agreement or other instrument binding on Lessee; (d) no consent of Lessee's
shareholders or holder of any indebtedness, or filing with, or approval of, any
governmental agency or commission, is a condition to the performance of the
terms hereof; (e) there is no action or proceeding pending or threatened against
Lessee before any court or administrative agency which might have a materially
adverse effect on the business, financial condition or operations of Lessee; (f)
no deed of trust, mortgage or third party interest arising through Lessee will
attach to the Equipment or the Lease; (g) the Equipment will remain at all times
under applicable law, removable personal property, free and clear of any lien or
encumbrance in favor of Lessee or any other person, notwithstanding the manner
in which the Equipment may be attached to any real property; (h) all credit,
financial and any other information submitted to Lessor herewith or any other
time is true and correct in all material respects as of the time delivered; and
(i) Lessee has provided, or will provide if requested, Lessee's tax
identification number.
6. EQUIPMENT ORDERING. Lessee shall be responsible for all packing,
rigging, transportation and installation charges for the Equipment and Lessor
may separately invoice Lessee for such charges. Lessee has selected the
Equipment itself and shall arrange for delivery of Equipment so that it can be
accepted in accordance with Section 7 hereof. Lessee hereby agrees to indemnify
and hold Lessor harmless from any claims, liabilities, costs and expenses,
including reasonable attorneys' fees, incurred by Lessor arising out of any
purchase orders or assignments executed by Lessor with respect to any Equipment
or services relating thereto.
7. LESSEE ACCEPTANCE. Lessee shall return to Lessor the signed and dated
Acceptance Notice attached to each Schedule hereto (a) acknowledging the
Equipment has been received, installed and is ready for use and (b) accepting it
as satisfactory in all respects for the purposes of this Lease. Lessor is
authorized to fill in the Rent Start Date on each Schedule in accordance with
the foregoing.
8. LOCATION; INSPECTION; LABELS. Equipment shall be delivered to and
shall not be removed from the Equipment "Location" shown on each Schedule
without Lessor's prior written consent. Lessor shall have the right to inspect
Equipment at any reasonable time. Lessee shall be responsible for all labor,
material and freight charges incurred in connection with any removal or
-3-
<PAGE>
relocation of such Equipment which is requested by the Lessee and consented to
by Lessor, as well as for any charges due to the installation or moving of the
Equipment. The rental payments shall continue during any period in which the
Equipment is in transit during a relocation. Lessor or its agent shall mark and
label Equipment, which labels shall state Equipment is owned by Lessor, and
Lessee shall keep such labels on the Equipment as labeled by Lessor or its
agent.
9. EQUIPMENT MAINTENANCE.
(a) General. Lessee will locate or base each item of Equipment where
-------
designated in an Acceptance Notice and will reasonably permit Lessor to inspect
such item of Equipment and its maintenance records. Lessee will at its sole
expense comply with all applicable laws, rules, regulations, requirements and
orders with respect to the use, maintenance, repair, condition, storage and
operation of each item of Equipment. Except as required herein, Lessee will not
make any addition or improvement to any item of Equipment that is not readily
removable without causing material damage to any item or impairing its original
value or utility. Any addition or improvement that is so required or cannot be
so removed will immediately become the property of Lessor.
(b) Service and Repair. With respect to computer equipment (which
------------------
term does not include production and test equipment), other than personal
computers, Lessee has entered into, and will maintain in effect, Vendor's
standard maintenance contract or another contract satisfactory to Lessor for a
period equal to the term of each Schedule and extensions thereto which provides
for the maintenance of the Equipment and repairs and replacement parts thereof
in good condition and working order, all in accordance with the terms of such
maintenance contract. Lessee shall have the computer equipment (which term does
not include production and test equipment), other than personal computers,
certified for the Vendor's standard maintenance agreement prior to delivery to
Lessor upon expiration of this Lease. With respect to any other Equipment,
Lessee will, at its sole expense, maintain and service, and repair any damage
to, each item of Equipment in a manner consistent with prudent industry practice
and Lessee's own practice so that such item of Equipment is at all times (i) in
the same condition as when delivered to Lessee, except for ordinary wear and
tear, and (ii) in good operating order for the function intended by its
manufacturer's warranties and recommendations.
10. LOSS OR DAMAGE. Lessee assumes the entire risk of loss to the
Equipment through use, operation or otherwise. On the first rental payment date
following the loss, damage or destruction of the Equipment, any such occurrence
being hereinafter called a "Casualty Occurrence," or, if there is no such rental
payment date, thirty (30) days after such Casualty Occurrence, Lessee shall (i)
repair the Equipment, returning it to good operating condition or (ii) replace
the Equipment with identical equipment in good condition and repair, the title
to which shall vest in Lessor and which thereafter shall be subject to the terms
of this Lease; or (iii) pay to Lessor (a) any unpaid amounts relating to such
Equipment due Lessor under this Lease up to the date of the Casualty Occurrence,
and (b) a sum equal to the Casualty Value as set forth in the Casualty Value
table attached to each Schedule hereto for such Equipment. Upon the making of
such payment, the term of this Lease as to each unit of Equipment with respect
to which the Casualty Value was paid shall terminate.
-4-
<PAGE>
11. GENERAL INDEMNITY. Lessee will protect, indemnify and save harmless
Lessor from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (other than Impositions,
liability for which is governed by Section 13 hereof, and legal and other
related fees and expenses incurred in connection with the preparation of this
Lease or any schedule), imposed upon or incurred by or asserted against Lessor
or any assignee of Lessor by Lessee or any third party by reason of the
occurrence or existence (or alleged occurrence or existence) of any act or event
relating to or caused by the Equipment, including but not limited to,
consequential or special damages of any kind, or any failure on the part of
Lessee to perform or comply with any of the terms of this Lease. In the event
that any action, suit or proceeding is brought against Lessor by reason of any
such occurrence, Lessee, upon request of Lessor, will at Lessee's expense resist
and defend such action, suit or proceeding or cause the same to be resisted and
defended by counsel designated and approved by Lessor. Lessee's obligations
under this Section 11 shall survive the expiration of this Lease with respect to
acts or events occurring or alleged to have occurred prior to the return of the
Equipment to Lessor at the end of the Lease term.
12. INSURANCE. Lessee at its expense shall keep the Equipment insured for
the entire term and any extensions of this Lease against all risks for the value
of the Equipment and in no event for less than the Casualty Value of such
Equipment and such insurance shall cover any Casualty Occurrence to any unit of
Equipment. Such insurance shall contain insurer's agreement to give thirty (30)
days written notice to Lessor before cancellation or material change of any
policy of insurance, and shall provide for (a) loss payable endorsement to
Lessor or any assignee of Lessor, and (b) public liability and property damage
insurance in an amount not less than Two Million Dollars ($2,000,000), naming
Lessor as additional insured. Lessee will provide Lessor and any assignee of
Lessor with a certificate of insurance from the insurer evidencing Lessor's or
such assignee's interest in the policy of insurance. Notwithstanding anything
in Section 10 or this Section 12 to the contrary, this Lease and Lessee's
obligations hereunder and under each Schedule shall remain in full force and
effect with respect to any unit of Equipment which is not subject to a Casualty
Occurrence. If Lessee fails to provide or maintain insurance as required
herein, Lessor shall have the right, but shall not be obligated to obtain such
insurance. In that event, Lessee shall pay to Lessor the cost thereof.
13. TAXES. Lessee agrees to reimburse Lessor for, (or pay directly if
instructed by Lessor), and agrees to indemnify and hold Lessor harmless from,
all fees (including, but not limited to, license, documentation, recording and
registration fees), and all sales, use, gross receipts, personal property,
occupational, value added or other similar taxes, levies, imposts, duties,
assessments, charges, or withholdings of any nature whatsoever, together with
any penalties, fines, additions, to tax, or interest thereon (all of the
foregoing being hereafter referred to as "Impositions") except same as may be
attributable to Lessor's income, arising at any rime prior to or during the term
of this Lease, or upon termination or early termination of this Lease and levied
or imposed upon Lessor directly or otherwise by any Federal, state or local
government in the United States or by any foreign country or foreign or
international taxing authority upon or with respect to (i) the Equipment, (ii)
the exportation, importation, registration, purchase, ownership, delivery,
leasing, possession, use, operation, storage, maintenance, repair, return, sale,
transfer of title, or other disposition thereof, (iii) the rentals, receipts, or
earnings arising from the Equipment, or any disposition of the rights to such
rentals, receipts, or earnings,
-5-
<PAGE>
(iv) any payment pursuant to this Lease, and (v) this Lease or the transaction
or any part thereof. Lessee shall have no obligation to indemnify Lessor or any
successor or assign of Lessor under this Section 13 for any Impositions that
solely arise as a result of Lessor or such assignee, as applicable, being an
entity organized outside the jurisdiction of the United States. Lessee's
obligations under this Section 13 shall survive the expiration of this Lease
with respect to acts or events occurring or alleged to have occurred prior to
the return of the Equipment to Lessor or the purchase of the Equipment by Lessee
at the end of the Lease term; provided, however, that Lessee shall in all cases
-------- -------
shall be responsible under this Section 13 for all sales, use and similar taxes
arising upon the purchase of the Equipment by Lessee.
14. PAYMENT BY LESSOR. If Lessee shall fail to make any payment or
perform any act required hereunder, then Lessor may, but shall not be required
to, make such payment or perform such act with the same effect as if made or
performed by Lessee after Lessor's reasonable efforts to give not less than
seven (7) days' notice to Lessee; provided, however, that Lessor shall not be
-------- -------
obligated to give notice in the case of a failure by Lessee to maintain any
insurance required under Section 12 hereof and less than seven (7) days' notice
may be given if Lessee's breach may result in any impairment of Lessor's rights
hereunder, imposition of any lien on any of the Equipment or impairment of
Lessee's further performance hereunder if such breach is not cured in less than
seven (7) days. Lessee will upon demand reimburse Lessor for all sums paid and
all costs and expenses incurred in connection with the performance of any such
act.
15. SURRENDER OF EQUIPMENT. Upon termination or expiration of this Lease,
with respect to each group of Equipment, Lessee will forthwith surrender the
Equipment to Lessor delivered in as good order and condition as originally
delivered, reasonable wear and tear excepted. Lessor may, at its sole option,
arrange for removal and transportation of the Equipment provided that Lessee's
obligations under Sections 10, 11 and 13 shall not be released. Lessee shall
bear all expenses of returning (which include, but are not limited to, the de-
installation, insurance, packaging and transportation of) the Equipment to
Lessor's location or other location within the continental United States as
Lessor may reasonably request. In the event Lessee fails to return the
Equipment as directed above, all obligations of Lessee under this Lease,
including rental payments, shall remain in full force and effect until Lessee
returns the Equipment to Lessor.
16. ASSIGNMENT. WITHOUT LESSOR'S PRIOR WRITTEN CONSENT, LESSEE SHALL NOT
(a) ASSIGN, TRANSFER, PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS LEASE,
EQUIPMENT, OR ANY INTEREST THEREIN, OR (b) SUBLET OR LEND EQUIPMENT OR PERMIT IT
TO BE USED BY ANYONE OTHER THAN LESSEE OR LESSEE'S EMPLOYEES. LESSOR MAY ASSIGN
THIS LEASE OR GRANT A SECURITY INTEREST IN ANY OR ALL EQUIPMENT, OR BOTH, IN
WHOLE OR IN PART TO ONE OR MORE ASSIGNEES OR SECURED PARTIES WITHOUT NOTICE TO
LESSEE. If Lessee is given notice of such assignment it agrees upon request to
acknowledge receipt thereof in writing and Lessee shall execute such additional
documentation as Lessor's assignee shall reasonably require. Each such assignee
and/or secured party shall have all of the rights, but none of the obligations,
of Lessor under this Lease, unless such assignee or secured party expressly
agrees to assume such obligations in writing. Lessee shall not assert against
any assignee and/or secured party any defense, counterclaim or offset that
Lessee may
-6-
<PAGE>
have against Lessor. Notwithstanding any such assignment, and providing no Event
of Default has occurred and is continuing, Lessor, or its assignees, secured
parties, or their agents or assigns, shall not interfere with Lessee's right to
quietly enjoy use of Equipment subject to the terms and conditions of this
Lease. Subject to the foregoing, this Lease inures to the benefit of and is
binding upon the successors and assignees of the parties hereto. Lessee
acknowledges that any such assignment by Lessor will not materially change
Lessee's duties or obligations under the Lease or increase any burden of risk on
Lessee.
17. DEFAULT.
(a) Event of Default. Any of the following events or conditions
----------------
shall constitute an "Event of Default" hereunder: (i) Lessee's failure to pay
any monies due to Lessor hereunder or under any Schedule beyond the fifth (5th)
day after the same is due (in the case of any payment other than a payment
scheduled hereunder it shall be due upon Lessee's receipt of notice from Lessor
of demand for such payment); (ii) Lessee's failure to comply with its
obligations under the first sentence of Section 12 or the first sentence of
Section 16; (iii) Lessee's failure to comply with or perform any term, covenant,
condition, warranty or representation of this Lease or any Schedule hereto or
under any other agreement between Lessee and Lessor or under any lease of real
property covering the location of Equipment if such failure to comply or perform
is not cured by Lessee within fifteen (15) days of receipt of notice thereof;
(iv) seizure of the Equipment under legal process; (v) the filing by or against
Lessee of a petition for reorganization or liquidation under the Bankruptcy Code
or any amendment thereto or under any other insolvency law providing for the
relief of debtors; (vi) the voluntary or involuntary making of an assignment of
a substantial portion of its assets by Lessee, or any guarantor ("Guarantor")
under any guaranty executed in connection with this Lease, for the benefit of
its creditors, the appointment of a receiver or trustee for Lessee or any
Guarantor for any of Lessee's or Guarantor's assets, the institution by or
against Lessee or any Guarantor of any formal or informal proceeding for
dissolution, liquidation, settlement of claims against or winding up of the
affairs of Lessee or any Guarantor, provided that in the case of all such
involuntary proceedings, same are not dismissed within sixty (60) days of
commencement; or (vii) the making by Lessee or any Guarantor of a transfer of
all or a material portion of Lessee's or Guarantor's assets or inventory not in
the ordinary course of business.
(b) Remedies. If any Event of Default shall have occurred:
--------
(i) Lessor may proceed by appropriate court action or actions
either at law or in equity to enforce performance by Lessee, of the applicable
covenants of this Lease, or to recover damages therefor; or
(ii) Lessee will, without demand, on the next rent payment date
following the Event of Default, pay to Lessor as liquidated damages which the
parties agree are fair and reasonable under the ,circumstances existing at the
time this Lease is entered into, and not as a penalty, an amount equal to the
Casualty Value of the Equipment set forth in the Casualty Value table(s)
attached to the Schedule(s) together with any rent or other amounts past due and
owing by Lessee hereunder (if Lessee receives payment under this clause (ii) and
also comes into
-7-
<PAGE>
possession of the Equipment, whether pursuant to the return thereof by Lessee or
otherwise, then Lessor shall take action under clause (iii) of this subsection
(b)); and
(iii) Lessor may, without notice to or demand Upon Lessee;
(A) Take possession of the Equipment and lease the same
or any portion thereof, for such period, amount, and to such entity as Lessor
shall elect. The proceeds of such lease will be applied by Lessor (1) first, to
pay all costs and expenses, including reasonable legal fees and disbursements,
incurred by Lessor as a result of the default and the exercise of its remedies
with respect thereto, (2) second, to pay Lessor an amount equal to any unpaid
rent or other amounts past due and payable plus the Casualty Value, to the
extent not previously paid by Lessee, and (3) third, to reimburse Lessee for the
Casualty Value to the extent previously paid. Any surplus remaining thereafter
will be retained by Lessor.
(B) Take possession of the Equipment and sell the same or
any portion thereof at public or private sale and without demand or notice of
intention to sell. The proceeds of such sale will be applied by Lessor (1)
first, to pay all costs and expenses, including reasonable legal fees and
disbursements, incurred by Lessor as a result of the default and the exercise of
its remedies with respect thereto, (2) second, to pay Lessor an amount equal to
any unpaid rent or other amounts past due and payable plus the Casualty Value,
to the extent not previously paid by Lessee, and (3) third, to reimburse Lessee
for the Casualty Value to the extent previously paid by Lessee. Any surplus
remaining thereafter will be retained by Lessor.
(C) Take possession of the Equipment and hold and keep
idle the same or any portion thereof.
Lessee agrees to pay all internal and out-of-pocket costs of Lessor related
to the exercise of its remedies, including direct costs of its in-house counsel
and out-of-pocket legal fees and expenses. At Lessor's request, Lessee shall
assemble the Equipment and make it available to Lessor at such location as
Lessor may designate. Lessee waives any right it may have to redeem the
Equipment.
Repossession of any or all Equipment shall not terminate this Lease or any
Schedule unless Lessor notifies Lessee in writing. Any amount required to be
paid under this Section shall be increased by a service charge of 1.5% per
month, or the highest rate of interest permitted by applicable law, whichever is
less, accruing from the date the Casualty Value or other amounts are payable
hereunder until such amounts are paid.
None of the above remedies is intended to be exclusive, but each is
cumulative and in addition to any other remedy available to Lessor, and all may
be enforced separately or concurrently.
18. LATE PAYMENTS. Lessee shall pay to Lender an amount equal to the
greater of 10% of all amounts owed Lessor by Lessee which are not paid when due
or $100, but in no event an amount greater than the highest rate permitted by
applicable law. If such funds have not been received by Lessor at Lessor's
place of business or by Lessor's designated agent by the date such
-8-
<PAGE>
funds are due under this Lease, Lessor shall bill Lessee for such charges.
Lessee acknowledges that invoices for rentals due hereunder are sent by Lessor
for Lessee's convenience only. Lessee's non-receipt of an invoice will not
relieve Lessee of its obligation to make rent payments hereunder.
19. LESSOR'S EXPENSE. Lessee shall pay Lessor all costs and expenses
including reasonable attorney's fees and the fees of the collection agencies,
incurred by Lessor in enforcing any of the terms, conditions or provisions
hereof.
20. OWNERSHIP; PERSONAL PROPERTY. The Equipment shall be and remain
personal property of Lessor, and Lessee shall have no right, title or interest
therein or thereto except as expressly set forth in this Lease, notwithstanding
the manner in which it may be attached or affixed to real property, and upon
termination or expiration of the Lease term, Lessee shall have the duty and
Lessor shall have the right to remove the Equipment from the premises where the
same be located whether or not affixed or attached to the real property or any
building, at the cost and expense of Lessee.
21. ALTERATIONS; ATTACHMENTS. No alterations or attachments shall be made
to the Equipment without Lessor's prior written consent, which shall not be
given for changes that will, in Lessor's determination, adversely affect the
reliability and utility of the Equipment or which cannot be removed without
damage to the Equipment, or which in any way, in Lessor's determination,
adversely affect the value of the Equipment for purposes of resale or re-lease.
22. FINANCING STATEMENT. Lessee will execute financing statements
pursuant to the Uniform Commercial Code. Lessee authorizes Lessor to file
financing statements signed only by Lessor (where such authorization is
permitted by law) at all places where Lessor deems necessary.
23. MISCELLANEOUS.
(a) Lessee shall provide Lessor with such corporate resolutions,
financial statements and other documents as Lessor shall request from time to
time.
(b) Lessee represents that the Equipment is being leased hereunder
for business purposes.
(c) Time is of the essence with respect to this Lease.
(d) Lessee shall keep its books and records in accordance with
generally accepted accounting principles and practices consistently applied and
shall deliver to Lessor its annual audited financial statements, unaudited
monthly financial statements (e.g., balance sheet and income statement and, if
----
available, funds flow and changes to projections) to include any financial
information given to Lessee's Board of Directors, and signed by an officer of
Lessee and such other unaudited financial statements as may be reasonably
requested by Lessor.
(e) Any action by Lessee against Lessor for any default by Lessor
under this Lease, including breach of warranty or indemnity, shall be commenced
within one (1) year after any such cause of action accrues.
-9-
<PAGE>
24. NOTICES. All notices hereunder shall be in writing, by registered
mail, and shall be directed, as the case may be, to Lessor at 2401 Kerner
Boulevard, San Rafael, California 94901, Attention: Lease Administration and to
Lessee at 1240 Elko Drive, Sunnyvale, California 94089, Attention: Chief
Financial Officer..
25. ENTIRE AGREEMENT. Lessee acknowledges that Lessee has read this
Lease, understands it and agrees to be bound by its terms, and further agrees
that it and each Schedule constitute the entire agreement between Lessor and
Lessee with respect to the subject matter hereof and supersedes all previous
agreements, promises, or representations. The terms and conditions hereof shall
prevail notwithstanding any variance with the terms of any purchase order
submitted by the Lessee with respect to any Equipment covered hereby.
26. AMENDMENT. This Lease may not be changed, altered or modified except
by an instrument in writing signed by an officer of the Lessor and the Lessee.
27. WAIVER. Any failure of Lessor to require strict performance by Lessee
or any waiver by Lessor of any provision herein shall not be construed as a
consent or waiver of any other breach of the same or any other provision.
28. SEVERABILITY. If any provision of this Lease is held invalid, such
invalidity shall not affect any other provisions hereof.
29. JURISDICTION AND WAIVER OF JURY TRIAL. This Lease shall be governed
by and construed under the laws of the State of California. It is agreed that
exclusive jurisdiction and venue for any legal action between the parties
arising out of this Lease shall be in the Superior Court for Marin County,
California, or, in cases where Federal diversity jurisdiction is available, in
the United States District Court for the Northern District of California.
LESSEE, TO THE EXTENT IT MAY LAWFULLY DO SO, HEREBY WAIVES TS RIGHT TO TRIAL BY
JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS LEASE, ANY SCHEDULE, OR
ANY AGREEMENT EXECUTED IN CONNECTION HEREWITH.
30. NATURE OF TRANSACTION. Lessor makes no representation whatsoever,
express or implied, concerning the legal character of the transaction evidenced
hereby, for tax or any other purpose.
31. SECURITY INTEREST.
(a) One executed copy of the Lease will be marked "Original" and all
other counterparts will be duplicates. To the extent, if any, that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction) no security interest in the
lease may be created in any documents other than the "Original."
(b) There shall be only one original of each Schedule and it shall be
marked "Original," and all other counterparts will be duplicates. To the
extent, if any, that any Schedule(s) to this Lease constitutes chattel paper (or
as such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction) no security interest in any Schedule(s) may be created
in any documents other than the "Original."
-10-
<PAGE>
32. SUSPENSION OF OBLIGATIONS. The obligations of Lessor hereunder will
be suspended to the extent that it is hindered or prevented from complying
therewith because of labor disturbances, including but not limited to strikes
and lockouts, acts of God, fires, storms, accidents, failure of the manufacturer
to deliver any item of Equipment, governmental regulations or interference, or
any cause whatsoever not within the sole and exclusive control of Lessor.
33. COMMITMENT FEE. Lessee has paid to Lessor a commitment fee ("Fee") of
Ten Thousand Dollars ($10,000). The Fee shall be applied by Lessor first to
reimburse Lessor for all out-of-pocket UCC search costs and appraisal fees
incurred by Lessor, and then proportionally to the first month's rent for each
Schedule hereunder in the proportion that the purchase price of the Equipment
leased pursuant to the Schedule bears to Lessor's entire commitment. However,
the portion of the Fee which is not applied to rental shall be non-refundable
except if Lessor defaults in its obligations pursuant to Section 3.
34. FINANCE LEASE. The parties agree that this lease is a "Finance Lease"
as defined by Section 10103(a)(7) of the California Commercial Code
(Cal.Com.C.). Lessee acknowledges either (a) that Lessee has reviewed and
approved any written Supply Contract (as defined by Cal.Com.C. Section
10103(a)(25)) covering Equipment purchased from the "Supplier" (as defined by
Cal.Com.C. Section 10103(a)(24)) thereof for lease to Lessee or (b) that Lessor
has informed or advised Lessee, in writing, either previously or by this Lease
of the following: (i) the identity of the Supplier; (ii) that the Lessee may
have rights under the Supply Contract; and (iii) that the Lessee may contact the
Supplier for a description of any such rights Lessee may have under the Supply
Contract. Lessee hereby waives any rights and remedies Lessee may have under
Cal.Com.C. Sections 10508 through 10522.
IN WITNESS WHEREOF, the parties hereto have executed this Lease.
PHOENIX LEASING INCORPORATED ADEZA BIOMEDICAL CORPORATION
By: /s/ Phoenix Leasing Incorporated By: /s/ Adeza Biomedical Corporation
-------------------------------- --------------------------------
Title: Title:
----------------------------- -----------------------------
Exhibit A - Closing Memorandum
-11-
<PAGE>
SCHEDULE
--------
Schedule No. 1 to Lease
Dated as of September 29, 1995
Between ADEZA BIOMEDICAL CORPORATION
and PHOENIX LEASING INCORPORATED
A. Description and Purchase Price of Equipment
-------------------------------------------
<TABLE>
<CAPTION>
Description of
Equipment
(quantity, model Purchase Mfr./
and serial number) Price Rent Vendor Location
- -----------------------------------------------------------------------------
See Exhibit A attached hereto.
<S> <C> <C> <C> <C>
Total: $59,909.31 $1,947.05
</TABLE>
B. Terms
-----
Initial Term: The Initial Term shall commence on the date the Equipment is
received, installed and accepted for use, as shown on the
Acceptance Notice, and continue for thirty-six (36) full months
after the "Rent Start Date." Provided that no material adverse
changes have occurred in Lessee's business condition and
performance according to the Business Plan, as reasonably
determined by Lessor, and no Event of Default has occurred and is
continuing, after Lessor's receipt of the first twelve (12)
monthly rental payments, Lessor, at Lessee's request, will make a
mid-term extension by amending this Schedule as follows: (i)
extend the Initial Term by twelve (12) months for a total Initial
Term of forty-eight (48) full months, and (ii) modify the
applicable Lease Rate Factor as specified below.
Rent Start
Date: December 1, 1995.
Rent Initial Rental Amount Per Month: $1,947.05, plus applicable
taxes, which amount shall be adjusted in accordance with the Rate
Factors and Terms shown herein below:
-12-
<PAGE>
Lease Rate Factor (as a percentage of Equipment's original Purchase Price) for
any Schedule:
Table "A"
Rate Factor and Term without Rate Factor and Term with Grant
Grant of Mid Term Extension of Mid Term Extension
- --------------------------- ---------------------
Months 1 - 36 @ 3.25% Months 1 - 12 @ 3.25%
Month 13 - 60 @ 2.65%
Lessee shall pay the rental amounts in the amounts provided above plus
applicable taxes.
Monthly Rental Payments in advance.
Initial
Rent Due: Payable on the Rent Start Date shall be
(1) the Rental Amount due including any
sales or use tax and (2) an amount equal
to 1/30th of the monthly rental amount
using a rate of 3.25% multiplied by
days, if any, between (and the number of
including) the date the Initial Term
commences and (but not including) the
Rent Start Date.
C. Invoice Information: Lessee's and Lessor's addresses for invoice purposes
-------------------
for the Equipment on the Schedule shall be as follows:
Lessee's Invoice Address: Remit Monthly Rental Amount To:
Adeza Biomedical Corporation Phoenix Leasing Incorporated
1240 Elko Drive P.O. Box 200432
Sunnyvale, California 94089 Dallas, Texas 75320-0432
Attention: Chief Financial Officer
D. Casualty Values: See attachment hereto.
---------------
E. Special Provisions: 1. Lessor's payment for Equipment hereunder is
------------------
conditioned on Lessor's satisfaction that there has been no material adverse
change in Lessee's business condition and performance to the Business Plan
subsequent to initial credit approval. 2. Sale Leaseback Addendum. 3. Renewal or
Purchase Rider.
LESSOR AND LESSEE AGREE THAT THIS SCHEDULE SHALL CONSTITUTE A LEASE OF THE
EQUIPMENT DESCRIBED ABOVE, SUBJECT TO THE TERMS AND CONDITIONS OF THIS SCHEDULE
AND OF THE MASTER EQUIPMENT LEASE, DATED AS OF SEPTEMBER 29, 1995, BETWEEN
LESSEE AND LESSOR. THE TERMS AND CONDITIONS OF SUCH MASTER EQUIPMENT LEASE ARE
HEREBY
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<PAGE>
INCORPORATED BY REFERENCE AND MADE A PART HEREOF TO THE SAME EXTENT AS IF SUCH
TERMS AND CONDITIONS WERE SET FORTH IN FULL HEREIN.
PHOENIX LEASING INCORPORATED ADEZA BIOMEDICAL CORPORATION
By: /s/ PHOENIX LEASING INCORPORATED By: /s/ ADEZA BIOMEDICAL CORPORATION
-------------------------------- --------------------------------
Title: Title:
------------------------------ ------------------------------
Date: December 1, 1995 Date: December 1, 1995
-14-
<PAGE>
Attachment to Equipment Schedule No. 1
CASUALTY VALUES
<TABLE>
<CAPTION>
% of Original % of Original
Month of Equipment Month of Equipment
Lease Term Purchase Price Lease Term Purchase Price
- ----------- -------------- ---------- --------------
<S> <C> <C> <C>
1 125.00 25 73.94
2 122.87 26 71.81
3 120.74 27 69.68
4 118.62 28 67.55
5 116.49 29 65.43
6 114.36 30 63.30
7 112.23 31 61.17
8 110.11 32 59.04
9 107.98 33 56.91
10 105.85 34 54.79
11 103.72 35 52.66
12 101.60 36 50.53
13 99.47 37 48.40
14 97.34 38 46.28
15 95.21 39 44.15
16 93.09 40 42.02
17 90.96 41 39.89
18 88.83 42 37.77
19 86.70 43 35.64
20 84.57 44 33.51
21 82.45 45 31.38
22 80.32 46 29.26
23 78.19 47 27.13
24 76.06 48 25.00
Thereafter 25.00
</TABLE>
-15-
<PAGE>
Sale Leaseback Addendum to Schedule No. 1
-----------------------------------------
This Addendum to Master Equipment Lease is made and entered into as of
December 1, 1995, between Phoenix Leasing Incorporated ("Lessor") and Adeza
Biomedical Corporation ("Lessee").
Notwithstanding anything to the contrary contained in the Lease referenced
above, Lessor and Lessee agree as follows:
1. Lessee shall sell the Equipment to and lease the Equipment from Lessor
and Lessor shall purchase the Equipment from and lease the Equipment to Lessee
upon the terms and conditions of the Bill of Sale attached hereto as Attachment
1.
2. Lessee represents and warrants that:
(a) Lessee has the right to sell the Equipment as set forth herein,
(b) the Equipment and Lessee's right, title and interest in such
Equipment is, as of the date of the Bill of Sale, free from all claims, liens,
security interests and encumbrances,
(c) Lessee will defend the sale against lawful claims and demands of
all persons, and
(d) the purchase price of the Equipment is equal to the fair market
value of such Equipment, plus soft costs not in excess of ten percent (10%) of
the purchase price of the Equipment, at the time of sale.
PHOENIX LEASING INCORPORATED ADEZA BIOMEDICAL CORPORATION
By: /s/ PHOENIX LEASING INCORPORATED By: /s/ ADEZA BIOMEDICAL CORPORATION
-------------------------------- --------------------------------
Title: Title:
------------------------------ ------------------------------
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<PAGE>
ATTACHMENT 1
------------
BILL OF SALE
For valuable consideration Adeza Biomedical Corporation ("Seller") sells to
Phoenix Leasing Incorporated ("Buyer"), the property listed on Exhibit A hereof
(the "Equipment").
Seller covenants and warrants that:
(1) It is the owner of, and has absolute title to, the Equipment which is
free and clear of all claims, liens and encumbrances.
(2) It has not made any prior sale, assignment, or transfer of the
Equipment.
(3) It has the present right, power, and authority to sell the Equipment
to Buyer.
(4) All action has been taken which is required to make this Bill of Sale
a legal, valid and binding obligation of Seller.
Seller shall forever warrant and defend the sale of Equipment to Buyer, its
successors and assigns, against any person claiming an interest in the Equipment
other than through Buyer.
This Bill of Sale is binding on the successors and assigns of Seller and
inures to the benefit of the successors and assigns of Buyer.
Executed on December 1, 1995, at Sunnyvale, California.
ADEZA BIOMEDICAL CORPORATION
By: /s/ ADEZA BIOMEDICAL CORPORATION
-----------------------------------
Title:
---------------------------------
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<PAGE>
Rider No. 1 to Schedule No. 1
RETURN, PURCHASE OR RENEWAL OPTION
Notwithstanding anything to the contrary in the Lease, Lessor hereby gives
Lessee the following options upon at least 90 days' written notice prior to the
expiration of the Initial Term:
Option No. 1
------------
To return all, but not less than all, of the Equipment to Lessor.
Option No. 2
------------
To purchase AS-IS-WHERE-IS all, but not less than all, of the Equipment
covered under this Schedule at the expiration of the Initial Term for said
Equipment's "Fair Market Value." Fair Market Value shall be determined by
mutual agreement of Lessor and Lessee; provided, however, that Fair Market Value
-------- -------
shall not exceed twenty percent (20%) of the original Purchase Price of the
Equipment. The Equipment will be delivered pursuant to a bill of sale that
provides that the Equipment is not subject to any lien or other security
interest or encumbrance granted by, or arising to secure an obligation of,
Lessor.
Option No. 3
------------
To extend the Initial Term of this Schedule for an additional term
("Renewal Term") mutually agreed to by Lessor and Lessee, for an amount equal to
the Equipment's Fair Rental Value. Fair Rental Value shall be determined by
mutual agreement of Lessor and Lessee.
Lessee's right to exercise either Option 2 or Option 3 is conditioned upon
(a) no Event of Default having occurred and be continuing and (b) Lessee's
payment to Lessor of the applicable amount, including any sales taxes and other
amounts due.
If Lessee and Lessor cannot agree on Fair Market Value or Fair Rental
Value, such value shall be determined by appraisal, with expenses to be shared
by Lessor and Lessee. Appraisal shall be a procedure whereby two recognized
independent appraisers, one chosen by Lessor and one by Lessee, shall mutually
agree on the amount in question. If the appraisers are unable to agree and the
higher appraisal is no more than 110% of the lower appraisal, the value shall be
equal to the average of the two appraisals. If the higher appraisal is more
than 110% of the lower appraisal, the two appraisers shall jointly name an
independent third appraiser who shall appraise the property and the value shall
equal the average of the two closest appraisals.
In the event Lessee does not exercise any option, or, if Lessee and Lessor
cannot agree on the value of the Equipment or the terms of the Lease extension,
and Lessee retains possession of the Equipment after the end of the Initial
Term, all obligations of Lessee under the Lease, including current rental
payments, shall remain in full force and effect during such holdover period on a
month-to-month basis, until the earlier of (i) Lessee's purchase of the
Equipment at an agreed upon , price or commencement of the Renewal Term as then
agreed by Lessee and Lessor,
-18-
<PAGE>
(ii) return of the Equipment to Lessor, or (iii) Lessor's taking possession of
the Equipment and termination of the Lease and Schedule after notice to Lessee.
Notwithstanding anything to the contrary in the Lease, Lessor hereby gives
Lessee the option, upon at least 90 days' written notice prior to the expiration
of the Renewal Term, to purchase AS-IS-WHERE-IS all, but not less than all, of
the Equipment covered under this Schedule at the expiration of the Renewal Term
for said Equipment's "Fair Market Value." Fair Market Value shall be determined
by mutual agreement of Lessor and Lessee; provided, however, that Fair Market
-------- -------
Value shall not exceed twenty percent (20%) of the original Purchase Price of
the Equipment. The Equipment will be delivered pursuant to a bill of sale that
provides that the Equipment is not subject to any lien or other security
interest or encumbrance granted by, or arising to secure an obligation of
Lessor. If Lessee and Lessor cannot agree on Fair Market Value, such value
shall be determined by appraisal in the manner described above.
Lessee shall be responsible for all applicable sales, use and similar taxes
in connection with any purchase of Equipment by Lessee.
-19-
<PAGE>
ACCEPTANCE NOTICE
SCHEDULE NO. 1
Reference is made to the Master Equipment Lease, dated as of September 29,
1995, between Phoenix Leasing Incorporated as Lessor and Adeza Biomedical
Corporation as Lessee (the "Lease").
Lessee confirms that the following Equipment has been received, installed
and is ready for use by Lessee. The Equipment is satisfactory in all respects
for the purposes of this Lease as of the date Lessee executes this Notice below.
<TABLE>
<CAPTION>
Description of
Equipment
(quantity, model Purchase Mfr./
and serial number) Price Rent Vendor Location
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
Total: $59,909.31 $1,947.05
</TABLE>
THE LEASE MAY NOT BE CHANGED, ALTERED OR MODIFIED EXCEPT BY AN INSTRUMENT IN
WRITING SIGNED BY AN OFFICER OF LESSOR AND A DULY AUTHORIZED REPRESENTATIVE OF
LESSEE.
IN WITNESS WHEREOF, Lessee has executed this Acceptance Notice as of
December 1, 1995.
ADEZA BIOMEDICAL CORPORATION
By: /s/ ADEZA BIOMEDICAL CORPORATION
------------------------------------
Title:
----------------------------------
-20-
<PAGE>
AS OF 10/1/95
<TABLE>
<CAPTION>
NET
EQUIPMENT SERIAL INVOICE INVOICE SALES CHECK CHECK
VENDOR DESCRIPTION NUMBER NUMBER AMOUNT TAX NO DATE
------ ----------- ------ ------ ------ --- -- ----
<S> <C> <C> <C> <C> <C> <C> <C>
AMAX ENGINEERING 486-DX2-66 COMPUTER (SN 404034054) 0016261-IN $1,555.00 $18.99 17458 8/30/94
[*] [*] (SN 972) 6196 [*] [*] 17460 8/30/94
[*] [*] (Table SN 2733) 5035 [*] [*] 17473 8/30/94
(Controller SN 2734)
[*] SN 2736
& 2735)
(Controller SN 1642)
JULIE KEMP RAM FOR FILE SERVER Exp Report $2,279.40 0 17957 12/01/94
NETWERX CONNOR 1GB 352 $1,350.00 0 18157 12/21/94
HARD DRIVE (2)
[*] [*] 100738-00 [*] [*] 18340 01/18/95
[*] [*] 100738-01 [*] [*] 18628 03/02/95
[*] [*] 9298134 [*] [*] 19480 06/15/95
[*] [*] 550270 [*] [*] 19514 06/21/95
LANOVATION LAN ESCORT V3.0 SOFTWARE 13515 $1,595.00 0 19752 07/26/95
---------- ----------
$80,088.40 $20,179.09
<CAPTION>
DUE
DEPRECIATED DUE VENDOR PHOENIX
VENDOR COST LESSEE (NET TAX) PO. NO. TAG NO.
------ ---- ------ --------- ------ ------
<S> <C> <C> <C> <C> <C>
AMAX ENGINEERING $513.15 $1,041.85 0 32156
[*] [*] [*] 0 32153
[*] [*] [*] 0 32099
JULIE KEMP $569.85 $1,709.55 0 17957
NETWERX $347.50 $1,012.50 0 32512
[*] [*] [*] 0 32518
[*] [*] [*] 0 32518
[*] [*] [*] 0 32671
[*] [*] [*] 0 32919
LANOVATION $127.60 $1,467.40 0 33012
----------
[*]
</TABLE>
* [CONFIDENTIAL TREATMENT REQUESTED]
-21-
<PAGE>
EXHIBIT 10.10
INDUSTRIAL SPACE LEASE
(MULTI-TENANT MODIFIED GROSS)
THIS LEASE, dated July 1, 1988 for reference purposes only, is made by and
between James R. Bancroft ("Landlord"), and Aspen Diagnostics Corporation
("Tenant"), to be effective and binding upon the parties as of the date of the
last of the designated signatories to this Lease shall have executed the Lease
(the "Effective Date of this Lease").
ARTICLE 1
REFERENCES
1.1 REFERENCES: All references in this Lease (subject to any further
classifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount percentage, calendar year or fiscal year as below set forth:
A. Tenant's Address for Notices: 1238 & 1240 Elko Drive
Sunnyvale, CA 94088
B. Tenant's Representative: A. Barr Dolan
Phone Number: (415) 325-6953
C. Landlord's Address for Notices: James R. Bancroft
601 Montgomery Street, Suite 800
San Francisco, CA 94111
D. Landlord's Representative: Edwin H. Kawamoto
Phone Number: (415) 433-1800
E. Intended Commencement Date: August 15, 1988
F. Intended Term: Three (3) years
G. Lease Expiration Date: August 14, 1991
H. Tenant's Punchlist Period:
I. First Month's Prepaid Rent: $8,096
J. Last Month's Prepaid Rent: -0-
K. Tenant's Security Deposit: $8,096
L. Late charge Amount: $250
M. Real Property Tax Base Year: 1988-1989
<PAGE>
Industrial Space Lease 2
N. Insurance Base Year: 1988-1989
O. Tenant's Required Liability Coverage: $1,000,000.00, Singe Limit
P. Tenant's Number of Parking Spaces: thirty-three (33)
Q: Brokers: Saratoga Management Company &
Cornish & Carey Commercial Real
Estate
R: Project: That certain property situated in the City of Sunnyvale, County
of Santa Clara, State of California, as presently improved with two (2)
buildings, which real property is shown on the Site Plan attached hereto as
Exhibit "A" and is commonly known as or otherwise described as follows:
Two (2) concrete tilt-up buildings consisting of approximately 37,600 square
feet commonly know as 1234-1240 Elko Drive and 1255-1259 Reamwood Avenue.
S: Buildings: That certain Building within the Project in which the Leased
Premises are located, which Building is shown outlined in red on Exhibit "A"
hereto.
T. Common Areas: The "Common Areas" shall mean those areas within the Project
which are located outside the buildings and which are provided and designated by
Landlord from time to time for general use by tenants of the Project including
driveways, pedestrian walkways, parking spaces, landscaped areas and enclosed
trash disposal areas.
U. Leased Premises: That certain interior space within the Building, which
space is shown outlines in [red} yellow on the Floor Plan attached hereto as
Exhibit "B" consisting of approximately 8,800 square feet and, for purposed of
this Lease agreed to contain said number of square feet. The Leased Premises
are commonly known as or otherwise described as follows:
Approximately 8,800 square feet of office and manufacturing space representing
about one-half of concrete tilt-up building located on the southwestern corner
of Elko Drive and Reamwood Avenue. The Leased Premises is commonly known as 1238
and 1240 Elko Drive.
V. Base Monthly Rent: The term "Base Monthly Rent" shall mean the following:
A monthly rental of Eight Thousand Ninety-Six and No/100 Dollars
<PAGE>
Industrial Space Lease 3
($8,096.00) due and payable from Tenant to Landlord on or before the fifteenth
(15th) day of each month of the Lease Term hereof, commencing August 15th, 1988.
All monthly rent shall be paid in advance, without any right of offset, except
as set forth in paragraph 12.3.B. of this Lease.
W. Permitted Use: The term "Permitted Use: shall mean the following:
Research and development, manufacture, sales, storage and distribution of
laboratory equipment, re-agents and related services, and office use in
connection therewith.
X. Exhibits: The term "Exhibits" shall mean the Exhibits to this Lease which
are described as follows:
Exhibit "A" Site Plan showing the Project and delineating the Building in
which the Leased Premises are located.
Exhibit "B" Floor Plan outlining the Leased Premises.
Exhibit "C" $25,000 Irrecovable Letter of Credit
Exhibit "D" Security Agreement
Exhibit "E" Financing Statement
Exhibit "F" Landlord's Improvements
Y. Addenda: The term "Addenda" shall mean the Addendum (or Addenda) to this
Lease which is (or are) described as follows:
Addendum No. One (containing paragraphs 15.1 through 15.5 inclusive)
ARTICLE 2
LEASED PREMISES, TERM AND POSSESSION
2.1 DEMISE OF LEASED PREMISES: Landlord hereby leases to Tenant and Tenant
hereby leased from Landlord for Tenant's own use in the conduct of Tenant's
business and not for purposes of speculating in real estate, for the Lease Term
and upon the terms and subject of the conditions of this Lease, that certain
interior space described in Article 1 as the Leased Premises, reserving and
excepting to Landlord the exclusive right to all profits to be derived from any
assignments or sublettings by Tenant during the Lease Term by reason of the
appreciation in the fair market rental value of the Leased Premises. Landlord
further reserves the right to install, maintain, use and replace ducts, wires,
conduits and pipes leading through the Leased Premises in locations which will
not materially interfere with Tenant's use of the Leased Premises. Tenant's
lease of the Leased Premises, together with the appurtenant right to use the
Common Areas as described in Paragraph 2.2 below, shall be conditioned upon and
<PAGE>
Industrial Space Lease 4
be subject to the continuing compliance by Tenant with (i) all the terms and
conditions of this Lease, (ii) all Laws governing the use of the Leased Premises
and the Project, (iii) all Private Restriction, easements and other matters now
of public record respecting the use of the Leased Premises and the Project, and
(iv) all reasonable rules and regulations from time to time established by
Landlord.
2.2 RIGHT TO USE COMMON AREAS: As an appurtenant right to Tenant's right
to the use of the Leased remised, Tenant shall have the non-exclusive right to
use the Common Areas in conjunction with other tenants of the Project and their
invitees, subject to the limitations on such use as set forth in Article 4, and
solely for the purposes for which they were designed and intended. Tenant's
right to use the Common Areas shall terminate concurrently with any termination
of this Lease.
2.3 LEASE COMMENCEMENT DATE AND LEASE TERM: The term of the Lease shall
begin, and the Lease Commencement Date shall be deemed to have occurred, on the
Intended Commencement Date (as set forth in Article 1) unless either (i)
Landlord is unable to deliver possession of the Leased Premises to Tenant on the
Intended Commencement Date, in which case the Lease Commencement Date shall be
as determined pursuant to paragraph 2.4 below or (ii) Tenant enters into
possession of the Leased Premises prior to the Intended Commencement Date, in
which case the Lease Commencement Date shall be as determined pursuant to
Paragraph 2.7 below (the "Lease Commencement Date"). The term of this Lease
shall end on the Lease Expiration Date (as set forth in Article 1), irrespective
of whatever date the Lease Commencement Date is determined to be pursuant to the
foregoing sentence. The Lease Term shall be that period of time commencing on
the Lease Commencement Date and ending on the Lease Expiration Date (the "Lease
Term").
2.4 DELIVERY OF POSSESSION: Landlord shall deliver to Tenant possession of
the Leased Premises on or before the Intended Commencement Date (as set forth in
Article 1) in their presently existing condition, broom clean, unless Landlord
shall have agreed, as a condition to Tenant's obligation to accept possession of
the Leased Premises, pursuant to an Addenda attached to and made a part of this
Lease to modify existing interior improvements or to make, construct and/or
install additional specified improvements within the Leased Premises, in which
case Landlord shall deliver to Tenant possession of the Leased Premises on or
before the Intended Commencement Date as so modified and/or improved. If
Landlord is unable to so deliver possession of the Leased Premises to Tenant on
or before the Intended Commencement Date, for whatever reason, Landlord shall
<PAGE>
Industrial Space Lease 5
not be in default under this Lease, nor shall this Lease be void, voidable or
cancelable by Tenant until the lapse of one hundred twenty days after the
Intended Commencement Date (the "delivery grace period"); however, the Lease
Commencement Date shall not be deemed to have occurred until such date as
Landlord notifies Tenant that the Leased Premises are Ready for Occupancy.
Additionally, the delivery grace period above set forth shall be extended for
such number of days as Landlord may be delayed in delivering possession of the
Leased Premises to Tenant by reason of Force Majeure or the actions of Tenant.
If Landlord is unable to delver possession of the Leased Premises to Tenant
within the described delivery grace period (including any extensions thereof by
reason of Force Majeure or the actions of Tenant), then Tenant's sole remedy
shall be to cancel and terminate this Lease, and in no event shall Landlord be
liable to Tenant for such delay. Tenant may not cancel this Lease at any time
after the date Landlord notifies Tenant the Lease Premises are Ready for
Occupancy.
2.5 ACCEPTANCE OF POSSESSION: Tenant acknowledges that it has inspected the
Leased Premises and is willing to accept them in their existing condition, broom
clean, unless Landlord shall have agreed, as a condition to Tenant's obligation
to accept possession of the Leased Premises, pursuant to an Addenda attached to
and made a part of this Lease to modify existing interior improvements or to
make, construct and/or install additional specified improvements within the
Leased Premises, in which case Tenant agrees to accept possession of the Leased
Premises when Landlord has substantially completed such modifications or
improvements and the Leased Premises are Ready for Occupancy. If Landlord shall
have so modified existing improvements or constructed additional improvements
within the Leased Premises for Tenant, Tenant shall, within Tenant's Punchlist
Period (as set forth in Article 1) which shall commence on the date that
Landlord notifies Tenant that the Leased Premises are Ready for Occupancy,
submit to Landlord a punchlist of all incomplete and/or improper work performed
by Landlord. Upon the expiration of Tenant's Punchlist Period, Tenant shall be
conclusively deemed to have accepted the Leased Premises in their then-existing
condition as so delivered by Landlord to Tenant, except as to those items
reasonably set forth in the punchlist submitted to Landlord prior to the
expiration of said period. Landlord agrees to correct all items reasonably set
forth in Tenant's punchlist, provided that such punchlist was submitted to
Landlord within Tenant's Punchlist Period. Additionally, Landlord agrees to
place in good working order all existing plumbing, lighting, heating,
ventilating and air conditioning systems within the Leased Premises and all man
doors and roll-up truck doors serving the Leased Premises to the extent that
such
<PAGE>
Industrial Space Lease 6
systems and/or items are not in good operating condition as of the date Tenant
accepts possession of the Leased Premises; provided that, and only if, Tenant
notifies Landlord in writing of such failures or deficiencies within five
business days from the date Tenant so accepts possession of the Leased Premises.
2.6 SURRENDER OF POSSESSION: Immediately prior to the expiration or upon
the sooner termination of this Lease, Tenant shall remove all of Tenant's signs
from the exterior of the Building and shall remove all of Tenant's equipment,
trade fixtures, furniture, supplies, wall decorations and other personal
property from the Leased Premises, and shall vacate and surrender the Leased
Premises to the Landlord in the same condition, broom clean, as existed at the
Lease Commencement Date, reasonable wear and tear excepted. Tenant shall repair
all damage to the Leased Premises caused by Tenant's removal of Tenant's
property and all damage to the exterior of the Building caused by Tenant's
removal of Tenant's signs. Tenant shall patch and refinish, to Landlord's
reasonable satisfaction, all penetrations made by Tenant or its employees to the
floor, walls or ceiling of the Leased Premises, whether such penetrations were
made with Landlord's approval or not. Tenant shall repair or replace all stained
or damaged ceiling tiles, wall coverings and floor coverings to the reasonable
satisfaction of Landlord. Tenant shall repair all damage caused by Tenant to the
exterior surface of the Building and the paved surfaces of the outside areas
adjoining the Lease Premises and, where necessary, replace or resurface same.
Additionally, Tenant shall, prior to the expiration or sooner termination of
this Lease, remove any improvements constructed or installed by Tenant which
Landlord requests be so removed by Tenant and repair all damage caused by such
removal. If the Leased Premises are not surrendered to Landlord in the
condition required by this Paragraph at the expiration or sooner termination of
this Lease, Landlord may, at Tenant's expense, so remove Tenant's signs,
property and/or improvements not so removed and make such repairs and
replacement not so made or hire, at Tenant's expense, independent contractors to
perform such work. Tenant shall be liable to Landlord for all costs incurred by
Landlord in returning the Leased Premises to the required condition, plus
interest on all costs incurred from the date paid by Landlord at the then
maximum rate of interest not prohibited by Law until paid, payable by Tenant to
Landlord within ten days after receipt of a statement therefore from Landlord.
