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<P ALIGN="CENTER"><FONT SIZE=2><B>As filed with the Securities and Exchange Commission on April 28, 2000</B></FONT></P>
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<P ALIGN="CENTER"><FONT SIZE=5><B>SECURITIES AND EXCHANGE COMMISSION<BR></B></FONT><FONT SIZE=2><B>Washington, D.C. 20549</B></FONT></P>
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<P ALIGN="CENTER"><FONT SIZE=5><B>FORM 10</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>General Form For Registration of Securities<BR>
Pursuant to Section 12(b) or (g) of<BR>
the Securities Exchange Act of 1934</B></FONT></P>
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<P ALIGN="CENTER"><FONT SIZE=5><B>BIONEBRASKA, INC.<BR></B></FONT><FONT SIZE=2>(Exact name of registrant as specified in its charter)</FONT></P>
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<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><B>Delaware</B></FONT><FONT SIZE=2><BR>
(State or other jurisdiction of<BR>
incorporation or organization)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><B>47-0727668</B></FONT><FONT SIZE=2><BR>
(I.R.S. Employer<BR>
Identification No.)</FONT></TD>
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<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2> <BR></FONT> <FONT SIZE=2><B>3820 N.W. 46th Street<BR>
Lincoln, Nebraska</B></FONT><FONT SIZE=2><BR>
(Address of principal executive offices)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2> <BR></FONT> <FONT SIZE=2><B>68524-1637</B></FONT><FONT SIZE=2><BR>
Zip Code</FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=2>Registrant's
telephone number, including area code: </FONT><FONT SIZE=2><B>(800) 786-2580</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>Securities
to be registered pursuant to Section 12(b) of the Act: </FONT><FONT SIZE=2><B>None</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>Securities to be registered pursuant to Section 12(g) of the Act:</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>Common Stock, .01 par value per share<BR></B></FONT><FONT SIZE=2>(Title of class)</FONT></P>
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<H2><FONT SIZE=2> </FONT></H2>
<BR>
<P><FONT SIZE=2><A
NAME="de2032_item_1._business"> </A></FONT> <FONT SIZE=2><B>Item 1. Business </B></FONT></P>
<P><FONT SIZE=2><B>Introduction</B></FONT></P>
<P><FONT SIZE=2> BioNebraska, Inc. (the "Company" or "BioNebraska") is a development stage therapeutics company which was incorporated in 1988 and began development
programs in 1989. Since 1992, the Company has focused on the reactivation of major body endocrine hormone cascades with regulatory peptide hormones in the natural form. The Company is engaged in
clinical development of products for the treatment of Type II (adult onset) Diabetes, impaired glucose tolerance, advanced cases of osteoporosis and other symptoms of aging, obesity and excess
appetite and various acute applications for serious medical conditions.</FONT></P>
<P><FONT SIZE=2> The
Company has and continues to develop, with the use of genetic engineering, the capability to biologically produce, purify and amidate middle-range peptide hormones (referred to
generally as "MR Peptides") in a natural form. Several MR Peptides serve as key hormones which activate and regulate particular body systems and functions. As a result of body malfunction or advancing
age, these peptide hormones are often deficient or lacking. The Company believes its ability to produce these peptide hormones in the natural form at relatively low cost will enable the peptides to be
reintroduced into the body to help restore and augment these hormones in patients who have lost the ability to produce them as a result of advancing age or body malfunctions.</FONT></P>
<P><FONT SIZE=2> One
of the Company's two principal pharmaceutical products under development is human Glucagon-Like Peptide-1 ("GLP-1"). The Company's goal is to
be a leader in the biological production of GLP-1 in the naturally-occurring form. GLP-1 is believed to be an important peptide hormone that regulates metabolism and normalizes
glucose and insulin levels in Type II diabetics, as well as persons with impaired glucose tolerance ("IGT").</FONT></P>
<P><FONT SIZE=2> The
Company is currently conducting Phase I/II clinical trials on the application of GLP-1 to treat patients with cases of Type II Diabetes. In the event the Phase I/II
trials are successful, Phase II/III trials are expected to be conducted in several clinics nationwide and in Europe in connection with U.S. Food and Drug Administration ("FDA") and European regulatory
approval processes.</FONT></P>
<P><FONT SIZE=2> During
1999, the Company initiated a Phase I/II clinical trial to establish the safety and efficacy of using GLP-1 to control obesity and excess appetite. The trial is
being conducted by Professor Mark K. Gutniak under a physician-sponsored IND at the Karolinska Institute in Stockholm, Sweden.</FONT></P>
<P><FONT SIZE=2> BioNebraska
is also conducting preliminary clinical evaluations of GLP-1 for acute applications, where there are serious medical conditions.</FONT></P>
<P><FONT SIZE=2> The
Company's other principal pharmaceutical product under development is Human Growth Hormone Releasing Factor (also known as growth hormone releasing hormone and referred to as
"GRF"). The Company believes this peptide hormone can serve as an effective therapy to improve the heart pumping functions of older patients suffering from enlarged left ventricle cardiomyopathy
("ELVC") and other forms of congestive heart failure ("CHF"). A Phase I/II clinical trial has been initiated at Massachusetts General Hospital and Harvard Medical School ("MGH/Harvard") for the GRF
treatment of elderly patients with ELVC.</FONT></P>
<P><FONT SIZE=2> The
Company also believes GRF can be an effective therapy for osteoporosis and various other symptoms of aging. The Company has initiated at the Osteoporosis Clinic of the
Columbia/Presbyterian Hospital in Haverstraw, New York, an initial clinical trial utilizing GRF and parathyroid hormone ("PTH"), which can also be produced with the Company's technologies, in separate
three-month cohorts. The objective is to stimulate new bone mass formation in elderly female patients with advanced osteoporosis. If GRF and PTH, respectively, prove to be safe and well tolerated, the
next clinical trial planned would be to treat with a combination of GRF and PTH. If safe and efficacious, this combined treatment could be important for the broad range of patients at substantial risk
of fractures from osteoporosis and other bone depletion disorders.</FONT></P>
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<P><FONT SIZE=2> The
Company also believes that GRF can be an effective treatment to strengthen muscle structure and mobility in persons suffering from old age muscle frailty. The Company has
initiated at the University of Virginia in Charlottesville, a clinical trial to investigate safety and early efficacy for the treatment of old age muscle frailty with GRF.</FONT></P>
<UL>
<P><FONT SIZE=2><B>Company Progress</B></FONT></P>
</UL>
<P><FONT SIZE=2> BioNebraska received its initial funding and began development programs in May 1989, having been incorporated in April 1988. From 1992 until the
present, the Company has dedicated the major part of its efforts and resources to the development and production scale-up of its proprietary technologies and methods for manufacturing MR
Peptides. Since 1994, the Company has also focused on evaluation and clinical development of its primary peptide products for potential medical applications. The Company now has the production
capabilities and cGMP facilities to supply its primary peptides for large scale clinical trials and is preparing for commercial-scale recombinant production of GLP-1, GRF and PTH in these
facilities. The Company intends to be a leading producer of these high purity peptides in their natural form.</FONT></P>
<P><FONT SIZE=2> The
Company is focusing on the use of natural MR Peptide regulatory hormones for therapy because they have been broadly studied and generally found to be safe. Accordingly, the
Company believes the time for development and pre-clinical and clinical testing of its natural MR Peptide hormone products may be shortened. However, the Company does not expect regulatory
approval for commercialization of any of its planned peptide hormone pharmaceuticals before mid-2002.</FONT></P>
<P><FONT SIZE=2><B>Middle-Range Peptides</B></FONT></P>
<P><FONT SIZE=2> Peptides are formed by amino acids which act as "building blocks" in various combinations and sequences. MR Peptides generally refer to peptides which are made
up of 20 to 60 amino acid "building blocks" or "residues." Peptides consisting of more than 60 amino acid residues are generally known as proteins and tend to develop complex three dimensional
structures. Some peptides, including many MR Peptides, perform fundamental activation and regulatory functions as hormones in the body and consequently can be pharmaceutically important.</FONT></P>
<P><FONT SIZE=2> Peptides
made up of less than 20 amino acid residues generally can be produced in commercial quantities by conventional chemical synthesis and often at acceptable costs. Proteins also
can be efficiently produced by conventional biological means using genetic engineering (referred to generally as "recombinant production") at relatively high but often acceptable costs for
pharmaceutical applications. Due to the inherent difficulty and expense, and the inability to amidate, associated with the recombinant production of MR Peptides, recombinant methods of producing MR
Peptides have not been generally successful. Further, the expense of producing MR Peptides with conventional chemical synthesis dramatically increases when the peptides incorporate more than 20 amino
acid residues, and efficiency is
sharply decreased. The difficulties of manufacturing MR Peptides by chemical synthesis and the associated costs are often not acceptable for commercial pharmaceutical use, particularly when the size
of the MR Peptide increases above 30 amino acid residues. The Company believes it has developed novel technologies and processes for the efficient production and purification of MR Peptides at
relatively low costs.</FONT></P>
<P><FONT SIZE=2> These
technologies and processes involve the introduction of the gene code for an expression leader peptide connected to a molecule, which is a precursor to the MR Peptide, into an
organism, such as E. coli bacteria. The bacteria are then introduced into a carefully controlled environment in a fermentation vessel and are grown by fermentation. The bacteria are then harvested,
their cells broken open and the leader peptide and the precursor MR Peptide are selectively removed from the cell mass by proprietary purification methods. The MR Peptide is then severed from the
leader peptide using proprietary technologies and further purified, and often amidated, to yield the natural human form of the MR Peptide. The production of an MR Peptide by these genetic engineering
and biological means is referred to as "recombinant production" and the product produced is a recombinant MR Peptide.</FONT></P>
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<P><FONT SIZE=2> An
important characteristic of many MR Peptides is that, in their natural form, they end with an amide. This amide ending is often required to constitute the natural peptide and
develop full biological activity. The inability to create amide endings on MR Peptides at an acceptable cost has been a major impediment to the efficient recombinant production of MR Peptides. The
Company believes it and its scientific collaborators have developed several efficient, novel and proprietary processes for adding this amide to MR Peptides which are produced recombinantly. In
combination with the Company's other recombinant production technologies, this makes possible the efficient and relatively low cost production of natural MR Peptides of high purity which incorporate
the amide.</FONT></P>
<P><FONT SIZE=2> Protein
hormone therapies are generally expensive. For example, growth hormone replacement treatment of abnormal short stature can cost from $20,000 to $30,000 per year and an annual
treatment with erythropoietin ("EPO") to supplement kidney dialysis can cost $10,000 to $14,000. These treatment costs result in part from the high production costs for the particular protein or
peptide. The Company believes that the lack of efficient recombinant production and amidation processes has been a major impediment in the development and production of MR Peptide hormone therapies
for wide medical applications. The Company's goal is to lower the costs of MR Peptide hormone therapies to increase the feasibility of sustained treatments with these peptides and to increase the
availability of third party reimbursement for these therapies.</FONT></P>
<P><FONT SIZE=2><B>MR Peptide Production</B></FONT></P>
<P><FONT SIZE=2> The Company has developed and plans to continue to develop and scale-up recombinant production processes to produce MR Peptide hormones for its
GLP-1 and GRF Programs, as well as for other proprietary Company pharmaceutical programs. The Company may also produce MR Peptide hormones for other pharmaceutical customers under
contract. Production processes have been developed for GLP-1, GRF, two forms of PTH, and certain other MR Peptide hormones, such as calcitonin and calcitonin analogs.</FONT></P>
<P><FONT SIZE=2> The
Company has designed and built fermentation and peptide purification facilities to produce cGMP pharmaceutical peptide products. In its current facility, BioNebraska can produce
enough recombinant organisms by fermentation to produce 200 Kg of peptide per year. While it can only produce 6 Kg of peptide in its current facility, which will provide for acute indications, the
Company is planning to build a larger (50 Kg) downstream processing facility in the near future.</FONT></P>
<P><FONT SIZE=2><B>Pharmaceutical Programs</B></FONT></P>
<P><FONT SIZE=2> The Company's pharmaceutical programs are initially focused on conducting human clinical trials on the therapeutic applications of GLP-1 and GRF.
It is the Company's plan to enter into one or more collaborations with pharmaceutical companies to obtain financial and marketing support for its pharmaceutical programs, including
the clinical trials and the scaled-up cGMP production of these peptide hormones. The Company's ability to commercialize these peptide hormones is dependent on the Company identifying and
entering into one or more satisfactory contractual relationships with other parties to provide such support, or on its ability to raise sufficient funds to carry out part or all of the pharmaceutical
programs by itself. There is no assurance that the Company will be able to do so.</FONT></P>
<UL>
<P><FONT SIZE=2><B><I>GLP-1 Therapy for Type II Diabetes and Impaired Glucose Tolerance</I></B></FONT></P>
</UL>
<P><FONT SIZE=2> One of the Company's two principal therapeutic platforms involves the recombinant production and formulation of GLP-1, which is a hormone made up
of 30 amino acid residues with an amide terminus. GLP-1 has been demonstrated in more than 50 short studies of humans with Type II Diabetes and related conditions to bring high glucose
levels in the blood back to normal and at the same time to lower high blood insulin toward normal levels.</FONT></P>
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<P><FONT SIZE=2> Type
II Diabetes, also known as "Non-Insulin Dependent Diabetes Mellitus" and adult onset diabetes, when untreated is characterized generally by elevated levels of glucose
and insulin in the blood. The disease, which normally appears after the age of 40, is preceded or accompanied by a condition known as impaired glucose tolerance ("IGT"). Normally, coincident with IGT,
is the condition of insulin resistance, where substantially higher insulin levels in the blood than normal are required to induce muscle and other tissues to take up or "metabolize" normal amounts of
glucose. Also coincident with IGT is the development of cardiovascular disease and obesity.</FONT></P>
<P><FONT SIZE=2> A
substantial number of persons with IGT progress in the course of one or more years into the state of Type II Diabetes. This state is characterized by a loss of blood glucose control
and a material elevation of glucose and (initially) insulin above normal levels in the blood. As these high levels of glucose persist in Type II Diabetes, numerous adverse effects develop. The
pressure on the beta cells in the pancreas to produce the extra insulin required for glucose control slowly destroys them. The high levels of glucose and insulin often result in obesity or increased
obesity and in further deterioration over time of the cardiovascular system, the kidneys, the nervous system (including impotence), vision and other systems, as well as premature death.</FONT></P>
<P><FONT SIZE=2> Current
medications for Type II Diabetes available on the market include a variety of agents in pill form. Some of these cause insulin to be released by the beta cells in the pancreas
and some temporarily reduce insulin resistance. The agents which cause the release of high amounts of insulin appear to have the effect of accelerating the demise of the beta cells and increasing
cardiovascular risks. Generally after a few years of use of these agents, due to the progressive elimination of beta cells leaving an inadequate number of such cells to produce the elevated insulin
required to metabolize the glucose, insulin must be injected into the patient. This is required to maintain the ever-increasing insulin levels needed to overcome the increasing insulin
resistance in order to metabolize the glucose and to bring down the elevated glucose levels in the blood toward normal.</FONT></P>
<P><FONT SIZE=2> A
recent study in Type I Diabetes (juvenile onset Diabetes) patients has shown that the severe complications from Diabetes can be minimized by holding glucose levels near normal. This
is accomplished through the use of invasive blood glucose monitors (often four times per day) to measure blood glucose for the purposes of adjusting the amount of insulin available in the blood.