Tenant shall indemnify Landlord against loss or liability resulting from delay
by Tenant in so surrendering the Leased Premises, including, without limitation,
any claims made by any succeeding tenant or any losses to Landlord due to lost
opportunities to lease to succeeding tenants.
<PAGE>
Industrial Space Lease 7
2.7 EARLY OCCUPANCY: If Tenant enters into possession of the Leased
Premises prior to the Intended Commencement date (or permits its contractors to
enter the Leased Premises prior to the Intended Commencement Date), unless
otherwise agreed in writing by Landlord, the Lease Commencement Date shall be
deemed to have occurred on such sooner date, and Tenant shall be obligated to
perform all its obligations under this Lease, including the obligation to pay
rent, from that sooner date.
ARTICLE 3
RENT, LATE CHARGES AND SECURITY DEPOSITS
3.1 BASE MONTHLY RENT: Commencing on the Lease Commencement Date (as
determined pursuant to Paragraph 2.3 above) and continuing throughout the Lease
Term, Tenant shall pay to Landlord, without prior demand therefore, in advance
on the first day of each calendar month, as base monthly rent, the amount set
forth as "Base Monthly Rent" in Article 1 (the "Base Monthly Rent").
3.2 ADDITIONAL RENT: Commencing on the Lease Commencement Date (as
determined pursuant to Paragraph 2.3 above) and continuing throughout the Lease
Term, in addition to the Base Monthly Rent, Tenant shall pay to Landlord as
additional rent (the "Additional Rent") the following amounts:
A. Tenant's Proportionate Share of all Project Maintenance Costs. Landlord
may bill Tenant, on a periodic basis not more frequently than monthly, Tenant'
Proportionate Share of such costs as paid or incurred by Landlord, and Tenant
shall pay to Landlord such share of such costs together with an accounting fee
equal to five percent of the amount so billed within ten days from the date
Landlord shall have billed Tenant for same.
B. Tenant's Proportionate Share of all increases in Landlord's Insurance
Costs and Real Property Taxes over those paid during the period set forth in
Article 1 as "Insurance Base Year" and the "Real Property Tax Base Year",
respectively , plus an accounting fee equal to five percent of such increase.
Payment shall be made by whichever of the following methods is from time to time
designated by Landlord:
(1) Landlord may bill to Tenant, on a periodic basis not more frequently
than monthly, Tenant's Proportionate Share of any increases in Landlord's
Insurance Costs or Real Property Taxes, as paid or incurred by Landlord during
the current period over those paid or incurred in the same period during the
applicable Base Year, and Tenant shall pay such share of such increases,
together with an accounting fee equal to five percent of the amount billed,
within ten days after receipt of a written bill therefore from Landlord, or
(2) Landlord may deliver to Tenant Landlord's reasonable
<PAGE>
Industrial Space Lease 8
estimate of the increase in Landlord's Insurance Costs and/or Real Property
Taxes it anticipates will be paid or incurred for the ensuing calendar or fiscal
year, as the case requires, over those paid or incurred during the applicable
Base Year, and Tenant shall pay its Proportionate Share of the estimated
increases for such year, together with an accounting fee equal to five percent
of the estimated increases, in equal monthly installments during such year with
the installments of Base Monthly Rent. Landlord reserves the right to change
from time to time the method of billing Tenant its Proportionate Share of such
increases or the periodic basis on which such increases are billed.
C. Landlord's share of the consideration received by Tenant upon certain
assignments and sublettings as required by Article 7;
D. Any legal fees and costs that Tenant is obligated to pay or reimburse to
Landlord pursuant to Article 13, and
E. Any other charges or reimbursements due Landlord from Tenant pursuant to
the terms of this Lease.
3.3 YEAR-END ADJUSTMENTS: If Landlord shall have elected to charge Tenant
its Proportionate Share of the increases in Landlord's Insurance Costs and/or
Real Property Taxes on an estimated basis in accordance with the provisions of
Paragraph 3.2B(2) above, Landlord shall furnish to Tenant within three months
following the end of the applicable calendar or fiscal year, as the case may be,
a statement setting forth (i) the amount of Landlord's Insurance Costs and/or
Real Property Taxes paid or incurred during the past ended calendar or fiscal
year, as appropriate, (ii) the amount of Landlord's Insurance Costs and/or Real
Property Taxes paid or incurred during the applicable Base Year, and (iii)
Tenant's Proportionate Share of the increases, if any, in Landlord's Insurance
Costs and/or Real Property Taxes for the just ended fiscal or calendar year, as
appropriate. If Tenant shall have paid more than its Proportionate Share of
such increases for the previous year, Landlord shall, at its election, either
(i) credit the amount of such overpayment toward the next ensuing payment or
payments of Additional Rent that would otherwise be due or (ii) refund in cash
to Tenant the amount of such overpayment. If such year-end statement shall show
that Tenant did not pay its Proportionate Share of any such increases in full,
then Tenant shall pay to Landlord the amount of such underpayment, together with
the accounting fee applicable thereto, within ten days from Landlord's billing
of same to Tenant. The provisions of this Paragraph shall survive the
expiration or sooner termination of this Lease.
3.4 LATE CHARGE AND INTEREST ON RENT IN DEFAULT: Tenant
<PAGE>
Industrial Space Lease 9
acknowledges that the late payment by Tenant of any monthly installment of Base
Monthly Rent or any Additional Rent will cause Landlord to incur certain costs
and expenses not contemplated under this Lease, the exact amounts of which are
extremely difficult or impractical to fix. Such costs and expenses will
include, without limitation, administration and collection costs and processing
and accounting expenses. Therefore, if any installment of Base Monthly Rent is
not received by Landlord from Tenant within six calendar days after the same
become due, Tenant shall immediately pay to Landlord a late charge in an amount
equal to ten percent of the Additional Rent not so paid. Landlord and Tenant
agree that this late charge represents a reasonable estimate of such costs and
expenses and is fair compensation to Landlord for its loss suffered by reason of
Tenant's failure to make timely payment. In no event shall this provision for a
late charge be deemed to grant to Tenant a grace period or extension of time
within which to pay any rental installment or prevent Landlord from exercising
any right or remedy available to Landlord upon Tenant failure to pay each rental
installment due under this Lease when due, including the right to terminate this
Lease. If any rent remains delinquent for a period in excess of six calendar
days, then, in addition to such late charge, Tenant shall pay to Landlord
interest on any rent that is not so paid from said sixth day at the ten maximum
rate of interest not prohibited by Law until paid.
3.5 PAYMENT OF RENT: All rent shall be paid in lawful money of the United
States, without any abatement, deduction or offset for any reason whatsoever, to
Landlord at such address as Landlord may designate from time to time. Tenant's
obligation to pay Base Monthly Rent and all Additional Rent as required
pursuant to this Lease when due shall be treated the same as a failure by Tenant
to pay Base Monthly Rent when due, and Landlord shall have the same rights and
remedies again Tenant as Landlord would have if Tenant failed to pay the Base
Monthly Rent when due.
3.6 PREPAID RENT: Tenant has paid to Landlord the amount set forth in
Article 1 as "First Month's Prepaid Rent" as prepayment of rent for credit
against the first installment(s) of Base Monthly Rent due hereunder.
Additionally, Tenant has paid to Landlord the amount set forth in Article 1 as
"Last Month's Prepaid Rent" as prepayment of rent for credit against the last
installment(s) of Base Monthly Rent due hereunder, subject, however, to the
provisions of Paragraph 3.7 below.
3.7 SECURITY DEPOSIT: Tenant has deposited with Landlord the amount set
forth in Article 1 as the "Security Deposit" as
<PAGE>
Industrial Space Lease 10
security for the performance by Tenant of the terms of this Lease to be
performed by Tenant, and not as prepayment of rent. Landlord may apply such
portion or portions of the Security Deposit as are reasonably necessary for the
following purposes: (i) to remedy any default by Tenant in the payment of Base
Monthly Rent or Additional Rent or a late charge or interest on defaulted rent,
(ii) to repair damage to the Leased Premises caused by Tenant, (iii) to clean
and repair the Leased Premises following their surrender to Landlord if not
surrendered in the condition required pursuant to the provisions of Article 2,
and (iv) to remedy any other default of Tenant to the extent permitted by Law
including, without limitation, paying in full on Tenant's behalf any sums
claimed by materialmen or contractors of Tenant to be owing to them by Tenant
for work done or improvements made at Tenant's request to the Leased Premises.
In this regard, Tenant hereby waives any restriction on the uses to which the
Security Deposit may be applied as contained in Section 1950 7(c) of the
California Civil code and/or any successor statute. In the event the Security
Deposit or any portion thereof is so uses, Tenant shall pay to Landlord,
promptly upon demand, an amount in cash sufficient to restore the Security
Deposit to the full original sum. If Tenant fails to promptly restore the
Security Deposit and if Tenant shall have paid to Landlord any sums as "Last
Month's Prepaid Rent", Landlord may, in addition to any other remedy Landlord
may have under this Lease, reduce the amount of Tenant's Last Month's Prepaid
Rent by transferring all or portions of such Last Month's Prepaid Rent to
Tenant's Security Deposit until such Security Deposit is restored to the amount
set forth in Article 1. Landlord shall not be deemed a trustee of the Security
Deposit. Landlord may use the Security Deposit in Landlord's ordinary business
and shall not be required to segregate it from its general accounts. Tenant
shall not be entitled to any interest on the Security Deposit. If Landlord
transfers the building during the Lease Term, Landlord may pay the Security
Deposit to any subsequent owner in conformity with the provisions of Section
1950.7 of the California Civil Code and/or any successor statue, in which event
the transferring Landlord shall be released from all liability for the return of
the Security Deposit. Tenant specifically grants to Landlord (and hereby waives
the provisions of California Civil Code Section 1950.7 to the contrary) a period
of sixty days following a surrender of the Leased Premises by Tenant to Landlord
within which to restore the SECURITY Deposit (less permitted deductions) to
Tenant, it being agreed between Landlord and Tenant that sixty days is a
reasonable period of time within which to inspect he Leased Premises, make
required repairs, receive and verify workmen's billings therefore, and prepare a
final accounting with respect to such eposit. IN no event shall the Security
Deposit, or any portion thereof, be considered
<PAGE>
Industrial Space Lease 11
prepaid rent.
ARTICLE 4
USE OF LEASED PREMISES AND COMMON AREAS
4.1 PERMITTED USE: Tenant shall be entitled to use the Leased Premises
solely for the "Permitted Use" as set forth in Article 1 and for no other
purpose whatsoever. Tenant shall continuously and without interruption use the
Leased Premises for such purpose for the entire Lease Term. Any discontinuance
of such use for a period of thirty consecutive calendar days shall be, at
Landlord's election, a default by Tenant under the terms of this Lease. Subject
to the limitations contained in this Article 4, Tenant shall have the right to
use the Common Areas, in conjunction with other tenants and during normal
business hours, solely for the purposed for which there were intended and for no
other purposes whatsoever. Tenant shall not have the right to use the exterior
surfaces of exterior walls, the area beneath the floor or the area above the
ceiling of the Leased Premises.
4.2 GENERAL LIMITATIONS ON USE: Tenant shall not do or permit anything to
be done in or about the Leased Premises, the Building, the Common Areas or the
Project which does or could (i) interfere with the rights of other tenants or
occupants of the Building or the Project, (ii) jeopardize the structural
integrity of the Building or (iii) cause damage to any part of the Building or
the Project. Tenant shall not operate any equipment within the Leased Premises
which does or could (i) injure, vibrate or shake the Leases Premises or the
Building, (ii) damage, overload or impair the efficient operations of any
electrical, plumbing, heating, ventilating or air conditioning systems within or
servicing the Leased Premises or the Building or (iii) damage or impair the
efficient operation of the sprinkler system (if any) within servicing the Leased
Premises or the Building. Tenant shall not install any equipment or antenna on
or make any penetration of the exterior walls or roof of the Building. Tenant
shall not affix any equipment to or make any penetrations or cuts in the floor,
ceiling or walls of the Leased Premises. Tenant shall not place nay loads upon
the floors, walls, ceiling or roof systems which could endanger the structural
integrity of the Building or damage its floors, foundations or supporting
structural components. Tenant shall not place any explosive, flammable or
harmful fluids or other waste materials in the drainage systems of the Building
or the Project. Tenant shall not drain or discharge any fluids in the
landscaped areas or across the paved areas of the Project. Tenant shall not use
any area located outside the Leased Premises for the storage of its materials,
supplies, inventory or equipment, and all such materials, suppliers, inventory
and equipment shall at all times
<PAGE>
Industrial Space Lease 12
be stores within the Leased Premises. Tenant shall not commit nor permit to be
committed any waste in or about the Leased Premises, the Common Areas or the
Project.
4.3 NOISE AND EMISSIONS: All noise generated by Tenant in its use of the
Leased Premises shall be confined or muffled so that it does not interfere with
the businesses of or annoy other tenants of the Building or the Project. All
dust, fumes, odors and other emissions generated by Tenant's use of the Leased
Premises shall be sufficiently dissipated in accordance with sound environmental
practices and exhausted from the Leased Premises in such a manner so as not to
interfere with the businesses of annoy the other tenants of the Building or the
Project, or cause any damage to the Leased Premises or the Building or any
component part thereof or the property of other tenants of the Building or the
Project.
4.4 TRASH DISPOSAL: Tenant shall provide trash and garbage disposal
facilities inside the Leased Premises for all of its trash, garbage an waste
requirements and shall cause such trash, garbage and waste to be regularly
removed form the Leased Premises at Tenant's sole cost. Tenant shall keep all
areas outside the Leased Premises and all fire corridors and mechanical
equipment rooms in or about he Leased Premises free and clear of all trash,
garbage, waste and boxes containing same at all times.
4.5 PARKING: Tenant is allocated, and Tenant and its employees and
invitees shall have the non-exclusive right to use, not more than the number of
parking spaces set forth in Article 1 as "Tenant's Number of Parking Spaces".
Tenant shall not, at any time, use or permit its employees or invitees to use
more parking spaces than the number so allocated to Tenant. Tenant shall not
have the exclusive right to use any specific parking space, and Landlord
reserves the right to designate form time to time the location of the parking
spaces allocated for Tenant's use. In the event Landlord elects or is required
by any Law to limit or control parking within the Project, whether by validation
of parking tickets or any other method, Tenant agrees to participate in such
validation or other program as reasonably established by Landlord. Tenant shall
not, at any time, park or permit to be parked any trucks or vehicles adjacent to
entryways or loading areas within the Project so as to interfere in any way with
the use of such areas, nor shall tenant, at any time, park or permit the parking
of Tenant's trucks or other vehicles, or the trucks and vehicles of Tenant's
suppliers or others, in any portion of the Common Areas not designated by
Landlord for such use by Tenant. Tenant shall not, at any time, park or permit
to be parked any recreational vehicles, inoperative vehicles or equipment on any
portion of the common parking area or other
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Industrial Space Lease 13
Common Areas of the Project. Tenant agrees to assume responsibility for
compliance by its employees and invitees with the parking provisions contained
herein. If Tenant or its employees park any vehicle within the Project in
violation of these provisions, then Landlord may charge Tenant, as Additional
Rent, and Tenant agrees to pay, as Additional Rent, Ten Dollars per day for each
day or partial day that each such vehicle to parked in any area other than that
designated. Tenant hereby authorizes Landlord, at Tenant's sole expense, to tow
away from the Project and store until redeemed by its owner any vehicle
belonging to Tenant or Tenant's employees parked in violation of these
provisions.
4.6 SIGNS: Tenant shall not place or install on or within any portion of
the Leased Premises, the Building, the Common Areas or the Project any sign
(other than a business identification sign first approved by Landlord in
accordance with this Paragraph), advertisements, banners, placards or pictures
which are visible from the exterior of the Leased Premises. Tenant shall not
place or install on or within any portion of the Leased Premises, the Building,
the Common Areas or the Project any business identification sign which is
visible from the exterior of the Leaded Premises until Landlord shall have first
approved in writing the location, size, content, design, method of attachment
and material to be used in the making of such sign. Any sign, once approved by
Landlord, shall be installed only in strict compliance with Landlord's approval,
at Tenant's expense, using a person first approved by Landlord to install same.
Landlord may remove any signs (not first approved in writing by Landlord),
advertisement, banners, placards or pictures so placed by Tenant on or within
the Leased Premises, the Building, the Common Areas or the Project and charge to
Tenant the cost of such removal, together with any costs incurred by Landlord to
repair any damage caused thereby, including any cost incurred to restore the
surface upon which such sign was so affixed to its original condition. Tenant
shall remove any such signs, repair any damage caused thereby, and restore the
surface upon which the sign was so affixed to its original condition, all to
Landlord's reasonable satisfaction, upon the termination of this Lease.
4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS: Tenant shall not use or
permit any person to use the Leased Premises in any manner which violates any
Laws or Private Restrictions. Tenant shall abide by and shall promptly observe
and comply with, at its sole cost and expense, all Laws and Private Restrictions
respecting the use and occupancy of the Leased Premises, the Building, the
Common Areas or the Project and shall defend with competent counsel, indemnify
and hold Landlord harmless from any claims, damages or liability resulting rom
Tenant's failure to do
<PAGE>
Industrial Space Lease 14
so.
4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS: With respect to any insurance
policies carried by Landlord in accordance with the provisions of this Lease,
Tenant shall not conduct (not permit any other person to conduct) any activities
within the Leased Premises, or store, keep, and use anything within the Leased
Premises which (i) is prohibited under the terms of any of such policies, (ii)
could result in the termination of the coverage afforded under any of such
policies, (iii) could give to the insurance carrier the right to cancel any of
such policies, or (iv) could cause an increase in the rates (over standard
rates) charged for the coverage afforded under any of such policies. Tenant
shall comply with all requirements of any insurance company, insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain, at
standard rates, the insurance coverages carried by either Landlord or Tenant
pursuant to this Lease.
4.9 CONTROL OF COMMON AREAS: Landlord shall at all times have exclusive
control of the Common Areas. Landlord shall have the right, without the same
constituting an actual or construction eviction and without entitling Tenant to
any reduction in or abatement of rent, to (i) temporarily close any part of the
Common Area to whatever extent required in the opinion of Landlord's counsel to
prevent a dedication thereof or the accrual of any prescriptive rights therein,
(ii) temporarily close all or any part of the Common Areas to perform
maintenance or for any other reason deemed sufficient by Landlord, (iii) change
the shape, size, location, number and extent of improvements within the Common
Areas including, without limitation, changing the location of driveways,
entrances, exits, parking spaces, parking areas, sidewalks, directional or
locator signs, or the direction of the flow of traffic, and (iv) to make
additions to the Common Area including without limitation, the construction of
parking structures. Landlord shall have the right to change the name or address
of the Building. Tenant, in its use of the Common Areas, shall keep the Common
Area free and clear of all obstructions created or permitted by Tenant. If, in
the opinion of Landlord, unauthorized persons are using any of the Common Areas
by reason of, or under claim of , the express or implied authority or consent of
Tenant, then Tenant, upon demand of Landlord, shall restrain, to the fullest
extent then allowed by Law, such unauthorized use, and shall initiate such
appropriate proceedings as may be required to so restrain such use. Nothing
contained herein shall affect the right of Landlord at any time to remove any
unauthorized person from the Common Areas or to prohibit the use of the Common
Areas by unauthorized person, including, without limitation, the right to
prohibit
<PAGE>
Industrial Space Lease 15
mobile food and beverage vendors. In exercising any such right regarding the
Common Area, Landlord shall make a reasonable effort to minimize any disruption
to Tenant's business.
4.11 RULES AND REGULATIONS: Landlord shall have the right from time to time
to establish reasonable rules and regulations and/or amendments or additions
thereto respecting the use of space within the Project and the use of the Common
Areas for the care and orderly management of the Project and the safety of its
tenants, occupants and invitees. Upon delivery to Tenant of a copy of such rules
and regulations or nay amendments or additions thereto, Tenant shall comply with
such rues and regulations. A violation by Tenant of any of such rules and
regulations shall constitute a default by Tenant under this Lease. If there is
a conflict between the rules and regulations and any of the provisions of this
Lease, the provision of this Lease shall prevail. Landlord shall not be
responsible or liable to Tenant for the violation of such rules and regulations
by any other tenant of the Project.
4.12 ENVIRONMENTAL PROTECTION: Landlord may voluntarily cooperate in a
reasonable manner with the efforts of all governmental agencies in reducing
actual or potential environmental damage. Tenant shall not be entitled to
terminate this Lease or to any reduction in or abatement of rent by reason of
such compliance or cooperation. Tenant agrees at all times to cooperate fully
with Landlord and to abide by all rules and regulations and requirements which
Landlord may reasonably prescribe in order to comply with the requirements and
recommendations of governmental agencies regulating, or otherwise involved in ,
the protection of the environment.
ARTICLE 5
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
5.1 REPAIR AND MAINTENANCE: Except in the case of damage to or destruction
of the Leased Premises, the Building or the Project caused by an Acto of God or
other peril, in which case the provisions of Article 10 shall control, the
parties shall have the following obligations and responsibilities with respect
to the repair and maintenance of the Leased Premises, the Building and the
Common Areas.
a. Tenant's Obligation: Tenant shall, at all times during the Lease Term
and at its sole cost and expense, regularly clean and continuously keep and
maintain in good order, condition and repair the Leased Premises and every part
thereof and all appurtenances thereto, including, without limiting the
generality of the foregoing, (i) all interior walls, floors and ceiling, (ii)
all windows, doors and skylights, (iii) all electrical
<PAGE>
Industrial Space Lease 16
wiring, conduits, connectors and fixtures, (iv) all plumbing, pipes, sinks,
toilets, faucets and drains, (v) all lighting fixtures, bulbs and lamps, (vi)
all heating ventilating and air conditioning equipment located within the Lease
Premises or located outside the Leased Premises (e.g. rooftop compressors) and
serving the Leased Premises (other than Common HVAC as defined in Subparagraph B
below), and (vii) all entranceway to the Leased Premises. Tenant, if requested
to do so by Landlord, shall hire, at Tenant's sole cost and expense, a licensed
heating, ventilating and air conditioning contractor to regularly and
periodically inspect (not less frequently than every three months) and perform
required maintenance on the heating, ventilating and air conditioning equipment
and systems serving the Leased Premises, or alternatively, Landlord may, at its
election, contract in this own name for such regular and periodic inspections f
and maintenance on such heating, ventilating and air conditioning equipment and
systems and charge to Tenant, as Additional Rent, the cost thereof. Tenant
shall, at its sole cost and expense, repair all damage to the Building, the
Common Areas or the Project caused by the activities of Tenant, its employees,
invitees, or contractors promptly following written notice from Landlord to so
repair such damage. If Tenant shall fail to perform the required maintenance or
fail to make repairs required of it pursuant to this Paragraph within a
reasonable period of time following notice from Landlord to do so, then Landlord
may, at its election and without waiving any other remedy it may otherwise have
under this Lease or at Law, perform such maintenance or make such repairs and
charge to Tenant, as Additional Rent, the costs so incurred by Landlord for
same. All glass within or a part of the Leased Premises, both interior and
exterior, is at the sole risk of Tenant and any broken glass shall promptly be
replaced by Tenant at Tenant's expense with glass of the same kind, size and
quality.
B. Landlord's Obligation: Landlord shall, at all times during the Lease
Term, maintain in good condition and repair, (i) the exterior and structural
parts of the Building (including the foundation, subflooring, load-bearing and
exterior walls, and roof), (ii) the Common Areas; and (iii) the electrical and
plumbing systems located outside the Leased Premises which service the Building.
Additionally, to the extent that the Building contains central heating,
ventilating and/or air conditioning systems located outside the Leased Premises
which are designed to service, and are then servicing, more than a single tenant
within the Building ("Common HVAC"), Landlord shall maintain in good operating
condition and repair such Common HVAC equipment and systems. The provision of
this Subparagraph B shall in no way limit the right of Landlord to charge to
tenants of the Project, as Additional Rent pursuant to Article 3, the costs
incurred by Landlord in making such repairs and/or
<PAGE>
Industrial Space Lease 17
performing such maintenance.
5.2 SERVICES AND UTILITIES: The parties shall have the following
responsibilities and obligations with respect to obtaining and paying the cost
of providing the following utilities and other services to the Leased Premises.
A. Gas and Electricity: Tenant shall arrange, at its sole cost and expense
and in its own name, for the supply of gas and electricity to the Leased
Premises. In the event that such services are not separately meters, [Tenant]
Landlord shall, at its sole expense, cause such meters to be installed. Tenant
shall be responsible for determining if the local supplier of gas and/or
electricity can supply the needs of Tenant and whether or not the existing gas
and/or electrical distribution systems within the Building and the Leased
Premises are adequate for Tenant's needs. Tenant shall pay all charges for gas
and electricity as so supplied to the Leased Premises.
B. Water: Landlord shall provide the Leased Premises with water [for
lavatory and drinking purposes only}. Tenant shall pay, as Additional Rent, the
cost to Landlord of providing water the Leased PREMISES [in excess of the amount
of water agreed to be provided by Landlord pursuant to the foregoing sentence.
In the event Landlord determines that Tenant is using more water than what
normally would be required for lavatory and drinking purposes, Landlord at its
election may (i) periodically charge Tenant, as Additional RENT, a sum equal to
Landlord's estimate of the cost of Tenant's excess water usage or (ii) install
(or require Tenant to install at Tenant's sole cost) a separate meter for
purposes of measuring Tenant's water usage, and based upon such meter readings,
periodically charge Tenant, as Additional Rent, a sum equal to Landlord's
estimate of the cost of Tenant's excess water usage. IN the event that Landlord
shall so install such a separate meter, Tenant shall pay to Landlord, upon
demand, the costs incurred by Landlord in purchasing and installing such meter
and thereafter all costs incurred by Landlord in maintaining said meter.] The
cost of Tenant's excess water usage shall include any costs to Landlord in
keeping account of such usage and all governmental fees, public charges or the
like attributable to or based upon (such as sewer usage fees) the use of water
to the extent of such excess usage.
C. Security Service: Tenant acknowledges that Landlord is not responsible
for the security of the Leased PREMISES or the protection of the Tenant's
property or Tenant's employees, invitees or contractors, and that to the extent
Tenant determines that such security or protection services are advisable or
necessary, Tenant shall arrange for and pay the costs of proving same.
D. Trash Disposal: Tenant acknowledges that Landlord is not responsible for
the disposal of Tenant's waste, garbage or trash
<PAGE>
Industrial Space Lease 18
and that Tenant shall arrange, in its own name and at its sole cost, for the
regular and periodic removal of such waste, garbage or trash from the Leases
Premises. IN no event shall Landlord be required to provide trash bins for the
disposal of Tenant's waste, garbage or trash.
5.3 ENERGY AND RESOURCE CONSUMPTION: Landlord may voluntarily cooperate in
a reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Project.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of Rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation of the
electrical, heating, ventilating and air conditioning systems and all other
energy or other resource consumption systems within the Project and/or (ii) in
order to comply with the requirements and recommendations of utility suppliers
and governmental agencies regulating the consumption of energy and/or other
resources.
5.4 LIMITATION OF LANDLORD'S LIABILITY: Landlord shall not be liable to
Tenant for injury to Tenant, its employees, agents, invitees or contractors,
damage to Tenant's property or loss of Tenant's business or profits, nor shall
Tenant be entitled to terminate this Lease or to any reduction in or abatement
of Rent by reason of (i) Landlord's failure to perform any maintenance or
repairs to the Project until Tenant shall have first notified Landlord, in
writing, of the need for such maintenance or repairs, and then only after
Landlord shall have had a reasonable period of time following its receipt of
such notice within which to perform such maintenance or repairs, or (ii) any
failure, interruption, rationing or other curtailment in the supply of water,
electric current, gas or other utility Service to the Leases Premises, the
Building or the Project from whatever cause (other than Landlord's active
negligence or willful misconduct), or (iii) any failure, interruption, rationing
or the curtailment in the supply of water, electric current, gas or other
utility Service to the Leased Premises, the Building or the Project from
whatever cause (other than Landlord's active negligence or willful misconduct)
or (iii) the unauthorized intrusion or entry into the Leased PREMISES by third
parties (other than Landlord).
ARTICLE 6
ALTERATIONS AND IMPROVEMENTS
6.1 BY TENANT: Tenant shall not make any alterations to or modifications of
the Leased Premises or construct any improvements to or within the leased
Premises without Landlord's
<PAGE>
Industrial Space Lease 19
prior written approval, and then not until Landlord shall have first approved,
in writing, the plans and specifications therefore, which approval shall not be
unreasonably withheld. All such modifications, alterations or improvements, once
so approved, shall be made, constructed or installed by Tenant at Tenant's
expense, using a licenses contractor first approved by Landlord, in substantial
compliance with the Landlord-approved plans and specifications therefore. All
work undertaken by Tenant shall be done in accordance with all Laws and in a
good and workmanlike manner using new materials of good quality. Tenant shall
not commence the making of any such modifications or alterations or the
construction of nay such improvements until (i) all required governmental
approvals and permits shall have been obtained, (ii) all requirements regarding
insurance imposed by this Lease have been satisfied, (iii) Tenant shall have
given Landlord at least five business days prior written notice of its intention
to commence such work so that Landlord may post and file notices of non-
responsibility, and (iv) if requested by Landlord, Tenant shall have obtained
contingent liability and broad form builder's risk insurance in an amount
satisfactory to Landlord to cover any perils relating to the proposed work not
covered by insurance carried by Tenant pursuant to Article 9. In no event shall
Tenant make any modifications, alternations or improvements to the Common Areas
or any areas outside of the Leased Premises. As used in this Article, the term
"modifications, alterations and/or improvements" shall include, without
limitation, the installation of additional electrical outlet, overhead lighting
fixtures, drains, sinks, partitions. Doorways, or the like.
6.2 OWNERSHIP OF IMPROVEMENTS: All modifications, alterations and
improvements made or added to the Leased Premises by Tenant (other than Tenant's
inventory, equipment movable furniture, wall decorations and trade fixtures/1/
shall be deemed real property and a part of the Leased Premises, but shall
remain the property of Tenant during the Lease Term. Any such modifications
alterations or improvements, once completed, shall not be altered or removed
from the Leased Premises during the Lease Term without Landlord's written
approval first obtained in accordance with the provisions of Paragraph 6.1
above. AT the expiration or sooner termination of this Lease, all such
modifications, alternations and improvement (other than Tenant's inventory,
equipment, movable furniture, wall decorations and
- -------------------------
/1/(Tenant's trade fixtures shall include, without limitation, all property
purchases by Tenant from Sclavo, Inc. and replacements for such property.)
<PAGE>
Industrial Space Lease 20
trade fixtures/2/) shall automatically become the property of Landlord and shall
be surrendered to Landlord as a part of the Leased Premises as required pursuant
to Article 2, unless Landlord shall require Tenant to remove any of such
modifications, alternations, or improvements in accordance with the provisions
of Article 2, in which case Tenant shall so remove same. Landlord shall have no
obligation to reimburse to Tenant all or any portion of the cost or value of any
such modifications, alterations or improvements so surrendered to Landlord. All
modifications, alterations or improvements which are installed or constructed on
or attached to the Leased Premises by Landlord at Landlord's expense shall be
deemed real property and a part of ht Leased Premises and shall be the property
of Landlord. All lighting, plumbing, electrical, heating, ventilating and air
conditioning fixtures, partitioning, window coverings, wall coverings and floor
coverings installed by Tenant shall be deemed improvement to the Leased Premises
and not trade fixtures of Tenant.
6.3 ALTERATIONS REQUIRED BY LAW: Tenant shall make all modifications,
alterations and improvements to the Leased Premises, at its sole cost, that are
required by any Law because of (i) Tenant's making of nay modifications,
alterations, or improvements to or within he Leased Premises. If Landlord shall,
at any time during the Lease Term, be required by any governmental authority to
make any modifications, alterations or improvements to the Building or the
Project, the cost incurred by Landlord in making such modifications, alternation
or improvements, including an eighteen percent per annum cost of money factor,
shall be amortized by Landlord over the useful life of such modifications,
alteration or improvements, as determined in accordance with generally accepted
accounting standards, and the monthly amortized cost of such modifications
alterations, and improvements as so amortized shall be considered a Project
Maintenance Cost.
6.4 LIENS: Tenant shall keep the Leased Premises, the Building and the
Project free from any liens and shall pay when due all bills arising out of any
work performed, materials furnished, or obligations incurred by Tenant, its
agents, employees or contractors relating to the Leased Premises. If any such
claim of lien it recorded against Tenant's interest in this Lease, the Leaded
Premises, the Building or the Project, Tenant shall bond against, discharge or
otherwise cause such lien to be
- -----------------------
/2/(Tenant's trade fixtures shall include, without limitation, all property
purchases by Tenant from Sclavo, Inc. and replacements for such property.)
<PAGE>
Industrial Space Lease 21
entirely released within ten days after the same has been so recorded.
ARTICLE 7
ASSIGNMENT AND SUBLETTING BY TENANT
7.1 BY TENANT: Tenant shall not sublet the Leased Premises (or any portion
thereof) or assign or encumber its interest in this Lease, whether voluntarily
or by operation of Law, without Landlord's prior written consent first obtained
in accordance with the provisions of this Article 7. Any attempted subletting,
assignment or encumbrance without Landlord's prior written consent, at
Landlord's election, shall constitute a default by Tenant under the terms of
this Lease. The acceptance of rent by Landlord from any persons or entity other
than Tenant, or the acceptance of rent by Landlord from Tenant with knowledge of
a violation of the provision of this Paragraph, shall not be deemed to be a
waiver by Landlord of any provision of this Article or this Lease or to be a
consent to any subletting By Tenant or any assignment or encumbrance of Tenant's
interest in this Lease.
7.2 MERGER OR REORGANIZATION: If Tenant is a corporation, any dissolution,
merger, consolidation or other reorganization shall be deemed a voluntary
assignment of Tenant's interest in this Lease. The phrase "controlling
percentage" means the ownership of and the right to vote stock possessing more
than fifty percent of the total combined voting power of all classes of Tenant's
capital stock issued, outstanding and entitled to vote for the election of
directors. If Tenant is a partnership, a withdrawal or change, voluntary,
involuntary or by operation of Law, of any general partner, or the dissolution
of the partnership, shall be deemed a voluntary assignment of Tenant's interest
in this Lease.
7.3 LANDLORD'S ELECTION: If Tenant shall desire to assign its interest
under this Lease or to sublet the Leased Premises, Tenant must first notify
Landlord, in writing, of its intent to so assign or sublet, at least ninety days
in advance of the date it intends to so assign its interest in this Lease or
sublet the Leased Premises but not sooner than one hundred eighty days in
advance of such date, specifying in detail the terms of such proposed assignment
or subletting including the name of the proposed assignee or sublessee, the
proposed assignee's or sublessee's intended use of the Leased Premises, a
current financial statement of such proposed assignee or sublessee and the form
of documents to be used in effectuating such assignment or subletting. Landlord
shall have a period of fifteen days following receipt of such notice within
which to do one of the following: (a) cancel and terminate this Lease effective
as of
<PAGE>
Industrial Space Lease 22
the intended subletting or assignment date set forth in Tenant's notice, or (b)
if Landlord shall not have elected to cancel and terminate this Lease, to either
(i) consent to such requested assignment or subletting subject to Tenant's
compliance with the conditions set forth in Paragraph 7.4 below or (ii) refuse
to so consent to such requested assignment or subletting, provided that such
consent shall not be unreasonably refused. During said fifteen day period,
Tenant covenants and agrees to supply to Landlord, upon request, all necessary
or relevant information which Landlord may reasonably request respecting such
proposed assignment or subletting and/or the proposed assignee or sublessee.
7.4 CONDITIONS TO LANDLORD'S CONSENT: If Landlord elects to consent, or
shall have been ordered to so consent by a court of competent jurisdiction, to
such requested assignment, subletting or encumbrance, such consent shall be
expressly conditioned upon the occurrence of each of the conditions below set
forth, and any purported assignment, subletting or encumbrance made or ordered
prior to the full and complete satisfaction of each of the following conditions
shall be void and, at the election of Landlord, which election may be exercised
at any time following such a purported assignment, subletting or encumbrance but
prior to the satisfaction of each of the stated conditions, shall constitute a
material default by Tenant under this Lease giving Landlord the absolute right
to terminate this Lease unless such default is promptly cured by satisfying in
full each such condition by the assignee, sublessee or encumbrancer. The
conditions are as follows:
A. Landlord having approved in form and substance the assignment or
sublease agreement (or the encumbrance agreement), which approval shall not be
unreasonably withheld by Landlord if the requirements of this Article 7 are
otherwise complied with.
B. Each such sublessee or assignee having agree, in writing satisfactory to
Landlord and its counsel and for the benefit of Landlord, to assume, to be bound
by, and to perform the obligations of this Lease to be performed by Tenant (or,
int he case of an encumbrances, each such encumbrancer having similarly agreed,
to assume, be bound by and to perform Tenant's obligations upon a foreclosure or
transfer in lieu thereof).
C. Tenant having fully and completely performed all of its obligations
under the terms of this Lease through and including the date of such assignment
or subletting
D. Tenant having reimbursed to Landlord all reasonable costs and attorneys'
fees incurred by Landlord in conjunction with the processing and documentation
of any such requested subletting, assignment or encumbrance.
E. Tenant having delivered to Landlord a complete and full-executed
duplicate original of such sublease agreement,
<PAGE>
Industrial Space Lease 23
assignment agreement or encumbrance (as applicable) and all related agreements.
F. Tenant having paid, or having agreed in writing to pay as to future
payments, to Landlord one hundred percent of all assignment consideration or
excess rentals to be paid to Tenant or to any other on Tenant's behalf or for
Tenant's benefit for such assignment or subletting as follows:
(1) If Tenant assigns its interest under this Lease and if all or a portion
of the consideration for such assignment is to be paid by the assignee at the
time of the assignment, that Tenant shall have paid to Landlord and Landlord
shall have received an amount equal to one hundred percent of the assignment
consideration so paid or to be paid (whichever is the greater) at the time of
the assignment by the assignee; or
(2) If Tenant assigns its interest under this Lease and if Tenant is to
receive all or a portion of the consideration for such assignment in future
installments, that Tenant and Tenant's assignee shall have entered into a
written agreement with and for the benefit of Landlord satisfactory to Landlord
and its counsel whereby Tenant and Tenant's assignee jointly agree to pay to
Landlord an amount equal to one hundred percent of all such future assignment
consideration installments to be paid by such assignee as and when such
assignment consideration is so paid.
(3) If Tenant subleased the Leased Premises, that Tenant and Tenant's
sublessee shall have entered into a written agreement with and for the benefit
of Landlord satisfactory to Landlord and its counsel whereby Tenant and Tenant's
sublessee jointly agree to pay to Landlord one hundred percent of all excess
rentals to be paid by such sublessee as and when such excess rentals are so
paid.
7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED: For purposes of
this Article, the term "assignment consideration shall mean all consideration to
be paid by the assignee to Tenant or to any other on Tenant's behalf or for
Tenant's benefit (not to exceed then standard rate), and the term "excess
rentals" shall mean all consideration to be paid by the sublessee to Tenant or
to any other on Tenant's behalf of the sublease of the Leased Premises in excess
of the rent due Landlord under the terms of this Lease for the same period, less
any commissions paid by Tenant to a licensed real estate broker for arranging
such sublease (not to exceed then standard rates). Tenant agrees that the
portion of any assignment consideration and/or excess rentals arising from any
assignment or subletting by Tenant which is to be paid to Landlord pursuant to
this Article now is and shall then be the property of Landlord and not the
property of Tenant.
<PAGE>
Industrial Space Lease 24
7.6 PAYMENTS: All payments required by this Article to be made to Landlord
shall be made in cash in full as and when they become due. At the time Tenant,
Tenant's assignee or sublessee makes each such payment to Landlord, Tenant or
Tenant's assignee or sublessee, as the case may be, shall deliver to Landlord an
itemized statement in reasonable detail showing the method by which the amount
due Landlord was calculated and certified by the party making such payment as
true and correct.
7.7 GOOD FAITH: The rights granted to Tenant by this Article are granted in
consideration of Tenant's express covenant that all pertinent allocations which
are made by Tenant between the rental value of the Leased Premises and the value
of any of Tenant's personal property which may be conveyed or leased generally
concurrently with and which may reasonably be considered a part of the same
transaction as the permitted assignment or subletting shall be made fairly,
honestly and in good faith. If Tenant shall breach this Covenant of Good Faith,
Landlord may immediately declare Tenant to be in default under the terms of this
Lease and terminate this Lease and/or exercise any other rights and remedies
Landlord would have under the terms of this Lease in the case of a material
default by Tenant under this Lease.
7.8 EFFECT OF LANDLORD'S CONSENT: No subletting, assignment or encumbrance,
even with the consent of Landlord, shall relieve Tenant of its personal and
primary obligation to pay rent and to perform all of the other obligations to be
performed by Tenant hereunder. Consent by Landlord to one or more assignments or
encumbrances of Tenant's interest in this Lease or to one or more sublettings of
the Leased Premises shall not be deemed to be a consent to any subsequent
assignment, encumbrance or subletting. If Landlord shall have been ordered by a
court of competent jurisdiction to consent to a requested assignment or
subletting, or such an assignment or subletting shall have been ordered over the
objection of Landlord, such assignment or subletting shall not be binding
between the assignee (or sublessee) and Landlord until such time as all
conditions set forth in Paragraph 7.4 above have been fully satisfied (to the
extent not then satisfied) by the assignee or sublessee, including, without
limitation, the payment to Landlord of all agreed assignment considerations
and/or excess rentals then due Landlord.
ARTICLE 8
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
<PAGE>
Industrial Space Lease 25
8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE: Landlord shall not be
liable to Tenant for, and Tenant hereby releases Landlord and its partners and
officers from, any and all liability, whether in contract, tort or on any other
basis,/1/ for any injury to or any damages sustained by Tenant, its agents,
employees, contractors or invitees; any damage to Tenant's property; or any loss
to Tenant's business, loss of Tenant's profits or other financial loss of Tenant
resulting from or attributable to the condition of, the management of, the
maintenance of, or the protection of the Leased Premises, the Building, the
Project or the Common Areas, including, without limitation, any such injury,
damage or loss resulting from (i) the failure, interruption, rationing or other
curtailment or cessation in the supply of electricity, water, gas or other
utility service to the Project, the Building or the Leased Premises; (ii) the
vandalism or forcible entry into Building or Leased Premises; (iii) the
penetration of water into or onto any portion of the Leased Premises through
roof leaks or otherwise; (iv) the failure to provide security and/or adequate
lighting in or about the Project, the Building or the Leased Premises; (v) the
existence of any design or construction defects within the Project, the Building
or the Leased Premises; (vi) the failure of any mechanical systems to function
properly (such as the HVAC systems); or (vii) the blockage of access to any
portion of the Project, the Building or the Leased Premises, except to the
extent such damage was proximately caused by Landlord's active negligence or
willful misconduct, or Landlord's failure to perform an obligation expressly
undertaken pursuant to this Lease but only if Tenant shall have given Landlord
prior written notice to perform such obligation and Landlord shall have failed
to perform such obligation within a reasonable period of time following receipt
of written notice from Tenant to so perform such obligation. In this regard,
Tenant acknowledges that it is fully apprised of the provisions of Law relating
to releases, and particularly to those provisions contained in Section 1542 of
the California Civil Code which read as follows:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement
with the debtor.
Notwithstanding such statutory provision, and for the purpose of implementing a
full and complete release and discharge, Tenant hereby (i) waives the benefit of
such statutory provision and (ii) acknowledges that, subject to the exceptions
specifically set forth herein, the release and discharge set forth in this
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/1/(other than liabilities arising from the gross negligence or willful
misconduct of Landlord, its agents, employees, contractors, or invitees)
<PAGE>
Industrial Space Lease 26
Paragraph is a full and complete settlement and release and discharge of all
claims and is intended to include in its effect, without limitation, all claims
which Tenant, as of the date hereof, does not know of or suspect to exist in its
favor.
8.2 TENANT'S INDEMNIFICATION OF LANDLORD: Tenant shall defend, with competent
counsel satisfactory to Landlord, any claims made or legal actions filed or
threatened by third parties against Landlord with respect to the death, bodily
injury, personal injury, damage to property or interference with contractual or
other rights suffered by any third party (including other tenants within the
Project) which (i) occurred within the Leased Premises or (ii) resulted from
Tenant's use or occupancy of the Leased Premises or the Common Areas or (iii)
resulted from Tenant's activities in or about the Leased Premises, the Building
or the Project, and Tenant shall indemnify and hold Landlord, Landlord's
principals, employees and agents harmless from any loss (including loss of rents
by reason of vacant space which otherwise would have been leased but for such
activities), liability, penalties, or expense whatsoever (including any legal
fees incurred by Landlord with respect to defending such claims) resulting
therefrom, except to the extent proximately caused by the active negligence or
willful misconduct of Landlord. This indemnity agreement shall survive until the
latter to occur of (i) the date of the expiration, or sooner termination, of
this Lease, or (ii) the date Tenant actually vacates the Leased Premises./2/
ARTICLE 9
INSURANCE
9.1 TENANT'S INSURANCE: Tenant shall maintain insurance complying with all of
the following:
A. Tenant shall procure, pay for and keep in full force and effect, at
all times during the Lease Term, the following:
(1) Comprehensive general liability insurance insuring Tenant against
liability for personal injury, bodily injury, death and damage to property
occurring within the Leased Premises, or resulting from Tenant's use or
occupancy of the Leased Premises or the Common Areas, or resulting from Tenants
activities in or about the Leased Premises, with combined single limit coverage
of not less than the amount of Tenant's Required Liability Coverage (as set
forth in Article 1), which insurance shall contain a "broad form liability"
endorsement insuring Tenant's performance of Tenant's obligation to indemnify
Landlord as contained in Article 8.2.
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/2/Notwithstanding the foregoing, Tenant's liability to defend shall not
extend to liabilities resulting from gross negligence or willful misconduct of
Landlord, its agents, employees, contractors, or invitees.
<PAGE>
Industrial Space Lease 27
(2) Fire and property damage insurance in so-called "fire and extended
coverage" form insuring Tenant against loss from physical damage to Tenant's
personal property, inventory, trade fixtures and improvements within the Leased
Premises with coverage for the full actual replacement cost thereof;
(3) Plate-glass insurance, at actual replacement cost;
(4) Pressure vessel insurance, if applicable;
(5) Product liability insurance/3/ (including, without limitation, if
food and/or beverages are distributed, sold and/or consumed within the Leased
Premises, to the extent obtainable, coverage for liability arising out of the
distribution, sale or consumption of food and/or beverages [including alcoholic
beverages, if applicable at the Leased Premises) for not less than Tenant's
Required Liability Coverage (as set forth in Article 1);
(6) Workers' compensation insurance and any other employee benefit
insurance sufficient to comply with all Laws; and
(7) With respect to making of alterations or the construction of
improvements or the like undertaken by Tenant, contingent liability and
builder's risk insurance, in an amount and with coverage satisfactory to
Landlord.
B. Each policy of liability insurance required to be carried by Tenant
pursuant to this Paragraph or actually carried by Tenant with respect to the
Leased Premises (i) shall, except with respect to insurance required by
Subparagraph A(6) above, name Landlord, and such others as are designated by
Landlord, as additional insureds; (ii) shall be primary insurance providing that
the insurer shall be liable for the full amount of the loss, up to and including
the total amount of liability set forth in the declaration of coverage, without
the right of contribution from or prior payment by any other insurance coverage
of Landlord; (iii) shall be in a form satisfactory to Landlord; (iv) shall be
carried with companies reasonably acceptable to Landlord; (v) shall provide that
such policy shall not be subject to cancellation, lapse or change except after
at least thirty days prior written notice to Landlord; and (vi) shall contain a
so-called "severability" or "cross liability" endorsement. Each policy of
property insurance maintained by Tenant with respect to the Leased Premises or
any property therein (i) shall provide that such policy shall not be subject to
cancellation, lapse or change except after at least thirty days prior written
notice to Landlord and (ii) shall contain a waiver and/or a permission to
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/3/if applicable and available.
<PAGE>
Industrial Space Lease 28
waive by the insurer of any right of subrogation against Landlord, its
principals, employees, agents and contractors, which might arise by reason of
any payment under such policy or by reason of any act or omission of Landlord,
its principals, employees, agents or contractors.
C. Prior to the time Tenant or any of its contractors enters the Leased
Premises, Tenant shall deliver to Landlord, upon request, with respect to each
policy of insurance required to be carried out by Tenant pursuant to this
Article, a copy of such policy (appropriately authenticated by the insurer as
having been issued, premium paid) or a certificate of the insurer certifying in
form satisfactory to Landlord that a policy has been issued, premium paid,
providing the coverage required by this Paragraph and containing the provisions
specified herein. With respect to each renewal or replacement of any such
insurance, the requirements of this Paragraph must be complied with not less
than thirty days prior to the expiration or cancellation of the policy being
renewed or replaced. Landlord may, at any time and from time to time, inspect
and/or copy any and all insurance policies required to be carried by Tenant
pursuant to this Article. If Landlord's Lender, insurance broker or advisor or
counsel reasonably determines at any time that the amount of coverage set forth
in paragraph 9.1A for any policy of insurance Tenant is required to carry
pursuant to this Article is not adequate, then Tenant shall increase the amount
of coverage for such insurance to such greater amount as Landlord's Lender,
insurance broker or advisor or counsel reasonably deems adequate; provided,
however, such increased level of coverage may not exceed the level of coverage
for such insurance commonly carried by comparable business similarly situated
and operating under similar circumstances.
9.2 LANDLORD'S INSURANCE: With respect to insurance maintained by Landlord:
A. Landlord shall maintain, as the minimum coverage required of it by
this Lease, fire and property damage insurance in so-called "fire and extended
coverage" form insuring Landlord (and such others as Landlord may designate)
against loss from physical damage to the Building with coverage of not less than
ninety percent of the full actual replacement cost thereof and against loss of
rents on Landlord's behalf to do so, (i) may be written in so-called "all risk"
form, excluding only those perils commonly excluded from such coverage by
Landlord's then property damage insurer; (ii) may provide coverage for physical
damage to the improvements so insured for up to the entire full actual
replacement cost thereof; (iii) may be endorsed to cover loss or damage caused
by any additional perils against which Landlord may elect to insure, including
earthquake and/or flood; (iv) may provide coverage for loss of rents for a
period of up to twelve
<PAGE>
Industrial Space Lease 29
months; and/or (v) may contain "deductibles' not exceeding One Thousand Dollars
per occurrence (or up to five percent of the Building's replacement value in the
case of earthquake and/or flood insurance). Landlord shall not be required to
cause such insurance to cover any of Tenant's personal property, inventory and
trade fixtures, or any modifications, alterations or improvements made or
constructed by Tenant to or within the Leased Premises.
B. Landlord shall maintain comprehensive general liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Project, or any portion thereof, with combined single limit coverage of at least
Two Million Dollars. Landlord may carry such greater coverage as Landlord or
Landlord's Lender, insurance broker or advisor or counsel may from time to time
determine is reasonably necessary for the adequate protection of Landlord and
the Project.