Adjustment of insulin levels
is accomplished with the use of oral agents (in early stages of Type II Diabetes) or insulin injections (in the case of Type I and later stages of Type II Diabetes), as the case may be, in order to
keep glucose levels within normal tolerances. This "Tight Control" objective is considered to be the optimum therapeutic goal in both types of Diabetes. This is because, as indicated in the study
noted above, Tight Control appears to have reduced the deterioration in body systems which was evident in the less well controlled patients who were studied in parallel. Tight Control is difficult to
achieve and requires major patient discipline to rigidly follow the protocols. This discipline can be more easily achieved with younger and middle-age patients, and has proved difficult to
achieve in the elderly.</FONT></P>
<P><FONT SIZE=2> Because
GLP-1 appears to trigger a number of regulatory responses in the body which have the cumulative effect of both normalizing glucose and insulin levels in the blood,
it is the Company's hypothesis that the application of GLP-1 could deliver the equivalent of Tight Control, i.e., the normalization of glucose, while at the same time bringing insulin
levels back toward normal. The latter effect is important because there would be less strain and demand on the patients' remaining beta cells, thereby tending to preserve their function. It is also
conceivable, though not demonstrated, that using GLP-1 to achieve Tight Control could involve less invasive monitoring and fewer requirements to adjust insulin, with less opportunities for
hypoglycemia and less treatment expense. Also, the cardiovascular and other complications attributed to high insulin levels could be minimized. Even when the Type II patient requires injected insulin
because of the depletion of beta cells, GLP-1 should be important in minimizing the amount needed and the complications from elevated levels of insulin. Finally, the Company believes that
the application of GLP-1 in early stages of Type II Diabetes may serve to preserve pancreatic beta cells and essentially arrest the otherwise inevitable progress of the disease.</FONT></P>
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<P><FONT SIZE=2> A
serious danger for all Diabetics under medication is the hypoglycemic condition, where glucose levels, due to medication, miscalculation or otherwise, drop seriously below normal.
In its worst manifestation, more often seen in the elderly, this condition can result in death or serious coma with permanent damage to the brain. In milder cases, there can be a shock to the system
and some neural damage and disorientation, often requiring help from another person to restore glucose levels and obtain relief. It is the Company's hypothesis, unproven as yet, that GLP-1
medication will serve to minimize this danger of hypoglycemic shock. This is because the GLP-1 regulatory functions appear to be effective in lowering glucose only when glucose levels are
higher than normal and do not appear to have the effect of pushing glucose levels sufficiently below normal to cause hypoglycemia.</FONT></P>
<P><FONT SIZE=2> The
Company has formed an Advisory Board of leading clinical experts on GLP-1 and its potential role in metabolic malfunctions and disease, such as Type II Diabetes, to
participate in the design and review of clinical trials and to analyze the results of these trials.</FONT></P>
<P><FONT SIZE=2> During
1999, the Company initiated in the United States and Europe Phase I/II clinical trials for the GLP-1 treatment of Type II Diabetes. One of these trials is being
carried out by principal investigators affiliated with the University of Washington in Seattle. A pre-IND conference was held with the FDA staff in this connection and a corporate IND has
been filed with the FDA covering the trial. If this trial and other trials are successful, the Company expects that multi-center Phase II/III clinical trials will be conducted with the goal of
obtaining FDA and European regulatory approvals for the marketing of this therapy.</FONT></P>
<UL>
<P><FONT SIZE=2><B><I>GLP-1 Therapy for Obesity and Excess Appetite</I></B></FONT></P>
</UL>
<P><FONT SIZE=2> During 1999, the Company initiated a Phase I/II clinical trial to preliminarily test the effect of GLP-1 treatment on food intake and appetite in
obese patients and its safety in this application. The trial is being conducted by an investigator affiliated with the Karolinska Institute in Stockholm, Sweden. In the event this trial is successful,
the Company intends to initiate additional Phase II and Phase III trials in Europe and the U.S. with a view toward obtaining regulatory marketing approvals for this application. The Company
anticipates that it will enlist the collaboration of a larger company to help finance these later trials and to market this program, in the event these approvals can be obtained.</FONT></P>
<UL>
<P><FONT SIZE=2><B><I>GRF Therapy for CHF and other Symptoms of Aging</I></B></FONT></P>
</UL>
<P><FONT SIZE=2> The Company's other principal therapeutic platform involves the recombinant production and amidation of GRF, which is a hormone made up of 44 amino acid
residues with an amide. GRF is generally believed to activate and regulate a major endocrine hormone cascade (referred to herein as the "growth/maintenance endocrine cascade"). To accomplish this, GRF
releases the several forms of growth hormone which in turn release the other proteins, growth factors and feed-back control mechanisms that generally govern the growth of the body during
younger years and the maintenance of the body in the years after growth stops.</FONT></P>
<P><FONT SIZE=2> The
Company initiated a program for the use of GRF to improve the heart pumping functions of older patients suffering from an enlarged left ventricle, a prevalent and serious form of
Congestive Heart Failure ("CHF"). In the event results of the MGH/Harvard dose-ranging and early efficacy trial are positive, the Company will embark on Phase II and III clinical trials
for the purpose of obtaining FDA and other regulatory approvals for the marketing of GRF for this CHF condition.</FONT></P>
<P><FONT SIZE=2> The
Company is also engaged in a longer term program for the application of GRF in combination with PTH as a therapy for osteoporosis. The Company completed a pilot study in 1997 on
the application of GRF to treat a small number of elderly female patients with advanced cases of post-menopausal osteoporosis. Advanced cases of osteoporosis are those where the patient
has suffered one or more fractures without substantial trauma. This pilot study sought to determine an appropriate GRF dose and then demonstrate that the application of low dose GRF therapy would
achieve significant growth hormone</FONT></P>
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<P><FONT SIZE=2>responses
in these patients over a sustained period. The study indicated that low GRF doses are well tolerated and without any apparent significant adverse side effects in this fragile group. The
study also indicated that low doses of GRF reactivated substantial growth hormone releases in most of the patients. These results were consistent with the reactivation of the growth/maintenance
cascade.</FONT></P>
<P><FONT SIZE=2> If
GRF and PTH, respectively, prove to be safe and well tolerated in the initial clinical trials currently being carried out by Professor Robert Lindsay, President of the U.S.
Osteoporosis Foundation at the Helen Hays Unit of New York Columbia Presbyterian Hospital, the next clinical trial planned will be to treat with a combination of GRF and PTH. If this trial indicates
safety and early efficacy, substantially longer clinical trials in several medical centers with a larger number of patients will be required. In the event these larger trials show safety and efficacy,
the Company could then be in a position to apply for regulatory approvals for marketing the therapy. If safe and efficacious, this combined treatment could be important for the broad range of patients
at substantial risk of fractures from osteoporosis and other bone depletion disorders who currently have no effective therapy. The Company holds issued patents in the United States covering the use of
GRF for the treatment of osteoporosis. The Company also holds issued patents in the United States and in several European countries covering the use of GRF and PTH in combination for the treatment of
osteoporosis.</FONT></P>
<P><FONT SIZE=2> A
Phase I/II clinical trial has been initiated with the application of the Company's GRF at the University of Virginia Medical Center for the treatment of catabolism and muscle
frailty in the elderly under the direction of Professor Johannes Veldhuis. In the event the results of these trials are encouraging, Professor Veldhuis will then conduct Phase II clinical trials for
the application of GRF, and GRF in combination with androgens and estrogens, for the treatment of these indications. Professor Veldhuis is a leading investigator in the growth/maintenance endocrine
cascade and is a Coordinator for the National Institutes of Health in this field. If warranted, the Company will then proceed with Phase III clinical trials to demonstrate definitive therapeutic
applications for this condition. The Company holds patents, issued in the U.S. and Europe, for the use of GRF, and GRF in combination with testosterone, for the treatment of catabolism and shock.</FONT></P>
<UL>
<P><FONT SIZE=2><B><I>MR Peptide Hormone Delivery</I></B></FONT></P>
</UL>
<P><FONT SIZE=2> The initial delivery modes for GLP-1 and GRF in the respective pharmaceutical programs, is by subcutaneous injection and by subcutaneous infusion
using programmable external pumps. The Company believes that these delivery methods are appropriate, given the serious nature of the illnesses addressed and the substantial markets involved. See
"Markets and Marketing" below. Because each of these products has potential applications in wider markets, i.e., GLP-1 to arrest the progress of Type II Diabetes in its earlier stages and
to prevent persons with IGT from becoming Type II Diabetics and GRF/PTH for material addition of bone mass to osteoporotics, the Company intends to embark upon programs to deliver these peptide
products by means which will not require one or more subcutaneous injections each day or continuous subcutaneous infusion with an external pump. New technologies for subcutaneous infusion with a small
disposable "patch" device or through the sustained release of these therapies over one or more weeks, over one or more months and for periods of up to one year are being considered.</FONT></P>
<P><FONT SIZE=2> Possibilities
for delivering these peptides into the peripheral circulation system include injected depot sustained-release technologies, the use of implanted steady state and
programmable pumps, orally-administered tablets, buccal tablets and deep lung insufflation techniques. Several companies have recently reported the successful delivery in humans of peptide hormones by
oral tablets. Because it does not have or intend to develop new non-injection or infusion technologies in-house, the Company will be required to work with one or more of the
several companies which have developed proprietary technologies in these delivery areas. There is no assurance that the Company will be able to demonstrate appropriate non-injection or
non-infusion delivery methods for its products or that, even if it does, an appropriate commercial agreement can be entered into with the company possessing the particular delivery
technology.</FONT></P>
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<P><FONT SIZE=2> The
Company intends to consider new delivery systems which can provide the functional equivalent of the injection or infusion delivery systems initially used. These new systems would
then be substituted for those systems as the equivalent. In general, additional clinical trials can be expected to be required before FDA or other regulatory approval can be obtained for wider
applications of GLP-1 and GRF products using these new delivery methods, and there can be no assurance that such approvals will be forthcoming.</FONT></P>
<P><FONT SIZE=2><B>Proprietary Rights</B></FONT></P>
<P><FONT SIZE=2> The success of the Company will depend on its ability to maintain competitive technological positions in the areas of the therapeutic applications of its
products and its production technologies. The Company's policy is to actively and continuously pursue efforts to obtain patent protection for its inventions in peptide production and therapeutic
applications in the United States and in other countries where the Company believes such protection is meaningful and economically justified. The Company has filed patent applications to cover its
recombinant peptide production technologies and its peptide/protein modification technologies which include basic elements of its amidation technology. Several additional applications are in various
stages of preparation for filing. Nineteen United States patents have been issued relating to elements of peptide production technologies that the Company has developed.</FONT></P>
<P><FONT SIZE=2> The
Company holds three United States Patents covering the use of GRF and its analogs for the treatment of osteoporosis and GRF and its analogs in combination with PTH (which the
Company recombinantly produces) for the treatment of osteoporosis. The Company also holds a U.S. patent covering the use of GRF and GRF in combination with testosterone for the treatment of patients
in catabolic or high stress states. Several additional patent applications have been and are expected shortly to be filed covering therapeutic uses of GLP-1 and GRF. There can be no
assurance that any of such patent applications will result in issued patents or that any such issued patent will provide meaningful protection for the Company's technologies or value for the Company
or enhance the Company's competitive position.</FONT></P>
<P><FONT SIZE=2> United
States patents were issued on March 25, 1997 and on September 28, 1999 to Massachusetts General Hospital with claims generally covering the use of
GLP-1 for the treatment of Type II Diabetes and hyperglycemia and for the enhancement of beta-cell expression of insulin. These patents have been assigned exclusively to two
pharmaceutical companies. The Company may be required to obtain a license under these patents and pay a royalty to carry out its planned programs. The Company can provide no assurance that it will be
able to obtain a license, on commercially reasonable terms, under these patents.</FONT></P>
<P><FONT SIZE=2> The
Company expects that it may need to obtain two licenses for the production and use of GRF. The Company has received assurances from one licensor that a license may be obtained on
terms currently
available to other licensees, and the Company believes that a license from the second licensor also should be available. The Company has entered into several license agreements related to the use of
technologies which can complement or form part of its business. These include an exclusive license covering products that are useful for an amidation procedure, which are covered by patents recently
issued in the United States and in the European Community. A recent agreement gives the Company exclusive rights to two United States patents relevant to adding amides to MR Peptides. The Company has
also obtained exclusive licenses covering patent applications for the use of GLP-1 to enhance parenteral nutrition and metabolism, to treat excess appetite and obesity, to treat impaired
glucose metabolism and resulting cardiovascular disease and to halt the progress of the impaired glucose tolerance condition into Type II Diabetes. The Company also has several
non-exclusive licenses relative to its peptide hormone production processes.</FONT></P>
<P><FONT SIZE=2> The
commercial success of the Company also will depend upon avoiding the infringement of patents issued to competitors and avoiding breach of the technology licenses upon which
certain of the Company's planned future products are or will be based. There can be no assurance that patents do not exist or that patent applications could not be filed which would have an adverse
effect on the Company's ability to produce and market its products. In the event the Company inadvertently breaches an existing license or</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>8</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2>fails
to obtain a license for any technology that it may require to commercialize its products, a material adverse effect on the Company could result. Litigation, which could result in substantial
cost to the Company, may be necessary to enforce the Company's patent and license rights or to determine the scope and validity of others' proprietary rights. If competitors of the Company prepare and
file patent applications in the United States that claim technology also claimed by the Company, the Company may have to participate in interference proceedings declared by the Patent and Trademark
Office to determine priority of invention, which could result in substantial cost to the Company, even if the outcome is favorable to the Company. There can be no assurance that the Company's patents,
if issued, would be held valid by a court of competent jurisdiction. An adverse outcome could subject the Company to significant liabilities to third parties, require disputed rights to be licensed
from third parties or require the Company to cease using the relevant technology.</FONT></P>
<P><FONT SIZE=2> The
Company also relies on certain technologies which constitute proprietary trade secrets and know-how that are not patentable and therefore may be available to the
Company's competitors. The Company believes substantial barriers exist for competitors desiring to commercialize similar products; however, there can be no assurance that others will not independently
develop technologies similar to those developed by the Company or obtain access to the Company's technologies. Although the Company has also taken steps to protect its unpatented trade secrets and
know-how through confidentiality agreements, there can be no assurance that these agreements can be effectively enforced. There can be no assurance that the Company will maintain the
confidentiality of its technology, dissemination of which could have a material adverse effect on the Company.</FONT></P>
<P><FONT SIZE=2><B>Markets and Marketing</B></FONT></P>
<P><FONT SIZE=2> The Company believes that there are as many as 16 million persons in the United States suffering from Type II Diabetes, only a portion of which are
diagnosed from time to time and put on medication. The Company believes that similar incidence of this disease exist in Western and Central Europe, Japan and Canada. China has announced that it has
60 million Type II Diabetics. The Company is not aware of any existing drug therapy which has the broad capability of holding glucose to near normal levels while, at the same time,
substantially lowering insulin levels for Type II diabetics and avoiding episodes of hypoglycemia.</FONT></P>
<P><FONT SIZE=2> The
Company intends to establish a collaboration to carry forward its program to market GLP-1 therapy for Type II Diabetes. This program entails clinical trials for the
delivery of GLP-1 by injection or external pump infusion as a therapy for Type II Diabetes and, if successful, applying to the FDA for marketing approval. In the event FDA approval is
obtained, the Company expects to develop additional delivery methods for GLP-1 for the treatment of this disease.</FONT></P>
<P><FONT SIZE=2> The
Company believes that there are currently more than 4 million cases of congestive heart failure in the United States and similar prevalence levels in relation to population
in Western and Central Europe, Japan, China and Canada. The Company believes that a substantial number of these could benefit from GRF therapy. The Company's initial focus will be on the application
of GRF for enlarged left ventricle cardiomyopathy with initial studies being carried out at MGH/Harvard. In the event this program is successful, the Company will move into further clinical trials for
this condition with a view toward obtaining applicable regulatory approvals. The marketing of GRF for this and similar applications, in the event regulatory approvals are received, is expected to be
carried out on a collaborative basis with a company which has an appropriate marketing presence in the cardiovascular field. Other than a heart transplant and the use of growth hormone in younger
cases, the Company is not aware of any therapies which have had substantial success in reversing the deterioration in, or in strengthening, the heart function in these cases. There can be no assurance
that any such GRF therapeutic application will be successful or obtain regulatory approval or that the Company's GRF could be marketed profitably for this application.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>9</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<H2><FONT SIZE=2> </FONT></H2>
<BR>
<P><FONT SIZE=2> The
Company believes that, at any one time, there are in excess of one million cases of acute osteoporosis in the United States. In addition, the Company believes that over
20 million women in the United States suffer substantial bone depletion from post menopausal osteoporosis conditions, and as a result, have a likelihood of developing serious bone fractures.
Older men, believed to number approximately one-tenth of the women with an osteoporosis condition in the same age ranges, also suffer from osteoporosis, sustain similar bone depletion
conditions and have substantial risks of serious fractures. As many as 50 million people in Europe and Japan may suffer from acute osteoporosis and from the lesser forms of osteoporosis. The
Company is not aware of any existing therapy for osteoporosis which has the capability of adding substantial natural bone mass to all parts of the skeleton of patients who suffer from osteoporosis.
The Company intends to conduct clinical trials for the application of GRF/ PTH as a therapy for acute osteoporosis with the objective of applying for market approvals. The Company may enter into a
collaborative or marketing arrangement with one or more pharmaceutical companies for the conduct of its osteoporosis clinical program, as well as for the marketing of other GRF therapies for the
elderly.</FONT></P>
<P><FONT SIZE=2> Obesity
is a major health problem in the U.S. Seventeen percent of the U.S. population is severely obese and more than thirty percent are obese. Obesity often leads to aberrant
glucose metabolism and Type II Diabetes. The Company believes that, in the event its clinical trials program for appetite control with GLP-1 proves successful, the application of
GLP-1 for appetite control will achieve a substantial market position. The Company plans to enlist a substantial corporate partner for this activity.</FONT></P>
<P><FONT SIZE=2><B>GRF Royalty</B></FONT></P>
<P><FONT SIZE=2> In 1996, in connection with the Company's purchase of a former equity interest in the Company's GRF program, the Company agreed to pay Cambridge Biotech
Corporation (now Aquila Biopharmaceuticals, Inc.) a royalty on proceeds from the sale of GRF made by the Company for therapeutic purposes. The Company has the right to buy out the royalty
interest by a lump sum payment within a six year period expiring on December 31, 2002 or a higher payment within a ten year period expiring on December 31, 2006.</FONT></P>
<P><FONT SIZE=2><B>Government Regulation</B></FONT></P>
<P><FONT SIZE=2> Regulation by governmental entities in the United States and other countries will be a significant factor in the preclinical and clinical testing, production,
labeling, sale, distribution, marketing, advertising and promotion of any products developed by the Company or its strategic partners. The Company's or its strategic partners' therapeutic products
will require regulatory approval or clearance by governmental agencies prior to commercialization. The nature and the extent to which such regulation may apply to the Company or its strategic partners
will vary depending on the nature of any such products.</FONT></P>
<P><FONT SIZE=2> Human
pharmaceutical therapeutic products, including pharmaceutical MR Peptides, are subject to rigorous preclinical and clinical testing and other requirements by the United States
Food and Drug Administration ("FDA") in the United States and similar health authorities in foreign countries. Various federal and, in some cases, state statutes and regulations also govern or
influence the manufacturing, safety, labeling, distribution, storage, record keeping and marketing of such products. The process of obtaining these approvals or clearances is uncertain and the process
of and the subsequent compliance with appropriate federal and foreign statutes and regulations is time consuming and require the expenditure of substantial resources.</FONT></P>
<P><FONT SIZE=2> Generally,
to gain FDA pre-market approval for a biopharmaceutical product, a company first must conduct extensive preclinical studies in the laboratory and in animal
model systems to gain preliminary information on a product's potential efficacy and to identify any safety problems. The results of these studies are submitted as a part of an investigational new drug
application ("IND"), which must become effective before human clinical trials of an investigational drug can start. To commercialize any products, the Company and its strategic partners will be
required to sponsor and file an IND and will be responsible</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>10</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2>for
initiating and overseeing a series of clinical trials to demonstrate the safety, purity, efficacy and potency in the case of biological drugs, or safety and efficacy in the case of
non-biological drugs that are necessary to obtain FDA approval of any such products. Clinical trials are normally done in three phases (Phase I—safety and pharmacologic
assessment; Phase II a small efficacy study; and Phase III—200-1000 patient studies to provide substantial evidence of safety and efficacy). These trials normally take three to
six or more years to complete.</FONT></P>
<P><FONT SIZE=2> After
completion of clinical trials for a new product, FDA marketing approval must be obtained. If the product is classified as a non-biological drug, the Company or its
strategic partner will be required to file a new drug application ("NDA") and receive approval before commercial marketing of the drug. In the case of a biological drug, an Establishment
License Application ("ELA") and Product License Application ("PLA") must be filed with and approved by the FDA before marketing can occur. If a given recombinant product is considered to be a
well-characterized biological drug, only a Biological License Application ("BLA") combining elements of an ELA and a PLA may be required. These testing and approval processes are uncertain
and require substantial time and the expenditure of substantial resources, and there can be no assurance that any such approval will be granted on a timely basis, if at all. NDAs or PLAs/ELAs
submitted to the FDA can take, on average, two to five years to receive approval. In the event a therapeutic product is considered to be important and have efficacy, not available with existing
products, this period can be substantially shortened. The FDA must confirm that good laboratory, clinical and manufacturing practices were maintained as well as determine that safety, purity,
efficacy, and potency (in the case of a biological drug) or safety and efficacy (in the case of a non-biological drug) have been established. If questions arise during the FDA review
process, approval can take more than five years.</FONT></P>
<P><FONT SIZE=2> Even
if FDA regulatory approvals are obtained, a marketed product is subject to continual review, and later discovery of previously unknown problems or failure to comply with the
applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions, including but
not limited to recall or seizure of product, injunction against manufacture, distribution, sales and marketing and criminal prosecution.</FONT></P>
<P><FONT SIZE=2> For
marketing outside the United States, the Company will also be subject to foreign regulatory requirements governing human clinical trials and marketing approval for pharmaceutical
products. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary widely from country to country.</FONT></P>
<P><FONT SIZE=2><B>Competition</B></FONT></P>
<P><FONT SIZE=2> In general, the markets being addressed by the Company are very large and would logically attract the attention of large companies which could expend
substantial resources in the development and marketing of competitive products. There can be no assurance that, in the case of each of the Company's programs and products, one or more major
competitors will not enter the market with an equivalent or superior program or product. Potential competitors may also have significantly greater experience than
the Company in conducting clinical trials and in obtaining FDA and other regulatory approvals of products for health care.</FONT></P>
<P><FONT SIZE=2> The
Company's competitive position will also depend in part on its ability to obtain patent protection for its processes and products. The Company owns or has licensed a substantial
number of patents and patent applications covering methods for the recombinant production of GLP-1 and GRF, and certain other peptide hormones. Patent protection for the Company does exist
for important therapeutic uses related to GRF and may exist for some important therapeutic uses of GLP-1. Patent protection will not be available, however, with regard to many therapeutic
uses of GLP-1 and GRF, and other peptide hormones which the Company may desire to produce. Patent protection may exist for various methods of producing GLP-1 and GRF, and other
peptide hormones by recombinant methods. There can be no assurance, however, that any new patent protection will materialize.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>11</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2> The
Company has focused on the medical application of peptide hormones in the precise natural form to reactivate body endocrine systems in the belief that, for long-term
and possibly lifetime applications, the patient's long-term, adverse side effects profile from these therapies should be minimized and, consequently, regulatory clearances for
long-term use should be simplified. BioNebraska is aware of one company that appears to have a program for the recombinant production of GLP-1. The Company believes that
competition may also come from chemically constructed forms of its peptide products, non-natural, chemically-constructed small peptides and small chemical molecule agents and mimics which
attempt to emulate the effect of the Company's natural-form regulatory peptide hormones. The competition may also come from smaller, non-natural but easier to produce analogs
of the Company's peptide products which may be more amenable to synthesis by chemical means. None of these competitive technologies are believed to have been qualified or near qualification with
regulatory authorities for long-term pharmaceutical use.</FONT></P>
<P><FONT SIZE=2> The
Company believes that two or more large pharmaceutical companies have considered, and possibly continue to consider, programs for the therapeutic use of GLP-1 or
analogs of GLP-1 for Type II Diabetes. The Company believes that such activities, if any, are in the early development stage. The Company also understands that the relatively high cost of
producing GLP-1 and its analogs by chemical synthesis has been a substantial deterrent to these programs and that there has not been evident success to date in being able to recombinantly
produce and amidate the GLP-1 molecule in the natural form on a sufficiently low-cost basis for large scale therapy. The Company believes that the processes it has developed
for the production and amidation of GLP-1 and certain other processes for production may be substantially protected by its nineteen issued U.S. patents and are also covered by additional
patent applications which have been filed or will be filed in the U.S. and other jurisdictions. However, there can be no assurance that a competitor will not succeed in reaching the market with a
GLP-1 therapy program before the Company, that the Company's processes for the production and amidation of GLP-1 will be protected by additional issued patents or that
efficient recombinant production methods, other than those protected by the patent applications and issued patents, will not be developed and deployed for the production of GLP-1.</FONT></P>
<P><FONT SIZE=2> The
Company is not aware of any programs of pharmaceutical companies which are focusing on the therapeutic application of GRF for enlarged left ventricle or other forms of CHF. The
only current therapy known to the Company for the advanced enlarged left ventricle form of CHF is heart transplant, which is often not a practical alternative, particularly when the patient is
elderly.</FONT></P>
<P><FONT SIZE=2> The
Company is aware of certain programs being undertaken by at least one large pharmaceutical company to create small peptides or small molecule chemical mimics which, when delivered
as a therapy, could have the effect of releasing growth hormone in the patient. While the Company believes
that these research programs are still in early development stages, there can be no assurance that such a small peptide or chemical mimic will not be developed which could be used in competition with
GRF therapy for osteoporosis or other applications. A small peptide or mimic could, if successfully developed, also become a competitor in the treatment of certain symptoms of aging.</FONT></P>
<P><FONT SIZE=2> The
Company is aware that an application for the use of a shorter analog of GRF, which is not the natural form, has been approved by the FDA for the treatment of short stature.
However, the Company understands that this form of GRF is produced by chemical means, which the Company believes involves considerably greater expense and may be less pure than the form derived from
the recombinant manufacture of GRF.</FONT></P>
<UL>
<P><FONT SIZE=2><B><I>Middle-Range Peptide Production</I></B></FONT></P>
</UL>
<P><FONT SIZE=2> The Company is aware of one large company which states that it is able to recombinantly produce, purify and amidate certain MR Peptides on an efficient basis.
The Company is aware of one small</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>12</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2>company
that has indicated an interest in entering the MR Peptide business, but has not, to the Company's knowledge, demonstrated the technical capabilities to do so.</FONT></P>
<P><FONT SIZE=2><B>Facilities</B></FONT></P>
<P><FONT SIZE=2> The Company currently leases approximately 27,000 square feet of facilities in the Lincoln, Nebraska Air Park. The Company has options to renew the principal
lease (approximately 24,000 square feet) through the year 2013. In these facilities, the Company has constructed offices and research laboratories, quality control and quality acceptance laboratories
and a six kilogram per year cGMP commercial-sized downstream processing plant. This commercial downstream processing plant has been started up and its operation is being validated. The Company's first
cGMP production from the plant is expected during the second quarter of 2000. Also in these facilities, a commercial-sized fermentation plant is currently under construction. The fermentation plant is
planned to be mechanically complete during the second quarter of 2000. The fermentation plant will be large enough to support commercial downstream processing plants with aggregate capacities of up to
200 kilograms per year.</FONT></P>
<P><FONT SIZE=2><B>Personnel</B></FONT></P>
<P><FONT SIZE=2> The Company employs 96 full-time and four part-time employees, and has been using the services of 20 part-time consultants,
primarily for medical advice and studies, and research and development functions. Sixteen of the employees hold degrees at the doctorate level, eight at the masters level and 51 others are university
graduates in science. Additional personnel will be required for plant operations, if and when commercial production commences. There can be no assurance that the Company will be able to continue to
attract, integrate and retain qualified personnel on acceptable terms.</FONT></P>
<BR>
<P><FONT SIZE=2><A
NAME="di2032_item_2._selected_historical_financial_and_other_data"> </A></FONT> <FONT SIZE=2><B>Item 2. Selected Historical Financial and Other Data </B></FONT></P>
<P><FONT SIZE=2> The following tables set forth selected financial data of the Company, which should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and with the Company's Financial Statements and Notes thereto included elsewhere in this document. The balance sheet data as of December 31, 1998
and 1999, and the selected statement of operations data for the three years ended December 3, 1997, 1998 and 1999 have been derived from the financial statements of the Company which have been
audited by Loren D. Swanson, CPA, independent auditor, whose report is included elsewhere in this document. The selected balance sheet data set forth below
as of December 31, 1995, 1996 and 1997, and the selected statement of operations data for the years ended December 31, 1995 and 1996 have been derived from audited financial statements
not included in this document.</FONT></P>
<BR>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="di2032_selected_historical_financial___sel03396"> </A></FONT> <FONT SIZE=2><B>Selected Historical Financial and Other Data<BR> (Dollars in thousands, except per share data) </B></FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="93%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="41%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="55%" COLSPAN=14 ALIGN="CENTER"><FONT SIZE=1><B>Year Ended December 31,</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="41%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1997</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1996</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1995</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%"><FONT SIZE=2><B>Statement of Operations Data:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="41%"><FONT SIZE=2>Operating revenues</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%"><FONT SIZE=2>Loss from continuing operations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(14,906</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(10,110</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(5,984</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(5,398</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(3,254</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="41%"><FONT SIZE=2>Loss from operations per share</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(2.95</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(2.37</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(1.41</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(1.27</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.76</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<BR>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="89%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="44%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="55%" COLSPAN=14 ALIGN="CENTER"><FONT SIZE=1><B>December 31,</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="44%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1997</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1996</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1995</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="44%"><FONT SIZE=2><B>Balance Sheet Data:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="44%"><FONT SIZE=2>Total Assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>23,505</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>10,262</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>3,050</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>3,464</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>2,460</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="44%"><FONT SIZE=2>Long term debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,414</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>255</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>96</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>46</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>60</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="44%"><FONT SIZE=2>Redeemable preferred stock</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,755</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,667</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>1,579</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>1,491</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>1,403</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2>13</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=4,SEQ=13,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=860143,FOLIO=13,FILE='DISK039:[00STP2.00STP2032]DI2032A.;7',USER='KLIND',CD='27-APR-2000;15:15 -->
<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<H2><FONT SIZE=2> </FONT></H2>
<BR>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dk2032_management_s_discussion_and_an__man03466"> </A></FONT> <FONT SIZE=2><B>MANAGEMENT'S DISCUSSION AND ANALYSIS OF<BR> FINANCIAL CONDITION AND RESULTS OF OPERATIONS </B></FONT></P>
<P><FONT SIZE=2> The following analysis of the financial condition and results of operations of the Company should be read in conjunction with the preceding "Selected
Historical Financial and Other Data," the Company's Financial Statements and Notes thereto and the other financial data included elsewhere in this document. The dollar amounts below have been rounded
in order to simplify their presentation. However, the ratios and percentages are calculated using the detailed financial information contained in the Financial Statements and the Notes thereto and the
financial data included elsewhere in this document. References to years are for the respective fiscal years ended December 31, unless otherwise noted.</FONT></P>
<P><FONT SIZE=2><B>Overview</B></FONT></P>
<P><FONT SIZE=2> BioNebraska is a development stage therapeutics company engaged in the recombinant production and clinical development of MR peptide hormone products for the
treatment of for the treatment of Type II Diabetes, impaired glucose tolerance, advanced cases of osteoporosis and other symptoms of aging, obesity and excess appetite and various acute conditions.