C. Landlord may maintain any other insurance which in the opinion of its
insurance broker or advisor or legal counsel is prudent to carry under the given
circumstances.
9.3. MUTUAL WAIVER OF SUBROGATION: Landlord hereby releases Tenant, and Tenant
hereby releases Landlord and its respective partners and officers, agents,
employees and servants, from any and all liability for loss, damage or injury to
the property of the other in or about the Leased Premises which is caused by or
results from a peril or event or happening which would be covered by insurance
required to be carried under the terms of this Lease, or is covered by insurance
actually carried and in force at the time of the loss, by the party sustaining
such loss; provided, however, that such waiver shall be effective only to the
extent permitted by the insurance covering such loss and to the extent such
insurance is not prejudiced thereby.
ARTICLE 10
DAMAGE TO LEASED PREMISES
10. LANDLORD'S DUTY TO RESTORE: If the Leased Premises are damaged by any
peril after the Effective Date of this Lease, Landlord shall restore the Leased
Premises/4/ as and when required by this Paragraph, unless this Lease is
terminated by Landlord
- ------------------------
/4/to the similar or comparable condition that existed before the damage,
<PAGE>
Industrial Space Lease 30
pursuant to Paragraph 10.2 or by Tenant pursuant to Paragraph 10.3. All
insurance proceeds available from the fire and property damage insurance carried
by Landlord shall be paid to and become the property of Landlord. If this Lease
is terminated pursuant to either Paragraph 10.2 or 10.3, all insurance proceeds
available from insurance carried by Tenant which cover loss to property that is
Landlord's property or would become Landlord's property on termination of this
Lease shall be paid to and become the property of Landlord, and the remainder of
such proceeds shall be paid to and become the property of Tenant. If this Lease
is not terminated pursuant to either Paragraph 10.2 or 10.3, all insurance
proceeds available from insurance carried by Tenant which cover loss to property
that is Landlord's property shall be paid to and become the property of
Landlord, and all proceeds available which cover loss to property which would
become the property of Landlord upon the termination of this Lease shall be paid
to and remain the property of Tenant. If this Lease is not so terminated, then
upon receipt of the insurance proceeds (if the loss is covered by insurance) and
the insurance of all necessary governmental permits, Landlord shall commence and
diligently prosecute to completion the restoration of the Leased Premises, to
the extent then allowed by Law, to substantially the same condition in which the
Leased Premises existed as of the Lease Commencement Date. Landlord's obligation
to restore shall be limited to the Leased Premises and interior improvements
constructed by Landlord. Landlord shall have no obligation to restore any other
improvements to the Leased Premises or any of Tenant's personal property,
inventory or trade fixtures. Upon completion of the restoration by Landlord,
Tenant shall forthwith replace or fully repair all of Tenant's personal
property, inventory, trade fixtures and other improvements constructed by Tenant
to like or similar condition as existed at the time of such damage or
destruction.
10.2. LANDLORD'S RIGHT TO TERMINATE: Landlord shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:
A. The Building is damaged by any peril covered by valid and collectible
insurance actually carried by Landlord and in force at the time of such damage
or destruction (an "insured peril") to such an extent that the estimated cost to
restore the Building exceeds the lesser of (i) the insurance proceeds available
from insurance actually carried by Landlord, or (ii) seventy-five percent of the
then actual replacement cost thereof;
B. The building is damaged by an uninsured peril, which peril Landlord
was required to insure against pursuant to the provisions of Article 9 of this
Lease, to such an extent that the estimated cost to restore the Building exceeds
the lesser of (i) the insurance proceeds which would have been available had
Landlord carried such required insurance, or (ii) seventy-five percent of the
then actual replacement cost thereof;
C. The Building is damaged by an uninsured peril, which peril Landlord
was not required to insure against pursuant to the provisions of Article 9 of
this Lease, to any extent.
<PAGE>
Industrial Space Lease 31
D. The Building is damaged by any peril and, because of the Laws then in
force, the Building (i) can not be restored at reasonable cost or (ii) if
restored, can not be used for the same use being made thereof before such
damage.
10.3 TENANT'S RIGHT TO TERMINATE: If the Leased Premises are damaged by any
peril and Landlord does not elect to terminate this Lease or is not entitled to
terminate this Lease pursuant to this Article, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord's architect or construction consultant as to when the restoration work
required of Landlord may be complete. Tenant shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised in the case of A or B below only by delivery to Landlord of a written
notice of election to terminate within seven days after Tenant receives from
Landlord the estimate of the time needed to complete such restoration:
A. The Leased Premises are damaged by any peril and, in the reasonable
opinion of Landlord's architect or construction consultant, the restoration of
the Leased Premises cannot be substantially completed within six [nine] months
after the date of such damage; or
B. [The Leased Premises are damaged by any peril within nine months of
the last day of the Lease Term and, in the reasonable opinion of Landlord's
architect or construction consultant, the restoration of the Leased Premises
cannot be substantially complete within ninety days after the date of such
restoration is commenced; or]
C. Landlord does not complete the restoration of the Leased Premises
within six [nine] months from the date of the damage, provided that such six
[nine] month period of time shall be extended for such number of days as
Landlord may be delayed by reason of Force Majeure.
10.4 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of
Paragraph 10.3 above, captioned "Tenant's Right to Terminate", are intended to
supercede and replace the provisions contained in California Civil Code, Section
1932, Subdivision 2, and California Civil Code, Section 1934, and accordingly,
Tenant hereby waives the provisions of said Civil Code Sections and the
provisions of any successor Code Sections or similar Laws hereinafter enacted.
10.5 ABATEMENT OF RENT: In the event of damage to the Leased Premises which
does not result in the termination of this Lease, the Base Monthly Rent (and any
Additional Rent) shall be temporarily abated during the period of restoration in
proportion to the degree to which Tenant's use of the Leased Premises is
impaired by such damage.
ARTICLE 11
CONDEMNATION
11.1 LANDLORD'S RIGHT TO TERMINATE: Subject to Paragraph 11.3, Landlord shall
have the option to terminate this Lease if, as a result of taking by means of
the exercise of the power of eminent domain (including inverse condemnation
and/or a voluntary sale or transfer by Landlord to an entity having the power of
eminent domain under threat of condemnation), (i) over 33-1/3% [all or any part]
of the Leased Premises is so taken, (ii) more than thirty-three and one-third
percent of the Building's leasable area is so taken, (iii) more than thirty-
three and one-third percent of the Common Area is so taken, or (iv) because of
the Laws then in force, the Leased Premises may not be used for the same use
being made thereof before such taking, whether or not restored as required by
Paragraph 11.4 below. Any such option to
<PAGE>
Industrial Space Lease 32
terminate by Landlord must be exercisable within a reasonable period of time, to
be effective as of the date possession is taken by the condemnor.
11.2 TENANT'S RIGHT TO TERMINATE: Subject to Paragraph 11.3, Tenant shall have
the option to terminate this Lease if, as a result of any taking by means of the
exercise of the power of eminent domain (including inverse condemnation and/or a
voluntary sale or transfer by Landlord to an entity having the power of eminent
domain under threat of condemnation), (i) all of the Leased Premises is so
taken, (ii) thirty-three and one-third percent or more of the Leased Premises is
so taken and the part of the Leased Premises that remains cannot, within a
reasonable period of time, be made reasonably suitable for the continued
operation of the Tenant's business, or (iii) there is a taking of a portion of
the Common Area and, as a result of such taking, Landlord cannot provide parking
spaces within the Project (or within a reasonable distance therefrom) equal in
number to at least sixty-six and two-thirds percent of Tenant's Number of
Parking Spaces (as set forth in Article 1), whether by rearrangement or the
remaining parking areas in the Common Area (including, if Landlord elects,
construction of multi-deck parking structures or restriping for compact cars
where permitted by Law), or by providing alternative parking facilities on other
land within reasonable walking distance of the Leased Premises. Tenant must
exercise such option within a reasonable period of time, to be effective on the
later to occur of (i) the date that possession of that portion of Common Area or
the Leased Premises that is condemned is taken by the condemnor or (ii) the date
Tenant vacates the Leased Premises.
11.3 [TEMPORARY TAKING: If any portion of the Leased Premises is temporarily
taken for one year or less, this Lease shall remain in effect. If any portion of
the Leased Premises is temporarily taken for a period which either exceeds one
year or which extends beyond the natural expiration of the Lease Term, then
Landlord and Tenant shall each independently have the option to terminate this
Lease, effective on the date possession is taken by the condemnor.]
11.4 RESTORATION AND ABATEMENT OF RENT: If any part of the Leased Premises is
taken by condemnation and this Lease is not terminated, then Landlord shall
repair any damage occasioned thereby to the remainder of the Leased Premises./5/
[to a condition
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/5/to similar or comparable condition that existed before the taking to
the extent possible
<PAGE>
Industrial Space Lease 33
reasonably suitable for Tenant's continued operations and otherwise, to the
extent practicable, in the manner and to the extent provided in Paragraph 10.1.]
As of the date possession is taken by the condemning authority, (i) the Base
Monthly Rent shall be reduced in the same proportion that the area of that part
of the Leased Premises so taken (less any addition to the area of the Leased
Premises by reason of any reconstruction) bears to the area of the Leased
Premises immediately prior to such taking, and (ii) Tenant's Proportionate Share
shall be appropriately adjusted.
11.5. DIVISION OF CONDEMNATION AWARD: Any award made for any condemnation of
the Project, the Building, the Common Areas or the Leased Premises, or any
portion thereof, shall belong to and be paid to Landlord, and Tenant hereby
assigns to Landlord all of its right, title and interest in any such award;
provided, however, that Tenant shall be entitled to receive any condemnation
award [that is made directly to Tenant] (i)/6/ for the taking of personal
property, inventory or trade fixtures belonging to Tenant, and (ii) for the
interruption of Tenant's business or its moving costs, (iii) for loss of
Tenant's goodwill, or (iv) for any temporary taking where this Lease is not
terminated as a result of such taking. The rights of Landlord and Tenant
regarding any condemnation shall be determined as provided in this Article, and
each party hereby waives the provisions of Section 1265.130 of the California
Code of Civil Procedure, and the provisions of any similar law hereinafter
enacted, allowing either party to petition the Superior Court to terminate this
Lease and/or allocating condemnation awards between Landlord and Tenant in the
event of a taking of the Leased Premises.
ARTICLE 12
DEFAULT AND REMEDIES
12.1 EVENTS OF TENANT'S DEFAULT: Tenant shall be in default of its obligations
under this Lease if any of the following events occur:
A. Tenant shall have failed to pay Base Monthly Rent or any Additional
Rent within 6 days of when due; or
B. Tenant shall have done or permitted to have been done any act, use or
thing in its use, occupancy or possession of the Leased Premises or in its use
of the Common Areas which is prohibited by the terms of this Lease;/7/ or
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/6/covering the value of the unexpired lease term and
/7/and (i) such default continues for more than 30 days after notice to
Tenant and (ii) Tenant shall fail within such 30-day period to commence promptly
and to continue to cure such default with utmost due diligence.
<PAGE>
Industrial Space Lease 34
C. Tenant shall have failed to perform any term, covenant or condition of
this Lease, except those requiring the payment of Base Monthly Rent or
Additional Rent, [within ten days after written notice from Landlord to Tenant
specifying the nature of such failure and requesting Tenant to perform same]/8/
D. Tenant shall have sublet the Leased Premises or assigned or encumbered
its interest in this Lease in violation of the provisions contained in Article
7, whether voluntarily or by operation of Law; or
E. Tenant shall have abandoned the Leased Premises; or
F. Tenant or any Guarantor of this Lease shall have permitted or suffered
the sequestration or attachment of, or execution on, or the appointment of a
custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant's (or such Guarantor's) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within thirty days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; or
G. Tenant or any Guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or
H. Tenant or any Guarantor of this Lease shall have allowed (or sought)
to have entered against it a decree or order which: (i) grants or constitutes an
order for relief, appointment of a trustee, or confirmation of a reorganization
plan under the bankruptcy laws of the United States; (ii) approves as properly
filed a petition seeking liquidation or reorganization under said bankruptcy
laws or any other debtor's relief law or similar statue of the United States or
any state thereof; or (iii) otherwise directs the winding up or liquidation of
Tenant; provided, however, if any decree or order was entered without Tenant's
consent or over Tenant's objection, Landlord may not terminate this Lease
pursuant to this Subparagraph if such decree or order is rescinded or reversed
within thirty days after its original entry.
I. Tenant or any Guarantor of this Lease shall have availed itself of the
protection of any debtor's relief law, moratorium law or other similar Law which
does not require the prior entry of a decree or order.
12.2 LANDLORD'S REMEDIES: In the event of any default by Tenant, and without
limiting Landlord's right to indemnification as provided in Article 8.2,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by Law or otherwise provided in this Lease, to which Landlord
may resort cumulatively, or in the alternative:
A. Landlord may, at Landlord's election, keep this Lease in effect and
enforce, by an action at law or in equity, all of its rights and remedies under
this Lease including, without limitation, (i) the right to recover the rent and
other sums as they become due by appropriate legal action, (ii) the right to
make payments required of Tenant, or perform Tenant's obligations and be
reimbursed by Tenant for the cost thereof with interest at the then maximum rate
of interest not prohibited by Law from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to prevent Tenant from violating the terms of
this Lease and/or to compel Tenant to perform its obligations under this Lease,
as the case may be.
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/8/and (i) such failure continues for more than 30 days after notice to
Tenant, and (ii) Tenant shall fail within such 30-day period to commence
promptly and to continue to cure such default with utmost due diligence.
<PAGE>
Industrial Space Lease 35
B. Landlord may, at Landlord's election, terminate this Lease by giving
Tenant written notice of termination, in which event this Lease shall terminate
on the date set forth for termination in such notice. Any termination under this
Subparagraph shall not relieve Tenant from its obligation to pay Landlord all
Base Monthly Rent and Additional Rent then or thereafter due, or any other sums
due or thereafter accruing to Landlord, or from any claim against Tenant for
damages previously accrued or then or thereafter accruing. In no event shall any
one or more of the following actions by Landlord, in the absence of a written
election by Landlord to terminate this Lease, constitute a termination of this
Lease:
(1) Appointment of a receiver or keeper in order to protect
Landlord's interest hereunder;
(2) Consent to any subletting of the Leased Premises or assignment of
this Lease by Tenant, whether pursuant to the provisions hereof or otherwise; or
(3) Any other action by Landlord or Landlord's agents intended to
mitigate the adverse effects of any breach of this Lease by Tenant, including,
without limitation, any action taken to maintain and preserve the Leased
Premises or any action taken to relet the Leased Premises, or any portion
thereof, for the account of Tenant and in the name of Tenant.
C. In the event Tenant breaches this Lease and abandons the Leased
Premises, Landlord may terminate this Lease, but this Lease shall not terminate
unless Landlord gives Tenant written notice of Termination. No act by or on
behalf of Landlord intended to mitigate the adverse effect of such breach,
including those described by Subparagraphs B(1), (2) and (3) immediately
preceding, shall constitute a termination of Tenant's right to possession unless
Landlord gives Tenant written notice of termination. If Landlord does not
terminate this Lease by giving written notice of termination, Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover rent as it becomes due under this Lease as provided in California Civil
Code Section 1951.4, as in effect on the Effective Date of this Lease.
D. In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to damages in an amount as set forth in
California Civil Code Section 1951.2, as in effect on the Effective Date of this
Lease. For purposes of computing damages pursuant to said Section 1951.2, an
interest rate equal to the maximum rate of interest then not prohibited by
<PAGE>
Industrial Space Lease 36
Law shall be used where permitted. Such damages shall include, without
limitation:
(1) The worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided, computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent; and
(2) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom, including, without limitation, the following: (i) expenses for
cleaning, repairing or restoring the Leased Premises; (ii) expenses for
altering, remodeling or otherwise improving the Leased Premises for the purpose
of reletting, including removal of existing leasehold improvements and/or
installation of additional leasehold improvements (regardless of how the same is
funded, including reduction of rent, a direct payment or allowance to a new
tenant, or otherwise); (iii) broker's fees, advertising costs and other expenses
of reletting the Leased Premises; (iv) costs of carrying the Leased Premises,
such as taxes, insurance premiums, utility charges and security precautions; (v)
expenses incurred in removing, disposing of and/or storing any of Tenant's
personal property, inventory or trade fixtures remaining therein; (vi)
attorneys' fees, expert witness fees, court costs and other reasonable expenses
incurred by Landlord (but not limited to taxable costs) in retaking possession
of the Leased Premises, establishing damages hereunder, and re-leasing the
Leased Premises; and (vii) any other expenses, costs or damages otherwise
incurred or suffered as a result of Tenant's default.
12.3 LANDLORD'S DEFAULT AND TENANT'S REMEDIES: In the event Landlord fails to
perform any of its obligations under this Lease, Landlord shall nevertheless not
be in default under the terms of this Lease until such time as Tenant shall have
first given Landlord written notice specifying the nature of such failure to
perform its obligations, and then only after Landlord shall have had a 30-day
[reasonable] period of time following its receipt of such notice within which to
perform such obligations. In the event of Landlord's default as above set forth,
then, and only then, Tenant shall have the following remedies only:
(A) Tenant may then proceed in equity or at law to compel Landlord to
perform its obligations and/or to recover damages proximately caused by such
failure to perform (except as and to
<PAGE>
Industrial Space Lease 37
the extent Tenant has waived its right to damages as provided in this Lease).
B. Tenant, at its option, may then cure any default of Landlord at
Landlord's cost. If, pursuant to this Subparagraph, Tenant reasonably pays any
sum to any third party or does any act that requires the payment of any sum to
any third party at any time by reason of Landlord's default, the sum paid by
Tenant shall be immediately due from Landlord to Tenant at the time Tenant
supplies Landlord with an invoice therefore (provided such invoice sets forth
and is accompanied by a written statement of Tenant setting forth in reasonable
detail the amount paid, the party to whom it was paid, the date it was paid, and
the reasons given rise to such payment), together with interest at twelve
percent per annum from the date of such invoice until Tenant is reimbursed by
Landlord. /9/Tenant may offset such sums against any installment of rent due
Landlord under the terms of this Lease.
12.4 LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation, trust,
partnership, joint venture, unincorporated association, or other form of
business entity, Tenant agrees that (i) the obligations of Landlord under this
Lease shall not constitute personal obligations of the officers, directors,
trustees, /10/partners, joint venturers, members, owners, stockholders, or other
principals of such business entity and (ii) Tenant shall have recourse only to
the assets of such business entity for the satisfaction of such obligations and
not against the assets of such officers, directors, trustees, /11/partners,
joint venturers, members, owners, stockholders or principals (other than to the
extent of their interest in the assets owned by such business entity).
Additionally, if Landlord is a partnership, then Tenant covenants and agrees:
A. No /12/partner of Landlord shall be sued or named as a party in any
suit or action brought by Tenant with respect to any alleged breach of this
Lease (except to the extent necessary to secure jurisdiction over the
partnership and then only for that sole purpose);
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/9/ If not paid within 30 day period,
/10/ limited
/11/ limited
/12/ limited
<PAGE>
Industrial Space Lease 38
B. No service of process shall be made against any /13/partner of
Landlord except for the sole purpose of securing jurisdiction over the
partnership; and
C. No writ of execution shall be levied against the assets of any
/14/partner of Landlord other than to the extent of his interest in the assets
of the partnership.
Tenant further agrees that each of the foregoing covenants and agreements shall
be enforceable by Landlord and by any /15/partner of Landlord and shall be
applicable to any actual or alleged misrepresentation or nondisclosure made
respecting this Lease or the Leased Premises or any actual or alleged failure,
default or breach of any covenant or agreement either expressly or implicitly
contained in this Lease or imposed by statute or at common law.
12.5 TENANT'S WAIVER: /16/Landlord and Tenant agree that the provisions of
Paragraph 12.3 above are intended to supercede and replace the provisions of
California Civil Code 1932(1), 1941 and 1942, and accordingly, Tenant hereby
waives, /17/the provisions of Section 1932(1), 1941 and 1942 of the California
Civil Code and/or any similar or successor Law regarding Tenant's right to
terminate this Lease or to make repairs and deduct the expenses of such repairs
form the rent due under this Lease. Tenant hereby waives any right of redemption
or relief from forfeiture under the Laws of the State of California, or under
any other present or future Law, in the event Tenant is evicted or Landlord
takes possession of the Leased Premises by reason of any default by Tenant.
ARTICLE 13
GENERAL PROVISIONS
13.1 TAXES ON TENANT'S PROPERTY: Tenant shall pay before delinquency any and
all taxes, assessments, license fees, use fees, permit fees and public charges
of whatever nature or description levied, assessed or imposed against Tenant or
Landlord by a governmental agency arising out of, caused by reason of or based
upon Tenant's estate
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/13/ limited
/14/ limited
/15/ limited
/16/ To the extent of any conflict,
/17/ to the extent of any conflict,
<PAGE>
Industrial Space Lease 39
on this Lease, Tenant's ownership of property, improvements made by Tenant to
the Leased Premises, improvements made by Landlord for Tenant's use within the
Leased Premises, Tenants use (or estimated use) of public facilities or services
or Tenant's consumption (or estimated consumption) of public utilities, energy,
water or other resources. On demand by Landlord, Tenant shall furnish Landlord
with satisfactory evidence of these payments. If any such taxes, assessments,
fees or public charges are levied against Landlord, Landlord's property, the
Building or the Project, or if the assessed value of the Building or the Project
is increased by the inclusion therein of a value placed upon same, then
Landlord, after giving written notice to Tenant, shall have the right,
regardless of the validity thereof, to pay such taxes, assessment, fee or public
charge and bill Tenant, as Additional Rent, the amount of such taxes,
assessment, fee or public charge so paid on Tenant's behalf. Tenant shall,
within 30 [ten] days from the date it receives an invoice from Landlord setting
forth the amount of such taxes, assessment, fee or public charge so levied, pay
to Landlord, as Additional Rent, the amount set forth in said invoice. Failure
by Tenant to pay the amount so invoiced within said 30 [ten] day period shall be
conclusively deemed a default by Tenant under this Lease. Tenant shall have the
right, and with Landlord's full cooperation if Tenant is not then in default
under the terms of this Lease, to bring suit in any court of competent
jurisdiction to recover from the taxing authority the amount of any such taxes,
assessment, fee or public charge so paid.
13.2 HOLDING OVER: This Lease shall terminate without further notice on the
Lease Expiration Date (as set forth in Article 1). Any holding over by Tenant
after expiration of the Lease Term shall neither constitute a renewal nor
extension of this Lease nor give Tenant any rights in or to the Leased Premises
except as expressly provided in this Paragraph. Any such holding over shall be
deemed an unlawful detainer of the Leased Premises unless Landlord has consented
to same. Any such holding over to which Landlord has consented shall be
construed to be a tenancy from month to month, on the same terms and conditions
herein specified insofar as applicable, except that the Base Monthly Rent shall
be increased to an amount equal to one hundred-25% [fifty] percent of the Base
Monthly Rent payable during the last full month immediately preceding such
holding over.
13.3 SUBORDINATION TO MORTGAGES: This Lease is subject and subordinate [to all
underlying ground leases and] to all mortgages and deeds of trust which affect
the Building and are of public record as of the Effective Date of this Lease,
and to all renewals, modifications, consolidations, replacements and extensions
thereof. However, if [the lessor under any such ground
<PAGE>
Industrial Space Lease 40
lease or] any Lender holding any such mortgage or deed of trust shall advise
Landlord that it desires or requires this Lease to be made prior and superior
thereto, then, upon written request of Landlord to Tenant, Tenant shall promptly
execute, acknowledge and deliver any and all documents or instruments which
Landlord and such lessor or Lender deem necessary or desirable to make this
Lease prior thereto. Tenant hereby consents to [Landlord's ground leasing the
land underlying the Building and/or] encumbering the Building as security for
future loans on such terms as Landlord shall desire, all or which future [ground
leases,] mortgages or deeds of trust shall be subject and subordinate to this
Lease. However, [if any lessor under any such future ground lease or] any Lender
holding such future mortgage or deed of trust shall desire or require that this
Lease be made subject and subordinate to such future [ground lease,] mortgage or
deed of trust, then Tenant agrees, within ten days after Landlord's written
request therefore, to execute, acknowledge and deliver to Landlord any and all
documents or instruments requested by Landlord or such [lessor or] Lender as may
be necessary or proper to assure the subordination of this Lease to such future
[ground lease,] mortgage or deed of trust; but only if such [lessor or] Lender
agrees to recognize Tenants rights under this Lease and not to disturb Tenant's
quiet possession of the Leased Premises so long as Tenant is not in default
under this Lease.
13.4. TENANT'S ATTORNMENT UPON FORECLOSURE: Tenant shall, upon request, attorn
(i) to any purchaser of the Building at any foreclosure sale or private sale
conducted pursuant to any security instrument encumbering the Building, (ii) to
any grantee or transferee designated in any deed given in lieu of foreclosure of
any security interest encumbering the Building, or (iii) to the lessor under any
underlying ground lease of the land underlying the Building, should such ground
lease be terminated; provided that such purchaser, grantee or lessor recognizes
Tenant's rights under this Lease.
13.5 MORTGAGEE PROTECTION: In the event of any default on the part of
Landlord, Tenant will give notice by registered mail to any Lender [or under any
underlying ground lease] who shall have requested, in writing, to Tenant that it
be provided with such notice, and Tenant shall offer such Lender 30 days [or
lessor a reasonable opportunity] to cure the default. [including time to obtain
possession of the Leased Premises by power of sale or judicial foreclosure or
other appropriate legal proceedings if reasonably necessary to effect a cure.]
13.6 ESTOPPEL CERTIFICATES: Tenant will, following any request by Landlord,
promptly execute and deliver to Landlord an estopped
<PAGE>
Industrial Space Lease 41
certificate (i) certifying that this Lease is unmodified and in full force and
effect, or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect, (ii) stating the
date to which the rent and other charges are paid in advance, if any, (iii)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults if any are claimed,
and (iv) certifying such other information about this Lease as may be reasonably
requested by Landlord. Tenant's failure to execute and deliver such estopped
certificate within ten days after Landlord's request therefore shall be a
material default by Tenant under this Lease, and Landlord shall have all of the
rights and remedies available to Landlord as Landlord would otherwise have in
the case of any other material default by Tenant, including the right to
terminate this Lease and sue for damages proximately caused thereby, it being
agreed and understood by Tenant that Tenant's failure to so deliver such
estoppel certificate in a timely manner could result in Landlord being unable to
perform committed obligations to other third parties which were made by Landlord
in reliance upon this covenant of Tenant. Landlord and Tenant intend that any
statement delivered pursuant to this Paragraph may be relied upon by any Lender
or purchaser or prospective Lender or purchaser of the Building, the Project, or
any interest therein.
13.7 TENANT'S FINANCIAL INFORMATION: Tenant shall, within 30 [ten business]
days after Landlord's request therefore, deliver to Landlord a copy of a current
financial statement and any such other information reasonably requested by
Landlord regarding Tenant's financial condition. Landlord shall be entitled to
disclose such financial statements or other information to its Lender, to any
present or prospective principal of or investor in Landlord, or to any
prospective Lender or purchaser of the Building, the Project or any portion
thereof or interest therein. Any such financial statement or other information
which is marked "confidential' or "company secrets" (or is otherwise similarly
marked by Tenant) shall be confidential and shall not be disclosed by Landlord
to any third party except as specifically provided in this Paragraph, unless the
same becomes a part of the public domain without the fault of Landlord.
13.8 TRANSFER BY LANDLORD: Landlord and its successors in interest shall have
the right to transfer their interest in the Building, the Project, or any
portion thereof at any time and to
<PAGE>
Industrial Space Lease 42
any person or entity/18/. In the event of any such transfer/19/, the Landlord
originally named herein (and in the case of any subsequent transfer, the
transferor), from the date of such transfer, (i) shall be automatically
relieved, without any further act by any person or entity, of all liability for
the performance of the obligations of the Landlord hereunder which may accrue
after the date of such transfer and (ii) shall be relieved of all liability for
the performance of the obligations of the Landlord hereunder/20/ which have
accrued before the date of transfer if its transferee agrees to assume and
perform all such prior obligations of the Landlord hereunder. Tenant shall
attorn to any such transferee. After the date of any such transfer, the term
"Landlord" as used herein shall mean the transferee of such interest in the
Building or the Project.
13.9 FORCE MAJEURE: The obligations of each of the parties under this Lease
(other than the obligation to pay money) shall be temporarily excused if such
party is prevented or delayed in performing such obligation by reason of any
strikes, lockouts or labor disputes; inability to obtain labor, materials, fuels
or reasonable substitutes therefore; governmental restrictions, regulations,
controls, action or inaction; civil commotion; inclement weather, fire or other
acts of God; or other causes (except financial inability) beyond the reasonable
control of the party obligated to perform (including acts or omissions of the
other party) for a period equal to the period of any such prevention, delay or
stoppage.
13.10 NOTICES: Any notice required or desired to be given by a party regarding
this Lease shall be in writing and shall be personally served, or in lieu of
personal service may be given by depositing such notice in the United States
mail, registered or certified, postage prepaid, addressed to the other party as
follows:
A. If addressed to Landlord, to Landlord at its Address for Notices (as
set forth in Article 1).
B. If addressed to Tenant, to Tenant at its Address for Notices (as set
forth in Article 1).
Any notice given by registered mail shall be deemed to have been given on the
third business day after its deposit in the United States mail. Any notice given
by certified mail shall be deemed given on the date receipt was acknowledged to
the postal authorities. Any notice given by mail other than registered or
certified mail shall be deemed given only if received by the other party, and
then on the date of receipt. Each party may, by
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/18/ that agrees to be bound by all terms and conditions of this Lease.
/19/ and if Landlord or any transferor has obtained an estoppel certificate
from Tenant as set forth in paragraph 13.6 of this Lease
/20/ except as set forth in such estoppel certificate
<PAGE>
Industrial Space Lease 43
written notice to the other in the manner aforesaid, change the address to which
notices addressed to it shall thereafter be mailed.
13.11 ATTORNEYS' FEES: In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease, to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any term or covenant of this Lease or rights or duties
hereunder of either party, the prevailing party shall be entitled to recover
from the non-prevailing party as a part of such action or proceeding, or in a
separate action for that purpose brought within one year from the determination
of such proceeding, reasonable attorneys' fees, expert witness fees, court costs
and other reasonable expenses incurred by the prevailing party. IN the event
that Landlord shall be required to retain counsel to enforce any provision of
this Lease, and if Tenant shall thereafter cure (or desire to cure) such
default, Landlord shall be conclusively deemed the prevailing party and Tenant
shall pay to Landlord all attorneys' fees, expert witness fees, court costs and
other reasonable expenses so incurred by Landlord promptly upon demand. Landlord
may enforce this provision by either (i) requiring Tenant to pay such fees and
costs as a condition to curing its default or (ii) bringing a separate action to
enforce such payment, it being agreed by and between Landlord and Tenant that
Tenant's failure to pay such fees and costs upon demand shall constitute a
breach or this Lease in the same manner as a failure by Tenant to pay the Base
Monthly Rent, giving Landlord the same rights and remedies as if Tenant failed
to pay the Base Monthly Rent.
13.2 DEFINITIONS: Any term that is given a special meaning by any provision in
this Lease shall, unless otherwise specifically stated, have such meaning
whenever used in this Lease or in any Addenda or amendment hereto. In addition
to the terms defined in Article 1, the following terms shall have the following
meanings:
A. REAL PROPERTY TAXES: The term :Real Property Tax" or "Real Property
Taxes" shall each mean (i) all taxes, assessments, levies and other charges of
any kind or nature whatsoever, general and special, foreseen and unforeseen
(including all installments of principal and interest required to pay any
general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership or new
construction), now or hereafter imposed by any governmental or quasi-
governmental authority or special district having the direct or indirect power
to tax or levy assessments, which are levied or assessed for whatever reason
against the Project or any portion thereof, or Landlord's interest therein,
<PAGE>
Industrial Space Lease 44
or the fixtures, equipment and other property of Landlord that is an integral
part of the Project and located thereon, or Landlord's business or owning,
leasing or managing the Project or the gross receipts, income or rentals from
the Project; (ii) all charges, levies or fees imposed by any governmental
authority against Landlord by reason of or based upon the use of or number of
parking spaces within the Project, the amount of public services or public
utilities used or consumed (e.g. water, gas, electricity, sewage or surface
water disposal) at the Project, the number of persons employed by tenants of the
Project, the size (whether measured in area, volume, number of tenants or
whatever) or the value of the Project, or the type of use or uses conducted
within the Project; and (iii) all costs and fees (including attorneys' fees)
incurred by Landlord in contesting any Real Property Tax and in negotiating with
public authorities as to any Real Property Tax. If, at any time during the Lease
Term, the taxation or assessment of the Project prevailing as of the Effective
Date of this Lease shall be altered so that in lieu of or in addition to any
Real Property Tax described above there shall be levied, assessed or imposed
(whether by reason of a change in the method of taxation or assessment, creation
of a new tax or charge, or any other cause) an alternate, substitute, or
additional tax or charge (i) on the value, size, use or occupancy of the Project
or Landlord's interest therein or (ii) on or measured by the gross receipts,
income or rentals from the Project, or on Landlord's business of owning, leasing
or managing the Project or (iii) computed in any manner with respect to the
operation of the Project, then any such tax or charge, however designated, shall
be included within the meaning of the terms "Real Property Tax" or "Real
Property Taxes" for purposes of this Lease. If any Real Property Tax is partly
based upon property or rents unrelated to the Project, then only that part of
such Real Property Tax that is fairly allocable to the Project shall be included
within the meaning of the terms "Real Property Tax" or "Real Property Taxes".
Notwithstanding the foregoing, the terms "Real Property Tax" or "Real Property
Taxes" shall not include estate, inheritance, transfer, gift or franchise taxes
of Landlord or the federal or state income tax imposed on Landlord's income from
all sources.
B. LANDLORD'S INSURANCE COSTS: The term "Landlord's Insurance Costs"
shall mean the costs to Landlord to carry and maintain the policies of fire and
property damage insurance for the Project and general liability insurance
required, or permitted, to be earned by Landlord pursuant to Article 9, together
with any deductible amounts paid by Landlord upon the occurrence of any insured
casualty or loss.
<PAGE>
Industrial Space Lease 45
C. PROJECT MAINTENANCE COSTS: The term "Project Maintenance Costs" shall
mean all costs and expenses (except Landlord's Insurance Costs and Real Property
Taxes) paid or incurred by Landlord in protecting, operating, maintaining,
repairing and preserving the Project and all parts thereof, including without
limitation, (i) professional management fees (not to exceed three percent of the
Project's scheduled gross rental income), (ii) the amortizing portion of any
costs incurred by Landlord in the making of any modifications, alterations or
improvements required by any governmental authority as set forth in Article 6,
which are so amortized during the Lease Term, and (iii) such other costs as may
be paid or incurred with respect to operating, maintaining and preserving the
Project, such as repairing and resurfacing the exterior surfaces of the
buildings (including roofs), repairing and resurfacing paved areas, repairing
structural parts of the buildings, and replacing, when necessary, electrical,
plumbing, heating, ventilating and air conditioning systems serving the
buildings.
D. READY FOR OCCUPANCY: The term "Ready for Occupancy" shall mean the
date upon which (i) the Leased Premises are available for Tenant's occupancy in
a broom clean condition and (ii) the improvements, if any, to be made to the
Leased Premises by Landlord as a condition to Tenant's obligation to accept
possession of the Leased Premises have been substantially completed and the
appropriate governmental building department (i.e. the City building department)
if the Project is located within a City, or otherwise the County building
department) shall have approved the construction of the improvements as complete
or is willing to so approve the construction of the improvements as complete
subject only to compliance with specified conditions which are the
responsibility of Tenant to satisfy.
E. TENANT'S PROPORTIONATE SHARE: The term "Tenant's Proportionate Share"
or "Tenant's Share", as used with respect to an item pertaining to the Building,
shall each mean that percentage obtained by dividing the leasable square footage
contained within the Leased Premises (as set forth in Article 1) by the total
leasable square footage contained within the Building as the same from time to
time exists or, as used with respect to an item pertaining to the Project, shall
each mean that percentage obtained by dividing the leasable square footage
contained within the Leased Premises (as set forth in Article 1) by the total
leasable square footage contained within the Project [as the same from time to
time exists, unless, as to any given item, such a percentage allocation unfairly
burdens or benefits a given tenant(s), in which case landlord shall have the
exclusive rights to equitably allocate such item so as to not unfairly burden or
benefit any given tenant(s). Landlord's determination
<PAGE>
Industrial Space Lease 46
of any such special allocation shall be final and binding upon Tenant unless
made in bad faith.] which is 23.4%.
F. BUILDING'S PROPORTIONATE SHARE: The term "Building's Proportionate
Share" or "Building's Share" shall each mean that percentage which is obtained
by dividing the leasable square footage contained within the Building by the
leasable square footage contained within all buildings located within the
Project, unless, as to any given item, such a percentage allocation unfairly
burdens or benefits a given building(s), in which case Landlord shall have the
exclusive right to equitably allocate such item so as to not unfairly burden or
benefit any given building(s). Landlord's determination of any such special
allocation shall be final and binding upon Tenant unless made in bad faith.
G. LAW: The term "Law" shall mean any judicial decision and any statute,
constitution, ordinance, resolution, regulation, rule, administrative order, or
other requirement of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Project, or any of them in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi-official entity or body (e.g. a board of fire examiners or a public
utility or special district).
H. LENDER: The term "Lender" shall mean the holder of any Note or other
evidence of indebtedness secured by the Project or any portion thereof.
I. PRIVATE RESTRICTIONS: The term "Private Restrictions" shall mean all
recorded [covenants, conditions and restrictions, private agreements,]
easements, and any other /21/recorded instruments affecting the use of the
Project, as they may exist from time to time.
J. RENT: The term "rent" shall mean collectively Base Monthly Rent and
all Additional Rent.
13.13 GENERAL WAIVERS: One party's consent to or approval of any act by the
other party requiring the first party's consent or approval shall not be deemed
to waive or render unnecessary the first party's consent to or approval of any
subsequent similar
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/21/ future
<PAGE>
Industrial Space Lease 47
act by the other party. No waiver of any provision hereof or any breach of any
provision hereof shall be effective unless in writing and signed by the waiving
party. The receipt by Landlord of any rent or payment with or without knowledge
of the breach of any other provision hereof shall not be deemed a waiver of any
such breach. No waiver of any provision of this Lease shall be deemed a
continuing waiver unless such waiver specifically states so in writing and is
signed by both Landlord and Tenant. No delay or omission in the exercise of any
right or remedy accruing to either party upon any breach by the other party
under this Lease shall impair such right or remedy or be construed as a waiver
of any such breach theretofore or thereafter occurring. The waiver by either
party of any breach of any provision of this Lease shall not be deemed to be a
waiver of any subsequent breach of the same or any other provisions herein
contained.
13.14 MISCELLANEOUS: Should any provision of this Lease prove to be invalid or
illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant. The term "party"
shall mean Landlord or Tenant as the context implies. If Tenant consists of more
than one person or entity, then all members of Tenant shall be jointly and
severally liable hereunder. This Lease shall be construed and enforced in
accordance with the Laws of the State in which the Leased Premises are located.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant. The captions used in this Lease are for convenience only and
shall not be considered in the construction or interpretation of any provision
hereof. When the context of this Lease requires, the neuter gender includes the
masculine, the feminine, a partnership or corporation or joint venture, and the
singular includes the plural. The terms "must", "shall", "will" and "agree" are
mandatory. The term "may" is permissive. When a party is required to do
something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless specific provision is made
therefore. Where Tenant is obligated not to perform any act or is not permitted
to perform any act, Tenant is also obligated to restrain any others reasonably
within its control, including agents, invitees, contractors, subcontractors and
employees, from performing said act. Landlord shall not become or
<PAGE>
Industrial Space Lease 48
be deemed a partner or a joint venturer with Tenant by reason of any of the
provisions of this lease.
ARTICLE 14
CORPORATE AUTHORITY,
BROKERS AND ENTIRE AGREEMENT
14.1 CORPORATE AUTHORITY; If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
Tenant is validly formed and duly authorized and existing, that Tenant is
qualified to do business in the State in which the Leased Premises are located,
that Tenant has the full right and legal authority to enter into this Lease,
that he is duly authorized to execute and deliver this Lease on behalf of Tenant
in accordance with the bylaws and/or a board of directors' resolution of Lease,
/22/deliver to Landlord a certified copy of the resolution of its board of
directors authorizing or ratifying the execution of this Lease, and if Tenant
fails to do so, Landlord at its sole election may elect to (i) extend the
Intended Commencement Date by such number of days tat Tenant shall have delayed
in so delivering such corporate resolution to Landlord or (ii) terminate this
Lease.
14.2 BROKERAGE COMMISSIONS: Tenant warrants that it has not had any dealings
with any real estate broker(s), leasing agent(s), finder(s) or salesmen, other
than those persons or entities named in Article 1 as the "Brokers" with respect
to the lease by it of the Leased Premises pursuant to this Lease, and that it
will indemnify, defend with competent counsel, and hold Landlord harmless from
any liability for the payment of any real estate brokerage commissions, leasing
commissions or finder's fees claimed by any other real estate broker(s), leasing
agent(s), finder(s) or salesmen to be earned or due and payable by reason of
Tenant's agreement or promise (implied or otherwise) to pay (or have Landlord
pay) such a commission or finder's fee by reason of its leasing the Leased
Premises pursuant to this Lease.
14.3 ENTIRE AGREEMENT: This Lease, the Exhibits (as described in Article 1)
and the Addenda (as described in Article 1), which Exhibits and Addenda are by
this reference incorporated herein, constitute the entire agreement between the
parties, and there are no other agreements, understandings or representations
between the parties relating to the lease by Landlord of the Leased Premises to
Tenant, except as expressed herein. No
- ----------------------------
/22/ and upon request shall
<PAGE>
Industrial Space Lease 49
subsequent changes, modifications or additions to this Lease shall be binding
upon the parties unless in writing and signed by both Landlord and Tenant.
14.4 LANDLORD'S REPRESENTATION: Tenant acknowledges that neither Landlord nor
any of its agents made any representations or warranties respecting the Project,
the Building or the Leased Premises, upon which Tenant relied in entering into
this Lease, which are not expressly set forth in this Lease. Tenant further
acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant's
intended use under existing Law or (ii) the suitability of the Leased Premises
for the conduct of Tenant's business or (iii) the exact square footage of the
Leased Premises, and that Tenant relied solely upon its own investigations
respecting said matters. Tenant expressly waives any and all claims for damage
by reason of any statement, representation, warranty, promise or other agreement
of Landlord's agent(s), if any, not contained in this Lease or in any Addenda
hereto.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
respective dates below set forth with the intent to be legally bound thereby as
of the Effective Date of this Lease first above set forth.
Dated: July 28, 1988 AS LANDLORD:
/s/ James R. Bancroft
---------------------
James R. Bancroft
Dated: July 26, 1988 AS TENANT:
ASPEN DIAGNOSTICS CORPORATION
By: /s/ Aspen Diagnostics Corporation
---------------------------------
Title: Secretary
If Tenant is a CORPORATION, the authorized officers must sign on behalf of the
corporation and indicate the capacity in which they are signing. This Lease must
be executed by the chairman of the board, president or vice-president, and the
secretary, assistant secretary, the chief financial officer or assistant
treasurer, unless the bylaws or a resolution of the board of directors shall
otherwise provide, in which event a certified copy of the bylaws
<PAGE>
Industrial Space Lease 50
or a certified copy of the resolution, as the case may be, must be attached to
this Lease.
<PAGE>
[FLOOR PLAN APPEARS HERE]
EXHIBIT A
<PAGE>
LAB I
- -----
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. l Lab Bench, 30-1/2"H x 48"L x 24"D.
2. 1 Lab Bench, 37"H x 184"L x 30-1/2"D, with 4 built-in
cabinets (including 1 fire protection cabinet).
3. 1 Lab Bench, 37"H x 36"L x 36"D, with sink and built-in
cabinet (corner unit).
4. 1 Lab Bench, 37"H x 84"L x 30-1/2"D, with 2 built-in
cabinets.
5. 1 Hamilton Fume Hood with pull-down glass door, 54"H x
48"L x 31"D, mounted on lab table, with exhaust duct.
6. 1 Wall Mounted Structure with 3 horizontal and 4 vertical
mounting bars.
7. 1 Floor Mounted Structure, 96"H x 72"W x 3"D, with table
24-1/2"H x 72"W x 24"D; 5 horizontal and 5 vertical
mounting bars.
8 1 Lab Bench, 37"H x 72"L x 30"D, with 2 built-in cabinets
and 1 counter-top shelf 18"H x 72"L x 16"D.
9. 1 Lab Bench, 37"H x 72"L x 30"D, with 2 built-in
cabinets.
10. 1 Wall Mounted Cabinet, 36"H x 47"L x 13"D, with glass
doors and 2 movable Shelves.
11. 1 Wall Mounted Cabinet, 31"H x 47"L x 12"D, with glass
doors and 2 movable shelves.
</TABLE>
<PAGE>
LAB II
- ------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 Lab Bench, 37"H x 47"L x 30"D, with built-in cabinet.
2. 1 Iriquois Fume Hood with pull-down glass door, 49"H x
47"W x 32-1/2"D, with exhaust duct.
3. 1 Floor Mounted Structure, 96"H x 70"W x 1-3/4"D, with
table 24"H x 70"L x 24"D; 5 horizontal mounting bars
and 4 vertical mounting bars.
4. 1 Lab Bench, 37"H x 131"L x 30-1/2"D with 2 built-in
cabinets.
5. 1 Lab Bench, 37"H x 36"L x 36"D, with sink, 3 faucets,
and built-in cabinet (corner unit).
6. 1 Lab Bench, 37"H x 112"L x 30"D, with 2 built-in
cabinets.
7. 1 Lab Bench, 37"H X 53"L x 30"D, with built-in cabinet.
8. 1 Lab Bench, 37"H x 39"L x 39"D, with built-in cabinet
(end unit).
9. 1 Lab Bench, 31"H x 91"L x 30"D.
10. 2 Wall Mounted Cabinets, 31"H x 7"L x 12"D with glass
doors and 2 movable shelves.
</TABLE>
<PAGE>
GLASS WASH ROOM
- ---------------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 Lab Bench, 37"H x 35"L X 30"D.
2. 1 Iriquois Fume Hood with pull-down glass door, 48"H x
35"L x 29"D, with exhaust duct.
3. 1 Lab Bench, 31-1/2"H x 72"L x 24"D.
4. 1 Hobart Automatic Dishwasher with 2 stain-less steel
tables, 37-1/2"H 59"L x 30"D, water holding tank and
movable washer racks.
5. 1 Lambertson stainless steel double sink, 35-1/2"H x 83"L
x 29"D.
6. 1 Wall Mounted Cabinet, 36"H x 47"L x 13"D, with glass
doors and 2 movable shelves.
</TABLE>
<PAGE>
LAB III
- -------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 Lab Bench, 37"H x 46"L x 30"D, with sink, 2 faucets,
and sink cabinet.
2. 1 Lab Bench, 37"H x 99"L x 30"D, with 2 built-in
cabinets.
3. 1 Lab Bench, 37"H x 94"L x 24"D, with built-in cabinet.
4. 1 Lab Bench, 37"H x 157"L x 30"D, with 2 built-in
cabinets.
5. 1 Lab Bench, 31-1/2"H x 95"L x 30"D, with built-it-in
cabinet.
6. 1 Wall Mounted Cabinet, 48"H X 35"L x 13"D, open with 3
movable shelves.
7. 2 Wall Mounted Cabinets, 48"H x 47"L x 13"D, open with 4
movable shelves.
8. 1 Wall Mounted Structure with 2 horizontal and 4 mounting
bars; 2 mounting brackets.
9. 1 Wall Mounted Cabinet, 36,"H x 47"L x 13"D, with glass
doors and 3 movable shelves.
10. 1 Floor Mounted Cabinet, 84"H x 35"L x 10"D, open with 5
movable shelves.
</TABLE>
<PAGE>
QA LAB
- ------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 Centrifuge Cabinet, 2 door/2 compartments, 45-1/2"H x
47"L x 31-l/2"D, with vent duct.
2. 1 Lab Bench, 37"H x 36"L x 24"D, with built-in open
cabinet, 2 movable shelves.
3. 1 Lab Bench, 37"H x 71"L X 24"D with built-in cabinet.
4. 1 Lab Bench, 37"H x 202"L x 30"D, with 1-19 x 16 sink, 2
faucets and sink cabinet and 1-16 x 14 sink, 3 faucets
and sink cabinet.
5. 1 Lab Bench, 31"H x 71"L x 30"D, with 2 built-in
cabinets.
6. 1 Lab Bench 31"H x 177"L x 48"D, with 5 built-in cabinets
and 1 counter-top shelf 18"H x 177"L x 16"D.
7. 1 Lab Bench, 37"H x 177"L x 53"D, with 7 built-in
cabinets and 1 counter-top shelf 18"H x 65-1/2"L x
16"D.
8. 1 Wall Mounted Cabinet, 36"H x 47"L x 13"D, open with 2
movable shelves.
9. 1 Floor Mounted Cabinet, 87"H x 47"L x 22"D, with glass
doors and 2 movable shelf.
</TABLE>
<PAGE>
LAB V
- -----
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 Lab Bench, 31-1/2"H x 253"L x 31"D, with 3 built-in
cabinets.
2. 1 Lab Bench, 37H x 207"L (wall side) x 30"D (one end cut
at 45 degrees) with 2 built-in cabinets, sink, 3
faucets and sink cabinet, and 1 counter-top shelf 12"H
x 207"L x 15"D.
3. 1 Lab Bench, 37"H x 231"L (wall side) x 30-1/2"D (one end
cut at 45 degrees), with 2 built-in cabinets.
4. 1 Lab Bench, 31"H x 129-1/2"L x 60"D, with counter-top
shelf 18"H x 127-1/2"D x 16"D.
5. l Wall Mounted Cabinet, 36"H x 47"L x 13"D, open with 2
movable shelves.
6. 2 Wall Mounted Cabinets, 30"H x 47"L x 13"D, open with 2
movable shelves.
7. 1 Floor Mounted Cabinet, 80"H x 47"L x 18"D, with glass
doors and 5 movable shelves.
</TABLE>
<PAGE>
LAB VI
- ------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. l Lab Bench, 37"H x 143"L x 31"D, with 2 built-in
cabinets.
2. 1 Floor Mounted Structure, 97"H x 70"W x 1-3/4"D, with
table 18"H x 70"L x 18"D, 5 horizontal mounting bars
and 5 vertical mounting bars.
3. 1 Lab Bench, 37"H x 207"L (wall side x 31"D (one end cut
at 45 degrees), with 2 built-in cabinets, and sink, 3
faucets, and sink cabinet.
4. 1 Lab Bench, 37"H x 289"L (wall side) x 30"D (one end cut
at 45 degrees), with 3 built-in cabinets.
5. 1 Lab Bench, 31"H x 143"L x 59-1/2"D, with 3 built-in
cabinets, and counter-top shelf 18"H x 141"L x 16"D.
6. 1 Wall Mounted Cabinet, 36"H x 47"L x 13"D, with glass
doors and 2 movable shelves.
7. 2 Wall Mounted Cabinets, 30"H x 47"L X 13"D, open with 2
movable shelves.