The Company is conducting clinical trials of these products for several of these applications. No regulatory approvals have been obtained, and consequently, the Company has derived no revenues from
the sale of these products.</FONT></P>
<P><FONT SIZE=2> Since
inception in 1989, the Company has experienced operating losses and anticipates that its operating losses will continue for the foreseeable future until such time as one or more
therapeutic products receive regulatory approval and are successfully marketed. Expenditures will be primarily related to research and development activities, which include clinical trials, and
scale-up of commercial manufacturing.</FONT></P>
<P><FONT SIZE=2><B>Results of Operations</B></FONT></P>
<UL>
<P><FONT SIZE=2><I>Fiscal Years Ended December 31, 1999 and 1998</I></FONT></P>
</UL>
<P><FONT SIZE=2> Research and development expenses include those costs associated with the research, development, production and testing of the Company's pharmaceutical
products and the protection of its proprietary rights. Clinical trials expenses include all of the direct costs incurred in conducting the Company's clinical trials. The Company has elected to expense
its research and development and clinical trials costs. These costs have totaled approximately $32.6 million since the Company's inception. Research and development costs increased from
$5.5 million in 1998 to $9.0 million in 1999 due to costs associated with initial studies to test the safety and efficacy of the Company's therapeutic products. Clinical trials expenses
increased from $566,595 in 1998 to $1.1 million in 1999 due to the increased number of trials. Research and development expenses and clinical trials expenses are expected to increase in fiscal
2000 due to expanding clinical trial expenses and increased product production scale-up activities, as well as further development of the Company's production technologies. A change in
accounting method was elected by the Company in 1997 to capitalize its issued patents and patent licenses.</FONT></P>
<P><FONT SIZE=2> General
and administrative expenses remained relatively constant at approximately $2.1 million in both 1999 and 1998.</FONT></P>
<P><FONT SIZE=2> The
Company incurred $231,550 in interest expense in 1999, compared to $319,549 in 1998. The 1998 interest expenses related primarily to a convertible bridge financing under which the
Company issued
$3,765,500 in principal amount of Bridge Notes. Each Bridge Note holder had the right to convert to Common Stock up to 50% of the principal amount of the Bridge Notes at a price of $7.00 per share.
Interest accrued under the Bridge Notes at 10% per annum for the first six months and at 12% per annum during the six-month extension period. As of December 31, 1998, $413,000
principal plus accrued interest had been converted into 65,329 shares of common stock and principal of $1,240,750, plus accrued interest had been repaid by the Company. Of the remaining $2,111,750 of
principal, $988,000 of principal, plus</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>14</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=1,SEQ=14,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=588462,FOLIO=14,FILE='DISK039:[00STP2.00STP2032]DK2032A.;7',USER='KLIND',CD='27-APR-2000;15:15 -->
<BR>
<P><FONT SIZE=2>accrued
interest, was converted into 160,478 shares of common stock in 1999. The balance of $1,123,750 of principal, plus accrued interest was repaid by the Company in early 1999.</FONT></P>
<UL>
<P><FONT SIZE=2><I>Fiscal Years Ended December 31, 1998 and 1997</I></FONT></P>
</UL>
<P><FONT SIZE=2> Research and development expenses increased to $5.5 million for 1998 from $3.5 million in 1997. The increase was the result of several factors,
including increased research and development and production scale-up activities, increased clinical development activities and patent filing and prosecution expenses. The Company's first
clinical trial expenses were incurred in 1998 in the amount of $566,595.</FONT></P>
<P><FONT SIZE=2> General
and administrative expenses increased to $2.1 million in 1998 from $1.3 million in fiscal 1997 due to administrative costs associated with an increase in
employees in connection with the Company's growth, medical programs and expansion of manufacturing facilities, as well as patent application and prosecuting expenses.</FONT></P>
<P><FONT SIZE=2><B>Liquidity and Capital Resources</B></FONT></P>
<P><FONT SIZE=2> The Company has financed its operations since inception primarily through sales of equity securities and, to a lesser extent, collaboration payments and sales
of metal detection kits. From inception through 1999 the Company has received approximately $62 million in net proceeds from equity financings, of which almost $25 million was raised
through the sale of Common Stock in 1999. During 1999, the Company used approximately $9.2 million of cash for research development and administrative activities and $4.7 million for
asset acquisitions. As of December 31, 1999, the Company had total cash, cash equivalents and available-for-sale securities of $18.4 million, and working capital
of $16.2 million.</FONT></P>
<P><FONT SIZE=2> At
December 31, 1999, the Company had a shareholders' deficit accumulated during the development stage of $42.2 million. The Company expects to continue to incur
additional losses, and will require additional working capital, as it incurs substantial expenses related to additional personnel, clinical trials, research and development activities, and
scale-up of commercial manufacturing. Although the Company believes that existing cash, cash equivalents and available-for-sale securities will be sufficient to
fund its operations for at least the next 12 months, the Company will require additional financing in the future. Any additional required financing may not be available to the Company on
satisfactory terms, if at all.</FONT></P>
<P><FONT SIZE=2> Certain
statements in this General Form of Registration of Securities on Form 10, particularly under this Item 2, may constitute "forward looking statements" within the Private
Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any future results, performance or achievements, expressed or implied by such forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, those discussed herein. The words "believe," "expect," "anticipate," "seek" and similar expressions identify forward-looking
statements. Readers are cautioned
not to place undue reliance on these forward-looking statements that speak only as of the date the statement was made.</FONT></P>
<BR>
<P><FONT SIZE=2><A
NAME="dk2032_item_3._properties"> </A></FONT> <FONT SIZE=2><B>Item 3. Properties </B></FONT></P>
<P><FONT SIZE=2> The Company currently leases a total of 27,000 square feet in facilities in the Lincoln, Nebraska Air Park. The Company has options to renew the lease on
24,000 square feet of these facilities through the year 2013 with further options to extend. See "Business—Facilities." The Company believes that its existing facilities are adequate to
meet its requirements for the near term.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>15</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<BR>
<P><FONT SIZE=2><A
NAME="dk2032_item_4._security_ownership_of___ite02724"> </A></FONT> <FONT SIZE=2><B>Item 4. Security Ownership of Certain Beneficial Owners and Management </B></FONT></P>
<P><FONT SIZE=2> The following table sets forth certain information with respect to beneficial ownership of the Company's outstanding voting stock (Common Stock and
Series B, C, D, E, F and G Preferred Stock on an as converted basis) as of April 17, 2000, by (i) those shareholders known to be the beneficial owners of more than five percent of
the voting power of the Company's outstanding capital stock, (ii) by each of the "named executive officers" director, and (iii) by all officers and directors as a group. Except as
otherwise noted, the Company believes that all named persons have sole voting and sole investment power with respect to such shares. The Series A Preferred Stock normally has no voting rights.
See "Description of Company's Securities to be Registered."</FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="81%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="62%" ALIGN="LEFT"><FONT SIZE=1><B>Name and Address of Beneficial Owner<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER"><FONT SIZE=1><B>Number of<BR>
Shares(1)(2)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER"><FONT SIZE=1><B>Percent (%) of Shares(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>LaMont Asset Management SA<BR>
Baarerstrasse 10, P.O. Box 4639<BR>
6304 Zug/ Switzerland</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,915,714</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>27.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>John N. Irwin III<BR>
405 Park Avenue<BR>
New York, NY 10022</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,273,489</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>12.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Hillside Capital Incorporated<BR>
405 Park Avenue<BR>
New York, NY 10022</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>860,885</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>8.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Thomas R. Coolidge<BR>
3820 NW 46th Street<BR>
Lincoln, NE 68524-1637</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>731,266</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>6.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Medtronic, Inc.<BR>
Corporate Center<BR>
7000 Central Avenue N.E.<BR>
Minneapolis, MN 55432</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>679,602</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>6.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Fred W. Wagner, Ph.D.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>289,653</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>2.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Barton Holmquist, Ph.D.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>73,334</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Mario R.W. Ehlers, M.B., Ch.B and Ph.D.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>30,002</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Malcolm Riddell</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>50,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Walter R. Barry, III</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>18,667</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Grant W. Denison, Jr.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>S. William Jenks</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>21,143</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Erich Sager</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>6,666</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>(5)</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>All officers and directors as a group (9 persons)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,220,731</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>11.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<HR NOSHADE ALIGN=LEFT WIDTH="120">
<DL compact>
<DT><FONT SIZE=2>**</FONT></DT><DD><FONT SIZE=2>Represents
less than 1%
<BR><BR></FONT></DD><DT><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Based
on (i) 6,980,381 shares of Common Stock (each with one vote per share) outstanding as of April 1, 2000, plus (ii) 3,666,979 votes based on the voting
rights of the outstanding shares of Series B, C, D, E, F and G Preferred Stock, which have voting power equal to the number of shares of Common Stock into which they are convertible.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Includes
the following options under the Stock Plan which are currently exercisable or will become exercisable within 60 days of the date of this Registration Statement:
Mr. Coolidge—180,000 shares;</FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>16</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=3,SEQ=16,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=30353,FOLIO=16,FILE='DISK039:[00STP2.00STP2032]DK2032A.;7',USER='KLIND',CD='27-APR-2000;15:15 -->
<UL>
<P><FONT SIZE=2>Dr. Wagner—113,334
shares; Dr. Holmquist—73,334 shares; Dr. Ehlers—30,002 shares; Mr. Riddell—50,000 shares;
Mr. Barry—18,667 shares; Mr. Jenks, 14,000 shares; Mr. Sager, 6,666 shares; and all officers and directors as a group—486,003 shares.</FONT></P>
</UL>
<DL compact>
<DT><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Mr. Irwin
is the Managing Director of Hillside Capital Incorporated. Includes (i) 860,885 shares held by Hillside Capital Incorporated; (ii) 93,005 shares
issuable upon an option from the Company which is currently exercisable by Mr. Irwin; (iii) 40,584 shares held in trust for Mr. Irwin's benefit; and (iv) 27,056 shares held
by or for the benefit of family members, as to which Mr. Irwin disclaims beneficial ownership.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Includes
96,387 shares held by members of his immediate family, as to which Mr. Coolidge disclaims beneficial ownership.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(5)</FONT></DT><DD><FONT SIZE=2>Mr. Sager
is a partner of LaMont Asset Management SA.</FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>17</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<UL>
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<H2><FONT SIZE=2> </FONT></H2>
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<P><FONT SIZE=2><A
NAME="dm2032_item_5._directors_and_executive_officers"> </A></FONT> <FONT SIZE=2><B>Item 5. Directors and Executive Officers </B></FONT></P>
<P><FONT SIZE=2> The officers and directors of the Company are:</FONT></P>
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<TABLE WIDTH="78%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="42%" ALIGN="LEFT"><FONT SIZE=1><B>Name<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="49%" ALIGN="CENTER"><FONT SIZE=1><B>Offices</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>Thomas R. Coolidge</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>66</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Chairman, Chief Executive Officer, Secretary and Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>Fred W. Wagner, Ph.D.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>60</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>President, Chief Scientist, Treasurer and Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>Barton Holmquist</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>57</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Senior Vice President, Research and Development</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>Mario R.W. Ehlers, M.B., Ch.B. and Ph.D.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>41</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Vice President and Chief Medical Officer</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>Mal Riddell</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>62</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Managing Director—Facilities Construction</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>Christopher S. Hickey</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>47</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Vice President of Production Management</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>James A. Williams, Ph.D.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>40</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Vice President and Director of Regulatory Affairs and Molecular Biology</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>Kris K. Christianson</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>43</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Director of Quality Control and Bioanalytics</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>Daniel R. Strydom, Ph.D.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>54</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Director of Research</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>Walter R. Barry, III</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>34</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>Grant W. Denison, Jr.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>50</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>Stephen W. Jenks</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>57</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>Erich Sager</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>41</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Director</FONT></TD>
</TR>
</TABLE>
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<P><FONT SIZE=2> Following
is a brief summary of the business experience of each of the officers and directors of the Company.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Thomas R. Coolidge, J.D.</B></FONT><FONT SIZE=2>, a founder of the Company, has been employed by the Company since its inception in 1989 and
serves as its Chairman and Chief Executive Officer. From 1987 through 1988, he was President and CEO of Finn Sugar U.S., Inc., Schaumberg, Illinois, which provided specialty enzyme and
sweetener products and specialty chemicals to the North American food markets. From 1982 through 1987, he was a Principal in the Stenbeck Group of New York City, where he was instrumental in winning
the "private side" cellular radio telephone license for all of the United Kingdom with a U.K. partner and represented that Group's ownership in connection with the successful building and
launching of that cellular system known as "Vodafone" to cover the licensed market. From 1975 through 1982, he served as the Executive Vice President of Parsons & Whittemore, Inc., a
large privately-held paper pulp and machinery producer, with offices in New York City, where among his responsibilities were the financing, construction and start up of one of the largest
single-line pulp mills at the time, located in Alabama. From 1960 through 1974, he practiced business and financial law as an associate and partner of a Wall Street law firm. He graduated
from Harvard College and Harvard Law School.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Fred W. Wagner, Ph.D.</B></FONT><FONT SIZE=2>, a founder of the Company, has been employed by the Company since its inception in 1989 and serves
as its President and Chief Scientist. He became a faculty member of the University of Nebraska-Lincoln in the Department of Biochemistry in 1968, and a Professor in 1980. Dr. Wagner retired as