8. 1 Floor Mounted Cabinet, 80"H x 47"L x 18"D, with glass
doors and 5 movable shelves.
</TABLE>
<PAGE>
LAB VII
- -------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 2 Centrifuge Cabinets, 2 door/2 compartments, 45"H x 47"L
x 31-1/2"D, with vent duct.
2. 1 Lab Bench, 31"H x 149"L x 37"D.
3. 1 Lab Bench, 31"H x 108"L x 37"D, with sink, 3 faucets
and sink cabinet.
4. 1 Lab Bench, 31"H x 71"L x 36"D.
5. 2 Wall Mounted Cabinets, 30"H x 47"L x 13"D, with glass
doors and 2 movable shelves.
</TABLE>
<PAGE>
LAB VIII
- --------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 Lab Bench, 37"H x 121"L x 30"D.
2. 1 Lab Bench, 37"H x 125-1/2"L x 32"D, with sink, 3
faucets and sink cabinet.
3. 1 Lab Bench, 31"H x 83"L x 30"D, with 2 built-in
cabinets.
4. 1 Wall Mounted Cabinet, 30"H x 48"L x 12"D, open with 2
movable shelves.
</TABLE>
<PAGE>
OTHER ITEMS
- -----------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 North Star cold room, 8'H x 11'W x 18'L, with
compressor, recorder and alarm.
2. 1 Culligan Water System (not including tanks).
3. 1 Steel Mesh Cage 8'H x 8'W x 17'L, located inside roll-
up door.
4. 2 Wall Mounted Fire Blankets in cabinets in hallway
outside Labs I and II.
</TABLE>
<PAGE>
[EXHIBIT A PARKING LOT PLAN]
<PAGE>
LEGAL DESCRIPTION:
- -----------------
REAL property situated in the City of Sunnyvale, County of Santa Clara, State of
California, described as follows:
Parcel One:
Beginning at a point on the Southerly line of Elko Drive at the Northwesterly
corner of that certain 6.169 acre parcel of land shown on the Record of Survey
or "Sunnyvale Industrial Park", filed for record in the Office of the Recorder
of the County of Santa Clara, State of California, in Book 131 of Maps, Page 5;
thence along the Northerly line of said 6.169 acre parcel, being the Southerly
line of said Elko Drive, North 89 degree 06' 50" Est 230.92 feet to the
beginning of a tangent curve to the right having a radius of 30.00 feet; thence
along said curve to the right, through an angle of 90 degree 53' 10" for an arc
length of 47.59 feet to a point on the Westerly line of Reamwood Avenue, said
avenue is shown on said Map; thence along said Westerly line, South 351.74 feet;
thence at a right angle, West 261.36 feet to the Westerly line of said 6.169
acre parcel; thence North, along said Westerly line, 378.17 feet to the point of
beginning, and being shown as Parcel One on Parcel Map filed for record on
April 18, 1973 in Book 321 of Maps, at Page 17.
Parcel Two:
An easement for ingress and egress for driveway purposes, the same to be
surfaced by blacktop or any other type of surfacing which Grantee herein may
desire, together with an easement for installation and maintenace of public
utilities, including storm drains, in, under, over, upon and across a strip of
land, 13 feet in width, the Northerly line of which is more particularly
described as follows:
Commencing at a point on the Southerly line of Elko Drive at the Northwesterly
corner of the certain 6.169 acre parcel of land shown on that certain Record of
Survey of "Sunnyvale Industrial Park", which said Record of Survey was filed for
record in Office of the Recorder of the County of Santa Clara, State of
California, on March 28, 1961 in Book 131 of Maps, at Page 5; thence from said
point of commencement, along the Westerly line of said 6.169 acre parcel of
land, South 378.17 feet to the true point of beginning of the Northerly line of
the 13 foot strip of land hereinabove referred to; thence from said true point
of beginning, East 261.36 feet to a point on the Westerly line of Reamwood
Avenue, as shown on said Map, and the terminus of said line.
EXHIBIT B
<PAGE>
[FLOOR PLAN]
EXHIBIT B
<PAGE>
NON-NEGOTIABLE COPY-RETURN TO: Please Acknowledge by Returning This Copy,
Specifying Your Reference Number Below
Cable Address: BankAmerica
[BANK OF AMERICA LOGO] Place:
Trade Finance Services - California
Letter of Credit Issuance # 6569
P.O. Box 4104, Concord, CA 94524-4104
- --------------------------------------------------------------------------------
[_] This refers to our preliminary teletransmission advice of this credit.
IRREVOCABLE APPLICANT
LETTER OF CREDIT NO. XXXXX ASPEN DIAGNOSTICS CORP.
525 UNIVERSITY AVE. SUITE 1500
PALO ALTO, CA 94301
DATE OF ISSUE: XXXXXX XX, 19XX
- --------------------------------------------------------------------------------
ADVISING BANK REFERENCE NO. BENEFICIARY
JAMES R. BANCROFT
601 MONTGOMERY ST., SUITE 800
SAN FRANCISCO, CA 94111
- --------------------------------------------------------------------------------
DATE AND PLACE OF ENTRY AMOUNT
SEPTEMBER 15, 1989 $25,000.00
AT OUR OFFICE (TWENTY FIVE THOUSAND U.S. DOLLARS)
- --------------------------------------------------------------------------------
Credit available with BANK OF AMERICA NT & SA, 1850 GATEWAY BLVD.,
CONCORD, CA 94520
by [X] sight payment [_] deferred payment [_] acceptance [_] negotiation
against presentation of the documents detailed below and your draft(s) at SIGHT
drawn on U.S.
- ------------------------ -------------------------- -------------------------
DOCUMENT REQUIRED:
- ------------------
1. A SIGNED STATEMENT FROM JAMES R. BANCROFT STATING:
"I HEREBY CERTIFY THAT ASPEN XXXXXXXXXXXX DIAGNOSTICS CORP. HAS DEFAULTED IN
ITS OBLIGATIONS TO JAMES R. BANCROFT UNDER THE TERMS OF THE INDUSTRIAL SPACE
LEASE BETWEEN ASPEN DIAGNOSTICS CORP. AND JAMES R. BANCROFT.".
THIS LETTER OF CREDIT SHALL EXPIRE ON SEPTEMBER 15, 1989, BUT SUCH EXPIRATION
DATE SHALL BE AUTOMATICALLY EXTENDED FOR A PERIOD OF ONE (1) YEAR ON SEPTEMBER
15, 1989, AND ON EACH SUCCESSIVE EXPIRATION DATE, BUT IN NO EVENT NO LATER THAN
SEPTEMBER 15, 1991, UNLESS, AT LEAST 30 DAYS BEFORE THE CURRENT EXPIRATION
DATE, WE NOTIFY YOUR BY CERTIFIED MAIL OR SIMILAR OVERNIGHT COURIER AT THE ABOVE
ADDRESS THAT THIS LETTER OF CREDIT IS NOT EXTENDED BEYOND THE CURRENT EXPIRATION
DATE. IN THE EVENT YOU ARE SO NOTIFIED, ANY UNUSED PORTION OF THIS CREDIT SHALL
BE AVAILABLE UPON PRESENTATION, WITHIN THE CURRENT EXPIRATION DATE, OF YOUR
DRAFT AT SIGHT ON US ACCOMPANIED BY A SIGNED STATEMENT FROM JAMES R. BANCROFT
STATING: "WE HAVE RECEIVED BANK OF AMERICA NT & SA'S NOTIFICATION OF NON-RENEWEL
UNDER THIS LETTER OF CREDIT AND HEREBY CERTIFY THAT THE AMOUNT DRAWN IS
THE AMOUNT OF ASPEN DIAGNOSTICS CORP.'S OUTSTANDING OBLIGATIONS TO JAMES. R.
BANCROFT UNDER THE TERMS OF THE INDUSTRIAL SPACE LEASE BETWEEN ASPEN DIAGNOSTICS
CORP. AND JAMES R. BANCROFT.".
THIS LETTER OF CREDIT MUST ACCOMPANY ANY DRAWINGS HEREUNDER FOR ENDORSEMENT OF
THE DRAWING AMOUNT AND WILL BE RETURNED TO THE BENEFICIARY UNLESS IT IS FULLY
UTILIZED.
EXHIBIT C
We hereby issue this Documentary Credit in your favour. It is subject to the
Uniform Customs and Practice for Documentary Credits 1933 revision, ICC
Publication No. 400, and engages us in accordance with the terms thereof. The
number and the date of the credit and the name of our bank must be quoted on all
drafts required. If the credit is available by negotiation, each
<PAGE>
presentation must be noted on the reverse of this advice by the bank where the
credit is available.
All documents to be forwarded in one cover, by airmail, unless otherwise stated
above. Negotiating bank charges, if any, are for account of beneficiary. The
advising bank is requested to notify the credit to the beneficiary without
adding their confirmation.
This document consists
of 1 signed page(s) /s/ /s/
___________________________ __________________________
Authorized Countersignature Authorized Signature
Please examine this instrument carefully. If you are unable to comply with the
terms or conditions, please communicate with your buyer to arrange for an
amendment. This procedure will facilitate prompt handling when documents are
presented.
<PAGE>
SECURITY AGREEMENT
------------------
AND
---
SECURITY INTEREST IN GOODS AND CHATTELS
---------------------------------------
This Agreement made as of August 15, 1988 is between James R. Bancroft, as
Landlord, and Aspen Diagnostics Corporation, as Tenant.
RECITALS
--------
This Agreement is made with reference to the following facts:
A. Landlord and Tenant have entered into an Industrial Space Lease, which
for reference purposes is dated August 15, 1988 (the "Lease").
B. As additional security for Tenant's full performance under the Lease,
Tenant desires to grant and Landlord is willing to accept a continuing security
interest in certain goods (as defined in Division 9 of the Uniform Commercial
Code of the State of California) and chattels described in Exhibit A attached
hereto and made a part hereof.
AGREEMENTS
----------
For and in consideration of the mutual covenants and undertakings set forth
in this Agreement, the parties agree as follows:
1. Tenant hereby grants to Landlord a continuing security interest in
certain goods and chattels purchased from Sclavo which are related, connected,
or attached to the premises described in the Lease. The goods and chattels
shall include without limitation all fixtures and equipment, laboratory benches,
hooks, exhaust fans, ventilating apparatus and electric motors which are now
located on the premises and more specifically described in Exhibit A (the
"Collateral").
2. Tenant shall have the right to replace such property as covered by
this document from time to time so long as the replacement property has a value
equal to or greater than that of the property replaced. Such property may be
moved about and relocated without prior written consent of Landlord.
3. The security interest hereby granted is to secure the full and exact
performance and observance of all of the covenants and conditions set forth in
the Lease, including but not limited to all fees, charges, expenses and
attorney's fees chargeable under the Lease.
4. Tenant warrants and covenants that: (a) Tenant is the lawful owner of
the collateral which is and will be free and clear of all security interest,
liens and encumbrances, and have the sole right and authority to deliver this
instrument; (b) Tenant will defend title to the collateral and security interest
herein against the claims and demands of all persons; (c) Tenant will keep the
collateral free and clear of all attachments, levies, taxes, liens, security
interests, and encumbrances of every kind and nature and will, at its own cost
and expense, keep the collateral
<PAGE>
in good state of repair and will not waste or destroy the same or any part
thereof and will not be negligent in the care and use thereof; (d) Tenant will
not, without Landlord's prior written consent, sell, assign, mortgage, lease or
otherwise dispose of the collateral; (e) Tenant shall insure the collateral in
Landlord's name against loss or damage by fire, theft, burglary and such other
hazards as Landlord shall specify in the amounts and under policies by insurers
acceptable to Landlord, and all premiums thereon shall be paid by Tenant and the
policies delivered to Landlord (if Tenant fails to do so, Landlord may procure
such insurance, the cost of which shall be and is hereby deemed to be a cost of
maintenance and preservation of the real property and the collateral); (f)
Tenant shall not remove the collateral from the leased premises without
Landlord's prior written consent, which shall not be unreasonably withheld,
provided, however, Tenant reserves the right to replace the collateral from time
to time so long as the collateral item replaced has a value equal to or greater
than that of the item being replaced.
5. Tenant further agrees that: (a) Tenant shall at reasonable times
(including regular business hours) after reasonable notice allow Landlord or
Landlord's representatives free access to and right of inspection of the
collateral; (b) Tenant shall comply with the terms and conditions of any orders,
ordinances, laws or statutes of any city, state or governmental department
having jurisdiction with respect to such premises where the collateral is
located or the conduct of business thereon and, when requested by Landlord,
Tenant shall execute any written instruments and do any other acts necessary to
effectuate more fully the purposes and provisions of this Agreement, and (c)
Tenant shall indemnify and save Landlord harmless from all loss, cost, damage,
liability or expense including reasonable attorney's fees that Landlord may
sustain or incur by reason of defending or protecting this security interest or
the priority thereof, or enforcing payment of the indebtedness hereby secured,
or in the prosecution of defense of any action or proceeding concerning any
matter growing out of or connected with this agreement and/or the obligations
and/or the collateral.
6. Landlord may, at Landlord's option, pay, purchase, contract,
compromise or discharge any taxes, claims, debts, liens, charges, security
interests or encumbrances, which in Landlord's judgment may affect or appear to
affect the collateral or Landlord's rights hereunder. In addition, Landlord may
pay for the maintenance and preservation of the collateral. The amount of any
payments made by Landlord under any provisions of this agreement, together with
all costs and expenses, including a reasonable attorney's fee, are all to be
repaid to Landlord, together with interest thereon at the rate of 10% per annum,
are all secured hereby and shall be, and is hereby deemed to be, a cost of
maintenance and preservation of the real property described herein and the
collateral.
7. Tenant shall be in default hereunder if: (a) Tenant shall fail to pay,
when due, or punctually perform any of the obligations under the Lease; or (b)
any warranty, representation or statement made or furnished to Landlord by
Tenant or on Tenant's behalf was false in any material respect when made or
furnished; or (c) any of the collateral shall be lost, stolen, or damaged
without replacement or repair; or (d) there shall be a levy upon, seizure or
attachment of any of the collateral; or (e) Tenant shall become insolvent; or
(f) Tenant shall make an assignment of its property for the benefit of creditors
or suffer the appointment of a receiver for any part of Tenant's property; or
(g) any proceedings under any provision of the Bankruptcy Act or any insolvency
law shall be commenced by or against Tenant; or (h) Tenant shall sell, assign,
-2-
<PAGE>
mortgage, lease, or otherwise dispose of the collateral, provided, however,
Tenant shall not be in default if Tenant replaces a collateral item from time to
time so long as the item replaced has a value equal to or greater than that of
the item being replaced, or if Tenant shall dispose of any such item of
collateral which has become worn or obsolete.
8. Upon Tenant's default hereunder or under the related Lease, Landlord
shall have all rights and remedies of a secured party under the Uniform
Commercial Code. In addition: (a) Landlord shall thereupon have the right to
take immediate possession of the collateral or any portion thereof, and for that
purpose, may enter the premises described herein, or any other premises, with or
without force or process of law, wherever this secured property might be, and
search for the same and take possession of and keep and store the same on said
premises until sold and delivered; and/or remove the collateral or any part
thereof to such other places as Landlord may desire; (b) if Landlord exercises
Landlord's right to take possession of the collateral, Tenant shall, upon
Landlord's demand, assemble the collateral and make it available to Landlord at
a place convenient to Landlord; (c) Landlord may sell and dispose of all or part
of the collateral at public auction or private sale, for cash or for credit upon
such terms as Landlord may elect, after giving such notice as is required by the
Uniform Commercial Code of the State of California, and Tenant shall be credited
with the amounts of any such sale only when the cash proceeds thereof are
actually received by Landlord. The requirements of notice shall be met if such
notice is mailed, postage prepaid, to Tenant at Tenant's address as set forth
herein, at least five days before the time of sale or other disposition; (d)
none of the collateral subject to the security interest created hereby need be
in view of those attending the sale and Landlord need not take or have the same
in Landlord's physical possession at or as a condition to selling or otherwise
disposing thereof; (e) Landlord may sell same or such other collateral as
Landlord may have securing said obligations (including real property collateral)
in such order, priority and lots as Landlord in Landlord's sole discretion may
designate, and Tenant shall not have the right to direct in what order or
priority the collateral may be sold; (f) all expenses of retaking, holding,
preparing for sale, selling or the like shall include, without limitation,
Landlord's reasonable attorney's fees and other legal expenses and
disbursements.
9. No delay or failure on Landlord's part in exercising any right,
privilege, remedy or option hereunder shall operate as a waiver of such or of
any other right, privilege, remedy or option and no waiver whatever shall be
valid unless in writing signed by Landlord, and then only to the extent therein
set forth. Landlord may have and may exercise one or more or all of the
foregoing remedies and rights and any one and/or more of all the rights and
remedies provided for in any and all contracts now or hereafter existing between
us and in such order and priority and/or successively, alternatively, or
concurrently and in such manner as Landlord in Landlord's sole discretion may
direct. All of Landlord's rights and remedies are specifically hereby made
cumulative. Tenant agrees to join with Landlord in executing financing
statements or other instruments pursuant to the Uniform Commercial Code in form
satisfactory to Landlord and in executing such other documents or instruments as
may be required or deemed necessary by Landlord for purposes of effecting or
continuing Landlord's security interest in the collateral.
10. This agreement cannot be changed or terminated orally. All of the
rights, privileges, remedies and options given to Landlord hereunder shall inure
to the benefit of Landlord's successors and assigns; and all of the terms,
conditions, promises, covenants,
-3-
<PAGE>
provisions and warranties of this agreement shall inure to the benefit of and
shall bind the representatives, successors and assigns of Landlord and of
Tenant.
11. This agreement is cumulative to and not in derogation of any prior
security agreements, letters of credit or lease between Landlord and Tenant
heretofore executed and shall not be construed to affect or vary any of the
terms or provisions of such prior security agreements, letters of credit, lease
or other security devices.
12. The address to which all notices hereunder may be sent is:
Aspen Diagnostics
1238 & 1240 Elko Drive
Sunnyvale, CA 94088
13. In the event of any conflict or inconsistency between this document
and the Lease, the Lease shall be controlling.
LANDLORD: TENANT:
- -------- ------
ASPEN DIAGNOSTICS CORPORATION
/s/ James R. Bancroft /s/ A. Barr Dolan
___________________________________ By: __________________________________
James R. Bancroft A. Barr Dolan,
Assistant Secretary
Date: August 10, 1988 Date: August 15, 1988
-4-
<PAGE>
<TABLE>
This FINANCING STATEMENT
presented for filing pursuant to the California Uniform Commercial Code.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Debtor (Last name first - if an individual) 1A. Social Security or Federal Tax No.
ASPEN DIAGNOSTICS
- --------------------------------------------------------------------------------------------------------------------------
1B. Mailing Address 1C. City, State 1D. Zip Code
- --------------------------------------------------------------------------------------------------------------------------
2. Additional Debtor (If any) (Last name first - if an individual) 2A. Social Security or Federal Tax No.
- --------------------------------------------------------------------------------------------------------------------------
2B. Mailing Address 2C. City, State 2.D Zip Code
- --------------------------------------------------------------------------------------------------------------------------
3. Debtor's Trade Names or Styles (If any) 3A. Federal Tax Number
- --------------------------------------------------------------------------------------------------------------------------
4. Secured Party 4A. Social Security No., Federal Tax No.
Or Bank Transit and A.B.A. No.
Name JAMES R. BANCROFT
Mailing address 601 MONTGOMERY STREET, SUITE 800
City SAN FRANCISCO, CA 94111
- --------------------------------------------------------------------------------------------------------------------------
5. Assignee of Secured Party (If any) 5A. Social Security No., Federal Tax No.
Or Bank Transit and A.B.A. No.
Name
Mailing address
City State Zip Code
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
6. This FINANCING STATEMENT covers the following types or items of property
(INCLUDE DESCRIPTION OF REAL PROPERTY ON WHICH LOCATED AND OWNER OF RECORD
WHEN REQUIRED BY INSTRUCTION 4).
SHOWN ON EXHIBIT "A" ATTACHED.
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
7. Check 7A. [_] Products of collateral 7B. Debtors(s) signature not required in accordance
if applicable [X] are also covered with instruction 5(A) item:
[_](1) [_](2) [_](3) [_](4)
- ---------------------------------------------------------------------------------------------------------------------------
8. Check [_] Debtor is a "transmitting utility" in accordance with UCC & 9105(1)(N)
if applicable [X]
- ---------------------------------------------------------------------------------------------------------------------------
9. Date C 10. THIS SPACE FOR USE OF FILING OFFICER
O (DATE, TIME, FILE NUMBER
Signature(s) of Debtor(s) D AND FILING OFFICER)
/s/ Aspen Diagnostics E
- ---------------------------------------------------------------------
1
Type or print name(s) of Debtor(s) 2
- --------------------------------------------------------------------- 3
Signature(s) of Secured Party(ies) /s/ James R. Bancroft 4
- --------------------------------------------------------------------- 5
James R. Bancroft 6
Type or print name(s) of secured party(ies)
=======================================================================
11. Return copy to 7
NAME EDWIN H. KAWAMOTO 8
ADDRESS 601 MONTGOMERY STREET, SUITE 800 9
CITY SAN FRANCISCO, CA 94111 0
STATE
ZIP CODE
=======================================================================
(1) Filing Office Copy Form UCC.1 Filing Fee $3.00
Approved by the Secretary of State
===========================================================================================================================
</TABLE>
<PAGE>
EXHIBIT "A" ATTACHED TO UCC-1 FINANCING STATEMENT
Page 1 of 11
All of the following items now located at 1238 and 1240 Elko Drive, Sunnyvale,
California, and more specifically described as follows:
LAB I
- -----
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. l Lab Bench, 30-1/2"H x 48"L x 24"D.
2. 1 Lab Bench, 37"H x 184"L x 30-1/2"D, with 4 built-in
cabinets (including 1 fire protection cabinet).
3. 1 Lab Bench, 37"H x 36"L x 36"D, with sink and built-in
cabinet (corner unit).
4. 1 Lab Bench, 37"H x 94"L x 30-1/2"D, with 2 built-in
cabinets.
5. 1 Hamilton Fume Hood with pull-down glass door, 54"H x
48"L x 31"D, mounted on lab table, with exhaust duct.
6. 1 Wall Mounted Structure with 3 horizontal and 4 vertical
mounting bars.
7. 1 Floor Mounted Structure, 96"H x 72"W x 3"D, with table
24-1/2"H x 72"W x 24"D; 5 horizontal and 5 vertical
mounting bars.
8 1 Lab Bench, 37"H x 72"L x 30"D, with 2 built-in cabinets
and 1 counter-top shelf 18"H x 72"L x 16"D.
9. 1 Lab Bench, 37"H x 72"L x 30"D, with 2 built-in
cabinets.
10. 1 Wall Mounted Cabinet, 36"H x 47"L x 13"D, with glass
doors and 2 movable shelves.
11. 1 Wall Mounted Cabinet, 31"H x 47"L x 12"D, with glass
doors and 2 movable shelves.
</TABLE>
<PAGE>
LAB I
- -----
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. l Lab Bench, 30-1/2"H x 48"L x 24"D.
2. 1 Lab Bench, 37"H x 184"L x 30-1/2"D, with 4 built-in
cabinets (including 1 fire protection cabinet).
3. 1 Lab Bench, 37"H x 36"L x 36"D, with sink and built-in
cabinet (corner unit).
4. 1 Lab Bench, 37"H x 84"L x 30-1/2"D, with 2 built-in
cabinets.
5. 1 Hamilton Fume Hood with pull-down glass door, 54"H x
48"L x 31"D, mounted on lab table, with exhaust duct.
6. 1 Wall Mounted Structure with 3 horizontal and 4 vertical
mounting bars.
7. 1 Floor Mounted Structure, 96"H x 72"W x 3"D, with table
24-1/2"H x 72"W x 24"D; 5 horizontal and 5 vertical
mounting bars.
8 1 Lab Bench, 37"H x 72"L x 30"D, with 2 built-in cabinets
and 1 counter-top shelf 18"H x 72"L x 16"D.
9. 1 Lab Bench, 37"H x 72"L x 30"D, with 2 built-in
cabinets.
10. 1 Wall Mounted Cabinet, 36"H x 47"L x 13"D, with glass
doors and 2 movable Shelves.
11. 1 Wall Mounted Cabinet, 31"H x 47"L x 12"D, with glass
doors and 2 movable shelves.
</TABLE>
<PAGE>
LAB II
- ------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 Lab Bench, 37"H x 47"L x 30"D, with built-in cabinet.
2. 1 Iriquois Fume Hood with pull-down glass door, 49"H x
47"W x 32-1/2"D, with exhaust duct.
3. 1 Floor Mounted Structure, 96"H x 70"W x 1-3/4"D, with
table 24"H x 70"L x 24"D; 5 horizontal mounting bars
and 4 vertical mounting bars.
4. 1 Lab Bench, 37"H x 131"L x 30-1/2"D with 2 built-in
cabinets.
5. 1 Lab Bench, 37"H x 36"L x 36"D, with sink, 3 faucets,
and built-in cabinet (corner unit).
6. 1 Lab Bench, 37"H x 112"L x 30"D, with 2 built-in
cabinets.
7. 1 Lab Bench, 37"H X 53"L x 30"D, with built-in cabinet.
8. 1 Lab Bench, 37"H x 39"L x 39"D, with built-in cabinet
(end unit).
9. 1 Lab Bench, 31"H x 91"L x 30"D.
10. 2 Wall Mounted Cabinets, 31"H x 7"L x 12"D with glass
doors and 2 movable shelves.
</TABLE>
<PAGE>
GLASS WASH ROOM
- ---------------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 Lab Bench, 37"H x 35"L X 30"D.
2. 1 Iriquois Fume Hood with pull-down glass door, 48"H x
35"L x 29"D, with exhaust duct.
3. 1 Lab Bench, 31-1/2"H x 72"L x 24"D.
4. 1 Hobart Automatic Dishwasher with 2 stain-less steel
tables, 37-1/2"H 59"L x 30"D, water holding tank and
movable washer racks.
5. 1 Lambertson stainless steel double sink, 35-1/2"H x 83"L
x 29"D.
6. 1 Wall Mounted Cabinet, 36"H x 47"L x 13"D, with glass
doors and 2 movable shelves.
</TABLE>
<PAGE>
LAB III
- -------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 Lab Bench, 37"H x 46"L x 30"D, with sink, 2 faucets,
and sink cabinet.
2. 1 Lab Bench, 37"H x 99"L x 30"D, with 2 built-in
cabinets.
3. 1 Lab Bench, 37"H x 94"L x 24"D, with built-in cabinet.
4. 1 Lab Bench, 37"H x 157"L x 30"D, with 2 built-in
cabinets.
5. 1 Lab Bench, 31-1/2"H x 95"L x 30"D, with built-it-in
cabinet.
6. 1 Wall Mounted Cabinet, 48"H X 35"L x 13"D, open with 3
movable shelves.
7. 2 Wall Mounted Cabinets, 48"H x 47"L x 13"D, open with 4
movable shelves.
8. 1 Wall Mounted Structure with 2 horizontal and 4 mounting
bars; 2 mounting brackets.
9. 1 Wall Mounted Cabinet, 36,"H x 47"L x 13"D, with glass
doors and 3 movable shelves.
10. 1 Floor Mounted Cabinet, 84"H x 35"L x 10"D, open with 5
movable shelves.
</TABLE>
<PAGE>
QA LAB
- ------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 Centrifuge Cabinet, 2 door/2 compartments, 45-1/2"H x
47"L x 31-l/2"D, with vent duct.
2. 1 Lab Bench, 37"H x 36"L x 24"D, with built-in open
cabinet, 2 movable shelves.
3. 1 Lab Bench, 37"H x 71"L X 24"D with built-in cabinet.
4. 1 Lab Bench, 37"H x 202"L x 30"D, with 1-19 x 16 sink, 2
faucets and sink cabinet and 1-16 x 14 sink, 3 faucets
and sink cabinet.
5. 1 Lab Bench, 31"H x 71"L x 30"D, with 2 built-in
cabinets.
6. 1 Lab Bench 31"H x 177"L x 48"D, with 5 built-in cabinets
and 1 counter-top shelf 18"H x 177"L x 16"D.
7. 1 Lab Bench, 37"H x 177"L x 53"D, with 7 built-in
cabinets and 1 counter-top shelf 18"H x 65-1/2"L x
16"D.
8. 1 Wall Mounted Cabinet, 36"H x 47"L x 13"D, open with 2
movable shelves.
9. 1 Floor Mounted Cabinet, 87"H x 47"L x 22"D, with glass
doors and 2 movable shelf.
</TABLE>
<PAGE>
LAB V
- -----
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 Lab Bench, 31-1/2"H x 253"L x 31"D, with 3 built-in
cabinets.
2. 1 Lab Bench, 37H x 207"L (wall side) x 30"D (one end cut
at 45 degrees) with 2 built-in cabinets, sink, 3
faucets and sink cabinet, and 1 counter-top shelf 12"H
x 207"L x 15"D.
3. 1 Lab Bench, 37"H x 231"L (wall side) x 30-1/2"D (one end
cut at 45 degrees), with 2 built-in cabinets.
4. 1 Lab Bench, 31"H x 129-1/2"L x 60"D, with counter-top
shelf 18"H x 127-1/2"D x 16"D.
5. l Wall Mounted Cabinet, 36"H x 47"L x 13"D, open with 2
movable shelves.
6. 2 Wall Mounted Cabinets, 30"H x 47"L x 13"D, open with 2
movable shelves.
7. 1 Floor Mounted Cabinet, 80"H x 47"L x 18"D, with glass
doors and 5 movable shelves.
</TABLE>
<PAGE>
LAB VI
- ------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. l Lab Bench, 37"H x 143"L x 31"D, with 2 built-in
cabinets.
2. 1 Floor Mounted Structure, 97"H x 70"W x 1-3/4"D, with
table 18"H x 70"L x 18"D, 5 horizontal mounting bars
and 5 vertical mounting bars.
3. 1 Lab Bench, 37"H x 207"L (wall side x 31"D (one end cut
at 45 degrees), with 2 built-in cabinets, and sink, 3
faucets, and sink cabinet.
4. 1 Lab Bench, 37"H x 289"L (wall side) x 30"D (one end cut
at 45 degrees), with 3 built-in cabinets.
5. 1 Lab Bench, 31"H x 143"L x 59-1/2"D, with 3 built-in
cabinets, and counter-top shelf 18"H x 141"L x 16"D.
6. 1 Wall Mounted Cabinet, 36"H x 47"L x 13"D, with glass
doors and 2 movable shelves.
7. 2 Wall Mounted Cabinets, 30"H x 47"L X 13"D, open with 2
movable shelves.
8. 1 Floor Mounted Cabinet, 80"H x 47"L x 18"D, with glass
doors and 5 movable shelves.
</TABLE>
<PAGE>
LAB VII
- -------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 2 Centrifuge Cabinets, 2 door/2 compartments, 45"H x 47"L
x 31-1/2"D, with vent duct.
2. 1 Lab Bench, 31"H x 149"L x 37"D.
3. 1 Lab Bench, 31"H x 108"L x 37"D, with sink, 3 faucets
and sink cabinet.
4. 1 Lab Bench, 31"H x 71"L x 36"D.
5. 2 Wall Mounted Cabinets, 30"H x 47"L x 13"D, with glass
doors and 2 movable shelves.
</TABLE>
<PAGE>
LAB VIII
- --------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 Lab Bench, 37"H x 121"L x 30"D.
2. 1 Lab Bench, 37"H x 125-1/2"L x 32"D, with sink, 3
faucets and sink cabinet.
3. 1 Lab Bench, 31"H x 83"L x 30"D, with 2 built-in
cabinets.
4. 1 Wall Mounted Cabinet, 30"H x 48"L x 12"D, open with 2
movable shelves.
</TABLE>
<PAGE>
OTHER ITEMS
- -----------
<TABLE>
<CAPTION>
Item No. Qty. Description
- -------- ---- -----------
<S> <C> <C>
1. 1 North Star cold room, 8'H x 11'W x 18'L, with
compressor, recorder and alarm.
2. 1 Culligan Water System (not including tanks).
3. 1 Steel Mesh Cage 8'H x 8'W x 17'L, located inside roll-
up door.
4. 2 Wall Mounted Fire Blankets in cabinets in hallway
outside Labs I and II.
</TABLE>
<PAGE>
LANDLORD'S IMPROVEMENTS
-----------------------
Pursuant to paragraph 15.3 of the Addendum No. 1 to the Lease, Landlord hereby
agrees to provide the following improvements:
1. Paint the interior walls with off-white or other mutually acceptable
color of paint on the areas shown in yellow on the attached map;
2. Replace all existing carpets with RHS Hurrah Blue Shadow cut pile,
commercial quality, on the areas shown in yellow on the attached map;
3. Install and paint a new dividing wall as shown on the attached map.
EXHIBIT F
<PAGE>
[FLOOR PLANS]
[EXHIBIT F]
[GRAPHIC DESCRIPTION]
<PAGE>
ADDENDUM NO. 1
--------------
This Addendum No. 1 relates to that Industrial Space Lease ("Lease") dated for
reference purposes as of July 1, 1988, between James R. Bancroft, as Landlord
and Aspen Diagnostics Corporation, as Tenant.
The Addendum shall be part of the Lease and shall include the following
provisions:
15.1 Additional Security. In addition to the security deposit described in
-------------------
paragraph 3.7 of the Lease, Tenant shall provide other additional security
to Landlord in order to secure Tenant's full compliance with the provisions
under the Lease. No later than August 15, 1988, Tenant shall deliver to
Landlord the following:
a. Irrevocable Letter of Credit. The irrevocable (standby) Letter of
----------------------------
Credit for $25,000 shall be issued from a bank acceptable to Landlord and
shall be effective from August 15, 1988 through September 15, 1991. The
Letter of Credit shall be in the form attached hereto and made a part
hereof as Exhibit C. Notwithstanding anything to the contrary, the amount
of the Letter of Credit shall be reduced to $12,500 on April 15, 1990
provided that Tenant shall not be in default under any provision of this
Lease.
<PAGE>
If Tenant is unable to obtain a Letter of Credit for 37 months, Tenant
may provide to Landlord a Letter of Credit for a shorter period. In this
event, Tenant agrees to provide a new substituted Letter of Credit to
Landlord at least thirty (30) days before the expiration date of any Letter
of Credit in Landlord's possession, serving as a security for Tenant'
performance under this Lease. Any substituted Letter of Credit shall
conform to the Exhibit C Letter of Credit, except for the dates. If Tenant
shall fail to deliver to Landlord a new substituted Letter of Credit thirty
(30) days before the expiration date of the Letter of Credit in Landlord's
possession, Landlord shall have the option to call on the full amount of
the Letter of Credit.
Subject to Landlord providing notice as required under the Lease and
the related Security Agreement described hereinafter and Tenant's failure
cure any default during the notice period, Landlord shall then have the
option to call on the Letter of Credit in an amount sufficient in
Landlord's sole discretion to cure any such default. When calling on the
Letter of Credit, Landlord shall not be required to provide any additional
notice to Tenant except as required under the Lease. Before calling on the
Letter of Credit, Landlord shall first be required to apply and to exhaust
the cash Security Deposit described in Paragraph 3.7.
-2-
<PAGE>
If the cash Security Deposit or any portion is applied to cure any
default, or if the Letter of Credit or any portion thereof is called and
applied to cure any default, Tenant shall have ten (10) days from
Landlord's demand to pay to Landlord the sum required to restore the cash
Security Deposit applied to cure any default or to deliver a new Letter of
Credit in an amount equal to that required under this paragraph and in the
same form set forth in Exhibit C, except for the dates. Failure to restore
the cash Security Deposit as set forth in paragraph 3.7 or failure to
provide a new Letter of Credit after the ten (10) days of written notice
shall constitute a material default under the Lease, and Landlord shall
have the option to exercise all rights and remedies under the Lease and
related Security Agreement.
b. Security Agreement and Security Interest in Goods and Chattels. The
--------------------------------------------------------------
Security Agreement and Security Interest in Goods and Chattels ("Security
Agreement") shall cover all real estate related goods and chattels that
Tenant has purchased from Sclavo, Inc. The Security Agreement shall be in
the form attached hereto and made a part hereof as Exhibit D.
c. Financing Statement. Two duly executed Financing Statement in the
-------------------
form attached as Exhibit E shall be delivered to Landlord. One Financing
Statement shall be
-3-
<PAGE>
executed in recordable form which will be recorded in Santa Clara County,
Official Records, and other Financing Statement will be filed with the
California Secretary of State.
15.2 Security Deposit. Provided that Tenant shall not be in default under any
----------------
provision of this Lease and the related Security Agreement, Landlord agrees
to return the case security deposit of $8,096 under paragraph 3.7 of this
Lease when Tenant can establish to Landlord's reasonable satisfaction that
Tenant has successfully raised an additional sum of $5,000,000 in working
capital.
15.3 Condition of Premises. Tenant has inspected the Premises and agrees to
---------------------
accept possession of the Premises in the "as is" condition, without
warranty, expressed or implied, except for the following: (a) Landlord
shall provide a finished dividing wall and shall paint and provide new
carpeting, both as needed, which are all more specifically described in
Exhibit F, attached hereto and made a part hereof; and (b) all plumbing and
electrical systems shall be in good working order. The parties stipulate
that the Leased Premises contain 8,800 sq. ft. If any subsequent
measurements determine that the Leased Premises contain more or less than
8,800 sq. ft., no adjustments will be made to the rent, common area
charges, real property taxes or any other related matter.
-4-
<PAGE>
15.4 Limited Right of First Refusal. Landlord has offered to lease to Tenant the
------------------------------
adjoining remaining half of the building consisting of 8,800 sq. ft.
Landlord's offer to lease includes the following terms and conditions:
a. Minimum rent per month: $7,040 ($.80 per sq. ft. per month).
b. Minimum term: 1 year.
c. Minimum Security Deposit: $7,040.
d. Minimum free rent: 1 month per 1 year term of lease.
Tenant has rejected Landlord's aforementioned offer. Accordingly, for
the term of this Lease, Landlord shall be free to offer the space to any
prospective tenant on the same or better terms and conditions to Landlord
as set forth above. If Landlord receives an offer to lease all or part of
the adjoining premises for less than $.80 per sq. ft. per month but on
terms and conditions otherwise acceptable to Landlord, Landlord shall
deliver a copy of such an offer to Tenant. A copy of this offer shall
constitute Landlord's offer to lease the adjoining premises to Tenant.
Tenant shall then have 3 business days to review and to unconditionally and
irrevocably accept Landlord's offer to lease the adjoining premises on the
same terms and conditions. If Tenant accepts Landlord's offer, Landlord and
Tenant shall promptly enter into a lease. If Tenant fails to respond within
the 3
-5-
<PAGE>
business days, Landlord shall then have the right to lease the adjoining
premises to anyone other than Tenant on the same terms and conditions
previously offered to Tenant.
15.5 Conditions Precedent. This Lease shall have no force and effect unless all
--------------------
of the following conditions precedent are fully satisfied on or before July
29, 1988:
a. Each party shall have received a fully executed Lease;
b. Tenant shall have paid the sum of $16,192 (representing the first
month's rent and the cash security deposit) to Landlord;
LANDLORD: TENANT:
ASPEN DIAGNOSTICS CORPORATION
/s/ James R. Bancroft By: /s/ Aspen Diagnostics Corporation
- ---------------------------- ---------------------------------
James R. Bancroft
Date: July 28, 1988 Date: July 29, 1988
-6-
<PAGE>
ADDENDUM NO. 2
--------------
This Addendum No. 2, which shall be effective as of September 15, 1988, relates
to that Industrial Space Lease ("Lease") dated for reference purposes as of
July 1, 1988, between James R. Bancroft, as Landlord, and Aspen Diagnostics
Corporation, as Tenant.
The Addendum shall be part of the Lease and shall include the following
provisions:
16.1 Leased Premises. The Leased Premises, as described in the Lease, consist
---------------
of about 8,800 sq. ft. Tenant agrees to lease the adjacent 3,400 sq. ft.
commonly known as 1236 Elko Drive, Sunnyvale, California. The adjacent 3,400 sq.
ft. is shown on Exhibit G, attached hereto and made a part hereof. The total
area of the Leased Premises shall now consist of about 12,200 sq. ft.
16.2 Base Monthly Rent. The Base Monthly Rent under the Lease is $8,096 per
-----------------
month. Effective October 1, 1988, Tenant shall rent the adjacent 3,400 sq. ft.
The additional monthly base rent for the adjacent 3,400 sq. ft. shall be $2,448
per month which shall be payable in advance and shall be due and payable to
Landlord on or before the 15th day of each and every month of the Lease Term
except for the monthly base rent due for October 1, 1988 through November 15,
1988, which shall be due and payable upon execution of this Addendum No. 2, in
the amount of $3,672.00
16.3 Additional Security Deposit. Upon execution of this Addendum No. 2,
---------------------------
Tenant shall deposit with Landlord the additional sum of $2,448.00 as security
for Tenant's performance of the provisions of the Lease pursuant to Paragraph
3.7, at page 4 of the Lease.
<PAGE>
16.4 Project Maintenance Cost. With respect to the adjacent 3,400 sq. ft.,
------------------------
Tenant shall not be required to pay for tenant's proportional share of the
Project Maintenance Costs under Paragraph 3.2.A. until September 30, 1990.
Effective October 1, 1990, Tenant shall be obligated to pay Tenant's
proportionate share of all Project Maintenance Costs, which shall then relate to
the 12,200 sq. ft. Leased Premises under Paragraph 3.2.A.
16.5 Condition of Adjacent 3,400 Sq. Ft. Leased Premises. Tenant has
---------------------------------------------------
inspected the adjacent 3,400 sq. ft. Leased Premises and agrees to accept
possession in the "as is" condition without warranty, expressed or implied,
except that Landlord shall provide a finished dividing wall which is shown on
Exhibit G, and that all plumbing and electrical shall be in good working order.
The parties stipulate that the Leased Premises contain 3,400 sq. ft. If any
subsequent measurements determine that the Leased Premises contain more or less
than 3,400 sq. ft., no adjustments will be made to the base monthly rent,
project maintenance costs, real property taxes, insurance costs or any other
related matter.
LANDLORD: TENANT:
ASPEN DIAGNOSTICS CORPORATION
/s/ James R. Bancroft By: /s/ Aspen Diagnostics Corporation
- ------------------------ ---------------------------------
James R. Bancroft
Date: September 22, 1988 Date: September 20, 1988
-- --
(4339C)
<PAGE>
ADDENDUM NO. 3
--------------
This Addendum No. 3 is made to that certain Industrial Space Lease (including
Addenda No. 1 and 2) between James R. Bancroft, as Landlord, and Aspen
Diagnostics Corporation, as Tenant, dated July 1, 1988 for reference purposes
(hereinafter collectively called the "Lease") and shall include the following
provisions:
17.1 Expansion of Leased Premises. The Leased Premises, as described in the
----------------------------
Lease, now consist of about 12,200 sq. ft. Tenant agrees to lease the adjacent
5,400 sq. ft. commonly known as 1234 Elko Drive, Sunnyvale, California effective
as of April 1, 1991. The adjacent space is shown on Exhibit H, attached hereto
and made a part hereof. When Tenant leases the adjacent 5,400 sq. ft., the
total area of the Leased Premises shall consist of about 17,600 sq. ft.
17.2 Extension of Lease Term. The Lease Expiration Date shall be extended five
-----------------------
(5) years from August 14, 1991 to August 14, 1996.
17.3 Base Monthly Rent. The Base Monthly Rent under the Lease is $10,544 and
-----------------
continues through August 14, 1991. Effective August 1, 1991 and continuing for
the remaining term of the Lease, Tenant agrees to pay the following Base Monthly
Rent:
<TABLE>
<CAPTION>
Base Monthly Rent Base Monthly Rent
(Based on (Based on
Period 17,600 sq. ft.) 5,400 sq. ft.)
- ------------------ ------------------ ------------------
<S> <C> <C>
8/01/91-8/14/91 $ -- $2,025
8/15/91-8/14/93 14,608 --
8/15/93-8/14/94 15,840 --
8/15/94-9/14/95 16,720 --
8/15/95-8/14/96 17,600 --
</TABLE>
Except for the partial Base Monthly Rent of $2,025 due on or before
August 1, 1991, all Base Monthly Rent shall be paid in advance to Landlord on
or before the 15th day of each and every month of the Lease Term.
17.4 Security Deposit. Tenant has provided Landlord with an irrevocable
----------------
Letter of Credit from the Bank of America in the amount of $12,500, which will
expire on September 15, 1991. On or before August 15, 1991, Tenant shall either
provide Landlord with a new letter of credit from the same bank for the same
amount or shall cause the same bank to extend the term through September 15,
1996.
17.5 Condition of Adjacent 5,400 Sq. Ft. Leased Premises. Tenant has inspected
---------------------------------------------------
the adjacent 5,400 sq. ft. Leased Premises and agrees to accept possession in
the "as is" condition without warranty, expressed or implied, except that all
<PAGE>
plumbing, electrical and heating, ventilating and air conditioning equipment
shall be in good working order or condition. The parties stipulate that the
adjacent space contain 5,400 sq. ft. If any subsequent measurements determine
that the Leased Premises contain more or less than 5,400 sq. ft., no adjustments
will be made to the base monthly rent, project maintenance costs, real property
taxes, insurance costs or any other related matter.
17.6 Delivery of Possession. Landlord agrees to exercise due diligence and
----------------------
best efforts to deliver possession of the Premises to Tenant on April 1, 1991.
If for any reason Landlord is unable to deliver possession of the adjacent 5,400
sq. ft. space to the Tenant on April 1, 1991, Tenant shall not have the right
to cancel this Lease, but Tenant's obligation to pay the Base Monthly Rent,
project maintenance costs, or any other charges relating to the adjacent 5,400
sq. ft. space shall not commence until 120 days from the date that possession is
delivered to Tenant.
17.7 Waiver of Tenant's Limited Right of First Refusal. Tenant has a limited
-------------------------------------------------
right of first refusal relating to the adjacent 5,400 sq. ft. space, which is
now leased to Micro Lithography Inc. ("Micro"). Micro has offered to lease the
adjacent 5,400 sq. ft. space from October 1, 1990 to March 31, 1991. Tenant
waives Tenant's limited right of first refusal to lease the adjacent 5,400
sq. ft. space and consents to Landlord's acceptance of Micro's offer to lease
the adjacent 5,400 sq. ft. space for the six (6) month term, ending March 31,
1991.
17.8 Heating, Ventilating and Air Conditioning Equipment. When possession of
---------------------------------------------------
the adjacent 5,400 sq. ft. space is delivered to Tenant, Tenant's obligation to
pay for the replacement of any component part of the heating, ventilating and
air conditioning equipment for the entire Leased Premises shall be limited to
the actual cost of repair or replacement which shall not exceed $1,000 per year
provided that Tenant has fully complied with paragraph 5.1.A. at page 6 of the
Lease.
17.9 Improvements. After April 1, 1991, Landlord agrees to provide funds for
------------
improvements to the Premises which shall not exceed $100,000. These
improvements shall include the work outlined in Cost Breakdown Summary from
Anthony & Sons General Contractors, Inc., attached hereto and made a part hereof
as Exhibit I, and the painting for the entire interior of the Leased Premises.
Subject to Landlord's written approval of the plans and specifications for the
aforementioned improvements (which shall not be unreasonably withheld provided
that such plans and specifications account for the possible subdivision of the
premises into 3 or 4 separate units), Landlord agrees to make progress payments
for the aforementioned improvements as work is completed in a workmanlike
manner. So long as the work completed complies with the approved plans and
specifications, Landlord shall either pay Tenant's licensed contractor or
reimburse Tenant for the cost of the completed work up to
-2-
<PAGE>
Landlord's maximum share not to exceed $100,000. Upon receipt of any invoice or
statement for work completed in full compliance with the approved plans and
specifications, Landlord shall have fifteen (15) business days to inspect,
approve the completed work and issue a check payable to Tenant or Tenant's
contractor. Concurrently with each payment, Tenant shall furnish to Landlord a
duly executed, valid and binding lien release in form and substance acceptable
to both Tenant and Landlord. Landlord shall not be obligated to make any
payment unless and until an acceptable lien release has been delivered to
Landlord. Tenant agrees to indemnify and hold Landlord and the Leased Premises
harmless from any liability, lien, expense or other obligation in connection
with any improvements, subject only to Landlord's obligation hereunder to make
an agreed contribution in a total amount not to exceed $100,000.
17.10. Option to Extend. Provided that Tenant is not in default under any
----------------
provision of the Lease, Tenant shall have one (1) option to extend the term of
the Lease for five (5) years commencing August 14, 1996 and ending August 13,
2001 on the same terms and conditions of this Lease, except that the Base
Monthly Rent shall be subject to adjustment. To exercise this option, Tenant
must provide advance written notice to Landlord on or before August 14, 1995,
and such notice shall be irrevocable and shall state Tenant's opinion of the
Fair Market Rent due on the commencement date of the option term. Landlord shall
have sixty (60) days from the receipt of Tenant's notice to accept or to reject
Tenant's opinion on the Fair Market Rent. If Landlord agrees to the Fair Market
Rent, the Base Monthly Rent for the first year of the option term shall be equal
to 90% of the established Fair Market Rent.
A. Appraisal. If the parties are unable to mutually agree to the Fair
---------
Market Rent, the Fair Market Rent shall then be determined by appraisal. If
this is necessary, real estate appraisers, all of whom shall be members of the
American Institute of Real Estate Appraisers and who have at least five (5)
years' experience appraising comparable properties located in the vicinity of
the Premises, shall be appointed and shall act in accordance with the following
procedures:
1. If the parties are unable to agree on the Fair Market Rent within
the allowed 60-day time period, either party may demand an appraisal by giving
written notice to the other party, which demand to be effective must state the
name, address and qualifications of an appraiser selected by the party demanding
an appraisal (the "Notifying Party"). Within ten (10) days following the
Notifying Party's appraisal demand, the other party (the "Non-Notifying Party")
shall either approve the appraiser selected by the Notifying Party or select a
second properly qualified appraiser by giving written notice of the name,
address and qualification of said appraiser to the Notifying Party. If the Non-
Notifying Party fails to select an appraiser within the ten (10) day period, the
appraiser selected by the Notifying Party shall be deemed selected by both
parties, and no other appraiser shall be selected.
-3-
<PAGE>
2. If only one appraiser is selected, that appraiser shall notify the
parties in simple letter form of its determination of the Fair Market Rent for
the Premises within fifteen (15) days following his selection, which appraisal
shall be conclusively determinative and binding on the parties as the
appraised Fair Market Rent.
3. If two appraisers are selected, the appraisers shall meet not later
than ten (10) days following the selection of the last appraiser. At such
meeting the appraisers shall attempt to determine the Fair Market Rent for the
Leased Premises as of August 15, 1996 by mutual agreement.
4. If the two appraisers cannot agree on the Fair Market Rent at the
initial meeting such appraisers shall select within five (5) days thereafter a
third qualified appraiser. If the two appraisers fail to select a third
qualified appraiser, the third appraiser shall be appointed by the then
presiding judge of the county where the Leased Premises are located upon
application by either party. The three appraisers shall meet not later than ten
(10) days following the selection of the third appraiser. If two (2) or more of
the appraisers agree on the Fair Market Rent for the Leased Premises at the
initial meeting, such agreement shall be determinative and binding upon the
parties hereto and the agreeing appraisers shall, in simple letter form executed
by the agreeing appraisers, forthwith notify both Landlord and Tenant of the
amount set by the agreement. If multiple appraisers are selected and two (2)
appraisers are unable to agree on the Fair Market Rent for the Leased Premises,
all appraisers shall submit to Landlord and Tenant an independent appraisal of
the Fair Market Rent for the Leased Premises in simple letter form within twenty
(20) days following appointment of the final appraiser. The parties shall then
determine the Fair Market Rent for the Leased Premises by averaging the
appraisals; provided that any high or low appraisal; provided that any high or
low appraisal, differing from the middle appraisal by more than ten percent
(10%) of the middle appraisal, shall be disregarded in calculating the average.
5. The appraisers' determination of Fair Market Rent as of August 15,
1996 shall be based on rental of comparable properties in terms of age,
condition, construction, size and location as the Leased Premises.
6. If only one appraiser is selected, then each party shall pay
one-half of the fees and expenses of that appraiser. If three appraisers are
selected, each party shall bear the fees and expenses of the appraiser it
selects and one-half of the fees and expenses of the third appraiser.
B. Base Monthly Rent. The Base Monthly Rent for the first year of the
-----------------
option term shall equal the Fair Market Rent (determined pursuant to this
paragraph) multiplied by 90%.
-4-
<PAGE>
C. Annual Adjustment to Base Monthly Rent. The Base Monthly Rent for the
--------------------------------------
first year of the option term shall be subject to an upward adjustment for each
and every year thereafter commencing on the second year of the option term. The
base for computing the adjustment shall be the Consumer Price Index for All
Urban Consumers (all items, San Francisco-Oakland) or for All Urban Wage Earners
(all items, San Francisco-Oakland), whichever is higher, published by the United
States Department of Labor, Bureau of Labor Statistics ("Index"), which is in
effect on the date of the commencement of the option term ("Beginning Index").
The Index published most immediately preceding the adjustment date in question
("Extension Index") is to be used in determining the amount of the adjustment.
If the Extension Index has increased over the Beginning Index, the Base Monthly
Rent for the following year (until the next rent adjustment) shall be set by
multiplying the Base Monthly Rent set forth in this paragraph by a fraction, the
numerator of which is the Extension Index and the denominator of which is the
Beginning Index. On adjustment of the Base Monthly Rent as provided in this
paragraph, Landlord shall notify Tenant of the applicable Base Monthly Rent.
If the Index is changed so that the base year differs from that in
effect when the term commences, the Index shall be converted in accordance with
the conversion factor published by the United States Department of Labor, Bureau
of Labor Statistics. If the Index is discontinued or revised during the term,
such other government index or computation with which it is replaced shall be
used in order to obtain substantially the same result as would be obtained if
the Index had not been discontinued or revised.
17.11. Parking. Separate and apart from the Improvements described in paragraph
-------
17.9., Landlord shall at Landlord's own cost restripe the parking lot. Upon
delivery of possession of the adjacent 5,400 sq. ft. space, Tenant shall have
the right to use all of the parking spaces allocated to the Leased Premises. So
long as at least sixty (60) parking spaces, on site, are allocated to the
Leased Premises, Landlord reserves the right to change or to alter the location
of the parking spaces allocable to the Leased Premises.
17.12. Other Provisions. Except as expressly set forth in this Addendum No. 3,
----------------
all other provisions of the Lease and its related Addenda No. 1 and 2 shall
remain in full force and effect.
-5-
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this Addendum No. 3 to
Lease as of the respective dates set forth below.
LANDLORD: TENANT:
ADEZA BIOMEDICAL CORPORATION
(formerly Aspen Diagnostic
Corporation)
/s/ James R. Bancroft By: /s/ David E. Charlton
- ------------------------------ -----------------------
James R. Bancroft
Date: September 7, 1990 Date: September 7, 1990
- -
9960C
-6-
<PAGE>
[ASI LOGO]
ANTHONY & SONS GENERAL CONTRACTORS, INC.
================================================================================
<TABLE>
<CAPTION>
PROJECT:
ADEZA
1240 ELKO DR.
SUNNYVALE, CA
COST BREAKDOWN SUMMARY
- --------------------------------------------------------------------------------
TOTAL COST PSF
- --------------------------------------------------------------------------------
<S> <C> <C>
1. DEMOLITION $ 4,125.00 $0.42
2. PARTITIONS $ 2,616.00 $0.27
3. DOORS & WINDOWS $ 2,700.00 $0.28
4. CEILING $ 2,000.00 $0.21
5. FLOOR & WINDOW COVERINGS $15,420.00 $1.69
6. PAINT & WALLCOVERING $ 4,000.00 $0.41
7. ELECTRICAL $11,000.00 $1.13
8. PLUMBING $26,450.00 $2.72
9. HVAC $ 3,500.00 $0.36
10. FIRE PROTECTION $ 2,500.00 $0.26
11. ROUGH & FINISH CARPENTRY $ 0.00 $0.00
12. MISCELLANEOUS $12,225.00 $1.26
13. GENERAL CONDITIONS $ 900.00 $0.09
14. PERMITS $ 875.00 $0.09
- --------------------------------------------------------------------------------
SUBTOTAL $89,311.00 $9.18
SUPERVISON 2.5% $ 2,232.78 $0.23
- --------------------------------------------------------------------------------
SUBTOTAL - JOB COSTS $91,543.77 $9.41
OVERHEAD & PROFIT 5% $ 4,577.19 $0.47
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL $95,120.96 $9.88
</TABLE>
THE ABOVE PRICING IS TO BE USED AS AN ESTIMATE ONLY. THIS IS NOT A BID.
EXHIBIT I
<PAGE>
[FLOOR PLAN]
[GRAPHIC DESCRIPTION TO COME]
<PAGE>
ADDENDUM NO. 4
--------------
This Addendum No. 4 is made to that certain Industrial Space Lease (including
Addenda Nos. 1, 2 and 3) between James R. Bancroft, as Landlord, and Aspen
Diagnostics Corporation, as Tenant, dated July 1, 1988 for reference purposes
(hereinafter collectively called the "Lease") and shall include the following
provisions:
18.1 Additional Base Monthly Rent. The Base Monthly Rent due under the extended
----------------------------
term terminating on August 14, 1996 is set forth in paragraph 17.3 of Addendum
No. 3. The Base Monthly Rent for the extended term shall be increased $1,011.90
per month effective August 15, 1991 through August 14, 1996.
18.2 Additional Improvements. Pursuant to paragraph 17.9 of Addendum No. 3,
-----------------------
Landlord has already agreed to provide $100,000 for the tenant improvement
allowance. Subject to the terms and conditions of Addendum No. 4, Landlord
agrees to provide an additional $85,000 to the tenant improvement allowance so
that Landlord's maximum share of the tenant improvement allowance shall not
exceed $185,000. Part of the tenant improvement allowance may be used for
repairing the pavement in the parking lot, provided that such cost shall not
exceed $15,000. The additional $85,000 tenant improvement allowance shall be
amortized without interest in 84 equal monthly installments of $1,011.90 and
paid to Landlord, as additional Base Monthly Rent, pursuant to paragraph 18.1 of
this Addendum No. 4. If Tenant exercises Tenant's option to extend the term of
the Lease for five (5) years ending August 13, 2001, Tenant
<PAGE>
shall not be required to pay the remaining unpaid balance of $24,285.60, and the
Base Monthly Rent applicable during the option period shall be determined
pursuant to paragraph 17.10 of Addendum No. 3. If Tenant does not exercise
Tenant's option to extend the term of the Lease, Tenant shall then pay to
Landlord the unpaid balance of $24,285.60 on August 25, 1995.
18.3 Security Deposit. Tenant has provided Landlord with an irrevocable Letter
----------------
of Credit from the Bank of America in the amount of $12,500, which will expire
on September 15, 1991. On or before August 15, 1991, Tenant shall provide
Landlord with a new letter of credit from the same bank for the amount of
$25,000, which shall be effective through September 15, 1996.
18.4 Other Provisions. Except as expressly set forth in this Addendum No. 4,
----------------
all other provisions of the Lease and its related Addenda Nos. 1, 2 and 3 shall
remain in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Addendum No. 4
to Lease as of the respective dates set forth below.
LANDLORD: TENANT:
ADEZA BIOMEDICAL CORPORATION
(formerly Aspen Diagnostics
Corporation)
/s/ James R. Bancroft By /s/ Adeza Biomedical Corporation
- --------------------- --------------------------------
James R. Bancroft
Dated: June 7, 1991 Date: June 6, 1991
2313D
-2-
<PAGE>
[LETTERHEAD OF EDWIN H. KAWAMOTO]
August 18, 1995
Mr. William H. O'Connor
Wayne Mascia Associates
3945 Freedom Circle, Suite 350
Santa Clara, CA 95054
Re: Proposed Addendum No. 5
Adeza Biomedical Corporation
Dear Bill:
Enclosed is a copy of the proposed Addendum No. 5.
The basic provisions of the proposed Addendum No. 5 are summarized as follows:
<TABLE>
<CAPTION>
Date to
Base Date to Replace
Beginning Ending Monthly Exercise Unamortized Letter of
Date Date Rent Option Cost Credit
<S> <C> <C> <C> <C> <C> <C>
Extended Term 8/15/96 2/14/97 $17,992.83 8/15/96
Six-Month Option 2/15/97 8/14/97 $17,992.83 2/15/96 $18,214.60 8/15/96
Five-Year Option 8/15/97 8/14/02 8/14/96 $12,142.80 8/15/97
</TABLE>
The unamortized cost will become due and payable only if Adeza does not exercise
the options to extend. The Base Monthly Rent for the Five-Year Option will be
determined in accordance with paragraph 17.10 at page 3 of the Addendum No. 3.
Please review and let me know if you have any questions.
Very truly yours,
/s/ Edwin H. Kawamoto
- ---------------------
Edwin H. Kawamoto
Enclosure
cc: James R. Bancroft (w/enclosure)
Norman A. Nason (w/enclosure)
Emory Anderson (w/enclosure)
<PAGE>
ADDENDUM NO. 5
--------------
This Addendum No. 5 is made to that certain Industrial Space Lease
(including Addenda Nos. 1, 2, 3 and 4) between James R. Bancroft, as Landlord,
and Adeza Biomedical Corporation (formerly Aspen Diagnostics Corporation), as
Tenant, dated as of July 1, 1988, for reference purposes (hereinafter
collectively called the "Lease") and shall include the following provisions:
19.1 Extended Term. The term of the Lease shall be extended six months
-------------
from August 15, 1996 to February 14, 1997 (the "Extended Term").
19.2 Options to Extend. Tenant has two options to extend the Lease beyond
-----------------
the Extended Term.
a. Six-Month Option. If the first option to extend for six months
----------------
is exercised, the term shall be extended six months from February 15, 1997 to
August 14, 1997 ("Six-Month Option"). To exercise the Six-Month Option, Tenant
must provide advance written notice to Landlord on or before February 15, 1996
in accordance with paragraph 17.10 at page 3 of Addendum No. 3.
b. Five-Year Option. If the Six-Month Option is exercised, Tenant
----------------
shall have a second option to extend for five years, commencing August 15, 1997
and ending August 14, 2002 (the "Five-Year Option"). To exercise the Five-Year
Option, Tenant must provide advance written notice to Landlord on or before
August 14, 1996 in accordance with paragraph 17.10 at page 3 of Addendum No. 3.
19.3 Base Monthly Rent. The Base Monthly Rent of $17,600 shall be
-----------------
increased to $17,992.83 for the Extended Term. If the Six-Month Option is
exercised, the Base Monthly Rent shall be $17,992.83 for the Six-Month Option
period. If the Five-Year Option is exercised, the Base Monthly Rent for the
Five-Year Option period shall be determined in accordance with paragraph 17.10
at page 3 of the Addendum No. 3.
19.4 Security Deposit. Tenant has provided Landlord with an irrevocable
----------------
Letter of Credit from the Bank of America in the amount of $25,000 which will
expire on September 15. On or before August 15, 1996, Tenant shall deliver to
Landlord a new letter of credit to replace the letter of credit expiring on
September 15, 1996. If the Six-Month Option is not exercised, Tenant shall
provide Landlord with a new letter of credit from the same bank for the same
amount of $25,000, which shall be effective through March 15, 1997. If the Six-
Month Option is exercised, Tenant shall provide Landlord with a new credit from
the same bank for the same amount of $25,000, which shall be effective through
September 15, 1997. If the Five-Year Option is exercised, Tenant shall provide
Landlord with a new letter of credit on or before August 15, 1997 from the same
bank for the same amount of $25,000, which shall be in effect through September
15, 2002.
<PAGE>
19.5 Reimbursement of Unamortized Improvement Costs. If Tenant does not
----------------------------------------------
exercise the Six-Month Option, Tenant shall be required to pay the remaining
unamortized improvement costs of $18,214.60 to Landlord on or before February
14, 1996. If Tenant does not exercise the Five-Year Option, Tenant shall then
pay Landlord the remaining unamortized improvement cost of $12,142.80, without
interest, on or before August 25, 1996.
19.6 Other Provisions. Except as expressly set forth in this Addendum No.
----------------
5, all other provisions of the Lease and its related Addenda Nos. 1, 2, 3 and 4
shall remain in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Addendum No. 5
to lease as of the respective dates set forth below.
LANDLORD: TENANT:
ADEZA BIOMEDICAL CORPORATION
(formerly Aspen Diagnostics Corporation)
/s/ James R. Bancroft /s/ Adeza Biomedical Corporation
_______________________________ By:_________________________________
James R. Bancroft
Date: August ___, 1995 Date: August ___, 1995
-2-
<PAGE>
EXHIBIT 10.11
LEASTEC MASTER LEASE AGREEMENT
NUMBER 9118
LESSOR: LEASTEC CORPORATION (Herein called "Lessor")
ADDRESS: 1470 MARIA LANE, WALNUT CREEK, CA 94596
LESSEE: ADEZA BIOMEDICAL CORPORATION (Herein called "Lessee")
ADDRESS: 1240 ELKO DRIVE, SUNNYVALE, CA 94089
1. LEASE. Lessor hereby agrees to lease to Lessee and Lessee hereby agrees
to lease from Lessor, subject to the terms of this Master Lease Agreement (the
"Agreement") the personal property (together with all attachments,
replacements, parts, substitutions, additions, repairs, and accessories at any
time incorporated therein and/or affixed, thereto, herein called "Equipment")
described in the Leasing Schedule attached.
2. TERM AND RENT. The term of this lease and obligation to pay rent
hereunder for each item of Equipment shall commence upon acceptance by Lessee
and execution of a Delivery and Acceptance Certificate on behalf of Lessee and
Lessor ("Lease Commencement Date(s)"), and shall continue at the amount and for
a period designated on the Leasing Schedule unless sooner terminated pursuant
to the provisions hereof. All rent and other amounts due hereunder shall be
payable unconditionally, without any deduction, counterclaim, set-off, further
notice or demand, and together with all other payments due. Any nonpayment of
rent or other amounts due hereunder shall result in the obligation of Lessee
promptly to pay also an amount equal to twelve percent (12%) per annum (or the
maximum per annum late payment rate permitted by law, whichever is less) of the
overdue rent or other amounts for the period of time during which they are
overdue.
3. WARRANTIES. Lessee acknowledges that it has made the selection of each
item of Equipment based upon its own judgement and expressly disclaims any
reliance upon statements made by Lessor, as evidenced by Lessee's execution of
a Certificate of Delivery and Acceptance. LESSOR MAKES NO EXPRESS OR IMPLIED
WARRANTIES INCLUDING THOSE OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE
WITH RESPECT TO THE EQUIPMENT, NON-INFRINGEMENT AND HEREBY DISCLAIMS THE SAME.
However, Lessor shall furnish to Lessee such warranties as are normally
furnished by manufacturer to Lessor and make any assignment to Lessee required
to transfer the rights herein to Lessee. Lessee agrees to look solely to the
manufacturer or vendor, and not to Lessor, for any claim or right it may have
---
resulting from any defect, failure to perform, or other problem with the
Equipment.
4. TITLE:IDENTIFICATION:PERSONAL PROPERTY. Title to Equipment shall at all
times remain in Lessor, and Lessee, at its own cost and expense, shall protect
and defend the title of Lessor. The Equipment shall remain personal property
irrespective of its use or manner of attachment to realty, and Lessee agrees to
take such action at its expense as may be necessary to prevent any third party
from acquiring any interest in the Equipment as a result of its attachment to
realty. Lessee shall, at Lessee's expense, affix or attach to the Equipment and
maintain a sign or other form of notice to disclose Lessor's ownership of the
Equipment.
Lessee agrees not to sell, assign, sublet, pledge, hypothecate, or
otherwise encumber or suffer a lien upon or against any interest in this
Agreement or the Equipment or to remove or relocate the Equipment without
Lessor's prior written consent.
5. TAXES:INDEMNITY: Lessee agrees to comply with all laws, regulations and
orders relating to the Agreement and to promptly pay when due, all license
fees, title registration fees, assessments and sales, use, property, excise and
other taxes whatsoever now or hereafter imposed by any governmental body or
agency upon the Equipment, or the use thereof whether upon the Lessor or
otherwise, exclusive, however, of any taxes based on the net income of Lessor,
and, upon execution hereof by Lessee, to assume the risk of liability arising
from or pertaining to the possession, operation or use of such Equipment. Any
fees, taxes or other lawful charges paid by Lessor upon failure of Lessee to
make such payments, shall at Lessor's option become immediately due from Lessee
to Lessor. Lessee does hereby agree to indemnify, hold safe and harmless from
and covenants to defend Lessor against any and all claims, costs, expenses,
damages and liabilities (including reasonable attorneys' fees), arising from or
pertaining to the purchase, ownership and title to, the Equipment, use,
possession, maintenance, condition, operation (such indemnity expressly
includes any claim arising from the strict liability in tort) or transportation
or storage, or any damage, loss, destruction, removal or disposition of such
Equipment. The indemnities contained in this Paragraph shall survive the term
of this Agreement.
MASTER LEASE AGREEMENT: Page 1 of 4 LESSEE LESSOR
INITIAL INITIAL
<PAGE>
6. USE, MAINTENANCE AND REPAIR. Lessee will cause the Equipment to be
operated in accordance with applicable manufacturer's manuals or instructions,
and any requirements under insurance policies, by competent and duly qualified
personnel only, in accordance with applicable governmental regulations, if any,
and for business purposes only. Lessor shall have the right from time to time
during normal business hours to enter upon Lessee's premises or elsewhere for
the purpose of confirming the existence, condition, and proper maintenance of
the Equipment.
Lessee agrees to procure and maintain in effect all licenses, certificates,
permits and other approvals and consents required by federal, state, county,
municipal, or foreign laws and regulations in connection with the possession,
use, operation and maintenance of the Equipment.
Lessee, at its own expense, shall (a) maintain the Equipment in good and
safe operating order, repair and condition, and (b) will pay for all fuel,
service, inspections, overhauls, replacements, substitutions, materials and
labor necessary or desirable therefor.
Lessee shall return the Equipment at the expiration of this Agreement in as
good condition as first delivered, ordinary wear and tear excluded, and shall
pay for any refurbishing, cleaning, or repair costs incurred by Lessor
necessary to place such Equipment under a then available manufacturer's
maintenance agreement.
7. LOSS, DAMAGE OR DESTRUCTION OF EQUIPMENT. Lessee shall bear all risks of
damage to, or loss or destruction of, any Equipment during the lease term and
until such Equipment has been returned to Lessor. Except as otherwise herein
expressly provided, no such damage to, or loss or destruction of, any
Equipment, or other event constituting a casualty occurrence as defined below,
shall impair any obligation of Lessee to Lessor, under this Lease, including,
without limitation, the obligation to pay rent. If any Equipment becomes lost,
stolen, destroyed or irreparably damaged from any cause whatsoever, or if any
item of Equipment or Lessor's title thereto shall be subject to any
condemnation or seizure (all referred to as a "Casualty Occurrence"), Lessee
shall promptly give written notice to, and shall, within thirty (30) days after
such Casualty Occurrence, pay Lessor an amount equal to the sum of (i) the
accrued rent payable for such item from the date of such Casualty Occurrence up
to and including the date of such payment, plus (ii) in the event of loss or
damage of any kind whatever to the Equipment, or any part thereof, Lessee at
the option of Lessor shall: (a) place the same in good repair, condition and
working order; or (b) replace the same with like property in good repair,
condition, and working order; which property shall thereupon be subject to this
Agreement; or (c) pay Lessor therefor in cash the "Stipulated Loss Value" as
set forth in Schedule A or any subsequent schedules which may hereafter be made
a part thereof. Upon such payment, this lease shall terminate with respect to
the Equipment or part thereof so paid for and Lessee thereupon shall become
entitled thereto.
Any insurance proceeds received as the result of a Casualty Occurrence
shall be applied first in reduction of any then unpaid obligation of Lessee to
Lessor hereunder and secondly, in reduction of Lessee's obligation in
accordance with sections (a) - (c) above to pay the "Stipulated Loss Value" for
such item, or, to the reimbursement of Lessee for its costs of repairs, or
replacement or payment of such "Stipulated Loss Value." The balance of the
insurance proceeds, if any, shall be paid to Lessee, if Lessee is not then in
default hereunder.
8. REQUIRED INSURANCE. Lessee shall obtain and maintain for the entire
term and until the Equipment is returned to Lessor, at its own expense,
property, damage and liability insurance and insurance against loss or damage
to the Equipment, including, without limitation, loss by fire (including so-
called extended coverage) theft, collision and contractual liability of the
Lessee and such other risks of loss as are customarily insured against on the
type of Equipment leased hereunder and by businesses in which Lessee is
engaged, in such amounts in such form and with such insurers as shall be
satisfactory to Lessor. The amount of insurance against loss or damage to the
Equipment shall not be less than the greater of "Stipulated Loss Value" of the
Equipment or the installments of rent then remaining unpaid hereunder. Each
policy will name Lessor as an additional insured and loss payee thereof as its
interests may appear, but shall require payment of property damage and proceeds
to Lessor and not Lessee, shall contain a clause requiring the insurer to give
Lessor at least 30 days prior written notice of any alteration in the terms of
such policy or of the cancellation thereof and provide that the policies will
not be invalidated as against Lessor (or its assignee) for any violation of any
term of the policy or application by Lessee and shall include a breach of
warranty coverage. Lessee shall furnish to Lessor a certificate of insurance or
other evidence satisfactory to Lessor that such insurance coverage is in
effect, provided, however, that Lessor shall be under no duty either to
ascertain the existence of or to examine such insurance policy or to advise
Lessee in the event such insurance coverage shall not comply with the
requirements hereof.
MASTER LEASE AGREEMENT: Page 2 of 4 LESSEE LESSOR
INITIAL INITIAL
<PAGE>
9. ANNUAL REPORT. Lessee shall, as soon as practicable, deliver to Lessor
Lessee's annual report of financial condition, prepared in accordance with
generally accepted accounting principles, in a manner consistently applied.
Lessee represents and warrants that each such statement shall, at the time when
prepared and delivered, fully and fairly present the true financial condition
of Lessee.
10. FURTHER ASSURANCES. Lessee, at its sole expense, will promptly execute
and deliver to Lessor and file, register or record such further documents,
(including but not limited to financing statement(s), and take such further
action (such as obtaining Landlord or Mortgagee's Waiver and Consent), as
Lessor may request in order to more effectively carry out the intent and
purpose of this Lease.
Lessor agrees, if applicable, at Lessee's expense to make such election,
and, at Lessee's expense to duly execute, file or deliver to Lessee documents
necessary to effectuate such elections from time to time during the term of
this Lease to transfer to Lessee the benefit of any investment credit that may
be, or become available under the Internal Revenue Code with respect to the
Equipment.
11. EVENTS OF DEFAULT. An event of default shall occur hereunder if Lessee
(i) fails to pay any installment of rent or other payment required hereunder
when due and such failure continues for a period of 5 days after written notice
is sent from Lessor; or (ii) fails to perform or observe any other covenant,
condition or agreement hereunder or breaches any representation or provision
contained herein or in any other document furnished Lessor in connection
herewith, and such failure or breach shall continue unremedied for a period of
10 days; or (iii) shall become insolvent or bankrupt to make an assignment for
the benefit of creditors or consent to the appointment of a Trustee or Receiver
or either shall be appointed for Lessor or for a substantial part of its
property without its consent, or bankruptcy reorganization or insolvency
proceedings shall be instituted by or against Lessee and any such act or
appointment shall not be vacated, discharged or dismissed in a period of 30
days; or (iv) shall be in default under any bankruptcy reorganization or
insolvency proceedings or shall be in default under any other agreement at any
time executed with Lessor.
12. REMEDIES OF LESSOR. Upon the occurrence of any event of default and at
any time thereafter as Lessor may, at its option, do any one or more of the
following: (1) declare this Agreement in default upon notice to Lessee,
whereupon, the entire amount of rent remaining to be paid over the balance of
the lease term of all Equipment from the date of default, together with all
other charges, shall become immediately due and payable; (2) exercise any right
or remedy available to Lessor under the Uniform Commercial Code or any other
applicable law; proceed by appropriate actions at law or in equity to enforce
performance by Lessee of the covenants and terms of this Agreement and/or
recover damages for the breach thereof; (3) terminate this Agreement upon
notice to Lessee; and demand that Lessee return all Equipment to Lessor; (4)
whether or not this Lease be so terminated, and without notice to Lessee, enter
the premises where the Equipment is located and repossess the Equipment
wherever found, with or without legal process. Repossession by Lessor shall not
constitute a termination of this Agreement.
Lessee shall be liable for all legal and collection fees, costs and
expenses arising from an event of default and shall pay or reimburse Lessor for
the exercise of Lessor's remedies hereunder, including cost of repossession,
storage, repairs, reconditioning, re-leasing with respect to such Equipment.
With respect to any Equipment returned to Lessor, or repossessed by Lessor
if Lessor has not terminated this Lease, Lessor shall either sell same at a
private or public, cash or credit sale, or re-lease same for such term and upon
such rental as shall be solely determined by Lessor. Whether or not the
Equipment is repossessed or leased or sold, Lessor may forthwith recover from
Lessee as liquidated damages for breach of this Lease, and not as a penalty, an
amount equal to such sum of (X) the entire amount of rent and all other charges
due under this Agreement or incurred under the provisions of this paragraph
which accrued to the date of sale, computed from the date of Lessee's default,
plus (Y) the "Stipulated Loss Value" applicable to such Equipment, less (Z) the
proceeds of any sale or re-leasing of such Equipment, (if applicable). Such
amounts shall be discounted to their then present value at the rate of six
percent (6%) per annum, and there shall be added to such amounts, after such
discount, interest at twelve percent (12%) from the date of Lessee's default up
to the date of the payment of such amounts to Lessor.
In the event that any court of competent jurisdiction determines that any
provision of this Paragraph is invalid or unenforceable in whole or in part,
such determination shall not prohibit Lessor from establishing its damages
sustained as a result of any breach of this Agreement in any action or
proceedings in which Lessor seeks to recover such damages. Any repossession or
resale of any Equipment shall not bar an action for damages for breach of this
Agreement, as hereinbefore provided, and the bringing of an action or the entry
of judgement against Lessee shall not bar Lessor's right to repossess any or
all Equipment.
The remedies herein provided in favor of Lessor, shall not be deemed to be
exclusive, but shall be cumulative and shall be in addition to all other
remedies in Lessor's favor existing in law, in equity, or in bankruptcy.
MASTER LEASE AGREEMENT: Page 3 of 4 LESSEE LESSOR
INITIAL INITIAL
<PAGE>
13. RETURN OF EQUIPMENT. Upon the expiration or termination of the lease
term of any Equipment, whether by the passage of time or otherwise, Lessee
shall forthwith surrender and return possession of such Equipment to Lessor, in
its original condition (except as set forth below) as of the Lease Commencement
Date therefore, reasonable wear and tear only being excepted, at such location
as Lessor shall designate.
14. ASSIGNMENT BY LESSOR. Lessee acknowledges that Lessor may sell and/or
assign its interest in the Equipment and/or this Lease. LESSEE AGREES THAT UPON
NOTICE OF SUCH ASSIGNMENT IT SHALL PAY DIRECTLY TO LESSOR'S ASSIGNEE WITHOUT
ABATEMENT, DEDUCTION OR SETOFF ALL AMOUNTS WHICH BECOME DUE HEREUNDER AND
FURTHER COVENANTS AND AGREES THAT IT WILL NOT ASSERT AGAINST LESSOR'S ASSIGNEE
ANY DEFENSE OR COUNTERCLAIM OR SETOFF ON ACCOUNT OF BREACH OF WARRANTY OR
OTHERWISE IN ANY ACTION FOR RENT OR FOR POSSESSION BROUGHT BY LESSOR'S
ASSIGNEE. Upon the assignment of the Lease, Lessor's assignee shall have and be
entitled to exercise any and all discretions, rights and remedies of Lessor
hereunder and all references herein to Lessor shall include Lessor's assignee
except that said assignee shall not be chargeable with any obligation or
liabilities of Lessor hereunder or with respect thereof.
15. NON-CANCELABLE LEASE, LESSEE'S OBLIGATIONS UNCONDITIONAL. This lease
cannot be canceled or terminated except as expressly provided herein.
16. MISCELLANEOUS. This Agreement may not be amended except in writing
executed by Lessor and Lessee, and shall be binding upon and inure to the
benefit of the parties hereto, their permitted successors and assigns. Any
provision of this Agreement which is unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition, or
unenforceability without invalidating the remaining provisions hereof and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. The captions
of this Agreement are for convenience only and shall not define or limit any of
the terms hereof. This Agreement shall in all respects be governed by, and
construed in accordance with, the laws of the State of California.
Lessee
Initial
This Agreement consisting of the foregoing, correctly set forth the
entire Agreement between Lessor and Lessee with respect to the use, possession
and lease of the Equipment. No agreements or understandings concerning the
foregoing shall be binding on either of the parties hereto unless specifically
set forth in this Agreement. The term "Lessee", as used herein shall mean and
include any and all Lessees who sign hereunder, each of whom shall be jointly
and severally bound thereby. THIS AGREEMENT WILL NOT BE BINDING ON LESSOR UNTIL
ACCEPTED BELOW.
Executed the 1ST day of JUNE, 1991 By execution hereof, the signer hereby
certifies that he has read this
Agreement, and that he is duly authorized
to execute this lease on behalf of
Lessee.
LESSEE: ADEZA BIOMEDICAL CORPORATION
Attest: /s/ By: /s/ ADEZA BIOMEDICAL CORPORATION
-------------------------- ----------------------------------
(Corporate Seal) Authorized Signature and Title
Accepted at Walnut Creek, CA LESSOR: LEASTEC CORPORATION
----------------------
Date: 6-1-91 By: /s/ LEASTEC CORPORATION President
---------------------------- -----------------------------------
Authorized Signature and Title
MASTER LEASE AGREEMENT: Page 4 of 4
<PAGE>
MASTER LEASE AGREEMENT
NUMBER 9118-1
RENTAL SCHEDULE NO. 1 to Master Lease Agreement No. 9118, dated June 1, 1991,
(the "Lease") by and between the undersigned, the terms and conditions of which
are hereby incorporated herein by reference. Lessee hereby (a) authorizes Lessor
to order for lease to Lessee the equipment described herein (the "Equipment")
and to insert hereon the Lease Commencement Date and the partial first period's
rent (if any) for such Equipment upon Lessee's acceptance of same for lease, (b)
agrees to lease such Equipment from Lessor Effective the Lease Commencement Date
thereof and for the lease term specified below, and (c) agrees to pay Lessor the
rent, in the amounts and at the times specified below, for each item of
Equipment. All of the terms used herein which are defined in the Lease shall
have the same meaning as so defined.
DESCRIPTION
- -----------
EQUIPMENT DESCRIBED ON EXHIBIT "A" TO RENTAL SCHEDULE NO. 1 ATTACHED HERETO AND
MADE A PART HEREOF.
TOTAL COST $ 132,565.96
This Rental Schedule is for a term of 60 months (plus 0 days partial first
period term) and the Lease Commencement Date is June 1, 1991. The partial first
period rent of $ 0 is payable together with $3,049.02 (plus applicable sales/use
tax) regular monthly rent on the 1st day of June, 1991 followed by equal payment
of regular rent on the 1st day of each month thereafter until a total rent of
$182,941.20 has been paid.
Location of Equipment 1240 ELKO DRIVE, SUNNYVALE, CA 94089
The "Acquisition Cost" means an amount equal to the sum of (i) the purchase
price of each item of Equipment paid by Lessor, plus (ii) any excise, sales and
use tax on or with respect thereto, plus (iii) any costs, expenses, and fees
paid or incurred by Lessor in obtaining and delivering such items of Equipment
to Lessee and any expenses of installation of such item of Equipment paid for by
Lessor.
LEASTEC CORPORATION (LESSOR) ADEZA BIOMEDICAL CORPORATION (LESSEE)
By /s/ LEASTEC CORPORATION By /s/ ADEZA BIOMEDICAL CORPORATION
----------------------------------- ----------------------------------
(authorized signature) (authorized signature)
Its PRESIDENT Its CONTROLLER
--------------------------------- --------------------------------
(Title) (Title)
Date June 1, 1991 Date June 1, 1991
--------------------------------- -------------------------------
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 1 Page 1
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATON ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advanced Micro Solutions, Inc. - Invoice 7324 (12/08/90)
- --------------------------------------------------------------------------------------------------------------------------
2 Micropolis 1684-7 HH 384MB SCSI $ 2,950.00
- --------------------------------------------------------------------------------------------------------------------------
1 Future Domain 16-bit SCSI w/Drive $ 310.00
- --------------------------------------------------------------------------------------------------------------------------
1 AT SCSI Disk Cable 3' $ 25.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 7340 (01/18/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Isolan ECS-4 Multimedia Repeater Un LN-ISO505 $ 1,295.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 7346 (02/08/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Isolan ThinNet 4-Port Repeater for LN-ISO520 $ 795.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 5,375.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 39.56
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $5,414.56
- --------------------------------------------------------------------------------------------------------------------------
AMAX - INVOICE 0039173-IN (08/17/90)
- --------------------------------------------------------------------------------------------------------------------------
1 Amax 386 System 900846154 $ 1,275.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0048997-IN (11/01/90)
- --------------------------------------------------------------------------------------------------------------------------
1 System - 386SX-20MHZ 901046201 $ 1,063.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0052186-IN (01/17/91)
- --------------------------------------------------------------------------------------------------------------------------
1 386-20MHZ Amax System 910146140 $ 1,063.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0052718-IN (01/29/91)
- --------------------------------------------------------------------------------------------------------------------------
1 386-20MHZ Amax System 910146182 $ 1,050.00
- --------------------------------------------------------------------------------------------------------------------------
1 Hyundai HMM1200 Monitor MLHA012405213
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0054185-IN (03/07/91)
- --------------------------------------------------------------------------------------------------------------------------
1 386-20MHZ System 910346112 $ 1,080.00
- --------------------------------------------------------------------------------------------------------------------------
1 Hyundai HMM1200 Monitor SD101400103
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0054704-IN (03/21/91)
- --------------------------------------------------------------------------------------------------------------------------
1 486-25MHZ Amax System 910300267 $ 2,045.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0054705-IN (03/21/91)
- --------------------------------------------------------------------------------------------------------------------------
1 386-20MHZ Amax System 910346136 $ 1,060.00
- --------------------------------------------------------------------------------------------------------------------------
1 Hyundai HMM1200 Monitor MLHA102402627
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 1 Page 2
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATON ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Invoice 00567157-IN (04/29/91)
- --------------------------------------------------------------------------------------------------------------------------
3 386SX-20MHZ System 910446140 $ 2,610.00
910446141
910446142
- --------------------------------------------------------------------------------------------------------------------------
3 Hyundai HMM1200 Monitor MLHA103406807
MLHA103406991
MLHA103406993
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $11,246.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 188.37
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 11,434.37
- --------------------------------------------------------------------------------------------------------------------------
Baxter Scientific Products - Invoice 2752289 (03/25/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Aquatest 8 Coulometri Titrator $ 4,217.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 51-F2789-BC (08/27/90)
- --------------------------------------------------------------------------------------------------------------------------
20 Single Full Rack Hold 11.2" Freezer Box $ 979.20
- --------------------------------------------------------------------------------------------------------------------------
Invoice 51-F2789-BD (09/18/90)
- --------------------------------------------------------------------------------------------------------------------------
4 Cryo Storage Box 9x9 F/T4050-2 $ 408.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 51-F2789-DA (09/21/90)
- --------------------------------------------------------------------------------------------------------------------------
1 Crest Freezer-90C 20CU Ft 208V $ 5,238.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 51-G0258-DA (09/18/90)
- --------------------------------------------------------------------------------------------------------------------------
1 Shaft $ 92.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 51-G7757-31 (09/06/90)
- --------------------------------------------------------------------------------------------------------------------------
1 IKA RW20DZM Stirring Motor $ 727.00
- --------------------------------------------------------------------------------------------------------------------------
1 R1823 Lab Stand w/1000MM Column $ 152.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 51-G7757-31A (09/14/90)
- --------------------------------------------------------------------------------------------------------------------------
1 R181 Boss Head Clamp $ 35.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 51-M3417-31 (09/11/90)
- --------------------------------------------------------------------------------------------------------------------------
1 Peristaltic Pump, 603S/R,115V $ 1,684.28
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $13,532.48
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 708.78
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 14,241.26
- --------------------------------------------------------------------------------------------------------------------------
Contact Office Group - Invoice 20444391 (07/25/90)
- --------------------------------------------------------------------------------------------------------------------------
3 Pedestal Desk 48x30 Single $ 573.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 1 Page 3
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATON ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2 S & K4 Opening Bookcase 60" High $ 218.00
- --------------------------------------------------------------------------------------------------------------------------
1 Bookcase 3 Opening 41" High $ 89.00
- --------------------------------------------------------------------------------------------------------------------------
1 Vertical 2 Drawer File w/Lock $ 110.00
- --------------------------------------------------------------------------------------------------------------------------
1 Secretarial Chair, Oak Frame $ 110.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 20444392 (08/08/90)
- --------------------------------------------------------------------------------------------------------------------------
2 Secretarial Chair, Oak Frame $ 220.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 20444401 (08/28/90)
- --------------------------------------------------------------------------------------------------------------------------
1 Recessed Pull Lateral File, 52 3/4"H x 42"W $ 534.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 1,854.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 101.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 1,955.00
- --------------------------------------------------------------------------------------------------------------------------
Costar - Invoice 90260276 (10/04/90)
- --------------------------------------------------------------------------------------------------------------------------
1 12-Channel Various Multipette $ 595.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 595.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 3.37
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 598.37
- --------------------------------------------------------------------------------------------------------------------------
David Findley Company - Invoice 0863 (03/14/91)
- --------------------------------------------------------------------------------------------------------------------------
1 HULL Freeze Dryer 70V2118 $36,560.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 36,560.00
- --------------------------------------------------------------------------------------------------------------------------
Gregg's Electronics - Invoice 03524 (03/06/91)
- --------------------------------------------------------------------------------------------------------------------------
1 GE Refrigerator TBX21 - White $ 565.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 565.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 35.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 600.00
- --------------------------------------------------------------------------------------------------------------------------
Hull Corporation - Invoice 00053971 (06/29/90)
- --------------------------------------------------------------------------------------------------------------------------
4 Bottomless Tray & Frame 12x24 $ 520.80
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 520.80
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 31.25
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 552.05
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 1 Page 4
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATON ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Integrated Technologies, Inc. - Invoice 11670 (03/18/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Precision Spin Coating System $ 3,869.00
- --------------------------------------------------------------------------------------------------------------------------
1 Trflon Coated Bowl 8" $ 240.00
- --------------------------------------------------------------------------------------------------------------------------
1 Vacuum Chuck - Type CS 3 5/1 $ 523.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 4,632.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 16.35
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 4,648.35
- --------------------------------------------------------------------------------------------------------------------------
James Old & Son - Invoice 57453 (11/05/90)
- --------------------------------------------------------------------------------------------------------------------------
4 Steel Shelving 9'H x 72" x36" - 5HW $ 1,000.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 1,000.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 110.78
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 1,110.78
- --------------------------------------------------------------------------------------------------------------------------
Kalleen's Computer Products - Invoice 158648 (08/14/90)
- --------------------------------------------------------------------------------------------------------------------------
1 LaserJet III 3015J91870 $ 1,599.00
- --------------------------------------------------------------------------------------------------------------------------
5 Data Cart 150MB 600' $ 115.00
- --------------------------------------------------------------------------------------------------------------------------
1 Memory, 2MB F/HP IIP, III $ 289.00
- --------------------------------------------------------------------------------------------------------------------------
2 9-1/2x11 18# Blank, (188) 2600 $ 39.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 2,042.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 16.73
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 2,058.73
- --------------------------------------------------------------------------------------------------------------------------
March Instruments, Inc. - Invoice 000800 (04/22/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Plasmod (Pyrex) - Plasma System 1547 $ 4,995.00
- --------------------------------------------------------------------------------------------------------------------------
1 Chamber, 6" Pyrex $ 2,000.00
- --------------------------------------------------------------------------------------------------------------------------
1 GCM-50 - Gas Control Module 1476 $ 775.00
- --------------------------------------------------------------------------------------------------------------------------
1 Vacuum Pump UM-1004AC 187230 $ 2,290.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $10,060.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 40.93
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 10,100.93
- --------------------------------------------------------------------------------------------------------------------------
Millipore - Invoice 45914 (04/16/91)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 1 Page 5
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Investigator 2-D Electrophoresis System $11,501.00
- --------------------------------------------------------------------------------------------------------------------------
1 11-Slab Cast Box $ 395.00
- --------------------------------------------------------------------------------------------------------------------------
1 Glass Ctr Plate w/Spacers $ 108.00
- --------------------------------------------------------------------------------------------------------------------------
1 Tape for Double Gels $ 15.30
- --------------------------------------------------------------------------------------------------------------------------
1 Support Double Gel Plate $ 52.20
- --------------------------------------------------------------------------------------------------------------------------
1 Gasket Double Analyst Slab $ 162.00
- --------------------------------------------------------------------------------------------------------------------------
1 Acryl Spacers 2/Pk $ 82.80
- --------------------------------------------------------------------------------------------------------------------------
Invoice UC9449 (04/23/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Milli-Q Plus Reagent Grade Water Purif. System $ 3,102.50
- --------------------------------------------------------------------------------------------------------------------------
1 Press Regulator w/Gauge $ 90.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $15,508.80
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 273.16
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 15,781.96
- --------------------------------------------------------------------------------------------------------------------------
Northgate Computer Systems - Invoice 93620 (12/12/90)
- --------------------------------------------------------------------------------------------------------------------------
1 80386 33MHZ 8 MEG 64 Cache System 193195 $ 3,249.00
- --------------------------------------------------------------------------------------------------------------------------
1 Amber Monitor 14" OXO3454
- --------------------------------------------------------------------------------------------------------------------------
1 Accessories for Cache System $ 162.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 3,411.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 50.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 3,461.00
- --------------------------------------------------------------------------------------------------------------------------
Novex - Invoice 9011167-IN (11/07/90)
- --------------------------------------------------------------------------------------------------------------------------
1 Xcell Cell & Blot Module Kit $ 695.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 695.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 18.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 713.00
- --------------------------------------------------------------------------------------------------------------------------
Pacific Sales Engineering, Inc. - Invoice 91-1742 (04/08/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Plastic Belt Conveyor $ 6,888.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 6,888.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 50.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 1 Page 6
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VENDOR TOTAL $ 6,938.00
- --------------------------------------------------------------------------------------------------------------------------
Packaging Aids Corporation - Invoice 86356 (09/27/90)
- --------------------------------------------------------------------------------------------------------------------------
1 Packaging Machine - 552VL3 5/16" SLR. W/HSP 15041-08 $ 9,039.00
- --------------------------------------------------------------------------------------------------------------------------
19 Character Hot Stamp Printer 1/8" $ 218.50
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 9,257.50
- --------------------------------------------------------------------------------------------------------------------------
PC Connection - Invoice 2517534 (08/20/90)
- --------------------------------------------------------------------------------------------------------------------------
2 NEC Multisync II A $ 998.00
- --------------------------------------------------------------------------------------------------------------------------
2 Video 7 1024I w/512K $ 538.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 2640995 (11/06/90)
- --------------------------------------------------------------------------------------------------------------------------
1 Netport Print Server - PCLA2101 $ 489.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 2695555 (12/04/90)
- --------------------------------------------------------------------------------------------------------------------------
1 American Power Convs $ 329.00
- --------------------------------------------------------------------------------------------------------------------------
1 Netport Print Server - PCLA2101 $ 489.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 2,843.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 113.44
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 2,956.44
- --------------------------------------------------------------------------------------------------------------------------
Pioneer Conveyors, Inc. - Invoice 101355 (09/18/90)
- --------------------------------------------------------------------------------------------------------------------------
1 Conveyor Belt w/2 side tables $ 3,020.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 3,020.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 75.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 3,095.00
- --------------------------------------------------------------------------------------------------------------------------
Terra Universal, Inc. - Invoice 13084 (02/14/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Desiccator:Plexiglass, 16"Wx16"Dx16"H w/Plenum $ 298.00
- --------------------------------------------------------------------------------------------------------------------------
2 Stainless Steel Perforated Shelf $ 110.00
- --------------------------------------------------------------------------------------------------------------------------
1 Flowmeter Fittings $ 2.22
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 410.22
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 70.18
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 480.40
- --------------------------------------------------------------------------------------------------------------------------
Thomas Scientific - Invoice 903061192-0001 (11/06/90)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 1 Page 7
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Rocker Chassis Platform $ 516.00
- --------------------------------------------------------------------------------------------------------------------------
1 Rocker Tray, 50x50 CM $ 80.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 596.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 12.26
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 608.26
- --------------------------------------------------------------------------------------------------------------------------
TOTAL EQUIPMENT COST $132,565.96
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
ADDENDUM NUMBER ONE
TO MASTER LEASE AGREEMENT NO. 9118
DATED JUNE 1, 1991
RENTAL SCHEDULE NO. 1
BY AND BETWEEN
LEASTEC CORPORATION ("Lessor")
AND
ADEZA BIOMEDICAL CORPORATION ("Lessee")
OBLIGATION TO PURCHASE LEASED EQUIPMENT
Lessor and the Lessee hereby agree that the Lessee shall purchase the leased
equipment from the Lessor at the end of the term of this Lease for a price equal
to 10% of the original equipment cost provided that the Lessee has performed all
of the terms and conditions set out in the Lease.
LEASTEC CORPORATION AZEDA BIOMEDICAL
CORPORATION
/s/ Leastec Corporation /s/ Adeza Biomedical
- ------------------------ ---------------------------
Title: PRESIDENT Title: CONTROLLER
------------------ --------------------
Date: June 1, 1991 Date: June 1, 1991
------------------ --------------------
<PAGE>
CERTIFICATE OF INSPECTION AND CUSTOMER ACCEPTANCE
RENTAL SCHEDULE NO. 1
PURSUANT TO MASTER LEASE AGREEMENT NO. 9118, dated as of June 1, 1991 (the
"Lease") by and between LEASTEC CORPORATION ("Lessor") and ADEZA BIOMEDICAL
CORPORATION("Lessee"). The undersigned, being the duly authorized representative
of the Lessor and the Lessee hereby CERTIFIES that the following units of
equipment (the "Equipment") referred to in the Lease between the Lessor and the
Lessee.
QUANTITY DESCRIPTION SERIAL NUMBER
EQUIPMENT DESCRIBED ON EXHIBIT "A" TO RENTAL SCHEDULE NO. 1 ATTACHED HERETO AND
MADE A PART HEREOF.
have been duly delivered to the Lessor in good order and duly inspected and
accepted by the undersigned as of the date hereof on behalf of the Lessor, and
have thereby been duly delivered by the Lessor to the Lessee and have been duly
accepted and inspected by the undersigned on said date on behalf of the Lessee
as conforming in all respects with the requirements and provisions of the Lease.
BY /s/ Controller
------------------
Its CONTROLLER
DATE: June 1, 1991
<PAGE>
SCHEDULE A
Schedule A ("Stipulated Loss Value") to Master Lease Agreement No. 9118, dated
June 1, 1991, between LEASTEC CORPORATION ("Lessor") and ADEZA BIOMEDICAL
CORPORATION ("Lessee").
During the rental period indicated in Column 1, the Stipulated Loss Value for
that time is an amount equal to the percentage of the Acquisition Cost of the
Equipment (as those terms are defined in the Rental Schedule) shown in Column 2.
<TABLE>
<CAPTION>
COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4
- -------- -------- -------- --------
<S> <C> <C> <C>
1 108.00 31 65.32
2 106.77 32 63.67
3 105.53 33 61.99
4 104.28 34 60.31
5 103.02 35 58.60
6 101.74 36 56.88
7 100.45 37 55.14
8 99.15 38 53.39
9 97.83 39 51.62
10 96.50 40 49.83
11 95.16 41 48.02
12 93.81 42 46.19
13 92.44 43 44.34
14 91.06 44 42.48
15 89.66 45 40.60
16 88.25 46 38.70
17 86.82 47 36.78
18 85.39 48 34.84
19 83.93 49 32.88
20 82.47 50 30.90
21 80.98 51 28.90
22 79.49 52 26.89
23 77.97 53 24.85
24 76.45 54 22.79
25 74.90 55 20.71
26 73.35 56 18.61
27 71.77 57 16.49
28 70.18 58 14.35
29 68.58 59 12.18
30 66.96 60 10.00
61 10.00
</TABLE>
If noted here, this Schedule A is applicable to Rental Schedule No.(s) 1 only,
otherwise to all Rental Schedules of the Lease not having specificalty noted
Schedule A's.
Lessee (initial)
Lessor (initial)
<PAGE>
BILL OF SALE
------------
KNOW ALL MEN BY THESE PRESENTS: THAT ADEZA BIOMEDICAL CORPORATION located at
1240 Elko Drive, Sunnyvale, CA 94089 in consideration of the sum of ONE HUNDRED
THIRTY-TWO THOUSAND FIVE HUNDRED SIXTY-FIVE and 96/100 Dollars ($132,565.96) and
other good and valuable consideration, the receipt of which is hereby
acknowledged, does hereby sell, assign, transfer and convey to LEASTEC
CORPORATION, a corporation, with offices at 1470 Maria Lane, Suite 320, Walnut
Creek, CA 94596, the following described personal property:
EQUIPMENT DESCRIBED ON EXHIBIT "A" TO RENTAL SCHEDULE NO 1. ATTACHED HERETO
AND MADE A PART HEREOF.
to have and to hold all and singular the said personal property to LEASTEC
CORPORATION, its successors and assigns, for its own use forever.
The undersigned hereby covenants that the undersigned is the lawful owner of the
said personal property; that it is free from all encumbrances; that the
undersigned has the right to sell the same as aforesaid; and that the
undersigned will warrant and defend the same against any and all claims and
demands of all persons.
IN WITNESS WHEREOF, the undersigned has hereunto executed this document this
1ST day of JUNE, 1991.
ADEZA BIOMEDICAL CORPORATION
BY /s/ Thomas L. Bever
--------------------------
Thomas L. Bever
Controller
(Typed name of signer and title)
<PAGE>
This FINANCING STATEMENT is presented for filing and will remain effective, with
certain exceptions, for five years from the date of filing, pursuant to Section
9403 of the California Uniform Commercial Code.