an active member of the faculty at the end of 1995 and now works full time for the Company. Dr. Wagner's areas of research interest include metallo-proteins and metallo-enzymes, proteolytic
enzymes and the immobilization, manipulation and purification of proteins. He is an author of more than 50 articles in scientific journals and of chapters in five books. Dr. Wagner
received his Ph.D. in Biochemistry from Texas A&M University.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>18</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Barton Holmquist, Ph.D.</B></FONT><FONT SIZE=2>, Senior Vice President, Research and Development, has been with the Company since February 1994,
having previously been a Harvard Medical School faculty member (Associate Professor in the Department of Biological Chemistry and Molecular Pharmacology). He received his Ph.D. degree in 1969 from the
University of California, Santa Barbara in chemistry and joined a renowned research group at Harvard where he studied in numerous areas of peptide chemistry and biochemistry, including the enzymology
of hypertension and alcoholism. He has published extensively (over 110 publications) in these and other areas including the role of metals in biology and ways of examining them, analytical
methods, and other aspects of enzymology. Prior to joining the Company, he was a consultant for the Company since its inception.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Mario R.W. Ehlers, M.B., Ch.B. (equivalent to M.D.) and Ph.D.</B></FONT><FONT SIZE=2>, joined the Company in June 1998 as its Vice
President and Chief Medical Officer. Dr. Ehlers received his M.B., Ch.B. and Ph.D. in biochemistry at University of Cape Town in South Africa. Subsequently he served for seven years as a
researcher and instructor at the Center for Biochemical and Biophysical Sciences for Medicine at Harvard Medical School. From 1992 to 1998, he served as the Chairman of the Department of Medical
Biochemistry at the University of Cape Town. Dr. Ehlers combines strong credentials in the biochemistry of endocrine peptides with extensive medical and clinical experience.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Malcolm Riddell</B></FONT><FONT SIZE=2>, Managing Director of Facilities Construction, has been employed by the Company since September 1989. From 1980
to 1989, he was President and Chief Executive Officer of Plaskon Electronic Materials, Inc., a manufacturer of sophisticated materials for the epoxy encapsulation of
semi-conductors. Prior to then, Mr. Riddell was employed in several managerial posts by Allied Chemical Corporation. Mr. Riddell is a graduate in science and engineering from
Fairleigh Dickenson University.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Christopher S. Hickey</B></FONT><FONT SIZE=2>, joined the Company in July 1997 as the Vice President of Production Management. Prior to joining
the Company, Mr. Hickey was employed by Somatogen in Boulder, Colorado for five years, where his responsibilities included fermentation and purification process development, production of
clinical supplies, maintenance and metrology. Before joining Somatogen, he worked for Monsanto in St. Louis, Missouri for fifteen years. While at Monsanto he was involved in the design,
construction, startup and operation of their pilot plant for the production of proteins from recombinant DNA technology. The Monsanto pilot plant experience resulted in his participation on the
startup team for the world's largest commercial recombinant DNA protein production facility. He received his M.S. in Microbiology from Clemson University in 1977.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>James A. Williams, Ph.D.</B></FONT><FONT SIZE=2>, has been an employee of the Company since November 1996 and serves as Vice President and
Director of Regulatory Affairs and Molecular Biology. He received his Ph.D. in Genetics from the University of Alberta and subsequently spent three years postdoctoral training at the University of
Wisconsin. Prior to joining BioNebraska, he was employed as a Section Manager by Ophidian Pharmaceuticals, Inc. in Madison, Wisconsin for three years, where his responsibilities included
cloning and E. coli expression vector development for multiple target proteins, and the development of scalable E. coli fermentation and protein purification methodologies for large
scale manufacture of target proteins. He was responsible for the development of the E. coli master and working cell banks, fermentation methodologies, and downstream recombinant protein
purification procedures for cGMP manufacture of two recombinant proteins that are currently utilized in a clinical development collaboration with a large pharmaceutical company.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Kris K. Christianson</B></FONT><FONT SIZE=2> has been with the Company since 1994 and serves as the Director of Quality Control and Bioanalytics. She is
responsible for method development and validation, product testing and evaluation of biological fluids for products. Before joining BioNebraska, she worked for Abbott Laboratories, North Chicago,
Illinois, for two years, where her responsibilities included construction and expression of recombinant proteins, purification and characterization of proteins and development of immunoassays. She was
engaged in animal vaccine research and development at SmithKline Beecham Animal Health, Lincoln, Nebraska for six years prior to working at Abbott. She worked in the toxicology section of</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>19</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2>Midwest
Laboratories, Kansas City, Missouri, for two years after receiving a M.S. in Microbiology from Kansas State University in 1983. She is an author of more than ten articles in scientific
journals.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Daniel J. Strydom, Ph.D.</B></FONT><FONT SIZE=2>, has been with the Company since December 1996 and serves as Director of Research with
the Peptide Group. He is primarily responsible for research on the purification and structural purity of the various peptides of interest to the Company. He received his Ph.D. in Physical Chemistry
from the University of South Africa in 1972 and his post-doctoral training at Harvard Medical School in 1973 and 1974. From 1966 to 1978, his research on various aspects of protein and
peptide chemistry was carried out at the National Chemical Research Laboratories of the South African Council for Scientific and Industrial Research. From 1978 until December 1996, he carried
out research in the Center for Biochemical and Biophysical Sciences and Medicine at Harvard Medical School in Boston and was Assistant Professor in the Department of Pathology at Harvard for the last
10 years. He has authored more than 60 articles in scientific journals, and has been active in protein and peptide chromatographic studies while serving on the editorial boards of
"Analytical Biochemistry" and "Journal of Chromatography". He is a member and has served on various committees of the Association of Biomolecular Research Facilities (ABRF), an international
organization which is concerned with establishing and maintaining high standards of analytical competence in the biotechnical industry and the biochemical field at universities.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Walter R. Barry, III</B></FONT><FONT SIZE=2>, has been a Director of the Company since December, 1993. Since 1999, Mr. Barry has been
Chairman and Chief Executive Officer of viaMD.com, a business-to-business e-commerce company focused on the medical device industry. From March 1994 to
August 1998, Mr. Barry was the Director of Business Development for First Physician Care, Inc., a physician group practice management company in Atlanta. Prior to that,
Mr. Barry was Director of Communications of CareNetwork, a publicly-traded HMO, from July 1991 to February 1994. From July 1989 to June 1991, Mr. Barry was an
Analyst in the Corporate Finance Department at the New York investment banking firm of Dillon, Read & Company, Inc. Mr. Barry graduated from Princeton University in 1989.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Grant W. Denison, Jr.</B></FONT><FONT SIZE=2>, has been a Director of the Company since October 29, 1999. Mr. Denison is the Chief
Executive Officer and Chairman of the Board of BioMarin Pharmaceutical, Inc., a pharmaceutical development company. Prior to joining BioMarin, Mr. Denison served as President, Consumer
Products and Corporate Senior Vice President, Business Development at Searle, a pharmaceutical company, from July 1993 to April 1997. Prior to that, he held positions as Vice President
Corporate Planning and President, U.S. Operations at Monsanto Company, Vice President, International Operations at Squibb Medical Systems, and Vice President, Planning and Business Development
at Pfizer, Inc. Mr. Denison also serves as a director of BioSyn, Nastech Pharmaceutical Company, Inc., Dentalview, Inc. and Clubb BioCapital. Mr. Denison received an
A.B. in Mathematical Economics from Colgate University and an M.B.A. from Harvard Graduate School of Business Administration.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Stephen W. Jenks</B></FONT><FONT SIZE=2>, has been a director of the Company since March 1998. Mr. Jenks has been President of Hollenbeck
Investments, a private investment company which he founded, since 1994. He also has an active consulting practice serving wealthy individuals, private companies and start-up companies.
From 1970 to 1994, he was with J.P. Morgan in New York and London where his responsibilities at various times involved the shipping business, project finance, Africa, and distressed loans.
Mr. Jenks graduated from the University of Pittsburgh and attended the Wharton School of Business of the University of Pennsylvania.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Erich Sager</B></FONT><FONT SIZE=2>, has been a director of the Company since July 1998. He is the Managing Partner of LaMont Asset
Management SA, a private investment management firm. Before joining LaMont, he was head of private banking at Dresden Bank (Switzerland) Ltd. in Zurich. He is a member of the board of
directors of BioMarin, Inc., and of Comptec Industries Ltd., a publicly held Canadian company which manufactures specialty plastic components.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>20</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<H2><FONT SIZE=2> </FONT></H2>
<BR>
<P><FONT SIZE=2><A
NAME="do2032_item_6._executive_compensation."> </A></FONT> <FONT SIZE=2><B>Item 6. Executive Compensation. </B></FONT></P>
<P><FONT SIZE=2><B>Compensation Summary</B></FONT></P>
<P><FONT SIZE=2> The following table shows the compensation earned for services rendered in all capacities to the Company by the Chief Executive Officer and the other most
highly compensated executive officer of the Company whose salary and bonuses exceeded $100,000 for the year ended December 31, 1999 (the "Named Executive Officers"):</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>Summary Compensation Table</B></FONT></P>
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<TABLE WIDTH="91%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="41%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=2> </FONT></TH>
<TH WIDTH="6%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=2> </FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=2> </FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="3%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="21%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Long-Term<BR>
Compensation Awards</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="41%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="3%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="24%" COLSPAN=5 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Annual Compensation(1)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="41%" ROWSPAN=2 ALIGN="LEFT"><FONT SIZE=1><B>Name and<BR>
Principal Position<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal<BR>
Year</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="21%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Securities Underlying<BR>
Options (# Shares)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Salary</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Bonus</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%"><FONT SIZE=2><B>Thomas R. Coolidge</B></FONT><FONT SIZE=2><BR>
Chairman of the Board,<BR>
Chief Executive Officer<BR>
and Secretary</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>1999<BR>
1998<BR>
1997</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>294,745<BR>
256,300<BR>
233,300</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>58,949<BR>
64,075<BR>
55,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><FONT SIZE=2>300,000<BR>
—<BR>
—</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="41%"><FONT SIZE=2><B>Fred W. Wagner</B></FONT><FONT SIZE=2><BR>
President, Chief Scientist<BR>
and Treasurer</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>1999<BR>
1998<BR>
1997</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>253,000<BR>
220,000<BR>
200,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>50,600<BR>
55,000<BR>
47,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><FONT SIZE=2>100,000<BR>
—<BR>
—</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%"><FONT SIZE=2><B>Barton Holmquist</B></FONT><FONT SIZE=2><BR>
Senior Vice President,<BR>
Research and Development</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>1999<BR>
1998<BR>
1997</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>177,100<BR>
154,000<BR>
140,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>35,420<BR>
38,500<BR>
33,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><FONT SIZE=2>25,000<BR>
—<BR>
—</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="41%"><FONT SIZE=2><B>Mario Ehlers</B></FONT><FONT SIZE=2><BR>
Vice President and Chief<BR>
Medical Officer</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>1999<BR>
1998</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> <BR>(1)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>144,000<BR>
72,917</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$<BR></FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>28,800<BR>
—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><FONT SIZE=2>10,000<BR>
40,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="41%"><FONT SIZE=2><B>Malcolm Riddell</B></FONT><FONT SIZE=2><BR>
Managing Director of<BR>
Facilities Construction</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>1999<BR>
1998<BR>
1997</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>150,000<BR>
130,000<BR>
130,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$<BR> <BR></FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>30,000<BR>
—<BR>
—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><FONT SIZE=2>—<BR>
—<BR>
—</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<HR NOSHADE ALIGN=LEFT WIDTH="120">
<DL compact>
<DT><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Dr. Ehlers
joined the Company in June 1998. Salary reflects a partial year.</FONT></DD></DL>
<BR>
<P><FONT SIZE=2><B>Stock Plan</B></FONT></P>
<P><FONT SIZE=2> The BioNebraska, Inc. Stock Plan (the "Stock Plan"), which was originally adopted in 1993 and subsequently amended, authorizes the grant of options to
purchase up to 1,540,000 shares of Common Stock. Both incentive stock options and non-qualified stock options may be granted under the Stock Plan. Exercise prices for incentive stock
options must equal the market value per share at the time of grant. The stock options are granted with the approval of the Board of Directors of the Company or a committee thereof. As of
April 1, 2000, there were outstanding options under the Stock Plan to purchase a total of 1,552,000 shares, of which options to purchase 659,671 shares were exercisable. The last 12,000 options
were granted subject to shareholder approval of an increase in the number of shares reserved under the Stock Plan.</FONT></P>
<P><FONT SIZE=2> In
addition, the Company intends to issue options to purchase a total of 96,387 shares of Common Stock outside of the Stock Plan to replace outstanding Stock Appreciation Rights held
by Mr. Riddell and three senior employees and consultants of the Company.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>21</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=1,SEQ=21,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=38557,FOLIO=21,FILE='DISK039:[00STP2.00STP2032]DO2032A.;24',USER='KLIND',CD='27-APR-2000;15:15 -->
<P><FONT SIZE=2><I>Option Grants</I></FONT></P>
<P><FONT SIZE=2> The following table contains information concerning the grant of stock options under the BioNebraska, Inc. Stock Plan to the Named Executive Officers
during the year ended December 31, 1999:</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>Option Grants in Last Fiscal Year</B></FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="52%" COLSPAN=11 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Individual Grants<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=4><FONT SIZE=1> </FONT></TH>
<TH WIDTH="23%" COLSPAN=5 ROWSPAN=4 ALIGN="CENTER"><FONT SIZE=1><B>Potential Realizable<BR>
Value at Assumed<BR>
Annual Rates of Stock<BR>
Price Appreciation<BR>
for Option Term</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="8%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=4><FONT SIZE=1> </FONT></TH>
<TH WIDTH="10%" ROWSPAN=4 ALIGN="CENTER"><FONT SIZE=1><B>% of Total<BR>
Options<BR>
Granted to<BR>
Employees<BR>
in Fiscal<BR>
Year</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="8%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="8%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1> </FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Market<BR>
Price<BR>
on Date<BR>
of Grant</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="8%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ROWSPAN=2 ALIGN="LEFT"><FONT SIZE=1><B>Name<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="8%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Options<BR>
Granted</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Exercise<BR>
Price<BR>
Per Share</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="8%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Expiration<BR>