Debtor: Adeza Biomedical Corporation
Federal Tax No.: 77-0054952
Mailing Address: 1240 Elko Drive
Sunnyvale, CA 94089
Secured Party: Leastec Income Fund IV
Federal Tax No.:
Mailing Address: 1470 Maria Lane, Suite 320
Walnut Creek, CA 94596
This FINANCING STATEMENT covers the following types or items of property:
MASTER LEASE AGREEMENT NO. 9118 DATED JUNE 1, 1991
EQUIPMENT DESCRIBED ON EXHIBIT "A" TO RENTAL SCHEDULE NO. 12 ATTACHED HERETO AND
MADE A PART HEREOF.
Signature of Debtor:
/s/ Adeza Biomedical Corporation ADEZA BIOMEDICAL CORPORATION
- --------------------------------
Date: 06/01/91
Signature of Secured Party:
/s/ Leastec Income Fund IV LEASTEC INCOME FUND IV
- --------------------------------
Date:
Return Copy To: LEASTEC CORPORATION
1470 MARIA LANE, SUITE 320
WALNUT CREEK, CA 94596
<PAGE>
CERTIFICATE OF INCUMBENCY AND AUTHORITY
I, BRIAN D. FRENZEL, do hereby certify that I am the duly elected, qualified and
acting secretary of ADEZA BIOMEDICAL CORPORATION, a California Corporation; that
the persons whose names, titles and signatures appear below are duly elected (or
appointed), qualified and acting officers of said Corporation and hold on the
date of this Certificate the offices set opposite their respective names; that
the signatures appearing opposite of their respective names are the genuine
signatures of such officers; that each of such officers is duly authorized for
and on behalf of said Corporation to execute and deliver any lease document
between said Corporation and said Leastec Corporation and that execution of such
documents, and instruments in connection therewith and any other document or
instrument related thereto for and on behalf of said Corporation is not
prohibited by or in any manner restricted by the terms of said Corporation's
Certificate of Incorporation, its by-laws, or of any loan agreement, indenture
or contract to which said Corporation is a party or under which it is bound.
NAME AND TITLE OF OFFICER SIGNATURE OF OFFICER
/s/ BRIAN D. FRENZEL
- ---------------------------
BRIAN D. FRENZEL, PRESIDENT
/s/ THOMAS L. BEVER
- ---------------------------
THOMAS L. BEVER, CONTROLLER
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said
Corporation this 1ST day of JUNE, 1991.
By
Title
<PAGE>
MASTER LEASE AGREEMENT
NUMBER 9188-2
RENTAL SCHEDULE NO. 2 to Master Lease Agreement No. 9118, dated June 1, 1991,
(the "Lease") by and between the undersigned, the terms and conditions of which
are hereby incorporated herein by reference. Lessee hereby (a) authorizes Lessor
to order for lease to Lessee the equipment described herein (the "Equipment")
and to insert hereon the Lease Commencement Date and the partial first period's
rent (if any) for such Equipment upon Lessee's acceptance of same for lease, (b)
agrees to lease such Equipment from Lessor Effective the Lease Commencement Date
thereof and for the lease term specified below, and (c) agrees to pay Lessor the
rent, in the amounts and at the times specified below, for each item of
Equipment. All of the terms used herein which are defined in the Lease shall
have the same meaning as so defined.
DESCRIPTION
- -----------
EQUIPMENT DESCRIBED ON EXHIBIT "A" TO RENTAL SCHEDULE NO. 2 ATTACHED HERETO AND
MADE A PART HEREOF.
TOTAL COST $128,012.47
This Rental Schedule is for a term of 60 months (plus 0 days partial first
period term) and the Lease Commencement Date is October 1, 1991. The partial
first period rent of $0 is payable together with $2,944.29 (plus applicable
sales/use tax) regular monthly rent on the 1st day of October, 1991 followed by
equal payment of regular rent on the 1st day of each month thereafter until a
total rent of $176,657.40 has been paid.
Location of Equipment 1240 ELKO DRIVE, SUNNYVALE, CA 94089
The "Acquisition Cost" means an amount equal to the sum of (i) the purchase
price of each item of Equipment paid by Lessor, plus (ii) any excise, sales and
use tax on or with respect thereto, plus (iii) any costs, expenses, and fees
paid or incurred by Lessor in obtaining and delivering such items of Equipment
to Lessee and any expenses of installation of such item of Equipment paid for by
Lessor.
LEASTEC CORPORATION (LESSOR) ADEZA BIOMEDICAL CORPORATION (LESSEE)
By /s/ LEASTEC CORPORATION By /s/ ADEZA BIOMEDICAL CORPORATION
------------------------------- ---------------------------------
(authorized signature) (authorized signature)
Its PRESIDENT Its CONTROLLER
------------------------------ -------------------------------
Date October 1, 1991 Date October 1, 1991
----------------------------- ------------------------------
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 2 Page 1
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advanced Micro Solutions, Inc. - Invoice 7392 (06/26/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Archive Python 1.2GB DAT Raw Drive $2,025.00
- --------------------------------------------------------------------------------------------------------------------------
1 Adaptec 1540 SCSI BusMaster 16-bit $ 300.00
- --------------------------------------------------------------------------------------------------------------------------
1 Cheyenne ARCServe VAP W/O Controlle $ 995.00
- --------------------------------------------------------------------------------------------------------------------------
1 SCSI Cable - Three Foot $ 20.00
- --------------------------------------------------------------------------------------------------------------------------
2 DAT Cartridge Tapes - 90 Meters $ 80.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $3,420.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 7.50
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $3,437.50
- --------------------------------------------------------------------------------------------------------------------------
Alcatel Vacuum Products, Inc. - Invoice 87045 (07/19/91)
- --------------------------------------------------------------------------------------------------------------------------
1 LIQ Nitrogen Trap SS NW 25 $ 860.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 860.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 4.47
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 864.47
- --------------------------------------------------------------------------------------------------------------------------
AMAX Engineering Corporation - Invoice 57201-IN (05/29/91)
- --------------------------------------------------------------------------------------------------------------------------
2 386SX-20Mhz System 910546129 $1,740.00
- --------------------------------------------------------------------------------------------------------------------------
910546130
- --------------------------------------------------------------------------------------------------------------------------
2 Monitor, Hyundai MLHA103406693
- --------------------------------------------------------------------------------------------------------------------------
MLHA103406740
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $1,740.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 41.72
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $1,781.72
- --------------------------------------------------------------------------------------------------------------------------
Bay Area Technology, Inc. - Invoice 10029 (07/26/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Clean Station w/C Frame $4,500.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $4,500.00
- --------------------------------------------------------------------------------------------------------------------------
Installation $ 720.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $5,220.00
- --------------------------------------------------------------------------------------------------------------------------
Baxter Diagnostics - Invoice 4394190 (05/15/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Pk Flask w/Tube 4L $ 68.15
- --------------------------------------------------------------------------------------------------------------------------
1 Timer 3-Channel Alarm $ 30.54
- --------------------------------------------------------------------------------------------------------------------------
1 Incubator Model 100 115V $ 248.00
- --------------------------------------------------------------------------------------------------------------------------
1 Direct Drive Vacuum Pump 115V $ 474.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 5351715 (06/14/91)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 2 Page 2
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Biofuge 13 $ 1,200.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 6267387 (07/17/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Electrode Combo BNC Deep $ 95.00
- --------------------------------------------------------------------------------------------------------------------------
1 Digital PH/ION Meter, Model 250 $ 1,160.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 6565873 (07/25/91)
- --------------------------------------------------------------------------------------------------------------------------
2 Finnpipette, 12 Channel, 50-300UL $ 1,172.84
- --------------------------------------------------------------------------------------------------------------------------
Invoice 7081412 (08/09/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Transferpette - 8 Channel, 50-200ML $ 423.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 7081414 (08/09/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Transferpette - 8 Channel, 50-200ML $ 495.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 7277975 (08/16/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Crest Freezer - 90C 20 Cu Ft 208V $ 5,563.10
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $10,929.63
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 339.88
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $11,269.51
- --------------------------------------------------------------------------------------------------------------------------
Beckman Instruments, Inc. - Invoice 173601FT01 (06/04/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Centrifuge Rotor, JA-10 Ay. 3882 $ 4,020.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 4,020.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 12.06
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 4,032.06
- --------------------------------------------------------------------------------------------------------------------------
Hoefer Scientific Instrument - Invoice 287915 (04/30/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Anderson ISO Gel Tube 18# $ 1,200.00
- --------------------------------------------------------------------------------------------------------------------------
1 ISO Gel Tube Seals (20) $ 30.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 1,230.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 4.38
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 1,234.38
- --------------------------------------------------------------------------------------------------------------------------
Hull Corporation - Invoice 54842 (01/18/91)
- --------------------------------------------------------------------------------------------------------------------------
2 Shelves for Freeze Dryer $ 5,660.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 5,660.00
- --------------------------------------------------------------------------------------------------------------------------
Ivek Corporation - Invoice 2957 (07/26/91)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 2 Page 3
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2 130.8 Digispense 8, Model DS-Micro-DE-AA 1408,1409 $ 7,100.00
- --------------------------------------------------------------------------------------------------------------------------
2 145.4.D.E. Pump/Motor Option $ 1,200.00
- --------------------------------------------------------------------------------------------------------------------------
2 145.5 Microspense Option $ 780.00
- --------------------------------------------------------------------------------------------------------------------------
4 402.2 Pump "AA" Option $ 1,380.00
- --------------------------------------------------------------------------------------------------------------------------
4 477.0 Accessory Kit $ 320.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $10,780.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 45.21
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $10,825.21
- --------------------------------------------------------------------------------------------------------------------------
James Old & Son - Invoice 60119 (06/05/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Shelving 72x36 $ 2,266.72
- --------------------------------------------------------------------------------------------------------------------------
1 Wire Material $ 1,750.48
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 4,017.20
- --------------------------------------------------------------------------------------------------------------------------
Frt & Installation $ 1,673.58
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 5,690.78
- --------------------------------------------------------------------------------------------------------------------------
KBM Office Furniture - Invoice 10126191 (04/26/91)
- --------------------------------------------------------------------------------------------------------------------------
3 Bookcase, 72" $ 406.50
- --------------------------------------------------------------------------------------------------------------------------
Invoice 10127480 (05/07/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Bookcase, 36x29 $ 122.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 10127481 (05/03/91)
- --------------------------------------------------------------------------------------------------------------------------
3 Double Pedestal Desk 36x72 $ 1,104.00
- --------------------------------------------------------------------------------------------------------------------------
3 Executive Chair $ 483.00
- --------------------------------------------------------------------------------------------------------------------------
4 Guest Chair $ 480.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 2,595.50
- --------------------------------------------------------------------------------------------------------------------------
Installation $ 22.50
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $2,618.00
- --------------------------------------------------------------------------------------------------------------------------
Redwood Office Products - Invoice 10336165 (08/09/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Beige-Fire Proof File $ 1,841.56
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 1,841.56
- --------------------------------------------------------------------------------------------------------------------------
Frt & Installation $ 165.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $2,006.56
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 2 PAGE 4
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- ------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Rostec - Invoice 1010 (08/29/91)
- ------------------------------------------------------------------------------------------------------------------------
3 Hardwire Receptacle Infeed 8-Wire $169.65
- ------------------------------------------------------------------------------------------------------------------------
11 Duplex Line I/II 8-Wire $60.06
- ------------------------------------------------------------------------------------------------------------------------
11 Duplex Line I/III 8-Wire $60.06
- ------------------------------------------------------------------------------------------------------------------------
1 24R PNL Trk/Trk Conn 8-Wire $56.55
- ------------------------------------------------------------------------------------------------------------------------
9 36W Power Assembly 8-Wire $407.16
- ------------------------------------------------------------------------------------------------------------------------
4 Pass Thru Cable 36" 8-Wire $121.68
- ------------------------------------------------------------------------------------------------------------------------
1 42W Power Assembly 8-Wire $48.36
- ------------------------------------------------------------------------------------------------------------------------
3 Pass Thru Cable 60" $105.30
- ------------------------------------------------------------------------------------------------------------------------
10 62x36 Panel 8-Wire, 9/381/402 $2,008.50
- ------------------------------------------------------------------------------------------------------------------------
14 62x36 Panel 8-Wire, 9/402 $2,811.90
- ------------------------------------------------------------------------------------------------------------------------
4 62x60 Panel 8-Wire, 9/381/402 $1,068.60
- ------------------------------------------------------------------------------------------------------------------------
4 62x60 Panel 8-Wire, 9/402 $1,068.60
- ------------------------------------------------------------------------------------------------------------------------
6 62x48 Panel 8-Wire, 9/381/402 $1,387.62
- ------------------------------------------------------------------------------------------------------------------------
2 62x24 Panel 8-Wire, 9/381/402 $327.60
- ------------------------------------------------------------------------------------------------------------------------
2 42x36 Panel 8-Wire, 9/381/402 $380.64
- ------------------------------------------------------------------------------------------------------------------------
6 62" Rad Panel 8-Wire, 9/IN 402/381 $2,157.48
- ------------------------------------------------------------------------------------------------------------------------
2 42" Rad Panel 8-Wire, 9/IN 402/381 $554.58
- ------------------------------------------------------------------------------------------------------------------------
2 62" C-Post, 9/381 $103.74
- ------------------------------------------------------------------------------------------------------------------------
8 62" T-Post, 9/381 $414.96
- ------------------------------------------------------------------------------------------------------------------------
2 62" X-Post, 9 $81.90
- ------------------------------------------------------------------------------------------------------------------------
4 62" Wall Post, 9 $129.48
- ------------------------------------------------------------------------------------------------------------------------
1 42" Wall Post, 9 $24.18
- ------------------------------------------------------------------------------------------------------------------------
18 62" End Trim, 9 $666.90
- ------------------------------------------------------------------------------------------------------------------------
1 42" End Trim, 9 $24.57
- ------------------------------------------------------------------------------------------------------------------------
10 36" Flipper Door Lam/T, 7/905 $873.60
- ------------------------------------------------------------------------------------------------------------------------
10 36" Open Shelf Lam/T, 7/905 $507.00
- ------------------------------------------------------------------------------------------------------------------------
11 Box/File Susp Pedestal, 7 $1,377.09
- ------------------------------------------------------------------------------------------------------------------------
10 24x36 Worksurface L/T, 7/905 $756.60
- ------------------------------------------------------------------------------------------------------------------------
10 24x60 Worksurface L/T, 7/905 $963.30
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
______ Lessee ______ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 2 Page 5
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 36" Corner Worksurface L/T, 7/905 $1,392.30
- --------------------------------------------------------------------------------------------------------------------------
2 24x60 Right Rad Surface, 7/905 $297.96
- --------------------------------------------------------------------------------------------------------------------------
2 Curved Cntr Lam/T, 9/91M18 $134.94
- --------------------------------------------------------------------------------------------------------------------------
2 36" Cntr Top Lam/T, 9/91M18 $131.04
- --------------------------------------------------------------------------------------------------------------------------
Invoice 1083 (09/12/91)
- --------------------------------------------------------------------------------------------------------------------------
10 Task Light for 36" Shelf $565.50
- --------------------------------------------------------------------------------------------------------------------------
Invoice 1084 (09/12/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Ceiling Feed 8-Wire $56.55
- --------------------------------------------------------------------------------------------------------------------------
2 Hardwire Receptacle Infeed 8-Wire $113.10
- --------------------------------------------------------------------------------------------------------------------------
13 Duplex Line I/II 8-Wire $70.98
- --------------------------------------------------------------------------------------------------------------------------
13 Duplex Line I/III 8-Wire $70.98
- --------------------------------------------------------------------------------------------------------------------------
7 30W Power Assembly 8-Wire $297.57
- --------------------------------------------------------------------------------------------------------------------------
25 36W Power Assembly 8-Wire $1,131.00
- --------------------------------------------------------------------------------------------------------------------------
1 Power-Pole 10" $148.20
- --------------------------------------------------------------------------------------------------------------------------
20 62x36 Panel 8-Wire, 9/381/402 $4,017.00
- --------------------------------------------------------------------------------------------------------------------------
18 62x36 Panel 8-Wire, 9/402 $3,615.30
- --------------------------------------------------------------------------------------------------------------------------
4 62x60 Panel 8-Wire, 9/381/402 $1,068.60
- --------------------------------------------------------------------------------------------------------------------------
4 62x60 Panel 8-Wire, 9/402 $1,068.60
- --------------------------------------------------------------------------------------------------------------------------
2 62x42 Panel 8-Wire, 9/381/402 $432.90
- --------------------------------------------------------------------------------------------------------------------------
2 62x42 Panel 8-Wire, 9/402 $432.90
- --------------------------------------------------------------------------------------------------------------------------
14 62x30 Panel 8-Wire, 9/381/402 $2,538.90
- --------------------------------------------------------------------------------------------------------------------------
1 42x36 Panel 8-Wire, 9/381/402 $190.32
- --------------------------------------------------------------------------------------------------------------------------
16 62" C-Post, 9/381 $829.92
- --------------------------------------------------------------------------------------------------------------------------
7 62" T-Post, 9/381 $363.09
- --------------------------------------------------------------------------------------------------------------------------
2 62" X-Post, 9 $81.90
- --------------------------------------------------------------------------------------------------------------------------
1 62" Wall Post, 9 $32.37
- --------------------------------------------------------------------------------------------------------------------------
16 62" End Trim, 9 $592.80
- --------------------------------------------------------------------------------------------------------------------------
2 Trans Trim P/P, 9 $32.76
- --------------------------------------------------------------------------------------------------------------------------
7 30" Flipper Door Lam/T, 7/905 $578.76
- --------------------------------------------------------------------------------------------------------------------------
7 30" Open Shelf Lam/T, 7/905 $335.79
- --------------------------------------------------------------------------------------------------------------------------
Invoice 5351715 (06/14/91)
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 2 Page 6
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7 Task Light for 30" Shelf $ 376.74
- --------------------------------------------------------------------------------------------------------------------------
6 36" Flipper Door Lam/T, 7/905 $ 524.16
- --------------------------------------------------------------------------------------------------------------------------
6 36" Open Shelf Lam/T, 7/905 $ 304.20
- --------------------------------------------------------------------------------------------------------------------------
6 Task Light for 36" Shelf $ 339.30
- --------------------------------------------------------------------------------------------------------------------------
13 Box/File Susp. Pedestal, 7 $ 1,627.47
- --------------------------------------------------------------------------------------------------------------------------
10 24x36 Worksurface Lam/T, 7/905 $ 756.60
- --------------------------------------------------------------------------------------------------------------------------
3 24x42 Worksurface Lam/T, 7/905 $ 239.85
- --------------------------------------------------------------------------------------------------------------------------
6 24x60 Worksurface Lam/T, 7/905 $ 577.98
- --------------------------------------------------------------------------------------------------------------------------
7 24x30 Worksurface Lam/T, 7/905 $ 521.43
- --------------------------------------------------------------------------------------------------------------------------
13 36" Corner Worksurface Lam/T, 7-905 $ 1,809.99
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $46,417.41
- --------------------------------------------------------------------------------------------------------------------------
Installation $ 2,862.89
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $49,280.30
- --------------------------------------------------------------------------------------------------------------------------
Sears - Invoice 914354 (09/12/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Freezer, 19 Cubic Foot $ 469.99
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 469.99
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 30.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $499.99
- --------------------------------------------------------------------------------------------------------------------------
Terra Universal, Inc. - Invoice 14114 (07/31/91)
- --------------------------------------------------------------------------------------------------------------------------
3 Standard Clean Room Bench Formica, 72"Wx36"D $ 909.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 14324 (07/24/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Glove Box, Plexiglass $ 452.00
- --------------------------------------------------------------------------------------------------------------------------
1 Air Lock Unit: Plexiglass $ 145.00
- --------------------------------------------------------------------------------------------------------------------------
1 Changeable Sleeve & Glove Combination (Size 9) $ 89.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 1,595.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 669.99
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $2,264.99
- --------------------------------------------------------------------------------------------------------------------------
Yield Engineering Systems, Inc. - Invoice 15713 (06/19/91)
- --------------------------------------------------------------------------------------------------------------------------
1 YES-3 Vacuum Bake/Vapor Prime System pn#4400 87935 $18,864.00
- --------------------------------------------------------------------------------------------------------------------------
1 Vacuum Pump, Alcatel, 7 cfm pn#3223 221366 $ 1,825.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 5351715 (06/14/91)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 2 Page 7
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Spare Parts Kit for YES-3 $275.00
- --------------------------------------------------------------------------------------------------------------------------
1 Sensor Vacuum Gauge, G-P Transducer $263.00
- --------------------------------------------------------------------------------------------------------------------------
1 Special Plumbing $100.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 21,327.00
- --------------------------------------------------------------------------------------------------------------------------
TOTAL EQUIPMENT COST $128,012.47
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
LEASTEC CORPORATION (LESSOR) ADEZA BIOMEDICAL CORPORATION (LESSEE)
By /s/ LEASTEC CORPORATION By /s/ ADEZA BIOMEDICAL CORPORATION
------------------------------ ---------------------------------
(authorized signature) (authorized signature)
Its PRESIDENT Its CONTROLLER
----------------------------- --------------------------------
Date October 1, 1991 Date October 1, 1991
---------------------------- -------------------------------
<PAGE>
ADDENDUM NUMBER ONE
TO MASTER LEASE AGREEMENT NO. 9118
DATED JUNE 1, 1991
RENTAL SCHEDULE NO. 2
BY AND BETWEEN
LEASTEC CORPORATION ("Lessor")
AND
ADEZA BIOMEDICAL CORPORATION ("Lessee")
OBLIGATION TO PURCHASE LEASED EQUIPMENT
Lessor and the Lessee hereby agree that the Lessee shall purchase the leased
equipment from the Lessor at the end of the term of this Lease for a price equal
to 10% of the original equipment cost provided that the Lessee has performed all
of the terms and conditions set out in the Lease.
LEASTEC CORPORATION (LESSOR) ADEZA BIOMEDICAL CORPORATION (LESSEE)
By /s/ LEASTEC CORPORATION By /s/ ADEZA BIOMEDICAL CORPORATION
------------------------------ ---------------------------------
(authorized signature) (authorized signature)
Its PRESIDENT Its CONTROLLER
----------------------------- --------------------------------
Date October 1, 1991 Date October 1, 1991
---------------------------- -------------------------------
<PAGE>
AMENDMENT No. I TO ADDENDUM NUMBER ONE
(OBLIGATION TO PURCHASE LEASED EQUIPMENT) TO
MASTER LEASE AGREEMENT NO. 9118 (the LEASE)
DATED JUNE 1, 1991
RENTAL SCHEDULE NO. 2
BY AND BETWEEN
ADEZA BIOMEDICAL CORPORATION ("LESSEE")
AND
LEASTEC CORPORATION ("LESSOR") ASSIGNED TO
LEASTEC INCOME FUND III
WHEREAS, Assignee and Lessee have entered into the Lease, rental schedule no. 2
and Obligation to Purchase Equipment; and
WHEREAS, Assignee and Lessee desire to amend certain provisions of the
Obligation to Purchase Equipment as hereinafter provided; and
WHEREAS Lessee desires to sell certain surplus equipment subject to the Lease
and Obligation to Purchase Equipment hereinafter identified as one Yield
Engineering Systems YES-3 Vacuum Bake/Vapor Prime System (pn # 4400) with
Alcatel Vacuum Pump (pn # 3223); and
NOW THEREFORE, for good and valuable consideration, Assignee and Lessee hereby
agree as follows:
Assignee shall sell the above identified equipment for $4,200 and the amount due
under the Obligation to Purchase Equipment from the Lessee shall be reduced to
$8,601 plus applicable taxes.
Except as set out herein, Assignee and Lessee hereby agree that all other terms
and conditions of the Lease, Rental Schedule and Obligation to Purchase
Equipment shall remain in full force and effect as entered into by the parties
on or prior to the date hereof.
LESSEE: ASSIGNEE:
Adeza Biomedical Corporation Leastec Income Fund IH
BY /s/ EMORY V. ANDERSON BY /s/ ERNEST LAVAGETTO
------------------------- ----------------------
Emory V. Anderson Ernest Lavagetto
- ----------------- ----------------
Title VP and CFO Title President
---------- ---------
Date February 16, 1996 Date November 15, 1996
------------------- -----------------
<PAGE>
This FINANCING STATEMENT is presented for filing and will remain effective, with
certain exceptions, for five years from the date of filing, pursuant to Section
9403 of the California Uniform Commercial Code.
Debtor: Adeza Biomedical Corporation
Federal Tax No.: 77-0054952
Mailing Address: 1240 Elko Drive
Sunnyvale, CA 94089
Secured Party: Leastec Income Fund III
Federal Tax No.: 68-0066209
Mailing Address: 2785 Mitchell Drive, Suite 110
Walnut Creek, CA 94598
This FINANCING STATEMENT covers the following types or items of property:
MASTER LEASE AGREEMENT NO. 9118 DATED JUNE 1, 1991
EQUIPMENT DESCRIBED ON EXHIBIT "A" TO RENTAL SCHEDULE NO. 2 ATTACHED HERETO AND
MADE A PART HEREOF.
Signature of Debtor:
/s/ Adeza Biomedical Corporation ADEZA BIOMEDICAL CORPORATION
- --------------------------------
Date: 10/01/91
Signature of Secured Party:
/s/ Leastec Income Fund III LEASTEC INCOME FUND III
- --------------------------------
Date:
Return Copy To: LEASTEC CORPORATION
2785 MITCHELL DRIVE, SUITE 110
WALNUT CREEK, CA 94598
<PAGE>
MASTER LEASE AGREEMENT
NUMBER 9118 - 3
RENTAL SCHEDULE NO. 3 to Master Lease Agreement No. 9118, dated June 1, 1991,
(the "Lease") by and between the undersigned, the terms and conditions of which
are hereby incorporated herein by reference. Lessee hereby (a) authorizes Lessor
to order for lease to Lessee the equipment described herein (the "Equipment")
and to insert hereon the Lease Commencement Date and the partial first period's
rent (if any) for such Equipment upon Lessee's acceptance of same for lease, (b)
agrees to lease such Equipment from Lessor Effective the Lease Commencement Date
thereof and for the lease term specified below, and (c) agrees to pay Lessor the
rent, in the amounts and at the times specified below, for each item of
Equipment. All of the terms used herein which are defined in the Lease shall
have the same meaning as so defined.
DESCRIPTION
- -----------
EQUIPMENT DESCRIBED ON EXHIBIT "A" TO RENTAL SCHEDULE NO. 3 ATTACHED HERETO AND
MADE A PART HEREOF.
TOTAL COST $ 90,177.17
This Rental Schedule is for a term of 60 months (plus 0 days partial first
period term) and the Lease Commencement Date is December 15, 1991. The partial
first period rent of $ 0 is payable together with $ 2,074.07 (plus applicable
sales/use tax) regular monthly rent on the 15th day of December 1991 followed by
equal payment of regular rent on the 15th day of each month thereafter until a
total rent of $ 124,444.20 has been paid.
Location of Equipment 1240 ELKO DRIVE, SUNNYVALE, CA 94089
The "Acquisition Cost" means an amount equal to the sum of (i) the purchase
price of each item of Equipment paid by Lessor, plus (ii) any excise, sales and
use tax on or with respect thereto, plus (iii) any costs, expenses, and fees
paid or incurred by Lessor in obtaining and deliverying such items of Equipment
to Lessee and any expenses of installation of such item of Equipment paid for by
Lessor.
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advanced Micro Solutions, Inc. - Invoice 7414 (08/31/91)
- --------------------------------------------------------------------------------------------------------------------------
2 Adeptec 1540 SCSI BusMaster 16-bit $590.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $590.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $3.09
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $593.09
- --------------------------------------------------------------------------------------------------------------------------
Aro Corporation - Invoice 33686 (09/12/91)
- --------------------------------------------------------------------------------------------------------------------------
1 F099-1080-2 Non-por Pkg Tester LG/CH Stand 306 $2,675.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $2,675.00
- --------------------------------------------------------------------------------------------------------------------------
Bio-Rad Laboratories - Invoice 781981 (09/27/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Sub-Cell System, UV Tray, 15x10 $407.00
- --------------------------------------------------------------------------------------------------------------------------
1 Wide Mini-Sub Cell $305.00
- --------------------------------------------------------------------------------------------------------------------------
1 Multi-Gel Casting Chamber $295.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $1,007.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $10.61
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $1,017.61
- --------------------------------------------------------------------------------------------------------------------------
Dynatex International - Invoice 29976 (09/30/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Dynatex DXE-6 Wafer Expander 10904 $4,834.50
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $4,834.50
- --------------------------------------------------------------------------------------------------------------------------
Freight $2.88
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $4,837.38
- --------------------------------------------------------------------------------------------------------------------------
Electro Biotransfer, Inc. - Invoice 6501 (07/26/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Semi dry electroblotter custom 10"x10" electrode $650.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $650.00
- --------------------------------------------------------------------------------------------------------------------------
James Old & Son - Invoice 61198 (09/20/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Wire Cage $1,201.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 61208 (09/20/91)
- --------------------------------------------------------------------------------------------------------------------------
1 10 Frames - 20 People $1,396.30
- --------------------------------------------------------------------------------------------------------------------------
2 7R6915-4HW Racks $400.00
- --------------------------------------------------------------------------------------------------------------------------
1 7R6024-4HW Rack $161.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $3,158.30
- --------------------------------------------------------------------------------------------------------------------------
Freight $69.46
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 3 Page 2
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Installation $40.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $3,267.76
- --------------------------------------------------------------------------------------------------------------------------
Kalleen's Computer Products - Invoice 264456 (09/25/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Draftpro Plotter DXL 8-Pn 311A21832 $3,549.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $3,549.00
- --------------------------------------------------------------------------------------------------------------------------
Karl Suss America, Inc. - Invoice 9510 (10/18/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Suss Automatic Scriber with the following: 1100 $30,874.50
- --------------------------------------------------------------------------------------------------------------------------
Digital Stepping Device AS120/Metric
- --------------------------------------------------------------------------------------------------------------------------
Electrical Equip. RA120 110V/60HZ
- --------------------------------------------------------------------------------------------------------------------------
Diamond Holder RA 120/5 50G
- --------------------------------------------------------------------------------------------------------------------------
Chuck ASMS/RD/110 MM/Pins/Spec
- --------------------------------------------------------------------------------------------------------------------------
4 Sided Shaft, 4 Scribing Edges, 90 Deg.
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $30,874.50
- --------------------------------------------------------------------------------------------------------------------------
KBM Office Furniture - Invoice 10141262 (09/30/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Single Pedestal Desk $1,197.00
- --------------------------------------------------------------------------------------------------------------------------
1 Bookcase, 3 Shelf, 36x60 $419.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 10141261 (09/09/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Round Table, 42" $329.00
- --------------------------------------------------------------------------------------------------------------------------
1 Four Prong Base $140.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 10142150 (09/09/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Right Pedestal Desk, 30x60 $374.00
- --------------------------------------------------------------------------------------------------------------------------
1 Left Return, 42x21 $231.00
- --------------------------------------------------------------------------------------------------------------------------
1 Storage Cabinet, 21x72 $484.00
- --------------------------------------------------------------------------------------------------------------------------
1 Bookcase, 36x29 $160.00
- --------------------------------------------------------------------------------------------------------------------------
4 Bookcase, 36x72 $572.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 10145750 (10/02/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Table, 12'x4' $2,022.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 10146550 (10/11/91)
- --------------------------------------------------------------------------------------------------------------------------
10 Medium Back Chair $3,800.00
- --------------------------------------------------------------------------------------------------------------------------
2 High Back Guest Chair $1,030.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $10,758.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
______ Lessee ______ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 3 Page 3
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Installation $30.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $10,788.00
- --------------------------------------------------------------------------------------------------------------------------
Molecular Devices - Invoice 106889 (10/16/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Vmax Refurbish Plate Reader $7,000.00
- --------------------------------------------------------------------------------------------------------------------------
1 550NM Filter Lens, 1" Dia. $275.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 107750 (10/24/92)
- --------------------------------------------------------------------------------------------------------------------------
1 VMAX Refurbish Plate Reader $7,000.00
- --------------------------------------------------------------------------------------------------------------------------
1 Centronics to Centronics Cable $45.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $14,320.00
- --------------------------------------------------------------------------------------------------------------------------
Installation $45.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $14,365.00
- --------------------------------------------------------------------------------------------------------------------------
Northgate Computer Systems - Invoice 163049 (09/30/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Elegance SP 486-33-16-64K File Server, 14" $4,199.00
Mon
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $4,199.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $115.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $4,314.00
- --------------------------------------------------------------------------------------------------------------------------
Phoenix Equipment, Inc. - Invoice 13789 (05/22/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Beckman Model J-21 High Speed Refrigerated $1,500.00
- --------------------------------------------------------------------------------------------------------------------------
Floor Model Entrifuge w/Tach, Brake &
- --------------------------------------------------------------------------------------------------------------------------
Variable Speed
- --------------------------------------------------------------------------------------------------------------------------
1 Model JA-20 Fixed Angle Rotor $1,250.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $2,750.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $371.15
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $3,121.15
- --------------------------------------------------------------------------------------------------------------------------
Tom Black Service Center - Invoice 2626 (10/04/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Beckman DU-50 Spectrophotometer $4,500.00
- --------------------------------------------------------------------------------------------------------------------------
1 Auto Sample Changer $700.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $5,200.00
- --------------------------------------------------------------------------------------------------------------------------
VWR Scientific - Invoice 26499650 (10/23/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Adapter Set for 18-500UL Tubest $105.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
______ Lessee ______ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 3 Page 4
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Invoice 26499651 (10/25/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Micro Centrifuge Model 5415C $1,470.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 26499660 (11/08/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Ice Maker Flaker, W/Bin, AF1 $1,680.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 26714940 (10/29/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Bath, Shaking, Model 25 $1,645.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $4,900.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $24.68
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $4,924.68
- --------------------------------------------------------------------------------------------------------------------------
TOTAL EQUIPMENT COST $90,177.17
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
LEASTEC CORPORATION ADEZA BIOMEDICAL CORPORATION
BY /s/ Leastec Corporation BY /s/ Thomas L. Bever
----------------------------- -----------------------------
Thomas L. Bever
TITLE PRESIDENT TITLE CONTROLLER
-------------------------- --------------------------
DATE December 15, 1991 DATE December 15, 1991
--------------------------- ----------------------------
<PAGE>
ADDENDUM NUMBER ONE
TO MASTER LEASE AGREEMENT NO. 9118
DATED JUNE 1, 1991
RENTAL SCHEDULE NO. 3
BY AND BETWEEN
LEASTEC CORPORATION ("Lessor" )
AND
ADEZA BIOMEDICAL CORPORATION ("Lessee")
OBLIGATION TO PURCHASE LEASED EQUIPMENT
Lessor and the Lessee hereby agree that the Lessee shall purchase the leased
equipment from the Lessor at the end of the term of this Lease for a price equal
to 10% of the original equipment cost provided that the Lessee has performed all
of the terms and conditions set out in the Lease.
LEASTEC CORPORATION (LESSOR) ADEZA BIOMEDICAL CORPORATION (LESSEE)
By /s/ Leastec Corporation By /s/ Adeza Biomedical Corporation
----------------------------- --------------------------------
(authorized signature) (authorized signature)
Title: PRESIDENT Title: CONTROLLER
------------------------- ----------------------------
Date: December 15, 1991 Date December 15, 1991
-------------------------- ------------------------------
<PAGE>
This FINANCING STATEMENT is presented for filing and will remain effective, with
certain exceptions, for five years from the date of filing, pursuant to Section
9403 of the California Uniform Commercial Code.
Debtor: Adeza Biomedical Corporation
Federal Tax No.: 77-0054952
Mailing Address: 1240 Elko Drive
Sunnyvale, CA 94089
Secured Party: Leastec Income Fund III
Federal Tax No.:
Mailing Address: 2785 Mitchell Drive, Suite 110
Walnut Creek, CA 94598
This FINANCING STATEMENT covers the following types or items of property:
MASTER LEASE AGREEMENT NO. 9118 DATED JUNE 1, 1991
EQUIPMENT DESCRIBED ON EXHIBIT "A" TO RENTAL SCHEDULE NO. 3 ATTACHED HERETO AND
MADE A PART HEREOF.
Signature of Debtor: /s/ Adeza Biomedical Corporation
--------------------------------
ADEZA BIOMEDICAL CORPORATION
Date: 12/15/91
Signature of Secured Party: /s/ Leastec Income Fund III
--------------------------------
LEASTEC INCOME FUND III
Date:
Return Copy To: LEASTEC CORPORATION
2785 MITCHELL DRIVE, SUITE 110
WALNUT CREEK, CA 94598
<PAGE>
MASTER LEASE AGREEMENT
NUMBER 9118 - 4
RENTAL SCHEDULE NO. 4 to Master Lease Agreement No. 9118, dated June 1, 1991,
(the "Lease") by and between the undersigned, the terms and conditions of which
are hereby incorporated herein by reference. Lessee hereby (a) authorizes Lessor
to order for lease to Lessee the equipment described herein (the "Equipment")
and to insert hereon the Lease Commencement Date and the partial first period's
rent (if any) for such Equipment upon Lessee's acceptance of same for lease, (b)
agrees to lease such Equipment from Lessor Effective the Lease Commencement Date
thereof and for the lease term specified below, and (c) agrees to pay Lessor the
rent, in the amounts and at the times specified below, for each item of
Equipment. All of the terms used herein which are defined in the Lease shall
have the same meaning as so defined.
DESCRIPTION
- -----------
EQUIPMENT DESCRIBED ON EXHIBIT "A" TO RENTAL SCHEDULE NO. 4 ATTACHED HERETO AND
MADE A PART HEREOF.
TOTAL COST $111,289.69
This Rental Schedule is for a term of 60 months (plus 0 days partial first
period term) and the Lease Commencement Date is May 15, 1992. The partial first
period rent of $ 0 is payable together with $2,559.66 (plus applicable
sales/use tax) regular monthly rent on the 15th day of May 1992 followed by
equal payment of regular rent on the 15th day of each month thereafter until a
total rent of $153,579.60 has been paid.
Location of Equipment 1240 ELKO DRIVE, SUNNYVALE, CA 94089
The "Acquisition Cost" means amount equal to the sum of (i) the purchase price
of each item of Equipment paid by Lessor, plus (ii) any excise, sales and use
tax on or with respect thereto, plus (iii) any costs, expenses, and fees paid or
incurred by Lessor in obtaining and delivering such items of Equipment to Lessee
and any expenses of installation of such item of Equipment paid for by Lessor.
LEASTEC CORPORATION (LESSOR) ADEZA BIOMEDICAL CORPORATION (LESSEE)
By /s/ Leastec Corporation By /s/ Adeza Biomedical Corporation
------------------------------ ---------------------------------
(authorized signature) (authorized signature)
Its PRESIDENT Its CONTROLLER
----------------------------- --------------------------------
Date May 15, 1992 Date May 15, 1992
---------------------------- -------------------------------
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 4 Page 1
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Amax Engineering - Invoice 0062762-IN (10/18/91)
- --------------------------------------------------------------------------------------------------------------------------
2 Computer System - 386SX-20Mhz 110002259 $ 1,590.00
110002258
- --------------------------------------------------------------------------------------------------------------------------
2 Monitor Mono - Hyundai MLHA108200066
MLHA108200069
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0062768-IN (10/18/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Computer System - 386SX-20Mhz 110002249 $ 930.00
- --------------------------------------------------------------------------------------------------------------------------
1 Monitor - Hyundai MLHA108515069
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0064501-IN (12/02/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Computer System - 386SX-20Mhz 112003492 $ 895.00
- --------------------------------------------------------------------------------------------------------------------------
1 Monitor Mono - Hyundai MLHA110523853
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0064731-IN (12/06/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Computer System - 386SX-20Mhz 112003634 $ 895.00
- --------------------------------------------------------------------------------------------------------------------------
1 Monitor Mono - Hyundai MLHA110522128
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0064737-IN (12/06/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Computer System - 386SX-20Mhz 112003650 $ 895.00
- --------------------------------------------------------------------------------------------------------------------------
1 Monitor Mono - Hyundai MLHA110521380
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0066356-IN (01/17/92)
- --------------------------------------------------------------------------------------------------------------------------
3 Computer System - 386-25Mhz Amax 201004656 $ 2,925.00
201004660
201004661
- --------------------------------------------------------------------------------------------------------------------------
3 Monitor Mono - Hyundai MLHA111527724
MLHA111527712
MLHA111527735
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0068154-IN (03/04/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Computer System - Invoice 386-25Mhz Amax 203005888 $ 1,265.00
- --------------------------------------------------------------------------------------------------------------------------
1 Monitor Mono - Hyundai MLHA110523759
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0068155-IN (03/04/92)
- --------------------------------------------------------------------------------------------------------------------------
3 Amax System 386SX-25 203005891 $ 2,745.00
203005890
203005892
- --------------------------------------------------------------------------------------------------------------------------
3 Monitor Mono - Hyundai MLHA110523751
MLHA110521870
MLHA110522668
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0068995-IN (03/26/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Amax System - 386SX-25 203006478 $ 1,265.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 4 Page 2
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Monitor Mono - Hyundai MLHA110525176
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0068996-IN (03/26/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Amax 386SX-25 System 203006506 $ 1,920.00
- --------------------------------------------------------------------------------------------------------------------------
1 Monitor W/System Multiscan 22K20689A
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $15,325.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 294.90
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 15,619.90
- --------------------------------------------------------------------------------------------------------------------------
Baxter Scientific Products - Invoice 0162673 (11/19/91)
- --------------------------------------------------------------------------------------------------------------------------
7 Chrome Lab Chr 221/4-27 1/2" $ 1,415.54
- --------------------------------------------------------------------------------------------------------------------------
Invoice 0722891 (12/06/91)
- --------------------------------------------------------------------------------------------------------------------------
2 120V Gen Gravity Incubator $ 3,296.30
- --------------------------------------------------------------------------------------------------------------------------
Invoice 8506369 (09/26/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Transferpette -12 Chnl, 50-200ML $ 505.75
- --------------------------------------------------------------------------------------------------------------------------
Invoice 9591701 (10/31/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Lo Temp Upright 17 CU Ft 110V $ 5,470.39
- --------------------------------------------------------------------------------------------------------------------------
Invoice 9953519 (11/12/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Lo Temp Upright 17 Cu Ft 110V $ 5,470.39
- --------------------------------------------------------------------------------------------------------------------------
Invoice 1069952 (12/18/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Purifier Cabinet 4' w/UV Light $ 5,226.25
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $21,384.62
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 994.73
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 22,379.35
- --------------------------------------------------------------------------------------------------------------------------
Bio Whittaker, Inc. - Invoice 352717 (12/04/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Slt 2/4 Plate Easy Shaker $ 525.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 525.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 47.77
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 572.77
- --------------------------------------------------------------------------------------------------------------------------
Cole-Parmer Instrument - Invoice 1139454 (02/10/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Mflex Drive, Std, 6-600 115 $ 520.00
- --------------------------------------------------------------------------------------------------------------------------
2 Pumphead, Easy-load, SS $ 340.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 4 Page 3
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Tubg, Mflex Tyg #18, 50/PK $ 65.10
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 925.10
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 14.77
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 939.87
- --------------------------------------------------------------------------------------------------------------------------
Ericomp, Inc. - Invoice 10302 (02/05/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Singleblock Easycycler 102209150A $ 3,250.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 3,250.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 85.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 3,335.00
- --------------------------------------------------------------------------------------------------------------------------
Fotodyne Inc. - Invoice 34314 (01/17/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Foto/Prep I, 120V $ 1,515.25
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 1,515.25
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 22.15
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 1,537.40
- --------------------------------------------------------------------------------------------------------------------------
Fry's Electronics - Invoice 4807 (03/26/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Avanti System - 386-SXL, 25Mhz 100264 $ 2,795.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 2,795.00
- --------------------------------------------------------------------------------------------------------------------------
Hoefer Scientific Instrument - Invoice 319188 (03/18/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Drygel Sr, Dryer, 35x44CM 92-1006 $ 995.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 995.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 6.37
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 1,001.37
- --------------------------------------------------------------------------------------------------------------------------
James Old & Son - Invoice 63128 (03/20/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Wire Shelving $ 5,818.80
- --------------------------------------------------------------------------------------------------------------------------
2 7R7236-4W Gray $ 500.00
- --------------------------------------------------------------------------------------------------------------------------
12 TS-36 Gray $ 61.32
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 6,380.12
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 290.78
- --------------------------------------------------------------------------------------------------------------------------
Installation $ 300.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 6,970.90
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 4 Page 4
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kalleen's Computer - Invoice 294106 (01/08/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Printer, Laserjet III 3140A22161 $ 1,565.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 295804 (01/14/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Memory, 2MB F/HP IIP $ 189.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 1,754.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 15.04
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 1,769.04
- --------------------------------------------------------------------------------------------------------------------------
KBM Office Furniture - Invoice 10152960 (12/05/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Credenza/Royal/Bevel/Strg.Crdz $ 1,550.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 10155272 (01/20/92)
- --------------------------------------------------------------------------------------------------------------------------
5 Secretary Chair, Oak $ 610.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 10161820 (03/03/92)
- --------------------------------------------------------------------------------------------------------------------------
2 Guest Chair, Oak $ 256.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 10161821 (03/03/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Guest Chair, Oak $ 128.00
- --------------------------------------------------------------------------------------------------------------------------
1 Bookcase, 36x29 $ 129.00
- --------------------------------------------------------------------------------------------------------------------------
2 Bookcase, 36x72 $ 301.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 10161823 (03/16/92)
- --------------------------------------------------------------------------------------------------------------------------
2 Chair, Exec. Low Back, Swivel $ 328.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 10163341 (03/11/92)
- --------------------------------------------------------------------------------------------------------------------------
15 Chair, Armed Stacker $ 495.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 3,797.00
- --------------------------------------------------------------------------------------------------------------------------
Leica Inc. - Invoice 040552 (02/21/92)
- --------------------------------------------------------------------------------------------------------------------------
Components for Leitz Microscope as follows:
- --------------------------------------------------------------------------------------------------------------------------
1 Tube, FSA/20-42 $ 1,450.80
- --------------------------------------------------------------------------------------------------------------------------
1 Eyepiece SG per 10X/18M HE $ 198.90
- --------------------------------------------------------------------------------------------------------------------------
1 Illum 104/12V, 100W $ 301.50
- --------------------------------------------------------------------------------------------------------------------------
1 Diffusion Disk, Mt $ 41.40
- --------------------------------------------------------------------------------------------------------------------------
1 Slider F/PH Light Rings $ 205.20
- --------------------------------------------------------------------------------------------------------------------------
2 Centering Key, SG/Hexagonal $ 18.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 4 Page 5
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Focusing Magnifier $ 402.30
- --------------------------------------------------------------------------------------------------------------------------
3 Bulb Hal 12V 100W, Osram $ 27.00
- --------------------------------------------------------------------------------------------------------------------------
1 Light Ring PH 1A/S 90 $ 20.70
- --------------------------------------------------------------------------------------------------------------------------
1 Obj EF 10/0.25 PH 1, WD 6.8 $ 300.60
- --------------------------------------------------------------------------------------------------------------------------
1 Obj EF L20/0.30 PH 1A, 5.3-4.8 $ 837.00
- --------------------------------------------------------------------------------------------------------------------------
1 Obj EF L32/0.40 PH 1A, 5.2-4.7 $ 1,078.20
- --------------------------------------------------------------------------------------------------------------------------
1 Eyepiece TB 10/12.5x160 $ 67.50
- --------------------------------------------------------------------------------------------------------------------------
1 Eyepiece SG per 10x/18 HE RD $ 194.40
- --------------------------------------------------------------------------------------------------------------------------
1 Connec-Tube 0.32X-SLR/40MM $ 286.20
- --------------------------------------------------------------------------------------------------------------------------
1 T Mount F/Olympus $ 56.70
- --------------------------------------------------------------------------------------------------------------------------
Invoice 041082 (02/26/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Transf WL 12V, 100W $ 253.80
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 5,740.20
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 13.44
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 5,753.64
- --------------------------------------------------------------------------------------------------------------------------
Lesco, Inc. - Invoice 8131 (02/12/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Lesco "Super Spot" Spotcure System 261 $ 3,850.00
- --------------------------------------------------------------------------------------------------------------------------
Morrow Service - Invoice 920210 (01/31/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Beckman Centrifuge, Mdl J2-21M 343 $10,000.00
- --------------------------------------------------------------------------------------------------------------------------
1 Beckman JA 17 Rotor 866 $ 1,800.00
- --------------------------------------------------------------------------------------------------------------------------
1 Beckman JA 10 Rotor 1387 $ 2,300.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $14,100.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 150.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 14,250.00
- --------------------------------------------------------------------------------------------------------------------------
Northgate Computer - Invoice 187792 (01/28/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Elegance SP 486-33-8-64K System 263639 $ 2,898.00
- --------------------------------------------------------------------------------------------------------------------------
1 Monochrome Monitor + MGP, 14" 0X03454
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 2,898.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 135.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 3,033.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 4 Page 6
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Office Club - Invoice 1204426 (12/13/91)
- --------------------------------------------------------------------------------------------------------------------------
2 4DRW 42", Lateral $ 799.98
- --------------------------------------------------------------------------------------------------------------------------
10 Copy Paper, 8.5x11 $ 169.70
- --------------------------------------------------------------------------------------------------------------------------
2 Box Bottom Hang Folder $ 21.98
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 991.66
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 30.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 1,021.66
- --------------------------------------------------------------------------------------------------------------------------
PC Connection - Invoice 3616659 (03/05/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Video 7 Card $ 329.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 329.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 61.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 390.00
- --------------------------------------------------------------------------------------------------------------------------
Rathbun Associates - Invoice 11891 (01/22/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Dispenser P/N 35625 $ 520.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 520.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 3.83
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 523.83
- --------------------------------------------------------------------------------------------------------------------------
Redwood Office Products - Invoice 10121805 (01/14/92)
- --------------------------------------------------------------------------------------------------------------------------
1 4 Dwr Lateral Parchment $ 1,872.20
- --------------------------------------------------------------------------------------------------------------------------
Invoice 10805975 (02/07/92)
- --------------------------------------------------------------------------------------------------------------------------
1 4 Dwr Letter C-Rated Parchment $ 1,000.25
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 2,872.45
- --------------------------------------------------------------------------------------------------------------------------
Robbins Scientific - Invoice 10014597 (01/09/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Hybridization Incubator (115V) 9212680109 $ 2,300.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 2,300.00
- --------------------------------------------------------------------------------------------------------------------------
Sears - Invoice 29431 (12/04/91)
- --------------------------------------------------------------------------------------------------------------------------
1 Compressor $ 599.99
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $ 599.99
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 30.00
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 629.99
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
____ Lessee ____ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 4 Page 7
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VWR Scientific - Invoice 26499652 (01/10/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Bath, Ref, Cir, Mic, VWR 1146 120VT $ 1,635.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 27995100 (01/02/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Incubator, VWR, Model 1535T $ 1,150.00
- --------------------------------------------------------------------------------------------------------------------------
1 Bath, VWR PC DIG CIR 26L 1265PCT $ 1,230.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 28571320 (01/29/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Orbit Inc-Shaker 120V 60HZ $ 4,720.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 30115270 (02/04/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Oven, GP, GC, Lrg Dig VWR 1370GDT $ 1,270.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 31066750 (03/04/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Rotor, Horizontal, 20671-155 $ 290.80
- --------------------------------------------------------------------------------------------------------------------------
3 Shield, Pk-2, 20738-008 $ 130.56
- --------------------------------------------------------------------------------------------------------------------------
1 Rotor, Horizontal, 20671-122 $ 293.25
- --------------------------------------------------------------------------------------------------------------------------
4 Trunnion Ring Pk-2 $ 306.00
- --------------------------------------------------------------------------------------------------------------------------
4 Shield Pk-2 20743-008 $ 224.40
- --------------------------------------------------------------------------------------------------------------------------
Invoice 31066751 (03/03/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Centrifuge, Clinical $ 595.40
- --------------------------------------------------------------------------------------------------------------------------
Invoice 31066760 (02/27/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Balance, Analyt Premier AT261E $ 4,036.75
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $15,882.16
- --------------------------------------------------------------------------------------------------------------------------
Freight $ 65.36
- --------------------------------------------------------------------------------------------------------------------------
VENDOR TOTAL $ 15,947.52
TOTAL EQUIPMENT COST $111,289.69
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
LEASTEC CORPORATION (LESSOR) ADEZA BIOMEDICAL CORPORATION (LESSEE)
BY: /s/ Leastec Corporation /s/ Adeza Biomedical Corporation
------------------------------- BY: ----------------------------------
(authorized signature) (authorized signature)
TITLE: PRESIDENT TITLE: CONTROLLER
--------------------------- -------------------------------
DATE: May 1, 1992 DATE: May 1, 1992
--------------------------- -------------------------------
____ Lessee ____ Lessor
Initial Initial
<PAGE>
ADENDUM NUMBER ONE
TO MASTER LEASE AGREEMENT NO. 9118
DATED JUNE 1, 1991
RENTAL SCHEDULE NO. 4
BY AND BETWEEN
LEASTEC CORPORATION ("Lessor")
AND
ADEZA BIOMEDICAL CORPORATION ("Lessee")
OBLIGATION TO PURCHASE LEASED EQUIPMENT
Lessor and the Lessee hereby agree that the Lessee shall purchase the leased
equipment from the Lessor at the end of the term of this Lease for a price equal
to 10% of the original equipment cost provided that the Lessee has performed all
of the terms and conditions set out in the Lease.
LEASTEC CORPORATION ADEZA BIOMEDICAL CORPORATION
BY: /s/ Leastec Corporation BY: /s/ Adeza Biomedical Corporation
------------------------------- ---------------------------------
(authorized signature) (authorized signature)
TITLE: PRESIDENT TITLE: CONTROLLER
--------------------------- ------------------------------
DATE: May 1, 1992 DATE: May 1, 1992
--------------------------- ------------------------------
<PAGE>
This FINANCING STATEMENT is presented for filing and will remain effective, with
certain exceptions, for five years from the date of filing, pursuant to Section
9403 of the California Uniform Commercial Code.
Transferor: Adeza Biomedical Corporation
Federal Tax No.: 77-0054952
Mailing Address: 1240 Elko Drive
Sunnyvale, CA 94089
Transferee: Leastec Income Fund IV
Federal Tax No.: 68-0100223
Mailing Address: 2785 Mitchell Drive, Suite 110
Walnut Creek, CA 94598
This FINANCING STATEMENT covers the following types or items of property:
MASTER LEASE AGREEMENT NO. 9118 DATED JUNE 1, 1991
EQUIPMENT DESCRIBED ON EXHIBIT "A" TO RENTAL SCHEDULE NO. 4 ATTACHED HERETO AND
MADE A PART HEREOF.
Signature of Transferor: /s/ Adeza Biomedical Corporation
--------------------------------
ADEZA BIOMEDICAL CORPORATION
Date: 05/01/92
Signature of Transferee: /s/ Leastec Income Fund IV
--------------------------------
LEASTEC INCOME FUND IV
Date:
Return Copy To: LEASTEC CORPORATION
2785 MITCHELL DRIVE, SUITE 110
WALNUT CREEK, CA 94598
<PAGE>
This FINANCING STATEMENT is presented for filing and will remain effective, with
certain exceptions, for five years from the date of filing, pursuant to Section
9403 of the California Uniform Commercial Code.
Transferor: Adeza Biomedical Corporation
Federal Tax No.: 77-0054952
Mailing Address: 1240 Elko Drive
Sunnyvale, CA 94089
Transferee: Leastec Income Fund IV
Federal Tax No.: 68-0100223
Mailing Address: 2785 Mitchell Drive, Suite 110
Walnut Creek, CA 94598
This FINANCING STATEMENT covers the following types or items of property:
Property leased or to be leased under that certain Master Lease agreement No.
9118 SCH 4 dated June 1, 1991, between Transferor, as Lessee, and Transferee, as
Lessor and all Rental Schedules thereunder including but not limited to various
computer equipment, office furniture, biomedical and lab equipment and other
property. This transaction is a lease and is not intended by the parties to be
a secured transaction; filing is intended to make the lease a matter of public
record.
This financing statement is being filed according to California Civil Code
Section 3440.1.
Signature of Transferor: /s/ Adeza Biomedical Corporation
--------------------------------
ADEZA BIOMEDICAL CORPORATION
Date: 05/01/92
Signature of Transferee: /s/ Leastec Income Fund IV
--------------------------------
LEASTEC INCOME FUND IV
Date:
Return Copy To: LEASTEC CORPORATION
2785 MITCHELL DRIVE, SUITE 110
WALNUT CREEK, CA 94598
<PAGE>
MASTER LEASE AGREEMENT
NUMBER 9118 - 5
RENTAL SCHEDULE NO. 5 to Master Lease Agreement No. 9118, dated June 1,1991,
(the "Lease") by and between the undersigned, the terms and conditions of which
are hereby incorporated herein by reference. Lessee hereby (a) authorizes Lessor
to order for lease to Lessee the equipment described herein (the "Equipment")
and to insert hereon the Lease Commencement Date and the partial first period's
rent (if any) for such Equipment upon Lessee's acceptance of same for lease, (b)
agrees to lease such Equipment from Lessor Effective the Lease Commencement Date
thereof and for the lease term specified below, and (c) agrees to pay Lessor the
rent, in the amounts and at the times specified below, for each item of
Equipment. All of the terms used herein which are defined in the Lease shall
have the same meaning as so defined.
DESCRIPTION
- -----------
EQUIPMENT DESCRIBED ON EXHIBIT "A" TO RENTAL SCHEDULE NO. 5 ATTACHED HERETO AND
MADE A PART HEREOF.
TOTAL COST $203,608.40
This Rental Schedule is for a term of 36 months (plus 0 days partial first
period term) and the Lease Commencement Date is August 15,1993. The partial
first period rent of $ 0 is payable together with $7,008.20 regular monthly rent
on the 15th day of August, 1993 followed by equal payment of regular rent on the
15th day of each month thereafter until a total rent of $252,295.20 has been
paid.
Location of Equipment 1240 ELKO DRIVE SUNNYVALE, CA 94089
The "Acquisition Cost" means ammount equal to the sum of (i) the purchase price
of each item of Equipment paid by Lessor, plus (ii) any excise, sales and use
tax on or with respect thereto, plus (iii) any costs, expenses, and fees paid or
incurred by Lessor in obtaining and deliverying such item of Equipment to Lessee
and any expenses of installation of such item of Equipment paid for by Lessor.
LEASTEC CORPORATION (LESSOR) ADEZA BIOMEDICAL CORPORATION (LESSEE)
By /s/ Leastec Corporation By /s/ Adeza Biomedical Corporation
----------------------------- --------------------------------
(authorized signature) (authorized signature)
Its PRESIDENT Its VICE PRESIDENT AND CHIEF
---------------------------- FINANCIAL OFFICER
--------------------------------
Date August 15, 1993 Date August 15, 1993
-------------------------- ------------------------------
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 5 Page 1
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ABOUT PACKAGING ROBOTICS - Invoice 100071 (03/03/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Pouchmaster XII 00486 $25,665.00
- --------------------------------------------------------------------------------------------------------------------------
6 Vacuum Plates (1-2 & 4 UP) $5,600.00
- --------------------------------------------------------------------------------------------------------------------------
1 Remote Arm $2,500.00
- --------------------------------------------------------------------------------------------------------------------------
1 Machine Bench Cabinet $1,950.00
- --------------------------------------------------------------------------------------------------------------------------
1 Automatic Bar Seal System w/Vacuum purge $11,500.00
- --------------------------------------------------------------------------------------------------------------------------
1 Pouch Top Closure Device (1 & 2 Up) $5,600.00
- --------------------------------------------------------------------------------------------------------------------------
1 Emboss Code System $1,500.00
- --------------------------------------------------------------------------------------------------------------------------
1 Pouchmaster PACSystem Spare Parts Kit $1,250.00
- --------------------------------------------------------------------------------------------------------------------------
1 Lable Master $5,000.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 100071-1 (05/05/92)
- --------------------------------------------------------------------------------------------------------------------------
12 4 sets LOT $3,724.80
- --------------------------------------------------------------------------------------------------------------------------
12 4 sets EXP
- --------------------------------------------------------------------------------------------------------------------------
24 24 spacers
- --------------------------------------------------------------------------------------------------------------------------
4 4 Dash
- --------------------------------------------------------------------------------------------------------------------------
48 4 each Alphabetical
- --------------------------------------------------------------------------------------------------------------------------
280 28 sets 0-9 numeric
- --------------------------------------------------------------------------------------------------------------------------
8 4 each 0 and 1
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $64,289.80
- --------------------------------------------------------------------------------------------------------------------------
Discount ($4,025.00)
- --------------------------------------------------------------------------------------------------------------------------
Vendor Total $60,264.80
- --------------------------------------------------------------------------------------------------------------------------
Fund 70% $42,185.36
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $3,480.30
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $ 45,665.66
- --------------------------------------------------------------------------------------------------------------------------
ALCATEL - Invoice S500218101 (4/30/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Post Scale $595.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $595.00
- --------------------------------------------------------------------------------------------------------------------------
Discount ($29.75)
- --------------------------------------------------------------------------------------------------------------------------
Vendor Total $565.25
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
______ Lessee ______ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 5 Page 2
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fund 50% $282.63
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $23.32
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $305.95
- --------------------------------------------------------------------------------------------------------------------------
AMAX ENGINEERING - Invoice 87613-IN (05/06/93)
- --------------------------------------------------------------------------------------------------------------------------
2 486 DX2/66 ISAMAX System 305023367 $3,240.00
305023368
- --------------------------------------------------------------------------------------------------------------------------
2 Monitor Impression 3-3428 .28SVGA ML313002865
ML313002866
- --------------------------------------------------------------------------------------------------------------------------
Fund 100% $3,240.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $267.30
- --------------------------------------------------------------------------------------------------------------------------
Freight $36.02
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $3,543.32
- --------------------------------------------------------------------------------------------------------------------------
AMSCO - Invoice 2096640A (04/26/92)
- --------------------------------------------------------------------------------------------------------------------------
1 38" Renaissance Grey Sterilizer R810849202 $24,563.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $841.42
- --------------------------------------------------------------------------------------------------------------------------
Fund 60% $14,737.80
- --------------------------------------------------------------------------------------------------------------------------
Fund 60% $504.85
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $1,215.87
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $16,458.52
- --------------------------------------------------------------------------------------------------------------------------
BAXTER SCIENTIFIC - Invoice 5692916 (05/12/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Rotator American Variable Sped $644.28
- --------------------------------------------------------------------------------------------------------------------------
Invoice 9104982 (08/25/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Lo Temp Upright 21 Cu Ft 110V Freezer OA37578B $7,444.73
- --------------------------------------------------------------------------------------------------------------------------
1 Ext. Compressor SVC Contract 4 $148.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 9704879 (09/11/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Shaker-Juniororbit 11Wx13Lx7H 0695-0155 $940.50
- --------------------------------------------------------------------------------------------------------------------------
Invoice 2275735 (10/29/92)
- --------------------------------------------------------------------------------------------------------------------------
1 7 Day Temp. Recorder 00544 $761.54
- --------------------------------------------------------------------------------------------------------------------------
Invoice 2324414 (10/30/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Freezer Chest-5Cu Ft, Model 301 $541.58
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $10,480.63
- --------------------------------------------------------------------------------------------------------------------------
Freight $345.14
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
______ Lessee ______ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 5 Page 3
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fund 70% $7,336.44
- --------------------------------------------------------------------------------------------------------------------------
Fund 70% $241.60
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $605.26
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $8,183.30
- --------------------------------------------------------------------------------------------------------------------------
BAXTER SCIENTIFIC - Invoice 2332363 (07/30/93)
- --------------------------------------------------------------------------------------------------------------------------
1 Revco Convertible Lab Refrigerator $1,880.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 100% $1,880.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $155.10
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $2,035.10
- --------------------------------------------------------------------------------------------------------------------------
BECKMAN INSTRUMENTS - Invoice 218259FT01 (01/08/93)
- --------------------------------------------------------------------------------------------------------------------------
1 Scintilliation Counter 7066005 $19,500.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 100% $19,500.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $1,608.75
- --------------------------------------------------------------------------------------------------------------------------
Freight $103.67
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $21,212.42
- --------------------------------------------------------------------------------------------------------------------------
BIO-RAD LABORATORIES - Invoice 42881 (07/02/93)
- --------------------------------------------------------------------------------------------------------------------------
1 GS-670 Densitometer-PC 100/240 T31215H $12,100.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 100% $12,100.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $998.25
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $13,098.25
- --------------------------------------------------------------------------------------------------------------------------
BRINKMAN - Invoice 931979 (05/12/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Polytron/Generator 9110024 $1,055.00
- --------------------------------------------------------------------------------------------------------------------------
1 Basic Unit PT10/35 110V 9010005 $1,576.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $2,631.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $16.80
- --------------------------------------------------------------------------------------------------------------------------
Fund 60% $1,578.60
- --------------------------------------------------------------------------------------------------------------------------
Fund 60% $10.08
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $130.23
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $1,718.91
- --------------------------------------------------------------------------------------------------------------------------
COMPUTER DISCOUNT - Invoice 1263081 (05/24/93)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
______ Lessee ______ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 5 Page 4
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2 Micropolis 1GB 3.5 SCSI 2 HD $2,662.00
- --------------------------------------------------------------------------------------------------------------------------
2 Ci Black Grey Univ Bracket 3.5 $20.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 100% $2,682.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $221.27
- --------------------------------------------------------------------------------------------------------------------------
Freight $17.20
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $2,920.47
- --------------------------------------------------------------------------------------------------------------------------
CHROMA TECHNOLOGY - Invoice 1578 (08/24/92)
- --------------------------------------------------------------------------------------------------------------------------
1 HQ FITC Filter Set $550.00
- --------------------------------------------------------------------------------------------------------------------------
1 HQ CY3 Filter Set $550.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $1,100.00
- --------------------------------------------------------------------------------------------------------------------------
Freight & Instal. $90.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 70% $770.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 70% $63.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $63.53
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $896.53
- --------------------------------------------------------------------------------------------------------------------------
DENNIS X-RAY CO. - Invoice 012993 (05/20/92)
- --------------------------------------------------------------------------------------------------------------------------
1 AFP Mini-Med/90 Film Processor MM-1683-90 $4,500.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 70% $3,150.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $259.88
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $3,409.88
- --------------------------------------------------------------------------------------------------------------------------
DYNATECH LABORATORIES - Invoice 63475 (08/24/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Plate Reader, MR-5000, 115 Volt 489 $5,750.00
- --------------------------------------------------------------------------------------------------------------------------
1 LX-810 Printer, 115 Volt $250.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 64312 (10/02/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Plate Reader, MR-5000, 115 Volt 412 $5,750.00
- --------------------------------------------------------------------------------------------------------------------------
1 LX-810 Printer, 114 Volt $250.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $12,000.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $208.96
- --------------------------------------------------------------------------------------------------------------------------
Fund 60% $720.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 60% $125.37
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
______ Lessee ______ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 5 Page 5
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax (8.25%) $594.00
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $7,919.37
- --------------------------------------------------------------------------------------------------------------------------
DYNATECH LABORATORIES - Invoice 40906 (05/07/93)
- --------------------------------------------------------------------------------------------------------------------------
1 MR-5000 Plate Reader, 115 Volt 410 $5,000.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 40947 (05/10/93)
- --------------------------------------------------------------------------------------------------------------------------
1 MR-5000 Microplate Reader - 115V 875 $5,000.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 100% $10,000.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $825.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $108.94
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $10,933.94
- --------------------------------------------------------------------------------------------------------------------------
FISHER SCIENTIFIC - Invoice 8376586 (04/16/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Power Supply Hicur, 110V 60HZ $873.82
- --------------------------------------------------------------------------------------------------------------------------
Freight $10.18
- --------------------------------------------------------------------------------------------------------------------------
Fund 50% $436.91
- --------------------------------------------------------------------------------------------------------------------------
Fund 50% $5.08
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $36.05
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $478.04
- --------------------------------------------------------------------------------------------------------------------------
HOEFER SCIENTIFIC - Invoice 343007 (10/29/92)
- --------------------------------------------------------------------------------------------------------------------------
1 DC Power Supply, 500VDC, 400MA 92-1262 $960.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $4.86
- --------------------------------------------------------------------------------------------------------------------------
Fund 50% $480.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 50% $2.43
- --------------------------------------------------------------------------------------------------------------------------
Tax 8.25% $39.60
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $522.03
- --------------------------------------------------------------------------------------------------------------------------
IVEK CORPORATION - Invoice 3318 (03/09/92), 3456 & 3455 (05/27/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Spotting Station 1643 $41,100.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 70% $28,770.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $2,373.53
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $ 31,143.53
- --------------------------------------------------------------------------------------------------------------------------
JAMES OLD & SON - Invoice 66542 (04/12/93)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
______ Lessee ______ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 5 Page 6
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Special Workbench $975.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 100% $975.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $80.44
- --------------------------------------------------------------------------------------------------------------------------
Freight $43.39
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $1,098.83
- --------------------------------------------------------------------------------------------------------------------------
KALLEEN'S COMPUTER - Invoice 325257 (04/09/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Deskjet 500 Color Printer 3212A21270 $739.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 331712 (04/30/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Monitor, NEC 4FG 22K20792A $825.00
- --------------------------------------------------------------------------------------------------------------------------
1 Vram VGA w/1MB $332.00
- --------------------------------------------------------------------------------------------------------------------------
1 Intel Nettport w/1MB $479.00
- --------------------------------------------------------------------------------------------------------------------------
Invoice 358941 (07/28/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Laserjet III Printer 3227A03607 $1,565.00
- --------------------------------------------------------------------------------------------------------------------------
1 Memory, 2MB F/HP IIP $189.00
- --------------------------------------------------------------------------------------------------------------------------
Subtotal $4,129.00
- --------------------------------------------------------------------------------------------------------------------------
Freight $45.65
- --------------------------------------------------------------------------------------------------------------------------
Fund 50% $2,064.50
- --------------------------------------------------------------------------------------------------------------------------
Fund 50% $22.83
- --------------------------------------------------------------------------------------------------------------------------
Tax 8.25% $170.32
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $2,257.65
- --------------------------------------------------------------------------------------------------------------------------
KALLEEN'S COMPUTER - Invoice 433430 (03/25/93)
- --------------------------------------------------------------------------------------------------------------------------
1 Laserjet IIP 3129JA3FW7 $885.00
- --------------------------------------------------------------------------------------------------------------------------
1 LJIIP Lower Paper Cassett $139.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 100% $1,024.00
- --------------------------------------------------------------------------------------------------------------------------
Sales Tax $84.48
- --------------------------------------------------------------------------------------------------------------------------
Freight $13.85
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $1,122.33
- --------------------------------------------------------------------------------------------------------------------------
KBM OFFICE FURNITURE - Invoice 10161824 (04/14/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Executive Chair $457.00
- --------------------------------------------------------------------------------------------------------------------------
3 Guest Chair $846.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
______ Lessee ______ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 5 Page 7
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Vendor Total $1,303.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 30% $390.90
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $32.25
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $423.15
- --------------------------------------------------------------------------------------------------------------------------
KBM OFFICE FURNITURE - Invoice 10180661 (07/22/92)
- --------------------------------------------------------------------------------------------------------------------------
1 Lat. File, 42"/4Drawer $492.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 50% $246.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $20.30
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $266.30
- --------------------------------------------------------------------------------------------------------------------------
MOLECULAR DEVICES - Invoice 112066 (04/13/93)
- --------------------------------------------------------------------------------------------------------------------------
1 VMAX Plate Reader $8,495.00
- --------------------------------------------------------------------------------------------------------------------------
1 Filter Lens, 1" Dia $1,510.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 100% $10,005.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $825.41
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $10,830.41
- --------------------------------------------------------------------------------------------------------------------------
NORTHGATE COMPUTER - Invoice 225216 (08/31/92)
- --------------------------------------------------------------------------------------------------------------------------
1 486DX2-50, 4MB System 306261 $2,269.00
- --------------------------------------------------------------------------------------------------------------------------
1 Mono Monitor, 14" OXD3454
- --------------------------------------------------------------------------------------------------------------------------
Freight $70.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 50% $1,134.50
- --------------------------------------------------------------------------------------------------------------------------
Fund 50% $35.00
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $93.60
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $1,263.10
- --------------------------------------------------------------------------------------------------------------------------
OFFICE CLUB - Invoice 1397156 (04/15/92)
- --------------------------------------------------------------------------------------------------------------------------
1 LateralFile, 4 Drawer, 42" $399.99
- --------------------------------------------------------------------------------------------------------------------------
Freight $15.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 50% $200.00
- --------------------------------------------------------------------------------------------------------------------------
Fund 50% $7.50
- --------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $16.50
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $224.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
______ Lessee ______ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 5 PAGE 8
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PC-CONNECTION - Invoice 3633224 (03/13/92)
- ------------------------------------------------------------------------------------------------------------------------
1 NEC Monitor, Multisync 4FG, 15" 22K20689A $779.00
- ------------------------------------------------------------------------------------------------------------------------
Fund 50% $389.50
- ------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $32.13
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $421.63
- ------------------------------------------------------------------------------------------------------------------------
RATHBUN ASSOCIATES - Invoice 12375 (05/08/92)
- ------------------------------------------------------------------------------------------------------------------------
1 Dispenser P/N 35625 $520.00
- ------------------------------------------------------------------------------------------------------------------------
Freight $18.68
- ------------------------------------------------------------------------------------------------------------------------
Fund 60% $312.00
- ------------------------------------------------------------------------------------------------------------------------
Fund 60% $11.21
- ------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $25.74
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $348.95
- ------------------------------------------------------------------------------------------------------------------------
UNITED SILICONE - Invoice 11673 (06/04/93)
- ------------------------------------------------------------------------------------------------------------------------
1 Model US-10 Hot Stamp Machine with 6" x 6" Head 1A-234-0193 $5,300.00
- ------------------------------------------------------------------------------------------------------------------------
1 Machine Stand $850.00
- ------------------------------------------------------------------------------------------------------------------------
1 Nesting Fixture (Small Cap) $200.00
- ------------------------------------------------------------------------------------------------------------------------
1 Nesting Fixture (Large Cap) $200.00
- ------------------------------------------------------------------------------------------------------------------------
1 Hardened Steel Die #D43393 $250.00
- ------------------------------------------------------------------------------------------------------------------------
1 Hardened Steel Die #D43394 $250.00
- ------------------------------------------------------------------------------------------------------------------------
1 Hardened Steel Die #D44152 $250.00
- ------------------------------------------------------------------------------------------------------------------------
1 Hardened Steel Die #D44163 $250.00
- ------------------------------------------------------------------------------------------------------------------------
Fund 100% $7,800.00
- ------------------------------------------------------------------------------------------------------------------------
Freight $5.75
- ------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $643.50
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $ 8,449.25
- ------------------------------------------------------------------------------------------------------------------------
USK, MFG., INC. - Invoice 34051 (07/06/92), 34124 (07/22/92), 34130 (07/22/92)
- ------------------------------------------------------------------------------------------------------------------------
3 Racks, Freeze Dryer $2,560.00
- ------------------------------------------------------------------------------------------------------------------------
Fund 70% $1,792.00
- ------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $147.84
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $ 1,939.84
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
______ Lessee ______ Lessor
Initial Initial
<PAGE>
EXHIBIT "A" TO RENTAL SCHEDULE NO. 5 PAGE 9
TO MASTER LEASE AGREEMENT NO. 9118 BETWEEN
LEASTEC CORPORATION ("LESSOR")
AND ADEZA BIOMEDICAL CORPORATION ("LESSEE")
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Quantity Description Serial Number Vendor Total
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VWR SCIENTIFIC - Invoice 31066770 (05/12/92)
- ------------------------------------------------------------------------------------------------------------------------
1 Cryostor Refrigerator Hi-Cap 101-013-44 $916.05
- ------------------------------------------------------------------------------------------------------------------------
1 Cryostor Alum. Rol Base, 18.8" $106.95
- ------------------------------------------------------------------------------------------------------------------------
Invoice 31500390 (04/27/92)
- ------------------------------------------------------------------------------------------------------------------------
1 Purification Cabinet, 3', w/UV Lit & Fix 131348 $4,340.90
- ------------------------------------------------------------------------------------------------------------------------
1 Base Stand-Sit $344.45
- ------------------------------------------------------------------------------------------------------------------------
Vendor Total $5,708.35
- ------------------------------------------------------------------------------------------------------------------------
Freight $274.62
- ------------------------------------------------------------------------------------------------------------------------
Fund 70% $3,995.85
- ------------------------------------------------------------------------------------------------------------------------
Fund 70% $192.23
- ------------------------------------------------------------------------------------------------------------------------
Tax (8.25%) $329.66
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FUNDED $4,517.74
- ------------------------------------------------------------------------------------------------------------------------
TOTAL EQUIPMENT FUNDED $203,608.40
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
LEASTEC CORPORATION ADEZA BIOMEDICAL CORPORATION
BY:/s/ Leastec Corporation BY: /s/ Adeza Biomedical Corporation
----------------------- ---------------------------------
TITLE: PRESIDENT TITLE: Vice President and Chief Financial Officer
------------------- ------------------------------------------
DATE: August 15, 1993 DATE: August 15, 1993
-------------------- ---------------------------
______ Lessee ______ Lessor
Initial Initial
<PAGE>
ADDENDUM NUMBER ONE
TO MASTER LEASE AGREEMENT NO. 9118
DATED JUNE 1, 1991
RENTAL SCHEDULE NO. 5
BY AND BETWEEN
LEASTEC CORPORATION ("Lessor")
AND
ADEZA BIOMEDICAL CORPORATION ("Lessee")
OBLIGATION TO PURCHASE LEASED EQUIPMENT
Lessor and the Lessee hereby agree that the Lessee shall purchase the leased
equipment from the Lessor at the end of the term of this Lease for $1.00
provided that the Lessee has performed all of the terms and conditions set out
in the Lease.
LEASTEC CORPORATION ADEZA BIOMEDICAL CORPORATION
By /S/ Leastec Corporation By /S/ Adeza Biomedical Corporation
-------------------------- -----------------------------------------------
Title: PRESIDENT Title: Vice President and Chief Financial Officer
---------------------- ------------------------------------------
Date: August 15, 1993 Date: August 15, 1993
---------------------- ---------------
<PAGE>
ADDENDUM NUMBER ONE
TO MASTER LEASE AGREEMENT NO. 9118
DATED JUNE 1, 1991
RENTAL SCHEDULE NO. 5
BY AND BETWEEN
LEASTEC CORPORATION ("Lessor")
AND
ADEZA BIOMEDICAL CORPORATION ("Lessee")
MASTER LEASE DATE 06/01/91
RENTAL SCHEDULE DATE 08/15/93
AMENDMENT DATE 08/24/93
By execution hereof, the Lessee, ADEZA BIOMEDICAL CORPORATION consents to the
incorporation of this Addendum to Master Lease No. 9118, Rental Schedule No. 5,
and to making it a part thereof. Further, by execution hereof, the Lessee
consents to LEASTEC CORPORATION amending the Equipment Description, Total
Equipment Cost and Monthly Rental Payments as follows:
EQUIPMENT DESCRIPTION:
Delete: Dynatech Laboratories Invoices 63475, 64312 and 40947
1 - Plate Reader, MR-5000 115 Volt S/N 489
1 - LX-810 Printer, 115 Volt
1 - Plate Reader, MR-5000, 115 Volt S/N 412
1 - LX-810 Printer, 115 Volt
1 - MR-5000 Microplate Reader, 115 Volt S/N 875
TOTAL EQUIPMENT COST
From: $203,608.40
To: $190.221.53
MONTHLY RENTAL PAYMENTS
From: $7,008.20
To: $6,547.43
Except as amended hereby, the Lease shall remain in full force and effect.
In the event of any conflict between the Lease and this Amendment to Lease, the
Amendment to Lease shall govern.
IN WITNESS WHEREOF, the parties have executed this Agreement to Lease as of
the dates set forth below.
AGREED TO BY:
LESSOR: LESSEE:
LEASTEC CORPORATION ADEZA BIOMEDICAL CORPORATION
By /s/ Leastec Corporation By /s/ Emory V. Anderson
--------------------------- ----------------------
Title: PRESIDENT Title: Vice President and Chief Financial Officer
----------------------- ------------------------------------------
Date: August 30, 1993 Date: August 24, 1993
---------------------- ----------------------
<PAGE>
This FINANCING STATEMENT is presented for filing and will remain effective, with
certain exceptions, for five years from the date of filing, pursuant to Section
9403 of the California Uniform Commercial Code.
Debtor: Adeza Biomedical Corporation
Federal Tax No.: 77-0054952
Mailing Address: 1240 Elko Drive
Sunnyvale, CA 94089
Secured Party: Leastec Income Fund III
Federal Tax No.: 68-0066209
Mailing Address: 2785 Mitchell Drive, Suite 110
Walnut Creek, CA 94598
This FINANCING STATEMENT covers the following types or items of property:
MASTER LEASE AGREEMENT NO. 9118 DATED JUNE 1, 1991
EQUIPMENT DESCRIBED ON EXHIBIT "A" TO RENTAL SCHEDULE NO. 5 ATTACHED HERETO AND
MADE A PART HEREOF.
Signature of Debtor: /s/ Adeza Biomedical Corporation
--------------------------------
ADEZA BIOMEDICAL CORPORATION
Date: 8/15/93
Signature of Secured Party: /s/ Leastec Income Fund III
--------------------------------
LEASTEC INCOME FUND III
Date:
Return Copy To: TERRI HOWDER
LEASTEC CORPORATION
2785 MITCHELL DRIVE, SUITE 110
WALNUT CREEK, CA 94598
<PAGE>
EXHIBIT 10.12
SECURITY AGREEMENT
------------------
This Security Agreement is made as of the 30th day of April, 1996, by and
between ADEZA BIOMEDICAL CORPORATION, a California corporation, having its
principal place of business at 1240 Elko Drive, Sunnyvale, California 94089
(hereinafter called the "Debtor"), and the parties listed on Schedule A hereto
----------
(hereinafter called individually a "Secured Party" and collectively the "Secured
Parties"). Unless otherwise defined, the terms used in this Security Agreement
shall have the meanings given them in the California Uniform Commercial Code
(the "Code").
RECITALS
--------
WHEREAS, the Secured Parties have agreed to provide to the Debtor credit in
the aggregate amount of up to Two Million Dollars ($2,000,000) (the "Credit"),
to be evidenced by a series of promissory notes dated on or after the date of
this Security Agreement (the "Notes") in substantially the form attached hereto
as Exhibit A; and
---------
WHEREAS, the Secured Parties and the Debtor hereto intend that repayment of
the Notes shall be secured by the grant to the Secured Parties of a security
interest in the collateral of the Debtor described on Exhibit B hereto (the
---------
"Collateral").
On the basis of the foregoing and the mutual promises contained herein, the
parties hereto agree as follows:
Article 1. Security Interest and Negative Covenants.
----------------------------------------
1.1 Grant of Security Interest. In consideration for the loans made
--------------------------
by the Secured Parties to the Debtor, and to secure the full, prompt and
unconditional payment by the Debtor to the Secured Parties of all amounts due
under the Notes, including any extensions, amendments or substitutions thereof,
or any new advances, and the strict performance and observance by the Debtor of
all agreements, warranties and covenants of this Security Agreement and any
other agreement related thereto (the "Obligations"), the Secured Parties have
retained and claimed, and the Debtor hereby pledges, assigns, transfers and
grants to the Secured Parties, a continuing security interest under the Code in
and to the Collateral.
1.2 No Right of Resale or Removal. The Debtor agrees that the
-----------------------------
Collateral shall be kept at its address given above and shall not be sold or
removed from those premises other than in the ordinary course of business (in
accordance with past practices) without the written consent of the Secured
Parties.
1.3 No Additional Indebtedness. The Debtor agrees that, until the
--------------------------
Obligations have been paid in full, it will not incur any additional
indebtedness for money borrowed, other than the $2,000,000 contemplated
hereunder or other than that incurred in the ordinary course of business (in
accordance with past practices), without the consent of holders of 50.1% of the
then-outstanding principal amount of the Notes.
<PAGE>
1.4 No Additional Liens. The Debtor agrees that, until the
-------------------
Obligations have been paid in full, it will not permit any lien, encumbrance or
mortgage to be placed on any of the Collateral, other than purchase money
security interests and liens incurred in the ordinary course of business, such
as materialmen's liens, mechanics liens, and liens for taxes accrued but not yet
due; provided, however, that such purchase money security interests and liens
are in existence for less than one hundred twenty (120) days or are being
contested in good faith upon the expiration of such 120 day period.
Article 2. Agreement Among the Secured Parties.
-----------------------------------
2.1 Payment Pro Rata. Payment to the Secured Parties under the Notes
----------------
shall be made in proportion to the principal and accrued interest then
outstanding on any such date of payment to each, until such obligations are paid
or retired in full.
2.2 Sharing of Payments. If any Secured Party shall at any time
-------------------
receive any payment of principal, interest or other charge arising under a Note,
or upon any other obligation of Debtor or any sums by virtue of counterclaim,
offset, or other lien that may be exercised, or from any security, other than
payments made on the same date to all Secured Parties, such Secured Party shall
share such payment or payments ratably with the other Secured Parties as to
maintain as near as possible the unpaid balance of the loans pro rata according
to the Secured Parties' aggregate proportionate interests.
2.3 Sharing of Security. Upon the occurrence of any event of default
-------------------
under this Agreement or any Note, and if the Secured Parties proceed to exercise
any rights with respect to the Collateral, the Secured Parties shall share the
Collateral subject to their respective security interests as set forth in this
Agreement and the proceeds of such Collateral ratably, without priority of one
over the other.
2.4 Appointment of Agent. The Secured Parties agree that Secured
--------------------
Parties holding 50.1% of the principal amount of Notes outstanding may act
together as the agent of all Secured Parties to execute and deliver in their
names such instruments, documents, statements and amendments thereto as may be
necessary or appropriate to perfect or continue the perfection of the security
interest granted in this Agreement.
2.5 Enforcement. Enforcement of the Secured Parties' rights
-----------
hereunder shall be taken by Secured Parties holding 50.1% of the principal
amount of Notes outstanding acting together as the agent for all of the Secured
Parties. The action of such percentage taken in accordance with the preceding
sentence, shall in each case bind all the Secured Parties. Each of the Secured
Parties agrees that any Secured Parties acting under Sections 2.4 and 2.5 shall
not be liable for any acts taken in good faith in enforcing the rights of the
Secured Parties hereunder.
Article 3. Default.
-------
3.1 Events of Default. The term "Event of Default," as used herein,
-----------------
shall mean the occurrence and continuation of any one or more of the following
events:
-2-
<PAGE>
(a) The Debtor shall fail to make any payment under a Note within ten
(10) days after such payment is due in accordance with the terms thereof;
(b) The Debtor shall fail to satisfy or comply with any of the
material terms or conditions of this Agreement and such failure shall continue
for thirty (30) days after written notice from the Secured Parties to the Debtor
specifying such failure; or
(c) The Debtor shall voluntarily make an assignment for the benefit of
creditors or voluntarily commence proceedings under the United States Bankruptcy
Code or any other insolvency, receivership, reorganization or debtor's relief
law, or have any such proceedings instituted against it that are not stayed or
dismissed within ninety (90)days.
3.2 Rights Upon Default. Upon the occurrence of an Event of Default,
-------------------
and subject to the agreement between Secured Parties regarding allocation of
proceeds and priority of interests, the Secured Parties shall have the right to
immediately demand payment of the Notes and, in addition to other rights and
remedies provided for herein or otherwise available to it, to pursue any other
remedy available to the Secured Parties under the Code or other applicable law
as enacted in any jurisdiction in which the Collateral may be located, and also
may without limitation:
(a) require the Debtor to, and the Debtor hereby agrees that it will
at its expense and upon request of the Secured Parties forthwith, assemble all
or any part of the Collateral as directed by the Secured Parties and make it
available to the Secured Parties at a place or places to be designated by the
Secured Parties which is or are reasonably convenient to the respective parties;
(b) themselves or through agents, without notice to any person and
without judicial process of any kind, enter the Debtor's offices and facilities
(or any other premises or location where any Collateral may be) and take
physical possession of any Collateral or disassemble, render unusable and/or
repossess any of the same, and the Debtor shall peacefully and quietly yield up
and surrender the same; and
(c) without notice except as specified below, sell, lease, assign,
grant an option or options to purchase or otherwise dispose of the Collateral or
any part thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at any office of a Secured Party or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the Secured
Parties may deem commercially reasonable.
The Secured Parties may maintain possession of Collateral at the
Debtor's premises or any other property owned, leased by or licensed to the
Debtor or remove the same or any part thereof to such places as the Secured
Parties may elect. The Debtor waives all rights which it would otherwise have
under any applicable law to prohibit entry to any premises to the Secured
Parties (or their representatives) or to require notice of any such action, to
the extent permitted by law. The Debtor agrees that, to the extent notice of
sale shall be required by law, ten (10) days' prior written notice to the Debtor
shall constitute reasonable notification. Notice of any public sale shall be
sufficient if it describes the Collateral to be sold in general terms, stating
the items or
-3-
<PAGE>
amounts thereof and the location and nature thereof, and is published at least
once in any newspaper selected by the Secured Parties and of general circulation
in the locale of such sale at least ten (10) days prior to the sale. The Secured
Parties shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given and may be the purchaser at any such sale, if
public, to the extent permitted by applicable law, free from any right of
redemption. The Debtor shall be fully liable for any deficiency. The Secured
Parties may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
3.3 Costs and Attorneys' Fees. The Debtor agrees to pay all costs
-------------------------
and expenses (including reasonable attorneys' fees and expenses) of the Secured
Parties incidental to the sale of, or realization upon, any of the Collateral or
in any way relating to the enforcement or protection or preservation of the
rights of the Secured Parties hereunder as against the Company.
3.4 Rights of Secured Parties; No Waiver. The Secured Parties shall
------------------------------------
have all the rights of a Secured Party under the Code and, in addition, shall
have all the rights specified herein. No failure on the part of the Secured
Parties to exercise, and no delay in exercising, any right, remedy or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise by the Secured Parties of any right, remedy or power hereunder preclude
any other or future exercise of any other right, remedy or power.
3.5 Financing Statement. The Debtor shall join in executing a
-------------------
financing statement or such other notices, assignments and documents as the
Secured Parties may request as may be appropriate under the laws as in effect in
any state or jurisdiction in which the Collateral is located or in which the
Debtor's principal place of business is located, including under any applicable
copyright or patent law, in order to protect the Secured Parties' interest in
the Collateral. Upon payment in full of all Obligations owed by the Debtor to
the Secured Parties, the security interest in the Collateral granted under this
Agreement shall terminate, and the Secured Parties agree promptly to file any
termination statements or other documents evidencing the termination of such
security interest.
3.6 Notice of Default. The Debtor will promptly give written notice
-----------------
to each of the Secured Parties upon the occurrence of any of the events
specified in Section 3.1 (a) through (c) above.
Article 4. Miscellaneous.
-------------
4.1 Agreement is Entire Contract. This Agreement, including the
----------------------------
Exhibits hereto, constitutes the entire contract between the parties hereto with
respect to the subject matter hereof. This Agreement may not be amended,
modified or supplemented except by a written agreement signed by the Company and
the holders of 50.1% of the principal amount then outstanding under the Notes,
provided that such written agreement (other than a written agreement signed by
all Secured Parties) does not affect the interests of any Secured Party in a
manner distinct or different from the interests of the other Secured Parties.
-4-
<PAGE>
4.2 Severability. If one or more provisions of this Agreement are
------------
held to be invalid, illegal or unenforceable under applicable law, portions of
such provisions, or such provisions in their entirety, to the extent necessary,
shall be severed from this Agreement, and the balance of this Agreement shall be
enforceable in accordance with its terms.
4.3 Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed to have been duly given if hand delivered,
transmitted by telegram, telex or telecopy or mailed by registered or certified
mail, postage prepaid, return receipt requested, as follows: to the Debtor, at
the address indicated at the beginning of this Agreement, and to the Secured
Parties, to their respective addresses on Schedule A or to such other address as
----------
the person to whom notice is given may have previously furnished to the other
parties in writing in accordance herewith. Notices given by telegram, telex or
telecopy and any notices of change of address shall be effective only upon
receipt. All other notices sent by mail shall be effective three (3) days after
posting.
4.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.5 Governing Law. It is the intention of the parties hereto that the
-------------
internal laws of the State of California (irrespective of its choice of law
principles) shall govern the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
parties hereto.
4.6 Binding Upon Successors and Assigns. This Agreement and the
-----------------------------------
rights and obligations of the parties hereunder shall be binding upon, and inure
to the benefit of, the permitted successors and assigns of the parties hereto.
4.7 Change of Address. Debtor agrees to notify the Secured Parties
-----------------
of any change of address of Debtor's principal place of business set forth
above.
4.8 Consent. With respect to any consent or notice required to be
-------
given or delivered hereunder to Debtor by Secured Parties, including any notice
regarding priorities among Secured Parties or allocation of proceeds upon sale
or disposition of the Collateral provided hereunder, Debtor shall be entitled to
rely upon any writing signed by the holder or holders of 50.1% of the principal
amount then outstanding under the Notes, provided that such writing (other than
a writing signed by all Secured Parties) does not affect the interests of any
Secured Party in a manner distinct or different from the interests of the other
Secured Parties.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Debtor: Secured Party:
ADEZA BIOMEDICAL CORPORATION /s/ Secured Party
___________________________________
By: /s/ Adeza Biomedical Corporation By:
________________________________ _______________________________
Name: ______________________________ Name: _____________________________
Title: _____________________________ Title: ____________________________
-6-
<PAGE>
SCHEDULE A
----------
Secured Parties
---------------
Name and Address
- ----------------
Aeneas Venture Corporation
c/o Harvard Management Co., Inc.
600 Atlantic Avenue
Boston, MA 02210-2203
Attn: Nancy Amer
Aspen Venture Partners, L.P.
c/o Alliance Technology Ventures, L.P.
3343 Peachtree Road N.E.
Suite 1140
East Tower
Atlanta, GA 30326
Attn: Michael Henos
Asset Management Associates 1989, L.P.
2275 East Bayshore Road
Suite 150
Palo Alto, CA 94303
Attn: Craig C. Taylor
B.G. Services Limited
Minden House, 6 Minden Place
St. Heliar, Jersey, Channel Islands
Charter Ventures II, L.P.
525 University Avenue, Suite 1500
Palo Alto, CA 94301
Attn: A. Barr Dolan
Enterprise Partners
5000 Birch Street
Suite 6200
Newport Beach, CA 92660
Attn: Andrew E. Senyei
STF II, L.P.
c/o Indosuez Partners
2180 Sand Hill Road, Suite 450
Menlo Park, CA 94025
Attn: Nancy Burrus
<PAGE>
EXHIBIT B
---------
Description of Collateral
-------------------------
All of the Debtor's goods, documents, instruments, chattel paper or
accounts, equipment, inventory, fixtures and general intangibles, including
patents, patent applications, copyrights, trade secrets and other intellectual
property and other personal property of every type and nature, including choses
in action, whether now or hereafter acquired. All cash or non-cash proceeds of
all of the foregoing including insurance proceeds or claims, proceeds from any
litigation or other claims, and all property received in trade for any of the
foregoing and all rents, royalties and other revenues from any lease, license or
other temporary disposition of any interest in any of the foregoing.
<PAGE>
EXHIBIT 10.13
NOTE AND WARRANT PURCHASE AGREEMENT
-----------------------------------
This Note and Warrant Purchase Agreement (this "Agreement") is made as of
April 30, 1996 (the "Effective Date"), by and between Adeza Biomedical
Corporation, a California corporation (the "Company") and each of the
individuals or entities set forth on Exhibit A hereto (each, a "Purchaser").
---------
WHEREAS, the Company may desire to issue up to an aggregate principal
amount of $2 million of its Convertible Secured Promissory Notes, the form of
which is attached as Exhibit B hereto (the "Notes") to the Purchasers;
---------
WHEREAS, each Purchaser has committed, upon the request of the Company, to
purchase up to such aggregate principal amount of Notes as is set forth opposite
such Purchaser's name on Exhibit A (for each Purchaser, the "Maximum
---------
Commitment");
WHEREAS, upon the execution of this Agreement and the other documents
required to be delivered on or before the Closing (as defined below), the
Company will issue to each such Purchaser a warrant in the form attached as
Exhibit C hereto ("Warrant") to purchase shares of the Company's preferred stock
- ---------
(the "Preferred Stock") or common stock (the "Common Stock"), as applicable, in
an initial amount equal to ten percent (10%) of such Purchaser's Maximum
Commitment and the number of shares purchasable upon exercise of such Warrant
shall be increased thereafter for each month that any Note(s) issued to such
Purchaser remain outstanding, as is more fully described in this Agreement; and
WHEREAS, the Company shall issue, and the Purchasers shall receive the
Warrants and, if requested by the Company, purchase the Notes, pursuant to the
terms and subject to the conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual promises contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. CERTAIN DEFINITIONS.
-------------------
1.1 "CONVERSION STOCK" shall mean all capital stock of the Company
issued to the Purchasers upon any conversion of the Notes pursuant to the terms
thereof.
1.2 "SECURITIES" shall mean the Notes, the Warrants, the Conversion
Stock, if any, and the Shares.
1.3 "SHARES" shall mean the shares of the Preferred Stock or Common
Stock, as the case may be, issued upon exercise of the Warrants and all
securities received in replacement of or in connection with the Shares pursuant
to stock dividends or splits, all securities received in replacement of the
Shares in a recapitalization, merger, reorganization, conversion, exchange or
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<PAGE>
the like, and all shares of Common Stock issuable upon conversion of any
Preferred Stock Shares in conformity with the Company's Restated Articles of
Incorporation.
2. CALL OPTION
-----------
2.1 Grant of Call Option. The Purchasers hereby grant the Company
--------------------
the irrevocable and unconditional right, at any time or from time to time, to
cause each Purchaser to purchase up to the aggregate principal amount of Notes
as equals such Purchaser's Maximum Commitment (the "Call Option"), pursuant to
the terms and subject to the conditions set forth in this Agreement. The
Company shall have the right to determine, when, whether and to what extent to
exercise the Call Option, subject only to the limitations set forth in this
Agreement. The Call Option shall expire upon the first anniversary of the
Effective Date.
2.2 Exercise of Call Option. In the event the Company decides to
-----------------------
exercise all or any part of the Call Option, from time to time, it shall deliver
a notice to each Purchaser (the "Notice of Intention") specifying the aggregate
principal amount of Notes that the Company desires to issue, along with the
portion of such amount to be issued to each Purchaser, which portion is equal to
the proportion that such Purchaser's Maximum Commitment bears to $2 million
(such Purchaser's "Pro Rata Amount"); provided, however, that the Company will
not exercise its Call Option with respect to Aspen Ventures ("Aspen") until (i)
the Company has filed a registration statement on Form S-1 with the Securities
and Exchange Commission ("SEC") in anticipation of an initial public offering of
the Company's Common Stock and (ii) every other Purchaser has purchased Notes in
an amount equal to their respective Maximum Commitments. The Notice of
Intention shall specify the date upon which the Notes will be issued and the
payment due therefor (the "Issuance Date"). Upon an Issuance Date, each
Purchaser shall pay to the Company, by check or wire transfer, funds equal to
its respective Pro Rata Amount and the Company will issue to such Purchaser a
Note in the principal amount of such Purchaser's Pro Rata Amount.
3. WARRANT COVERAGE. At the Closing, the Company will issue to each
----------------
Purchaser a Warrant to purchase that number of Shares as equals (x) ten percent
(10%) of such Purchaser's Maximum Commitment, divided by the Warrant's exercise
price per share (as set forth in the Warrant) plus (y) the quotient of (i) five
percent (5%) of the aggregate outstanding principal amount of any Note(s) issued
to such Purchaser for each full or partial calendar month that such Note(s)
remain outstanding, divided by (ii) the Warrant's exercise price per share (as
set forth in the Warrant); provided however, in no event will the number of
Shares issuable upon exercise of the Warrant issued to a Purchaser exceed fifty
percent (50%) of the aggregate principal amount of all Notes issued to such
Purchaser divided by the Warrant's exercise price per share (as set forth in the
Warrant).
4. CLOSING. The closing of the transactions contemplated by this
-------
Agreement shall take place at the offices of Venture Law Group, 2800 Sand Hill
Road, Menlo Park, California 94025 at 10:00 a.m. on April 30, 1996, or at such
other time and place as the Company and Purchaser's counsel may agree (which
time and place are designated as the "Closing").
5. AUTHORIZATION OF STOCK ISSUABLE UPON EXERCISE OF WARRANTS. The Company
---------------------------------------------------------
hereby covenants that, upon conversion of the Notes and/or exercise of the
Warrants issued
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<PAGE>
hereunder, the Company will have duly reserved and authorized such number of
shares of its securities as is necessary to issue all Conversion Stock and/or
Shares issuable upon conversion of such Notes or exercise of such Warrants.
6. REPRESENTATIONS AND WARRANTIES OF COMPANY. Except as set forth on
-----------------------------------------
Exhibit D to this Agreement (the "Schedule of Exceptions"), the Company hereby
- ---------
makes the following representations and warranties to Purchaser as of the
Closing:
6.1 Organization and Standing; Articles and By-Laws. The Company is
-----------------------------------------------
a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted. The Company is qualified or licensed to do business as a foreign
corporation and is in good standing in all jurisdictions where such
qualification or licensing is required, except where the failure to so qualify
would not have a material adverse effect upon the Company.
6.2 Corporate Power. The Company and its officers and directors now
---------------
have, or will have at the Closing, all requisite corporate power to enter into
this Agreement, the Notes, the Warrants and the Security Agreement dated of even
date herewith, by and between the Company and the Purchasers, in the form
attached hereto as Exhibit E, (the "Security Agreement"), to perform all
---------
obligations of the Company hereunder and thereunder, and to sell and issue the
Notes and Warrants hereunder, to issue the Conversion Stock issuable on
conversion of the Notes and to issue the Shares issuable on exercise of the
Warrants. Each of this Agreement, the Notes, the Warrants and the Security
Agreement (together, the Notes, the Warrants and the Security Agreement shall be
referred to hereafter as the "Related Documents") has been duly authorized by
the Company and is the valid and binding obligation of the Company enforceable
in accordance with its terms, except as the same may be limited by equitable
principles and by bankruptcy, insolvency, moratorium, and other laws of general
application affecting the enforcement of creditors' rights, and except to the
extent the indemnification provisions of the Investors' Rights Agreement dated
December 21, 1994, by and between the Company and certain holders of the
Company's Series 1 and Series 2 Preferred Stock, as amended by that certain
First Amendment to the Investors' Rights Agreement dated April 30, 1996 (the
"Rights Agreement") may be limited by applicable federal or state securities
laws.