Date</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>5%</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>10%</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2>Thomas R. Coolidge</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>300,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>41.6</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>8.00</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>8.00</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>2/01/04</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>663,076</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,465,224</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2>Fred W. Wagner</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>100,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>13.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>8.00</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>8.00</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>2/01/04</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>272,077</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>617,249</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2>Barton Holmquist</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>25,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>8.00</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>8.00</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>2/01/04</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>81,420</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>189,743</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2>Mario Ehlers</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>10,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>8.00</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>8.00</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>2/01/04</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>38,196</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>91,487</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2>Malcolm Riddell</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<HR NOSHADE ALIGN=LEFT WIDTH="120">
<DL compact>
<DT><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>The
total number of options held by Mr. Coolidge and Dr. Wagner represent 24% and 12%, respectively, of the total options outstanding under the Stock Plan.</FONT></DD></DL>
<BR>
<P><FONT SIZE=2><I>Option Exercises and Year-End Values</I></FONT></P>
<P><FONT SIZE=2> No stock options were exercised by the Named Executive Officers during the year ended December 31, 1999. The following table sets forth certain
information regarding exercised and unexercised options held by each of the Named Executive Officers at the end of the year ended December 31, 1999.</FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="97%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="20%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="48%" COLSPAN=7 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Aggregated Option Exercises in Last Fiscal Year and Option Values at Fiscal Year End</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="14%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="20%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="3%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="28%" COLSPAN=5 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Value of Unexercised<BR>
In-the-Money Options<BR>
at December 31, 1999(1)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="20%" ALIGN="LEFT"><FONT SIZE=1><B>Name<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="12%" ALIGN="CENTER"><FONT SIZE=1><B>Shares<BR>
Acquired On<BR>
Exercise (#)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER"><FONT SIZE=1><B>Value<BR>
Realized</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="24%" COLSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Number of Securities<BR>
Underlying Unexercised<BR>
Options at December 31, 1999</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="20%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="12%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="8%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>Exercisable<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER"><FONT SIZE=1><B>Unexercisable<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Exercisable<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="14%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Unexercisable<BR></B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="20%"><FONT SIZE=2>Thomas R. Coolidge</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>180,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>200,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>990,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>900,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="20%"><FONT SIZE=2>Fred W. Wagner</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>113,334</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>66,666</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>690,003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>299,997</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="20%"><FONT SIZE=2>Barton Holmquist</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>73,334</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>16,666</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>487,503</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>74,997</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="20%"><FONT SIZE=2>Mario Ehlers</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>16,668</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>33,332</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>88,340</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>176,660</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="20%"><FONT SIZE=2>Malcolm Riddell</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>50,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>345,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<HR NOSHADE ALIGN=LEFT WIDTH="120">
<DL compact>
<DT><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Represents
only options that were "in-the-money" on December 31, 1999. The value of unexercised options is calculated by determining the difference
between the fair market value of the shares underlying the options at December 31, 1999 and the exercise price of the options, times the number of options outstanding. Fair market value was
determined based upon the last sales price at which the Company sold Common Stock in a private placement.</FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>22</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=2,SEQ=22,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=770645,FOLIO=22,FILE='DISK039:[00STP2.00STP2032]DO2032A.;24',USER='KLIND',CD='27-APR-2000;15:15 -->
<UL>
</UL>
<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<H2><FONT SIZE=2> </FONT></H2>
<BR>
<P><FONT SIZE=2><B>Employment Agreements</B></FONT></P>
<P><FONT SIZE=2> Mr. Coolidge, Dr. Wagner and Dr. Holmquist have entered into employment agreements with the Company, under which either party may
terminate the contract on one year's notice. The Company has also entered into an employment agreement with Dr. Ehlers and Mr. Riddell, which can be terminated by either the employee or
the executive on six month's notice.</FONT></P>
<P><FONT SIZE=2> All
of the officers and employees of the Company, including Mr. Coolidge, Dr. Wagner, Dr. Holmquist, Dr. Ehlers and Mr. Riddell, have signed
agreements with the Company which incorporate provisions for Company ownership of all inventions and technology conceived by them which pertain to the Company's business, and the safeguarding of the
Company's confidential information and trade secrets. All of the employment agreements with the officers and key employees contain covenants prohibiting the employee from (i) competing with the
Company, (ii) interfering with its business or business relationships, and (iii) soliciting any Company personnel (employees and independent contractors) for employment elsewhere, during
employment with the Company and thereafter for specified periods after termination of employment and in the event certain compensation is paid to the officer or key employee.</FONT></P>
<P><FONT SIZE=2><B>Compensation of Directors</B></FONT></P>
<P><FONT SIZE=2> All directors hold office for an indefinite term continuing until the next meeting of stockholders at which directors are elected. Non-employee
directors are paid $1,000 per quarter and $1,000 per meeting attended, and are reimbursed for expenses and compensated for consulting services. In addition, the current non-employee
directors have received non-qualified stock options to purchase an aggregate of 70,000 shares of Common Stock at the fair market value on the date of grant.</FONT></P>
<P><FONT SIZE=2><B>Compensation Committee Interlocks and Insider Participation</B></FONT></P>
<P><FONT SIZE=2> Mr. Jenks is a member of the Compensation Committee and also provides consulting services to the Company. In 1999, the Company paid him $113,205 for
these consulting services. Mr. Sager is a member of the Compensation Committee. He is a managing partner of LaMont Asset Management SA, a firm which invested $24,750,000 in the Company's Common
Stock in 1999.</FONT></P>
<P><FONT SIZE=2><B>Board Compensation Committee Report on Executive Compensation</B></FONT></P>
<P><FONT SIZE=2> The Compensation Committee consists of Messrs. Barry, Jenks and Sager. There was no formal Compensation Committee Report for fiscal 1999. The
Compensation Committee made decisions on compensation of the Company's Chief Executive Officer and the President for fiscal 1999. Compensation decisions for the remaining executives and other
employees were made by Mr. Coolidge and Dr. Wagner. The compensation philosophy of the Company is to provide competitive levels of compensation that are consistent with the Company's
annual and long-term performance goals, recognize individual initiative and achievements and assist the Company in attracting and retaining qualified executives.</FONT></P>
<P><FONT SIZE=2> In
establishing compensation for executive officers, the Company examines a variety of factors, including salaries for executives holding comparable positions in similarly situated
companies, including companies in the biotech industry. The Company also seeks to establish an executive compensation program that provides incentives that will reward officers for pursuing the
actions necessary to improve the Company's performance and increase long-term shareholder value.</FONT></P>
<P><FONT SIZE=2> There
are three elements to the Company's executive compensation program: base salary, cash bonuses and long-term stock-based incentives. The Company believes that there
should be a strong relationship between executive compensation and achievement of corporate goals.</FONT></P>
<P><FONT SIZE=2><I> Base Salary.</I></FONT><FONT SIZE=2> Executive base salaries are based upon past performance, experience, responsibility and salary levels for
persons holding similar positions in similarly situated companies.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>23</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2><I> Cash Bonuses.</I></FONT><FONT SIZE=2> Bonuses are awarded to executive officers upon recognized achievements during the fiscal year.</FONT></P>
<P><FONT SIZE=2><I> Stock Options.</I></FONT><FONT SIZE=2> Stock options are generally granted to executive officers in connection with their initial employment
and periodically upon review of compensation levels and past performance. Stock options are also granted to substantially all of the Company's other professional employees (approximately 70 persons)
and non-employee directors and consultants, who collectively hold approximately 50% of all outstanding stock options granted by the Company. The Committee believes that stock ownership by
management and the Company's professional personnel and stock-based performance compensation arrangements are beneficial in aligning the interests of management and professional employees on the one
hand and the interests of the shareholders on the other hand in enhancing shareholder value. Stock options have been awarded at an exercise price equal to the fair market on the date of grant and
therefore have value only if the price of the Company's stock appreciates from the price on the date on which the stock options are granted. In this way, the Company's executive officers, professional
employees and shareholders benefit from such stock price appreciation. Stock options are awarded in a manner consistent with the Company's objective to provide a long-term equity interest
in the Company and to provide an opportunity for a greater financial reward if long-term performance is sustained. To encourage a long-term perspective, options generally vest
over a three-year period.</FONT></P>
<P><FONT SIZE=2><I> Chief Executive Officer Compensation.</I></FONT><FONT SIZE=2> In accordance with applicable regulations, this Compensation Committee Report
sets forth the Committees' bases for the Chief Executive Officer's compensation. In determining the base salary, the Compensation Committee has utilized compensation surveys and has considered
performance against major accomplishments and longevity with the Company. The base salary also reflects a cost of living increase. Mr. Coolidge received a salary adjustment from $256,300 to
$294,745 in 1999. The Committee believes this level is competitive with other salaries of chief executive officers in the industry. Mr. Coolidge also received a stock option to purchase 300,000
shares of the Company's common stock in 1999. The exercise price of $8.00 is equal to the fair market value of the shares on the date of the grant. The option becomes exercisable in cumulative annual
installments of one-third of the total option grant commencing one year from the date of grant, with full vesting occurring on the third anniversary date.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>SUBMITTED BY THE COMPENSATION COMMITTEE<BR>
OF THE BOARD OF DIRECTORS</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>Walter
R. Barry, III Stephen W. Jenks Erich Sager</FONT></P>
<BR>
<P><FONT SIZE=2><A
NAME="dq2032_item_7._certain_relatio__dq202148"> </A></FONT> <FONT SIZE=2><B>Item 7. Certain Relationships and Related Transactions </B></FONT></P>
<P><FONT SIZE=2><B>Transactions with Management and Others</B></FONT></P>
<P><FONT SIZE=2> The Company leases office space from Mr. Coolidge for which the Company paid $20,352 in 1999 and $14,400 in 1998. The lease payments constitute
reimbursement of the mortgage interest and property taxes for the space. See "Compensation Committee Interlocks and Insider Participation."</FONT></P>
<BR>
<P><FONT SIZE=2><A
NAME="dq2032_item_8._legal_proceedings"> </A></FONT> <FONT SIZE=2><B>Item 8. Legal Proceedings </B></FONT></P>
<P><FONT SIZE=2> There are no pending legal proceedings to which the Company is a party or to which any of the Company's assets or properties are subject.</FONT></P>
<BR>
<P><FONT SIZE=2><A
NAME="dq2032_item_9._market_price_of_and_di__ite03920"> </A></FONT> <FONT SIZE=2><B>Item 9. Market Price of and Dividends on the Company's Common Equity and Related Stockholder Matters. </B></FONT></P>
<P><FONT SIZE=2><B>Market Price</B></FONT></P>
<P><FONT SIZE=2> There is no established public market for the Company's Common Stock.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>24</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2><B>Holders</B></FONT></P>
<P><FONT SIZE=2> As of April 17, 2000, the Company had issued and outstanding 6,980,381 shares of Common Stock held by 411 holders of record; 11,750 shares of
Series A Preferred Stock held by one holder of record; 16,365 shares of Series B Preferred Stock held by 48 holders of record; 21,000 shares of Series C Preferred Stock held by 72
holders of record; 60,739 shares of Series D Preferred Stock held by 135 holders of record; 17,076 shares of Series E Preferred Stock held by 34 holders of record; 110,118 shares of
Series F Preferred Stock held by 22 holders of record; and 50,000 shares of Series G Preferred Stock held by one holder of record. Many of the holders of Common Stock are also holders of
record of one or more series of Preferred Stock.</FONT></P>
<P><FONT SIZE=2> Of
the 6,980,381 shares of Common Stock outstanding, 4,511,758 shares are currently eligible for resale without restriction under the Securities Act of 1933, as amended (the "Act"),
unless held by "affiliates" of the Company as that term is defined in rule 144 promulgated under the Act. In addition 3,666,979 other shares of Common Stock are issuable upon the conversion of
outstanding convertible preferred stock. All of those shares of Common Stock would become eligible for resale under the Act, subject to the restrictions imposed upon affiliates of the Company under
Rule 144. See "Registration Rights" under Item 18.</FONT></P>
<P><FONT SIZE=2><B>Dividends</B></FONT></P>
<P><FONT SIZE=2> To date, the Company has not paid cash dividends on its Common Stock and currently does not intend to pay cash dividends in the foreseeable future. If and to
the extent that any operating profits are realized, the Company currently intends, for the foreseeable future, to utilize such profits for operating purposes. 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 other such factors as the
Board of Directors deems relevant. As long as any Convertible Preferred Stock is outstanding, no dividend whatsoever may be declared or paid upon, nor shall
any distribution be made upon Common Stock or any junior securities, unless payment in full of all cumulative dividends on the outstanding Convertible Preferred Stock has been paid.</FONT></P>
<BR>
<P><FONT SIZE=2><A
NAME="dq2032_item_10._recent_sales_of_unregistered_securities."> </A></FONT> <FONT SIZE=2><B>Item 10. Recent Sales of Unregistered Securities. </B></FONT></P>
<P><FONT SIZE=2><B>Recent Sales of Unregistered Securities</B></FONT></P>
<P><FONT SIZE=2> In the past three years, the Company raised capital pursuant to the following issuances of securities. Each of the following transactions involved the offering
of such securities (i) to a limited number of persons who purchased the securities as an investment for his or her own account and not with a view to a distribution thereof pursuant to
Rule 506 under the Securities Act of 1933, as amended (the "Act") or (ii) in an offshore offering to Non-U.S. persons pursuant to Regulation S under the Act. Based in
part on the foregoing, the Company believes that the transactions enumerated above were exempt under Section 4(2) of the Act, and from the Registration and prospectus delivery requirements of