6.3 Subsidiaries. The Company does not control, directly or
------------
indirectly, any other corporation, association or business entity.
6.4 Capitalization. The authorized capital stock of the Company is
--------------
(or, at the Closing, will be) 20,000,000 shares of Common Stock and 13,132,059
shares of Preferred Stock, of which 4,513,411 have been designated Series 1
Preferred Stock and 8,618,648 have been designated Series 2 Preferred Stock. As
of the Closing, there will be issued and outstanding 384,592 shares of Common
Stock, 4,513,401 shares of Series 1 Preferred Stock and 7,974,965 shares of
Series 2 Preferred Stock. All such issued and outstanding shares of Common
Stock and Preferred Stock have been duly authorized and validly issued, are
fully paid and nonassessable and were issued in accordance with the registration
or qualification provisions of the Securities Act of 1933, as amended, and any
relevant state securities laws, or pursuant to valid exemptions therefrom.
Except as set forth on the Schedule of Exceptions, there are no outstanding
rights,
-3-
<PAGE>
options, warrants, conversion rights or agreements for the purchase or
acquisition from the Company of any shares of its capital stock. Other than the
Voting Agreement dated December 21, 1994, by and between the Company and certain
holders of the Company's Series 1 and Series 2 Preferred Stock, the Company is
not a party to or subject to any agreement or understanding, and, to the
Company's knowledge, there is no agreement or understanding between or among any
persons and/or entities, that affects or relates to the voting or giving of
written consents with respect to any security of the Company or by a director of
the Company.
6.5 Authorization.
-------------
(a) Corporate Action. All corporate action on the part of the
----------------
Company, its officers, directors and shareholders necessary for the sale and
issuance of the Securities pursuant to the terms and subject to the conditions
of this Agreement and the performance of the Company's obligations hereunder and
under the Related Documents has been taken or will be taken prior to the
Closing.
(b) Valid Issuance. Upon conversion of the Notes in conformity with
--------------
their terms, the Conversion Stock will be duly authorized, validly issued, fully
paid and nonassessable, and free of any liens or encumbrances caused or created
by the Company. Upon exercise of the Warrants in conformity with their terms,
the Shares will be duly authorized, validly issued, fully paid and
nonassessable, and free of any liens or encumbrances caused or created by the
Company. Upon conversion of any Preferred Stock Shares into shares of Common
Stock in conformity with the Company's Restated Articles of Incorporation, such
shares of Common Stock will be duly authorized, validly issued, fully paid and
nonassessable, and free of any liens or encumbrances caused or created by the
Company.
6.6 Patents, Trademarks, etc. The Company owns and possesses or is
------------------------
licensed under all patents, patent applications, licenses, trademarks, trade
names, brand names, trade secrets, proprietary rights and processes, inventions
and copyrights employed in the operation of its business as now conducted and
necessary for its business as proposed to be conducted (collectively, the
"Intellectual Property"), without any infringement of or conflict with the
rights of others respecting any of the same. The Company is not obligated to
make any payments by way of royalties, fees or otherwise to any owner or
licensor of any patent, trademark, trade name, copyright, trade secret or other
intangible asset, with respect to the use thereof or in connection with the
conduct of its business, or otherwise. The Company has not granted to any third
party any option, license or other right of any kind to its Intellectual
Property. The Company has not received any communications alleging that it has
violated or, by conducting its business as proposed, would violate any 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 of
any violation or infringement by a third party of any of its Intellectual
Property.
6.7 Compliance with Other Instruments, None Burdensome, etc. The
-------------------------------------------------------
Company is not in violation of any term of its Restated Articles of
Incorporation or By-Laws, each as amended to date. The Company is not in
violation of, or in default in any material respect under, the terms of any
mortgage, indenture, contract, agreement, instrument, judgment or decree
applicable to it or to which it is a party, the violation of which would have a
material adverse effect on the Company as a whole or on the transactions
contemplated herein, and, to the best of
-4-
<PAGE>
the Company's knowledge, the Company is not in violation of any order, statute,
rule or regulation applicable to the Company, the violation of which would have
a material adverse effect on the Company. The execution, delivery and
performance of and compliance with this Agreement and the Related Documents, and
the issuance and sale of the Notes and Warrants pursuant hereto will not result
in any such 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 pursuant to any
such term or the suspension, revocation, impairment, forfeiture or nonrenewal of
any material permit, license, authorization, or approval applicable to the
Company, its business or operations or any of its assets or properties.
6.8 Proprietary Agreements; Employees. Each employee and consultant
---------------------------------
of the Company has executed an agreement with the Company agreeing to maintain
the confidentiality of proprietary information and agreeing to assign certain
inventions to the Company. The Company is not aware that any of its employees
or consultants is in violation thereof. The Company is not aware that any of
its employees is obligated under any contract (including licenses, covenants, or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of his or her best efforts to promote the interests of the Company or
that would conflict with the Company's business as proposed to be conducted.
6.9 Litigation, etc. There is no action, proceeding or investigation
---------------
pending, or to the best of the Company's knowledge, threatened, against the
Company or, to the best of its knowledge, its officers, directors or
shareholders, which questions the validity of this Agreement or the Related
Documents, or the right of the Company to enter into any of them, 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 business, prospects, conditions, affairs or operations of the Company as
a whole or in any of its consolidated properties or assets, or any material
impairment of the right or ability of the Company to carry on its business as
now conducted or as proposed to be conducted, or any material liability on the
part of the Company. The foregoing includes, without limitation, actions
pending or, to the best of the Company's knowledge, threatened, 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 to 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.
6.10 Governmental Consent, etc. No consent, approval or
-------------------------
authorization of or registration, designation, declaration or filing with any
governmental authority in the United States on the part of the Company is
required in connection with the valid execution, delivery and performance of
this Agreement, or the offer, sale or issuance of the Securities, except, if
required, filings or qualifications under the California Corporate Securities
Law of 1968, as amended (the "California Law"), and the rules thereunder, or
other applicable blue sky laws, which filings or qualifications, if required,
will be timely filed or obtained.
-5-
<PAGE>
6.11 Offering. In reliance on the representations and warranties of
--------
the Purchaser in Section 7 hereof, the offer, sale and issuance of the Notes and
Warrants in conformity with the terms of this Agreement are exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as amended
(the "Securities Act") and from the qualification or registration requirements
of the California Law or other applicable blue sky laws.
6.12 Taxes. The Company has filed all consolidated tax returns that
-----
are required to have been filed with appropriate federal, state, county, local
and foreign governmental agencies or instrumentalities. All such returns and
reports were true and correct in all material respects at the time made. The
Company has paid or established reserves for all income, franchise and other
taxes, assessments, governmental charges, penalties, interest and fines due and
payable by it on or before the Closing. There is no pending dispute with any
taxing authority relating to any of such returns and the Company has no
knowledge of any proposed liability for any tax to be imposed upon the
properties or assets of the Company. The provision for taxes of the Company as
shown in the Audited Statements (as hereinafter defined), if any, is adequate
for taxes due or accrued as of the date thereof. The Company has not elected
pursuant to the Internal Revenue Code of 1986, as amended (the "Code"), to be
treated as a Subchapter S corporation or a collapsible corporation pursuant to
Section 341(f) of Section 1362(a) of the Code.
6.13 Title. The Company owns its property and assets free and clear
-----
of all liens, mortgages, loans or encumbrances except such encumbrances and
liens which arise in the ordinary course of business and do not materially
impair the Company's ownership or use of such property or assets. With respect
to the property and assets leased by the Company, the Company is in compliance
with such leases and, to the best of the Company's knowledge, holds valid
leasehold interests free and clear of any liens, claims or encumbrances.
6.14 Material Contracts and Commitments. All of the contracts,
----------------------------------
mortgages, indentures, agreements, instruments and transactions to which the
Company is a party or by which it is bound that involve (i) obligations of, or
payments to, the Company in excess of Fifty Thousand Dollars ($50,000), (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company that is material to the Company's business as conducted or as
proposed to be conducted, (iii) provisions restricting the development,
manufacture or distribution of the Company's products or services, or (iv)
agreements between the Company and its officers, directors, consultants,
affiliates and employees, are set forth on the Schedule of Exceptions (the
"Contracts"). The Company is not in material default under any of such
Contracts. To the best of the Company's knowledge, no other party to any of the
Contracts is in material default thereunder.
6.15 Financial Statements. The Company has provided to the
--------------------
Purchasers its audited consolidated financial statements, consisting of a
balance sheet, income statement and statement of cash flows, for the fiscal year
ended December 31, 1995 (the "Audited Statements"), and its unaudited
consolidated financial statements, consisting of a balance sheet, income
statement and statement of cash flows, for the three month period ended March
31, 1996 (the "Unaudited Statements"). The Audited Statements and the Unaudited
Statements are collectively referred to as the "Financial Statements." The
Audited Statements and the Unaudited Statements were prepared in compliance with
generally accepted accounting principles applied on a consistent
-6-
<PAGE>
basis, except that, with respect to the Unaudited Statements, no footnotes are
provided and except for minor year-end adjustments, and fairly present the
Company's consolidated financial condition and results of operations as of the
dates of and for the periods covered thereby. Except as set forth in the
Unaudited Statements, the Company has no liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to March 31, 1996 which individually or in the aggregate are not
material to the financial condition or operating results of the Company and (ii)
obligations not required under generally accepted accounting principles to be
reflected in the Financial Statements. The Company has maintained and will
continue to maintain a standard system of accounting established and
administered in accordance with generally accepted accounting principles. Since
March 31, 1996, there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business which have not
been, either individually or in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(c) any waiver by the Company of a valuable right or of a material
debt owed to it;
(d) any declaration or payment of any dividend or other distribution
of the assets of the Company on, or any direct or indirect redemption, purchase
or acquisition of, any securities of the Company other than repurchases of
Common Stock from terminated employees, consultants, officers and directors
pursuant to written agreements;
(e) any sale, transfer or lease of any of the Company's assets except
in the ordinary course of business, or any mortgage or pledge of or lien imposed
upon any of the Company's assets;
(f) any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and which is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted and as it is proposed to be conducted);
(g) any change or amendment to a material contract or arrangement by
which the Company or any of its properties or assets is bound or subject;
(h) any increase in compensation of any of its existing officers, or
the rate of pay of its employees as a group, except as part of regular
compensation increases in the ordinary course of business or under existing
employment or consulting agreements;
(i) any resignation or termination of employment of any officer or key
employee of the Company;
-7-
<PAGE>
(j) to the Company's knowledge, any other event or condition of any
character which has materially and adversely affected the assets, properties,
financial condition, operating results or business of the Company (as such
business is presently conducted and as it is proposed to be conducted); or
(k) any agreement by the Company to take any action which would
violate any of (a) through (j) above.
6.16 Registration Rights. Other than as granted pursuant to the
-------------------
Rights Agreement, the Company has not granted or agreed to grant any rights to
register any of its securities as that term is defined in the Rights Agreement,
including any rights to include securities in any registration initiated by the
Company or another shareholder, to any person or entity.
6.17 Disclosure. Neither this Agreement nor the Related Documents,
----------
nor any exhibit or schedule furnished or to be furnished to the Purchasers
pursuant hereto or thereto, when taken together, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements made herein and therein, in the light of
the circumstances under which they were made, not misleading.
6.18 Insurance. The Company has in full force and effect fire and
---------
casualty insurance policies covering itself, with extended coverage, sufficient
in amount (subject to reasonable deductibles) to allow it to replace any of its
material properties that might be damaged or destroyed and general liability,
products liability and other employer's insurance in amounts, and covering such
risks, as is reasonable in light of its business and facilities.
6.19 Licenses and Permits. The Company has, and is operating in
--------------------
compliance with, all material permits, licenses, approvals and authorizations of
all federal, state, municipal and other political authorities necessary for it
to carry on its business as presently conducted and as proposed to be conducted.
6.20 Compliance With Laws. To the best of the Company's knowledge,
--------------------
the Company has complied in all material respects with all applicable foreign
and domestic federal, state, municipal or other governmental statutes,
ordinances and regulations in respect of the ownership of its properties and the
conduct of its business (including, without limitation, statutes, ordinances and
regulations relating to the development, testing, introduction, manufacturing or
marketing of diagnostic and therapeutic medical products, the storage, handling
or disposal of hazardous substances, or the health and safety of the Company's
employees and consultants), wherein failure to be in compliance would have a
material adverse effect on the Company taken as a whole.
6.21 Related Party Transactions. Other than with respect to advances
--------------------------
of expenses made in the ordinary course of business or in connection with
employee stock purchases, no employee, officer, or director of the Company or
member of his or her immediate family is indebted to the Company, nor is the
Company indebted (or committed to make loans or extend or guarantee credit) to
any of them. To the best of the Company's knowledge, none of such persons has
any direct or indirect ownership interest in any firm or corporation with which
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<PAGE>
the Company is affiliated or with which the Company has a business relationship,
or any firm or corporation that competes with the Company, except that
employees, officers or directors of the Company and members of their immediate
families may own stock in publicly traded companies that compete with the
Company. No member of the immediate family of any officer or director of the
Company is directly or indirectly interested in any material contract with the
Company.
6.22 Labor Agreements and Actions; Employee Benefits. The Company is
-----------------------------------------------
not bound by or subject to (and none of its assets or properties is bound by or
subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
knowledge of the Company, has sought to represent any of the employees of the
Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company, threatened, which could have a
material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees. The Company is not
aware that any officer or key employee, or that any group of employees,
presently intends to terminate their employment with the Company, nor does the
Company have a present intention to terminate the employment of any of the
foregoing. Subject to general principles related to wrongful termination of
employees, the employment of each officer and employee of the Company is
terminable at the will of the Company.
6.23 U.S. Real Property Holding Corporation. The Company is not now
--------------------------------------
and has never been a "United States Real Property Holding Corporation," as
defined in Section 897(c)(2) of the Code, and Section 1.897-2(b) of the
regulations promulgated by the Internal Revenue Service.
7. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. In connection with the
--------------------------------------------
purchase of the Notes (and acquisition of any related Securities), each
Purchaser represents to the Company as follows:
7.1 Authorization. Purchaser has full power and authority to enter
-------------
into this Agreement and the Related Documents, and each such agreement
constitutes its valid and legally binding obligation, enforceable in accordance
with its terms.
7.2 Company Affairs; Purchaser's Account; Accredited Investor.
---------------------------------------------------------
Purchaser is aware of the Company's business affairs and financial condition,
has had sufficient opportunity to ask questions of and receive answers from
representatives of the Company and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to purchase the Notes.
Purchaser is purchasing the Notes for investment for Purchaser's own account
only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act. Purchaser is
an "accredited investor" as such term is defined in Rule 501(a) of Regulation D
under the Securities Act and has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
investing in the Notes, including a complete loss of its investment.
7.3 Unregistered Securities. Purchaser understands that none of the
-----------------------
Securities have been registered under the Securities Act by reason of a specific
exemption therefrom, which
-9-
<PAGE>
exemption depends upon, among other things, the bona fide nature of Purchaser's
investment intent as expressed herein.
7.4 Hold; Legends. Purchaser further acknowledges and understands
-------------
that the Securities must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Purchaser understands that the Notes and Warrants and, when and if
issued, certificates evidencing the Conversion Stock and Shares will be
imprinted with a legend that prohibits the transfer of such Securities unless
they are registered or such registration is not required in the opinion of
counsel for the Company.
7.5 Restricted Securities. Purchaser understands that the Securities
---------------------
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations, such securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
such Purchaser represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
7.6 No Market. Purchaser further understands that at the time
---------
Purchaser wishes to sell the Securities there may be no public market upon which
to make such a sale, and that, even if such a public market then exists the
Company may not be satisfying the current public information requirements of
Rule 144, and that, in such event, Purchaser will be precluded from selling the
Securities under Rule 144 even if the two-year minimum holding period had been
satisfied.
7.7 Registration of Sale. Purchaser further understands that in the
--------------------
event all of the applicable requirements of Rule 144 are not satisfied,
registration under the Securities Act, compliance with Regulation A or some
other registration exemption will be required; and that, notwithstanding the
fact that Rule 144 is not exclusive, the staff of the SEC has expressed its
opinion that persons proposing to sell private placement securities other than
in a registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales and that such persons and their respective
brokers who participate in such transactions do so at their own risk.
7.8 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, such Purchaser further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 7, the Rights Agreement and the Voting Agreement, provided and to
the extent this Section 7, the Rights Agreement and the Voting Agreement are
then applicable, and:
(a) 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
(b) (i) Such Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances
-10-
<PAGE>
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 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.
(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 an Investor that is a partnership to a partner of such partnership
or a retired partner of such partnership who retires after the date hereof, or
to the estate of any such partner or retired partner or the transfer by gift,
will or intestate succession of any partner to his or her spouse or to the
siblings, lineal descendants or ancestors of such partner or his or her spouse,
if the transferee agrees in writing to be subject to the terms hereof to the
same extent as if he or she were an original Investor hereunder.
8. CONDITIONS TO THE PURCHASERS' OBLIGATIONS AT CLOSING. The obligations
----------------------------------------------------
of each Purchaser under this Agreement are subject to the fulfillment on or
before the Closing of each of the following conditions:
8.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 6 hereof shall be true on and as
of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
8.2 Performance. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
8.3 Compliance Certificate. The President of the Company shall
----------------------
deliver to the Purchaser at the Closing a certificate certifying that (i) the
conditions specified in Sections 8.1, and 8.2 have been fulfilled and (ii) there
shall have been no adverse change in the business, affairs, prospects,
operations, properties, assets or conditions of the Company since March 31,
1996.
8.4 State Qualifications. The Commissioner of Corporations of the
--------------------
State of California shall have issued a permit qualifying the offer and sale to
the Purchasers of the Notes and Warrants or such offer and sale shall be exempt
from such qualification under the California Corporate Securities Law of 1968,
as amended
8.5 Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Purchaser.
8.6 Warrants. The Warrant shall have been duly executed and
--------
delivered by the Company, and shall have been agreed and acknowledged by
Purchaser.
8.7 Opinion of Company Counsel. Purchaser shall have received from
--------------------------
Venture Law Group, counsel for the Company, an opinion dated as of the Closing,
in the form attached hereto as Exhibit F.
---------
-11-
<PAGE>
9. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
--------------------------------------------------
of the Company to each Purchaser under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by the
Purchasers:
9.1 Representations and Warranties. The representations and
------------------------------
warranties of each Purchaser contained in Section 7 hereof shall be true on and
as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
9.2 State Qualifications. The Commissioner of Corporations of the
--------------------
State of California shall have issued a permit qualifying the offer and sale of
the Notes and Warrants to the Purchasers or such offer and sale shall be exempt
from such qualification under the California Corporate Securities Law of 1968,
as amended.
9.3 Warrants. Each Warrant shall have been duly executed and
--------
delivered by the Company, and each Warrant shall have been agreed and
acknowledged by each Purchaser.
9.4 Waiver. Each of the Purchasers shall have signed that certain
------
Election and Waiver Letter Agreement dated April 24, 1996, pursuant to which
such Purchaser waives certain registration rights of Purchaser as set forth in
the Rights Agreement.
10. MISCELLANEOUS.
-------------
10.1 Survival of Representations and Warranties. The representations
------------------------------------------
and warranties made by the Purchaser and the Company in this Agreement and the
respective obligations of each party, to be performed on the terms hereof at,
prior to, or after the Closing, shall not expire with, or be terminated, or
extinguished on, the Closing.
10.2 Modification; Waiver. No modification or waiver of any
--------------------
provision of this Agreement shall be effective unless in writing and approved by
the Company and a majority-in-interest of the Purchasers. Upon the effectuation
of each waiver, consent, agreement of amendment or modification, the Company
promptly shall give written notice thereof to the Purchasers as provided in
Section 10.3 of this Agreement.
10.3 Notices. Any notice, demand or report herein required or
-------
permitted to be given shall be deemed given upon personal delivery, upon the
transmittal thereof if made by telecopy with confirmed transmission receipt or
upon the seventh day following mailing by registered airmail (or certified first
class mail if both the addresser and addressee are located in the United
States), postage prepaid and addressed to the parties as follows: If to the
Company, to its principal executive offices at 1240 Elko Drive, Sunnyvale,
California 94089, if to the Purchaser, to the address set forth on Exhibit A to
---------
this Agreement, or to such other single place as any single addressee shall
designate by written notice to the other addressees.
10.4 Successors and Assigns. All covenants and agreements of the
----------------------
parties contained in this Agreement shall be binding upon and inure to the
benefit of their respective successors and permitted assigns. Except for an
assignment by operation of law in connection with a merger or consolidation
involving the Company, the Company may not assign or transfer any of its rights
or obligations under this Agreement or any Related Documents without the prior
-12-
<PAGE>
written consent of a majority-in-interest of the Purchasers. Any purported
assignment in violation of this section shall be void.
10.5 Governing Law. This Agreement shall in all respects be governed
-------------
by the laws of the State of California, United States of America as such laws
are applied to agreements between California residents entered into and to be
performed entirely within California without reference to rules of conflicts of
laws.
10.6 Headings. The section and paragraph headings contained herein
--------
are for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.
10.7 Entire Agreement. This 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 thereof.
10.8 California Qualification. THE SALE OF THE SECURITIES WHICH ARE
------------------------
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM
QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES WITH RESPECT TO SUCH SECURITIES ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
10.9 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.
10.10 Delays or Omissions. It is agreed that no delay or omission to
-------------------
exercise any rights, power, or remedy accruing to either party, upon any breach
or default of the other party under this Agreement, shall impair any such
rights, power, or remedy, nor shall it be construed to be a waiver of any such
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. It is further agreed that any waiver, permit, consent,
or approval of any kind or character on a party's part of any breach or default
under this Agreement, or any waiver on a party's part of any provisions or
conditions of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing, and that all remedies, either
under this Agreement or by law or otherwise afforded to such party, shall be
cumulative and not alternative.
10.11 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (x) such
provision shall be excluded from this Agreement, (y) the balance of
-13-
<PAGE>
the Agreement shall be interpreted as if such provision were so excluded and (z)
the balance of the Agreement shall be enforceable in accordance with its terms.
10.12 Legends. Each Note and Warrant and the certificates for any
-------
Conversion Stock issued on Conversion of the Notes and the certificates for any
Shares issued on exercise of the Warrants shall be stamped or otherwise
imprinted with a legend substantially in the following form:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO SUCH SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE ACT OR UNLESS SOLD
IN FULL COMPLIANCE WITH RULE 144 UNDER THE ACT."
(b) Any legend required to be placed thereon by the California
Commissioner of Corporations or by any other applicable state securities law.
[Signature page follows]
-14-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
ADEZA BIOMEDICAL CORPORATION
By: /s/ Adeza Biomedical Corporation
-------------------------------------
Title:
----------------------------------
/s/ Purchaser
----------------------------------------
(Print Name of Purchaser)
By:
-------------------------------------
Title:
----------------------------------
-15-
<PAGE>
EXHIBIT A
---------
<TABLE>
<CAPTION>
Name and Address Maximum Commitment
- ---------------------------------------- ------------------
<S> <C>
Aeneas Venture Corporation $ 250,000
c/o Harvard Management Co., Inc.
600 Atlantic Avenue
Boston, MA 02210-2203
Attn: Nancy Amer
Aspen Venture Partners, L.P. $ 100,000
c/o Alliance Technology Ventures, L.P.
3343 Peachtree Road N.E.
Suite 1140
East Tower
Atlanta, GA 30326
Attn: Michael Henos
Asset Management Associates 1989, L.P. $ 356,118
2275 East Bayshore Road
Suite 150
Palo Alto, CA 94303
Attn: Craig C. Taylor
B.G. Services Limited $ 215,581
Minden House, 6 Minden Place
St. Heliar, Jersey, Channel Islands,
U.K.
copy correspondence to:
Bruce Keller
650 California Street, Suite 2800
San Francisco, CA 94108
Charter Ventures II, L.P. $ 457,049
525 University Avenue, Suite 1500
Palo Alto, CA 94301
Attn: A. Barr Dolan
Enterprise Partners $ 356,118
5000 Birch Street
Suite 6200
Newport Beach, CA 92660
Attn: Andrew E. Senyei
STF II, L.P. $ 265,134
c/o Indosuez Partners
2180 Sand Hill Road, Suite 450
Menlo Park, CA 94025
Attn: Nancy Burrus
TOTAL $2,000,000
</TABLE>
-16-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. CERTAIN DEFINITIONS.......................................... 1
2. CALL OPTION.................................................. 2
2.1 Grant of Call Option........................................ 2
2.2 Exercise of Call Option..................................... 2
3. WARRANT COVERAGE............................................ 2
4. CLOSING...................................................... 2
5. AUTHORIZATION OF STOCK ISSUABLE UPON EXERCISE OF WARRANTS.... 3
6. REPRESENTATIONS AND WARRANTIES OF COMPANY.................... 3
6.1 Organization and Standing; Articles and By-Laws............. 3
6.2 Corporate Power............................................. 3
6.3 Subsidiaries................................................ 3
6.4 Capitalization.............................................. 3
6.5 Authorization............................................... 4
6.6 Patents, Trademarks, etc.................................... 4
6.7 Compliance with Other Instruments, None Burdensome, etc..... 5
6.8 Proprietary Agreements; Employees........................... 5
6.9 Litigation, etc............................................. 5
6.10 Governmental Consent, etc.................................. 6
6.11 Offering................................................... 6
6.12 Taxes...................................................... 6
6.13 Title...................................................... 6
6.14 Material Contracts and Commitments......................... 6
6.15 Financial Statements....................................... 7
--------------------
6.16 Registration Rights........................................ 8
-------------------
6.17 Disclosure................................................ 8
----------
6.18 Insurance.................................................. 8
---------
6.19 Licenses and Permits....................................... 9
--------------------
6.20 Compliance With Laws....................................... 9
--------------------
6.21 Relatled Party Transactions................................ 9
---------------------------
6.22 Labor Agreements and Actions; Employee Benefits............ 9
-----------------------------------------------
6.23 U.S. Real Property Holding Corporation..................... 9
--------------------------------------
7. REPRESENTATIONS AND WARRANTIES OF PURCHASERS................. 10
7.1 Authorization............................................... 10
7.2 Company Affairs; Purchaser's Account; Accredited Investor... 10
7.3 Unregistered Securities..................................... 10
7.4 Hold; Legends............................................... 10
7.5 Restricted Securities....................................... 10
</TABLE>
-17-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.6 No Market................................................... 11
7.7 Registration of Sale........................................ 11
7.8 Further Limitations on Disposition.......................... 11
----------------------------------
8. CONDITIONS TO THE PURCHASERS' OBLIGATIONS AT CLOSING......... 11
8.1 Representations and Warranties.............................. 12
8.2 Performance................................................. 12
8.3 Compliance Certificate...................................... 12
8.4 State Qualifications........................................ 12
8.5 Proceedings and Documents................................... 12
8.6 Warrants.................................................... 12
8.7 Opinion of Company Counsel.................................. 12
9. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING........... 12
9.1 Representations and Warranties.............................. 12
9.2 State Qualifications........................................ 13
9.3 Warrants.................................................... 13
9.4 Waiver...................................................... 13
10. MISCELLANEOUS............................................... 13
10.1 Survival of Representations and Warranties................. 13
10.2 Modification; Waiver....................................... 13
10.3 Notices.................................................... 13
10.4 Successors and Assigns..................................... 13
10.5 Governing Law.............................................. 14
10.6 Headings................................................... 14
10.7 Entire Agreement........................................... 14
10.8 California Qualification................................... 14
10.9 Counterparts............................................... 14
10.10 Delays or Omissions....................................... 14
10.11 Severability.............................................. 14
10.12 Legends................................................... 15
</TABLE>
-18-
<PAGE>
EXHIBIT 10.14
NEITHER THIS CONVERTIBLE SECURED PROMISSORY NOTE NOR THE
SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH
NOTE OR SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY THAT SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE ACT OR
UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER THE ACT.
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS
CONVERTIBLE SECURED PROMISSORY NOTE HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA OR ANY OTHER
STATE AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF
ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SUCH SECURITIES IS
EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE OR SUCH PROVISIONS OF THE CORPORATIONS
CODE OF ANY SUCH OTHER STATE. THE RIGHTS OF THE HOLDER OF THIS NOTE
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
FORM OF CONVERTIBLE SECURED PROMISSORY NOTE
-------------------------------------------
$__________ Sunnyvale, California
____________ 1996
For value received, Adeza Biomedical Corporation, a California corporation
(the "Company"), promises to pay to ____________________ ("Creditor"), or order,
at such place or places as Creditor may from time to time designate in writing,
the principal sum of ____________________ Dollars ($__________).
This note is one of a series of notes of like tenor (the "Notes") in an
aggregate principal amount of up to $2,000,000 issued by the Company to certain
persons under that certain Note and Warrant Purchase Agreement dated as of April
30, 1996 (together, the "Creditors").
-1-
<PAGE>
1. Interest. Simple interest shall accrue daily from and after the date
--------
hereof on the unpaid principal sum then outstanding at an annual rate of __%,
which is the minimum interest rate necessary to avoid imputation of interest by
the Internal Revenue Service.
2. Payment. Unless otherwise converted pursuant to the terms set forth
-------
below, all unpaid principal and accrued interest shall be due and payable upon
the earlier of (i) thirty (30) days following the date that the sale of the
Company's Common Stock in a firm commitment, underwritten initial public
offering registered under the Securities Act of 1933, as amended, is deemed
effective (the "IPO") or (ii) the first anniversary of the date upon which the
Company first issues a Note (as defined above) (such date, as it may be
extended, is referred to as the "Due Date").
3. Prepayment. The Company may at any time prepay the entire principal
----------
sum, or any portion thereof, without premium, penalty or restriction except as
set forth in this Section 3. Any prepayment shall be applied first to interest
accrued but not yet paid, and then to principal. Any prepayment of less than
the then-outstanding principal balance of Notes shall be made pro rata among all
--------
the Creditors, in accordance with the then-outstanding principal amounts of each
such Creditor's Note.
4. Conversion at the Option of the Company. This Note is subject to
---------------------------------------
conversion at the option of the Company into the class of equity securities
issued by the Company in its next equity financing of at least $4 million
(including the principal and interest under the Notes, so converted) that occurs
prior to the IPO (the "Equity Financing") upon the same terms (including price
based on the amount of principal and interest then accrued but not paid) as such
equity issuance.
5. Conversion at the Option of the Creditor. This Note is subject to
----------------------------------------
conversion upon the written election of the holders of a majority of the then-
outstanding principal amount of the Notes into the class of equity securities
issued by the Company in the Equity Financing upon the same terms (including
price based on the amount of principal and interest then accrued but not paid)
as such equity issuance.
6. Events of Default. If the Company should (i) voluntarily make an
-----------------
assignment for the benefit of creditors or voluntarily commence proceedings
under the United States Bankruptcy Code or any other insolvency, receivership,
reorganization or debtor's relief law, or have any such proceedings instituted
against it that are not stayed or dismissed within ninety (90) days, (ii) fail
to effect the conversion of the Notes upon the written election of the holders
of a majority of the then-outstanding principal amount of the Notes as set forth
in Section 5 above or (iii) materially breach any of its covenants,
representations or warranties contained in Sections 5 and 6 of that certain Note
and Warrant Purchase Agreement dated April 30, 1996, by and between the Company
and the Creditors, which breach remains uncured for a period of thirty (30) days
following the Company's receipt of written notice thereof, then the entire
principal amount of this Note shall, without notice of default or demand, become
immediately due and payable.
-2-
<PAGE>
7. Attorneys' Fees. If the principal and interest are not paid in full
---------------
when due, the Company hereby agrees to pay Creditor, in addition to such amounts
owed pursuant to this Note, all costs and expenses of collection, including a
reasonable sum for attorneys fees.
8. Modifications and Waivers. This Note may be extended, modified or
-------------------------
waived by an instrument in writing signed by the Company and the holders of a
majority of the then-outstanding principal amount of the Notes. No delay in
exercising any rights hereunder shall imply or otherwise operate as a waiver of
any rights of the holder of this Note. The Company waives presentment, demand
for performance, notice of nonperformance, protest, notice of protest and notice
of dishonor. Notwithstanding the foregoing, the Company may not, without the
prior written consent of each Note holder, (i) reduce the principal amount or
rate of a Note, (ii) modify, in any material way, the redemption or currency
repayment terms of a Note or (iii) reduce the percentage in interest of
Creditors required to amend or waive any provision of this Note as is set forth
in the initial sentence of this Section 8.
9. Security Agreement. This Note is secured pursuant to the terms of a
------------------
Security Agreement dated April 30, 1996 between the Creditor and the Company.
10. Governing Law. This Note shall be governed by and construed in
-------------
accordance with the laws of the State of California, without regard to its
conflicts of laws provisions.
-3-
<PAGE>
IN WITNESS WHEREOF, the Company does execute this Note as of the date first
set forth above.
ADEZA BIOMEDICAL CORPORATION
By: ______________________________
Title: ____________________________
ACCEPTED BY CREDITOR:
By: _______________________________
Title: ____________________________
-4-
<PAGE>
EXHIBIT 10.15
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER
HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO SUCH WARRANT OR SECURITIES, OR DELIVERY OF AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH
THE ACT OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER THE ACT.
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS WARRANT
HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA OR ANY OTHER STATE AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS
THE SALE OF SUCH SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION
25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE OR SUCH
PROVISIONS OF THE CORPORATIONS CODE OF ANY SUCH OTHER STATE. THE
RIGHTS OF THE HOLDER OF THIS WARRANT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
STOCK PURCHASE WARRANT
OF
ADEZA BIOMEDICAL CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA
------------------------------------------------------
Issued: April 30, 1996
THIS CERTIFIES THAT, for value received, ___________________________ (the
"Holder") is entitled to subscribe for and purchase shares (the "Shares") of
fully paid and nonassessable (i) common stock ("Common Stock") of Adeza
Biomedical Corporation (the "Company") at an exercise price per share equal to
eighty-five percent (85%) of the per share price at which the Common Stock is
offered in the Company's firm commitment, underwritten initial public offering
(the "IPO"), in the event that the date that the registration statement for the
IPO is deemed effective by the Securities and Exchange Commission occurs prior
to the closing date of the Company's next private equity financing in an
aggregate amount of at least $4 million (including conversion of all then-
outstanding convertible secured promissory notes (the "Notes") issued by the
Company in connection with the Note and Warrant Purchase Agreement (the
<PAGE>
"Purchase Agreement") dated April 30, 1996, by and between the Company and
certain holders of the Company's Series 1 and Series 2 Preferred Stock) (the
"Private Equity Financing"), or (ii) preferred stock of the Company issued in
--
the next Private Equity Financing ("Preferred Stock") at an exercise price per
share equal to the price paid for the Preferred Stock by the investors in such
Private Equity Financing, in the event that the Company consummates a Private
Equity Financing prior to the effective date of the IPO; in each case subject to
the provisions and upon the terms and conditions set forth in this Warrant. In
the event that neither the effective date of the IPO nor the closing of the
Private Equity Financing occurs on or before December 31, 1997, this Warrant
will be exercisable for shares of the Company's Series 2 Preferred Stock at a
price of $1.00 per share. In the event that neither the effective date of the
IPO nor the closing of the Private Equity Financing occurs on or before the
Holder receives notice of a pending sale or acquisition pursuant to Section 1
below, this Warrant will be exercisable for shares of the Company's Series 2
Preferred Stock at a price per share equal to eighty-five percent (85%) of the
per share price at which the Series 2 Preferred Stock is sold to the acquiring
entity in such sale or acquisition. The Common Stock or Preferred Stock, as the
case may be, issued upon exercise of this Warrant shall be referred to hereafter
as the "Stock." The exercise price per share for the Stock, as adjusted
pursuant to the terms hereof, shall be referred to hereafter as the "Warrant
Price." "Grant Date" shall mean April 30, 1996.
This Warrant is issued in connection with a committed line of funding
("Line of Funding") provided by the Holder to the Company pursuant to the terms
and subject to the conditions of the Purchase Agreement.
1. TERM. Subject to the terms and conditions of this Warrant, the
----
purchase right represented by this Warrant is exercisable, in whole or in part,
at any time and from time to time from and after the Grant Date and prior to the
earlier of (a) the date five (5) years after the Grant Date or (b) the closing
of the Company's sale of all or substantially all of its assets or the
acquisition of the Company by another entity by means of a merger or other
transaction as a result of which the shareholders of the Company immediately
prior to such acquisition possess a minority of the voting power of the
acquiring entity immediately following such acquisition. At least thirty (30)
days prior to the occurrence of an event specified in (a) or (b) of this Section
1, the Company shall mail to the Holder notice of such event and that the
Holder's right to exercise this Warrant shall terminate upon the occurrence of
such event.
2. LOCK-UP. Notwithstanding Section 1 above, in the event that the
-------
effective date of the IPO occurs prior to June 30, 1997, this Warrant may not be
exercised during the one (1) year period following the effective date of the
IPO.
3. NUMBER OF SHARES. Subject to the terms and conditions hereinafter set
----------------
forth, the Holder is entitled, upon surrender of this Warrant, to purchase from
the Company that number of Shares as equals (x) one tenth of the aggregate
principal amount that the Holder has committed to loan to the Company pursuant
to the Line of Funding, divided by the Warrant Price, plus (y) the quotient of
(i) .05 multiplied by the total original principal dollar amount of all Notes
issued to the Holder (the "Note Amount") multiplied by the number of full or
partial calendar months such Note Amount is outstanding, divided by (ii) the
Warrant Price; provided, however, in no event
-2-
<PAGE>
will the number of Shares issuable upon exercise of this Warrant exceed fifty
percent (50%) of the aggregate principal amount of all Notes issued to the
Holder divided by the Warrant Price.
4. METHOD OF EXERCISE; NET ISSUE EXERCISE.
--------------------------------------
(a) Method of Exercise; Payment; Issuance of New Warrant. The
----------------------------------------------------
purchase right represented by this Warrant may be exercised by the Holder, in
whole or in part and from time to time, by either, at the election of the
Holder, (i) the surrender of this Warrant (with the notice of exercise form
attached hereto as Exhibit A duly executed) at the principal office of the
---------
Company and by the payment to the Company, by check, of an amount equal to the
then-applicable Warrant Price multiplied by the number of Shares then being
purchased, or (ii) if in connection with a registered public offering of the
Company's securities, the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit A-1 duly executed) at the principal office of
-----------
the Company together with notice of arrangements reasonably satisfactory to the
Company for payment to the Company either by check or from the proceeds of the
sale of shares to be sold by the Holder in such public offering of an amount
equal to the then-applicable Warrant Price multiplied by the number of Shares
then being purchased. The person or persons in whose name(s) any certificate(s)
representing Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the Shares represented thereby (and such
Shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised. In the
event of any exercise of the rights represented by this Warrant, certificates
for the Shares so purchased shall be delivered to the Holder as soon as possible
and in any event within thirty (30) days of receipt of such notice and, unless
this Warrant has been fully exercised or expired, a new warrant representing the
portion of the Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to the Holder as soon as possible and
in any event within such thirty (30) day period.
(b) Net Issue Exercise.
------------------
(i) In lieu of exercising this Warrant as set forth in Section
4(a) above, the Holder may elect to receive shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant
(with the notice of exercise form attached hereto as Exhibit A duly executed) at
---------
the principal office of the Company in which event the Company shall issue to
the Holder a number of shares of the Company's Stock computed using the
following formula:
X = Y(A - B)
--------
A
Where X = The number of shares of Stock to be issued to the Holder.
Y = the number of shares of Stock purchasable under this Warrant.
A = the fair market value of one share of such Stock.
B = the Warrant Price (as adjusted to the date of such calculations).
-3-
<PAGE>
(ii) For purposes of this Section 4(b), the "fair market value" of the
Stock shall be determined by the Company's Board of Directors in good faith;
provided, however, that in the event the Warrant is exercised after the
Company's IPO, the fair market value per Share shall be calculated on the basis
of (a) if the Stock is then traded on a securities exchange, the average of the
closing prices of the Stock on such exchange over the 30-day period ending three
(3) days prior to the date of exercise, (b) if the Stock is then regularly
traded over-the-counter, the average of the sale prices or secondarily the
closing bid of the Stock over the 30-day period ending three (3) days prior to
the date of exercise, or (c) if there is no active public market for the Stock,
the fair market value thereof as determined in good faith by the Board of
Directors of the Company.
5. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares that may be issued
---------------------------------------
upon the exercise of the rights represented by this Warrant will, upon issuance,
be fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof. 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 issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Stock to provide for the exercise of the right represented by this Warrant.
6. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and kind
------------------------------------------------
of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification. In case of any reclassification, change or
----------------
conversion of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), the
Company shall execute a new Warrant (in form and substance satisfactory to the
Holder) providing that the Holder shall have the right to exercise such new
Warrant and upon such exercise to receive, in lieu of each share of Stock
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change or conversion by a holder of one (1) share of Stock.
Such new Warrant shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
6. The provisions of this subparagraph (a) shall similarly apply to successive
reclassification, changes and conversions.
(b) Splits, Subdivisions or Combination of Shares. If the Company at
---------------------------------------------
any time while this Warrant remains outstanding and unexpired shall split,
subdivide or combine the Stock, the Warrant Price and the number of Shares
issuable upon exercise hereof shall be proportionately adjusted such that the
aggregate exercise price of this Warrant shall at all time remains equal.
(c) Stock Dividends. If the Company at any time while this Warrant is
---------------
outstanding and unexpired shall pay a dividend payable in shares of Stock
(except any distribution specifically provided for in the foregoing
subparagraphs (a) and (b)), then the Warrant Price shall be adjusted, from and
after the date of determination of shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying the Warrant
Price in effect immediately prior to such date of determination by a fraction
(i) the numerator of which shall be
-4-
<PAGE>
the total number of shares of Stock outstanding immediately prior to such
dividend or distribution, and (ii) the denominator of which shall be the total
number of shares of Stock outstanding immediately after such dividend or
distribution, and the number of Shares subject to this Warrant shall be
proportionately adjusted.
(d) Certain Dilutive Issuances. The Shares issuable upon exercise of
--------------------------
this Warrant shall be afforded the same antidilution protection as the Company's
Preferred Stock as set forth in Section 5(d)(i)-(v) of the Company's Restated
Articles of Incorporation.
(e) No Impairment. The Company will not, by amendment of its Articles
-------------
of Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all the provisions of
this Section 6 and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against impairment.
(f) Notices of Record Date. In the event of any taking by the Company
----------------------
of a record of its shareholders for the purpose of determining shareholders who
are entitled to receive payment of any dividend (other than a cash dividend) or
other distribution, any right to subscribe for, purchase or otherwise acquire
any share of any class or any other securities or property, or to receive any
other right, or for the purpose of determining shareholders who are entitled to
vote in connection with any proposed merger or consolidation of the Company with
or into any other corporation, or any proposed sale, lease or conveyance of all
or substantially all of the assets of the Company, or any proposed liquidation,
dissolution or winding up of the Company, the Company shall mail to the Holder,
at least twenty (20) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right.
7. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price shall be adjusted
---------------------
pursuant to the provisions hereof, the Company shall within five (5) days of
such adjustment deliver a certificate signed by its chief financial officer to
the Holder setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the Warrant Price after giving effect to such adjustment.
8. FRACTIONAL SHARES. No fractional shares of Stock will be issued in
-----------------
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Warrant
Price then in effect.
9. MARKET STAND-OFF AGREEMENT. The Holder hereby agrees that, during the
--------------------------
period of duration specified by the Company or an underwriter of capital stock
or other securities of the Company, following the effective date of a
registration statement of the Company filed under the Act, it shall not, to the
extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be
-5-
<PAGE>
similarly bound) any securities of the Company held by it at any time during
such period except capital stock included in such registration; provided,
however, that:
(a) all executive officers and directors of the Company and all
holders of one percent (1%) or greater of the Company's capital stock enter into
similar agreements; and
(b) such period shall not exceed one hundred eighty (180) days
beginning the day after the effective date of such registration statement.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Stock of the Investor until the
end of such period.
10. TRANSFERS AND EXCHANGES.
-----------------------
(a) This Warrant shall not be transferable in whole or in part unless
and until all conditions to transfer set forth in Section 7.8 of the Purchase
Agreement have been met.
(b) It shall be a further condition to each such transfer that the
transferee shall receive and accept a Warrant, of like tenor and date, executed
by the Company.
(c) All new Warrants issued in connection with transfers or exchanges
shall be identical in form and provision to this Warrant except as to the number
of Shares.
11. RIGHTS AS SHAREHOLDERS. No holder of this Warrant, as such, shall be
----------------------
entitled to vote or receive dividends or be deemed the holder of Stock, or any
other securities of the Company which may at any time be issuable on the
exercise thereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a shareholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
12. REGISTRATION RIGHTS. The Shares shall be subject to the registration
-------------------
rights set forth in that certain Investors' Rights Agreement dated December 21,
1994, by and between the Company and certain holders of the Company's Series 1
and Series 2 Preferred Stock, as amended on April 30, 1996, and as modified by
that certain shareholder election and waiver letter dated April 24, 1996.
13. AMENDMENTS AND WAIVERS. Any term of this Warrant may be amended and
----------------------
the observance of any term of this Warrant 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 Holder. Any such amendment or waiver
shall be binding on the parties.
14. NOTICES. Any notice, request or other document required or permitted
-------
to be given or delivered to the Holder or the Company shall be delivered, or
shall be sent by certified or registered mail, postage prepaid, to such Holder
at its address as shown on the books of the Company or to the Company at the
address indicated on the signature page of this Warrant.
-6-
<PAGE>
15. BINDING EFFECT ON SUCCESSORS. 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 and all of the covenants and
agreements of the Company shall inure to the benefit of the permitted successors
and assigns of the Holder.
16. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to the
-----------------------------------
Holder that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate 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 or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
17. DESCRIPTIVE HEADINGS. The descriptive headings of the several
--------------------
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
18. GOVERNING LAW. 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 California, without regard to its conflicts of law provisions.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-7-
<PAGE>
IN WITNESS WHEREOF, this Stock Purchase Warrant is executed effective as of
the date first above written.
ADEZA BIOMEDICAL CORPORATION
By:_____________________________
Title:__________________________
Address: 1240 Elko Drive
Sunnyvale, CA 94089
ACKNOWLEDGED AND AGREED TO:
By: ________________________________
Name: ______________________________
Title: _____________________________
Address: ___________________________
____________________________________
-8-
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
To: _______________________________
___________________________________
___________________________________
Attn: _____________________________
1. The undersigned hereby elects to purchase __________ shares of
________________ Stock of Adeza Biomedical Corporation pursuant to the terms of
the attached Warrant, and (please indicate either (a) or (b) below):
_____ (a) tenders herewith payment of the purchase price of such shares
in full, or
_____ (b) elects to effect such purchase through the Net Issue Exercise
provision set forth in Section 4(b) of the attached Warrant.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below
Name: ________________________________
Address: _____________________________
_____________________________
_____________________________
3. The undersigned represents that the aforesaid shares being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.
___________________________________
(Signature)
___________________________
(Date)
-9-
<PAGE>
EXHIBIT A-1
NOTICE OF EXERCISE
To: _______________________________
___________________________________
___________________________________
Attn: _____________________________
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement of Form S-______, filed __________, __________, the undersigned hereby
elects to purchase shares of _______________ Stock of the Company (or such
lesser number of shares as may be sold on behalf of the undersigned at the
Closing) pursuant to the terms of the attached Warrant.
2. Please deliver to the custodian for the selling shareholders a stock
certificate representing such __________ shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $__________ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering. If
such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
___________________________________
(Signature)
___________________________
(Date)
<PAGE>
EXHIBIT B
NOTICE OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto the person(s) listed below the right to purchase that number of shares of
_____________ Stock of Adeza Biomedical Corporation pursuant to the terms of
the attached Warrant, together with all right, title and interest therein,
with full power of substitution in the premises:
<TABLE>
<CAPTION>
NAME(S) OF ASSIGNEE(S) ADDRESS OF ASSIGNEE(S) # OF SHARES ASSIGNED
- -------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
</TABLE>
And if said number of Shares shall not be all the Shares represented by
the attached Warrant, a new Warrant is to be issued in the name of the
undersigned for the balance remaining of the Shares registered by said
Warrant.
19
Dated: ________________________________
Signature: ________________________________
Address: ________________________________
________________________________
________________________________
Notice: The signature to the foregoing Assignment must correspond to the
name as written upon the face of the attached Warrant in every particular,
without alteration or any change whatsoever; signature(s) must be guaranteed
by an eligible guarantor institution (banks, stock brokers, savings and loan
associations and credit unions with membership in an approved signature
guarantee medallion program) pursuant to Securities and Exchange Commission
Rule 17Ad-15.
<PAGE>
EXHIBIT 11.1
ADEZA BIOMEDICAL CORP.
COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------- ----------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Historical primary and
fully diluted:
Weighted average
common stock
outstanding.......... 117,464 138,784 157,532 157,408 159,301
Preferred stock if-
converted............ -- -- -- -- --
Shares related to
staff accounting
bulletins:
Stock options....... 58,801 58,801 58,801 58,801 58,801
Warrants............ 26,175 26,175 26,175 26,175 26,175
----------- ----------- ----------- --------- -----------
202,440 223,760 242,508 242,384 244,277
=========== =========== =========== ========= ===========
Net loss................ $(6,109,000) $(3,660,000) $(1,144,000) $(875,000) $(1,077,000)
=========== =========== =========== ========= ===========
Net loss per share...... $ (30.17) $ (16.36) $ (4.72) $ (3.61) $ (4.41)
=========== =========== =========== ========= ===========
Pro forma:
Weighted average
common stock
outstanding.......... 117,464 138,784 157,532 157,408 159,301
Preferred stock if-
converted............ 1,784,061 2,012,939 5,203,465 5,203,465 5,203,465
Shares related to
staff accounting
bulletins:
Stock options....... 58,801 58,801 58,801 58,801 58,801
Warrants............ 26,175 26,175 26,175 26,175 26,175
----------- ----------- ----------- --------- -----------
1,986,501 2,236,699 5,445,973 5,445,849 5,447,742
=========== =========== =========== ========= ===========
Net loss................ $(6,109,000) $(3,660,000) $(1,144,000) $(874,000) $(1,077,000)
=========== =========== =========== ========= ===========
Net loss per share...... $ (3.08) $ (1.64) $ (0.21) $ (0.16) $ (0.20)
=========== =========== =========== ========= ===========
</TABLE>
- --------
Note: The number of shares of preferred stock have been retroactively restated
to show the effect of the recapitalization in December 1994.
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
Adeza International Limited
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
April 30, 1996 (except for Note 9 as to which the date is , 1996) in the
Registration Statement (Form S-1) and the related Prospectus of Adeza
Biomedical Corporation for the registration of 2,875,000 shares of its Common
Stock.
Our audits also included the financial statement schedule of Adeza
Biomedical Corporation listed in Item 16(b). This schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, the financial statement
schedule referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
Ernst & Young LLP
Palo Alto, California
, 1996
- -------------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon completion of
the one-for-2.4 reverse stock split and reincorporation into Delaware
described in Note 9 to the consolidated financial statements.
Palo Alto, California
May 9, 1996