that Act and from applicable state securities laws in the states where the United States purchasers reside.</FONT></P>
<P><FONT SIZE=2> In
June through August 1997, the Company conducted a private offering of 17,070 shares of Series E Convertible Preferred Stock at $100.00 per share, resulting in gross
proceeds of $1,202,000 to the Company. The offering was sold to a limited number of accredited investors in the United States. The Company paid a 10% commission ($140,700) and issued a warrant to
purchase 20,100 shares of Common Stock at $7.00 per share, to a registered broker-dealer in the United States. A Form D was filed with the SEC on July 3, 1997 and amended on
December 22, 1997.</FONT></P>
<P><FONT SIZE=2> In
late 1997 and early 1998, the Company conducted a private bridge financing of units consisting of $50,000 six-month convertible subordinated notes (the "Bridge Notes")
and warrants to purchase 5,000 shares of Common Stock at $7.00 per share. The Company issued $3,765,500 in principal amount of Bridge</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>25</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2>Notes
and 376,550 warrants. In connection with the offering, the Company paid a registered broker-dealer a 6% commission ($225,930) and issued agent warrants to purchase an aggregate of 37,655 shares
of Common Stock at $7.00 per share. A Form D was filed with the SEC on January 20, 1998.</FONT></P>
<P><FONT SIZE=2> Each
Bridge Note holder had the right to convert to Common Stock up to 50% of the principal amount of the Bridge Notes at a price of $7.00 per share. Interest accrued under the Bridge
Notes at 10% per annum for the first six months and at 12% per annum during the six-month extension period. In late 1998, the Company solicited conversion of the Bridge Notes. Principal in
the aggregate amount of $1,401,000 was converted into 225,807 shares of Common Stock. The remaining principal in the amount of $2,364,500 plus accrued interest was repaid by the Company in cash. In
connection with this solicitation, the Company sold 25,736 additional shares of Common Stock for gross proceeds of $180,155. The Company paid a 5% solicitation fee in the amount of $50,970.10 to a
registered broker-dealer. A Form D was filed with the SEC on November 14, 1998.</FONT></P>
<P><FONT SIZE=2> In
June 1998, the Company conducted a private offering of 110,118 shares of Series F Convertible Preferred Stock at $100 per share, resulting in gross proceeds of
$11,011,800 to the Company. Of the total number of shares issued, 98,450 shares were sold in an offshore offering through a London placement agent pursuant to Regulation S. The Company paid
that placement agent an 8.5% commission of $836,800 (paid $50,000 in cash and the remainder through the delivery of 7,868 shares of Series F Preferred Stock). In additional, the placement agent
received a warrant to purchase an aggregate of 104,603 shares of Common Stock at an exercise price of $8.00 per share. The Company also
paid an 8.5% commission equal to $4,250 and issued a warrant to purchase 531 shares of Common Stock at $8.00 per share to a registered broker-dealer in the United States for the sale of 500 shares of
Series F Preferred Stock to an accredited investor pursuant to Regulation D. The Company sold the remaining 3,300 shares directly to an accredited investor. The Company paid a 4.25% fee
($10,625) and issued a warrant to purchase 1,328 shares to a consultant in connection with that sale. A Form D was filed with the SEC on June 15, 1998 with respect to the U.S. Sales.</FONT></P>
<P><FONT SIZE=2> In
June 1998, the Company issued 50,000 shares of its Series G Convertible Preferred Stock to an accredited investor at $100 per share, resulting in $5,000,000 gross
proceeds. No commissions or finders fees were paid in connection with that purchase. No Form D was filed for this isolated sale. The Company believes the sale was exempt under
Section 4(2) of the Act.</FONT></P>
<P><FONT SIZE=2> In
May 1999, the Company sold 375,000 shares of Common Stock to one accredited investor in an offshore offering pursuant to Regulation S at a purchase price of $8.00 per
share, with gross proceeds of $3,000,000. An 8% commission ($240,000) was paid to a London placement agent. The holder of the Company's Series G Stock also exercised its right to purchase
34,441 shares of Common Stock in connection with that offering for an aggregate purchase price of $273,316. A Form D was filed with the SEC on June 1, 1999.</FONT></P>
<P><FONT SIZE=2> In
the Summer of 1999, seven holders of placement agent warrants exercised their warrants to purchase an aggregate of 15,534 shares of Common Stock at $7.00 per share. Since
January 2000, fourteen holders of placement agent warrants exercised warrants to purchase 161,348 shares of Common Stock at prices ranging from $5.00 to $7.00 per share. A Form D was
filed with the SEC on February 4, 2000.</FONT></P>
<P><FONT SIZE=2> On
October 26, 1999, a former employee exercised a stock option under the Company's 1993 Stock Plan to purchase 1,100 shares of Common Stock at an exercise price of $7.00 per
share. The Company believes that the issuance of the shares was exempt under Rule 701 of the Act.</FONT></P>
<P><FONT SIZE=2> Between
October and December 1999, the Company sold an aggregate of 1,782,500 shares of Common Stock in an offshore offering pursuant to Regulation S at $12.50 per
share, for aggregate gross proceeds of $22,281,250. An 8% commission ($1,782,500) and $50,000 for expenses was paid to a London placement agent. No Form D was filed because sales were made
pursuant to Regulation S.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>26</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<H2><FONT SIZE=2> </FONT></H2>
<BR>
<P><FONT SIZE=2> In
January and February 2000, the Company sold an additional 14,000 shares of Common Stock at $12.50 per share to two accredited investors in the United States for gross
proceeds of $175,000. No commissions were paid in connection with those purchases.</FONT></P>
<P><FONT SIZE=2> On
March 31, 2000, the Company completed the private placement of Common Stock, selling 85,800 shares at $12.50 per share. The Company paid an 8% commission ($85,800) to a
registered broker-dealer for those sales. The Form D was filed for this U.S. offering on February 4, 2000 and amended on April 14, 2000.</FONT></P>
<BR>
<P><FONT SIZE=2><A
NAME="ds2032_item_11._description_of_compan__ite02305"> </A></FONT> <FONT SIZE=2><B>Item 11. Description of Company's Securities To Be Registered. </B></FONT></P>
<P><FONT SIZE=2> Under its Certificate of Incorporation, the Company's authorized capital stock consists of 20,000,000 shares of Common Stock, $.01 par value, and 3,000,000
shares of Preferred Stock, $.01 par value. Holders of shares of Common Stock have no preemptive rights to purchase additional shares of any class or series of the Company's stock. All of the issued
and outstanding shares of the Company's Common Stock are duly authorized and validly issued, fully paid and nonassessable. Each share of Common Stock entitles the holder thereof to one vote, in person
or by proxy, upon all matters submitted for a vote by the shareholders of the Company. Holders of shares of Common Stock do not have cumulative voting rights for the election of directors. Thus, the
owners of a majority of the voting power outstanding may elect all of the directors, if they choose to do so, and the owners of the balance of such shares would not be able to elect any directors.</FONT></P>
<P><FONT SIZE=2><B>Preferred Stock</B></FONT></P>
<P><FONT SIZE=2> The Company's Certificate of Incorporation authorizes the Board of Directors to establish by resolution different classes or series of preferred stock and to
fix the relative rights and preferences of said shares in any class or series. Of the Preferred Stock the Board of Directors has designated 11,750 shares as Series A Convertible Preferred
Stock, 16,500 shares as Series B Convertible Preferred Stock, 50,000 shares as Series C Convertible Preferred Stock, 100,000 shares as Series D Convertible Preferred Stock,
200,000 shares as Series E Convertible Preferred Stock, 200,000 shares as Series F Convertible Preferred Stock and 50,000 shares of Series G Convertible Preferred Stock.</FONT></P>
<P><FONT SIZE=2> Existence
of the undesignated preferred stock and the authority of the Board of Directors to issue such shares without shareholder approval could have the effect of making mergers or
the assumption of control more difficult, thus making the removal of incumbent management more difficult. The Board of Directors could cause the Company to issue additional shares of preferred stock
with voting rights designed to thwart an attempted takeover or business combination. Similarly, the existence of the preferred stock could permit the Company to effect a private placement of such
shares that would make a merger or takeover more difficult to accomplish, particularly if the investor or investors in such a private placement were known to be friendly to incumbent management.</FONT></P>
<P><FONT SIZE=2><B>Series A Preferred Stock</B></FONT></P>
<P><FONT SIZE=2> The Board of Directors has designated 11,750 of the preferred shares as Series A Preferred Stock and all such shares were issued to Hillside Capital
Incorporated in exchange for the extinguishment of certain debt and stock options. The following is a brief summary of the terms of the Series A Preferred Stock.</FONT></P>
<P><FONT SIZE=2> The
holders of the Series A Preferred Stock have no voting power, except in the event that at least one year's dividends have not been paid on the Series A Preferred
Stock prior to May 31, 2001. In that event, the holders of the outstanding Series A Preferred Stock, voting separately as a class, shall be entitled to elect one-third
(<SUP>1</SUP>/<SMALL>3</SMALL>) of the members of the Board of Directors (the "Preferred Stock Directors"), and shall have the exclusive right to remove any Preferred Stock Director, until the accrued dividends
are paid in full. In addition, the holders of Series A Preferred Stock have the right to vote on the authorization or creation of any class of stock having a liquidation preference or priority
superior to the liquidation preference and priority of the Series A Preferred Stock.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>27</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2> The
holders of the Series A Preferred Stock are entitled to receive cumulative dividends at the rate of $7.50 per share per annum beginning as of May 31, 1993, payable
annually in preference and priority to any payment of any dividend on Common Stock or any other shares ranking junior to the Series A Preferred Stock as to dividends. Dividends began to accrue
and be cumulative on May 31, 1993, however, the holder of the Series A Stock has agreed that the Company is not required to pay any dividends until May 31, 2001.</FONT></P>
<P><FONT SIZE=2> The
Series A Preferred Stock may be redeemed by the Company at any time at a redemption price equal to the $100 face value per share plus all unpaid and accumulated dividends.
In addition, each holder has the right to require the Company to redeem his or her Series A Preferred Stock beginning after May 31, 2001 at a redemption price of the face value per share
plus all unpaid and accumulated dividends. The Company has the right to pay all or part of the mandatory redemption in cash and to issue a two-year promissory note in the amount of the
unpaid balance, which note shall be unsecured and bear interest at the rate of twelve percent (12%) per annum.</FONT></P>
<P><FONT SIZE=2> Upon
the voluntary or involuntary liquidation, dissolution or winding up of the Company, holders of the Series A Preferred Stock are entitled to receive $100 in cash per share
plus all unpaid and accumulated dividends before any distribution is made to any class of stock ranking junior to the Series A Preferred Stock. The consolidation or merger of the Company, a
transfer of all or substantially all of its assets for cash or securities or a share exchange will not be considered a liquidation, dissolution or winding up of the Company. So long as any shares of
Series A Preferred Stock shall be outstanding, the Company shall not, without first obtaining the affirmative vote or written consent of the holders of not less than two-thirds of
the outstanding shares of Series A Preferred Stock, voting as a separate class, authorize or create any shares of any class of stock having a liquidation preference or priority superior to the
liquidation preference and priority of the Series A Preferred Stock.</FONT></P>
<P><FONT SIZE=2><B>Series B through Series G Preferred Stock</B></FONT></P>
<P><FONT SIZE=2> The Company has outstanding six series of Preferred Stock (Series B, C, D, E, F and G), which it sold through private placements of the stock and one
negotiated equity investment. Each of the Series ranks on a parity with each other, as well as the Series A Preferred Stock, with respect to the payment of dividends and liquidation rights.
Each of Series B Preferred Stock though Series G Preferred Stock has substantially the same terms, except the conversion price and the redemption and put rights.</FONT></P>
<UL>
<P><FONT SIZE=2><B><I>Voting Rights</I></B></FONT></P>
</UL>
<P><FONT SIZE=2> Holders of the Series B through Series G Preferred Stock are entitled to vote on all matters submitted to the shareholders and receive one vote
for each share of Common Stock into which such holder's shares are then convertible. The Company is prohibited from authorizing or issuing any capital stock having a
liquidation preference superior to a series of Preferred Stock or amending the Certificate of Incorporation or the resolution relating to the series, without the affirmative vote of the holders of
two-thirds (<SUP>2</SUP>/<SMALL>3</SMALL>) of that series of Preferred Stock, voting separately as a class.</FONT></P>
<UL>
<P><FONT SIZE=2><B><I>Dividends</I></B></FONT></P>
</UL>
<P><FONT SIZE=2> The holders of the outstanding Series B through Series G Preferred Stock are entitled to receive cumulative dividends at the rate of $9.75 per
share per year, payable annually on a parity with the Series A Preferred Stock and in preference and priority to any payment of any dividend on the Common Stock or any other shares junior to
the Preferred Stock. Dividends begin to accrue on the date of the original issue of the shares of the Preferred Stock. Accrued and unpaid dividends do not bear interest.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>28</FONT></P>
<P><FONT SIZE=2><HR
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<UL>
<P><FONT SIZE=2><B><I>Conversion</I></B></FONT></P>
</UL>
<P><FONT SIZE=2> The holders of the shares of Preferred Stock have the right at any time to convert without payment of additional consideration each share of Preferred Stock
into shares of Common Stock, at the rate determined by multiplying the number of shares of Preferred Stock to be converted by $100 and dividing the product thereof by the imputed conversion price. The
initial conversion price for each series is as follows: Series B—$7.00; Series C—$7.00; Series D—$7.00; Series E—$7.00;
Series F—$8.00; Series G—$7.75. The conversion prices are subject to certain adjustments. All outstanding shares of Series B through Series G
Preferred Stock will automatically convert into Common Stock upon notice by the Company to the holders if the Company closes an underwritten public offering of its Common Stock with gross proceeds of
at least $7,000,000. At such time, all cumulated dividends will be paid.</FONT></P>
<UL>
<P><FONT SIZE=2><B><I>Redemption</I></B></FONT></P>
</UL>
<P><FONT SIZE=2> With respect to the Series B, C, D, E and F Preferred Stock, the Company has the right to redeem the Preferred Stock, in whole or in part, at its $100
face value per share plus all unpaid and cumulated dividends, at any time after the date set forth in the Certificate of Designation (which date is approximately 3-4 years after
issuance of the stock). Holders will have the right to convert to Common Stock any Preferred Stock that the Company seeks to redeem.</FONT></P>
<UL>
<P><FONT SIZE=2><B><I>Put Right</I></B></FONT></P>
</UL>
<P><FONT SIZE=2> For the three-month period commencing on the redemption date described above, holders of Series D through Series F Preferred Stock have the right
to put their shares to the Company for mandatory redemption for a purchase price equal to the face value ($100 per share) plus cumulated dividends. No holder has exercised this right to date. The put
rights for the outstanding Series B, Series C and Series D Preferred Stock have expired. If a put right is exercised, the Company has the right to pay the redemption price in
three installments over a twelve-month period.</FONT></P>
<P><FONT SIZE=2><B>Series G Preferred Stock</B></FONT></P>
<P><FONT SIZE=2> In connection with the acquisition of the Series G Preferred Stock described above, the holder entered into an Investment Agreement and a Registration
Rights Agreement with the Company. Under the Investment Agreement, the Company granted the holder, among other rights, a right of first refusal to purchase its pro rata share of any New Securities (as
defined in the Agreement) that the Company may issue. "New Securities" excludes, among other transactions, the conversion of outstanding securities and the issuance of stock options under the
Company's Stock Plan.</FONT></P>
<P><FONT SIZE=2><B>Warrants and Options</B></FONT></P>
<P><FONT SIZE=2> In connection with a Bridge Note Offering in 1997 and early 1998, the Company issued Warrants to investors to purchase an aggregate of 376,550 shares of Common
Stock. The Warrants may be exercised to purchase common stock at any time after the maturity date of the Notes at $7.00 per share. The Warrants will expire on the fifth anniversary of the date of
their issuance.</FONT></P>
<P><FONT SIZE=2> The
Company also has issued Warrants to purchase an aggregate of 303,773 shares of Common Stock to placement agents and advisors. These Warrants generally have a term of four or five
years and are exercisable at prices ranging from $7.00 to $12.50 per share.</FONT></P>
<P><FONT SIZE=2> As
described in Executive Compensation, the Company currently has outstanding options to purchase 1,552,000 shares of Common Stock under the Stock Plan. Also the Company intends to
issue options to purchase a total of 96,387 shares of Common Stock outside of the Stock Plan to replace outstanding Stock Appreciation rights held by four employees and consultants to the Company.
There is also an outstanding option to purchase 93,005 shares of Common Stock which was granted outside of the Stock Plan.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>29</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<H2><FONT SIZE=2> </FONT></H2>
<BR>
<P><FONT SIZE=2><B>Registration Rights</B></FONT></P>
<P><FONT SIZE=2> Certain holders of the Company's Common Stock issued prior to the 1993 Unit Offering are entitled to certain Registration rights with respect to their Common
Stock. Under the Registration Rights Agreement dated as of July 13, 1989 and amended as of November 22, 1989, John N. Irwin III, the Managing Director of Hillside Capital Incorporated
("Hillside"), and his affiliates are entitled to one limited demand Registration at the expense of the Company, and a group consisting of Cultor Ltd., Hillside and Messrs. Coolidge,
Wagner, Sheldon M. Schuster and Dwane E. Wylie are entitled to two demand registrations in the aggregate. The Company is not obligated to effect such a Registration if a demand is made within
180 days of an underwritten initial public offering, or if the Company gives notice of a planned initial public offering, or if the holder is able to sell its registrable securities under
Rule 144 of the federal securities laws during the three-month period following the request, or if the holders making the request in the aggregate own less than 5 percent of the
outstanding stock of the Company, or if the requested aggregate offering to the public would not be at least $2,500,000. The Company's Board of Directors may delay any such Registration if the
Registration would be "seriously detrimental" to the Company. These holders of the Common Stock are also entitled to certain "piggyback" registration rights in connection with a registered offering of
the Company (other than an initial public offering), subject to certain exceptions and restrictions.</FONT></P>
<P><FONT SIZE=2> In
addition, holders of warrants issued to the placement agent in the 1993 Unit Offering of the Company ("1993 Warrants") have Registration rights for an aggregate 166,459 shares of
Common Stock to be issued upon exercise of such Warrants ("Warrant Shares"). These Registration rights consist of (i) a demand Registration right, which is exercisable by the holders of a
majority in interest of the 1993 Warrants and/or the Warrant Shares at any time prior to the expiration of five (5) years from the date of the 1993 Warrants, provided the Company has conducted
an initial public offering of the Common Stock of the Company, and (ii) the right to include the Warrant Shares in certain registered offerings conducted by the Company at any time prior to the
expiration of seven (7) years from the date of the 1993 Warrants, subject to the right of the managing underwriter in an underwritten offering to reduce pro rata the number of Warrant Shares
includable in such offerings. The rights in (i) have expired.</FONT></P>
<P><FONT SIZE=2> Holders
of warrants issued to the placement agent in the 1997 Bridge Financing of the Company ("Bridge Financing Warrants") also have Registration rights for 37,655 shares of Common
Stock to be issued exercise of such Warrants ("Bridge Warrant Shares"). These Registration rights consist of (i) a demand Registration right, which is exercisable by the holders of a majority
in interest of the Bridge Warrants and/or Bridge Warrant Shares beginning one (1) year after an initial public offering of the Common Stock of the Company, and (ii) the right to include
the Bridge Warrant Shares in certain registered offerings conducted by the Company prior to December 31, 1999, subject to the right of the managing underwriter in an underwritten offering to
limit or exclude Bridge Warrant Shares if required by marketing factors. The rights described in (ii) have expired because the Company conducted no such offerings.</FONT></P>
<P><FONT SIZE=2> The
holder of Series G Preferred Stock (or Common Stock issuable upon conversion thereof), has registration rights consisting of: (i) up to two demand registrations,
(ii) Form S-3 Registration rights, and (iii) piggyback Registration rights. The Company is not obligated to effect a demand Registration until the earliest to occur
of: (a) three years after the issuance of the Series G stock, (b) the first date that any other Company shareholder exercises a demand Registration right, or
(c) 180 days after the Company's initial public offering. The Company has the option to defer a demand Registration under certain circumstances and the Form S-3 and
piggyback Registration rights are subject to customary limitations.</FONT></P>
<P><FONT SIZE=2><B>Delaware Law and the Company's Charter and By-law Provisions</B></FONT></P>
<P><FONT SIZE=2> The Company's Amended and Restated Bylaws provide that stockholder action may be taken at a duly called and convened annual or special meeting of stockholders
only if properly brought before the meeting.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>30</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2>In
order for any matter to be considered "properly brought" before a meeting, a stockholder must comply with requirements regarding providing certain information and advance notice to the Company. In
addition, special meetings of stockholders may be called only by the Chief Executive Officer or by the Board of Directors, and nominations for the election of directors may be made by shareholders
only if the nomination complies with requirements regarding providing certain information and advance notice to the Company.</FONT></P>
<P><FONT SIZE=2> These
provisions may have the effect of discouraging a third party from initiating a proxy contest, making a tender offer or attempting to change the composition or policies of the
Company's Board of Directors. These provisions could delay, until the next stockholders' meeting, actions which are favored by the holders of a majority of the outstanding voting securities. These
provisions may also discourage a third party from making a tender offer for the Company's Common Stock, because even if it acquired a majority of our outstanding voting securities, it would be able to
take action as a stockholder only if specific procedures are followed for a duly called stockholders' meeting or written consent.</FONT></P>
<P><FONT SIZE=2> The
Delaware General Corporation Law provides that the vote of a majority of the shares entitled to vote on any matter is required to amend a corporation's certificate of
incorporation or by-laws, unless a corporation's certificate of incorporation or by-laws, as the case may be, requires a greater percentage. The Company's Bylaws will require
the vote of the holders of at least 75% of the general voting power of the Company's capital stock to amend or repeal any of the foregoing provisions.</FONT></P>
<P><FONT SIZE=2> BioNebraska
is subject to the provisions of Section 203 of the General Corporation Law of Delaware. Section 203 prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for three years after the date of the transaction in which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A "business combination" includes mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder. An
"interested stockholder" is a person who, together with affiliates and associates, owns, or within three years did own, 15% or more of the corporation's voting stock.</FONT></P>
<BR>
<P><FONT SIZE=2><A
NAME="du2032_item_12._indemnification_of_officers_and_directors."> </A></FONT> <FONT SIZE=2><B>Item 12. Indemnification of Officers and Directors. </B></FONT></P>
<P><FONT SIZE=2> The Company's Certificate of Incorporation and Amended and Restated Bylaws provide that any person who at any time serves as a director, officer, employee or
agent shall be indemnified by the Company to the fullest extent permitted by the Delaware General Corporation Law ("DGCL").</FONT></P>
<P><FONT SIZE=2> Section 145
of the DGCL permits the Company to, and the Certificate of Incorporation provides that the Company may, indemnify each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was, or has
agreed to become, a director or officer of the Company, or is or was serving, or has agreed to serve, at the request of the Company, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including
attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom. Such right of indemnification shall inure
to such individuals whether or not the claim asserted is based on matters that antedate the adoption of the Bylaws. Such right of indemnification shall continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs and personal representatives of such a person.</FONT></P>
<P><FONT SIZE=2> The
indemnification provided by the Bylaws shall not be deemed exclusive of any other rights that may be provided now or in the future under any provision currently in effect or
hereafter adopted by the Certificate of Incorporation, by any agreement, by vote of stockholders, by resolution of directors, by provision of law or otherwise. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors of the Company pursuant to the foregoing provision, or otherwise, the Company</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>31</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2>has
been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.</FONT></P>
<BR>
<P><FONT SIZE=2><A
NAME="du2032_item_13._financial_statements_and_supplementary_data"> </A></FONT> <FONT SIZE=2><B>Item 13. Financial Statements and Supplementary Data </B></FONT></P>
<P><FONT SIZE=2> The financial statements and supplemental data required by this Item 13 follow the index of financial statements appearing at Item 15 of this Form 10.</FONT></P>
<BR>
<P><FONT SIZE=2><A
NAME="du2032_item_14._changes_in_and_disagr__ite03555"> </A></FONT> <FONT SIZE=2><B>Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure </B></FONT></P>
<P><FONT SIZE=2> Not applicable.</FONT></P>
<BR>
<P><FONT SIZE=2><A
NAME="du2032_item_15._financial_statements_and_exhibits"> </A></FONT> <FONT SIZE=2><B>Item 15. Financial Statements and Exhibits </B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>32</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<BR><BR>
<P ALIGN="CENTER"><FONT SIZE=3><B>BIONEBRASKA, INC.<BR>
(A Development Stage Company)<BR>
3820 NW 46th Street<BR>
Lincoln, Nebraska 68524<BR>
Independent Auditor's Report<BR>
and Financial Statements<BR>
For The Years Ended<BR>
December 31, 1999, 1998, 1997<BR>
and the Cumulative Period from<BR>
April 15, 1988 (date of incorporation) to December 31, 1999</B></FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P ALIGN="CENTER"><FONT SIZE=2><B>BIONEBRASKA, INC.<BR>
Table of Contents</B></FONT></P>
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<CENTER><TABLE WIDTH="72%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="88%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>Page</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="88%"><FONT SIZE=2><B>Independent Auditor's Report</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="88%"><FONT SIZE=2> <BR></FONT> <FONT SIZE=2><B>Financial Statements:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> <BR>
</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="88%"><FONT SIZE=2>Balance Sheets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>2 - 3</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="88%"><FONT SIZE=2>Statements of Operations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="88%"><FONT SIZE=2>Statements of Shareholders' Equity</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>5</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="88%"><FONT SIZE=2>Statements of Cash Flows</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>6</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="88%"><FONT SIZE=2>Notes to Financial Statements</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>7 - 16</FONT></TD>
</TR>
</TABLE></CENTER>
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<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P ALIGN="CENTER"><FONT SIZE=2><B>Loren D. Swanson<BR>
Certified Public Accountant<BR>
6120 Havelock Avenue, Suite A-2<BR>
Lincoln, Nebraska 68507</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>Independent Auditor's Report</B></FONT></P>
<P><FONT SIZE=2>The Board of Directors<BR>
BioNebraska, Inc.<BR>
3820 N. W. 46th Street<BR>
Lincoln, Nebraska 68524</FONT></P>
<P><FONT SIZE=2> I
have audited the accompanying balance sheets of BioNebraska, Inc. as of December 31, 1999 and 1998, and the related statements of operations, shareholders' equity, and
cash flows for the years ended December 31, 1999, 1998 and 1997, and the cumulative period from April 15, 1988 (date of incorporation) to December 31, 1999. These financial
statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.</FONT></P>
<P><FONT SIZE=2> I
conducted my audits in accordance with generally accepted auditing standards. Those standards require that I 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 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. I believe that my audits provide a
reasonable basis for my opinion.</FONT></P>
<P><FONT SIZE=2> In
my opinion, the financial statements referred to above represent fairly, in all material respects, the financial position of BioNebraska, Inc. as of December 31, 1999
and 1998, and the results of its operations and its cash flows for the years ended December 31, 1999, 1998 and 1997 and for the cumulative period from April 15, 1988 (date of
incorporation) to December 31, 1999, in conformity with generally accepted accounting principles.</FONT></P>
<P><FONT SIZE=2> The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 11 to the financial statements, the
Company, from inception, has incurred losses from development activities that raise substantial questions about its ability to continue as a going concern, unless supporting funds or assistance
continue to become available to the Company from external sources. Management has in the past and continues to rely on the proceeds of private investments and development collaborations to fund its
operating deficit. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.</FONT></P>
<P><FONT SIZE=2>Loren
D. Swanson<BR>
March 4, 2000</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>1</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P ALIGN="CENTER"><FONT SIZE=2><B>BIONEBRASKA, INC.</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>Balance Sheets</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>December 31, 1999 and 1998</B></FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="85%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="65%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="15%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="15%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2><B>ASSETS</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> <BR>
Current Assets:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>18,393,567</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>8,517,945</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Receivables</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>13,896</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>4,746</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Inventories</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>35,172</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Total Current Assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>18,442,635</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>8,522,691</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> <BR>
Property and Equipment, at cost:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Modular facilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>149,810</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Furniture and fixtures, computer and office equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>343,459</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>250,597</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Laboratory equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,277,876</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,063,541</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Production equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,673,658</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>4,454,803</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,314,138</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Less: accumulated depreciation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,063,090</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,330,831</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Net property and equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,391,713</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>983,307</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> <BR>
Leasehold Improvements, at cost</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
491,225</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
133,354</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Less: accumulated depreciation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>22,349</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>14,345</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Net leasehold improvements</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>468,876</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>119,009</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> <BR>
Prepaid Finance Charges, at cost</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
231,680</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
231,680</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Less: accumulated amortization</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>231,680</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>223,472</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Net prepaid finance charges</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>8,208</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> <BR>
Patents and Patents Licensed, at cost</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
719,747</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
602,559</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Less: accumulated amortization</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>128,805</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>87,085</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Net patents and patents licensed</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>590,942</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>515,474</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> <BR>
Other assets:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Licensing agreements</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>82,500</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Deposits and fees</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,527,937</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>112,815</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Total Other Assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,610,437</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>112,815</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2>Total Assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>23,504,603</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>10,261,504</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2>See
accompanying notes.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=1,SEQ=36,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=774384,FOLIO=2,FILE='DISK039:[00STP2.00STP2032]FC2032A.;10',USER='KLIND',CD='27-APR-2000;16:42 -->
<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<P ALIGN="CENTER"><FONT SIZE=2><B>BIONEBRASKA, INC.</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>Balance Sheets</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>December 31, 1999 and 1998</B></FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="86%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="63%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="16%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="16%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2><B>LIABILITIES AND SHAREHOLDERS' EQUITY</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2> <BR>
Current liabilities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Accounts payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,608,335</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>324,134</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Accrued expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>29,269</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>104,558</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Bridge loan financing</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,111,750</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Equipment financing-current portion</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>565,335</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>225,796</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Total Current Liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,202,939</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,766,238</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2> <BR>
Long-Term Liabilities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Other notes payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>25,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Equipment financing-less current portion</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,389,369</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>254,642</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Total Long-Term Liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,414,369</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>254,642</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Total Liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>3,617,308</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>3,020,880</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2> <BR>
Redeemable Convertible Preferred Stock:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Series A ($0.01 par value; 11,750 shares authorized, issued and outstanding in 1999 and 1998)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,755,156</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,667,031</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2> <BR>
Shareholders' Equity:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Common stock, ($0.01 par value; 20,000, 000 shares authorized, 6,719,233 shares issued and outstanding in 1999, and 4,324,444 shares issued and outstanding in 1998)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>67,192</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>43,244</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Convertible preferred stock, Series B, C, D, E, F, G, ($0.01 par value; 2,988,500 shares authorized, 275,292 shares issued and outstanding in 1999 and 1998</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,752</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,752</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Additional paid-in capital</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>60,255,861</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>35,587,283</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Retained (deficit) accumulated during the development stage</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(42,193,666</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(30,059,686</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>Total Shareholders' Equity</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>18,132,139</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>5,573,593</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="63%"><FONT SIZE=2>TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY EQUITY</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>23,504,603</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>10,261,504</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2>See
accompanying notes.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=1,SEQ=37,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=215822,FOLIO=3,FILE='DISK039:[00STP2.00STP2032]FE2032A.;6',USER='KLIND',CD='27-APR-2000;15:15 -->
<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<P ALIGN="CENTER"><FONT SIZE=2><B>BIONEBRASKA, INC.<BR>
(a development stage company)</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>Statements of Operations For The Years Ended December 31, 1999, 1998, 1997 and<BR>
Cumulative period from April 15, 1988 (date of incorporation) to December 31, 1999</B></FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="98%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="29%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="44%" COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Year Ended December 31,</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="22%" COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Cumulative Period<BR>
from April 15, 1988<BR>
(date of incorporation)<BR>
to December 31, 1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="29%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="14%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="14%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="13%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1997</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2>COSTS AND EXPENSES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2>General and administrative</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>2,068,379</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>2,132,883</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,299,431</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>12,998,599</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2>Clinical trials</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>1,123,154</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>566,595</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>1,689,749</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2>Research and development</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>9,007,597</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>5,469,241</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,545,860</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>31,028,013</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2>OPERATING LOSS</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(12,199,130</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(8,168,719</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(4,845,291</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>(45,716,361</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2> <BR>
OTHER INCOME (EXPENSE):</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="12%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="12%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2>Other income and interest</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>296,700</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>369,939</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>37,711</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>4,507,064</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2>Interest expense</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(231,550</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(319,549</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(49,090</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>(984,369</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>65,150</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>50,390</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(11,379</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>3,522,695</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2>NET LOSS</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(12,133,980</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(8,118,329</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(4,856,670</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>(42,193,666</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2> <BR>
Preferred stock dividends<BR>
(accreted $88,125 per year, cumulating but not declared of $2,684,097, $1,903,521, $1,039,730 and $6,521,828 for 1999, 1998, 1997 and the cumulative period ended December 31, 1999 respectively)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
(2,772,222</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
(1,991,646</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
(1,127,855</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
(7,101,984</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2> <BR>
Net loss applicable to common stock</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
(14,906,202</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
(10,109,975</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
(5,984,525</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR>$</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
(49,295,650</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2>Basic and diluted earnings per share</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(2.95</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(2.37</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(1.41</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>(1.18</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="29%"><FONT SIZE=2>Average number of common shares outstanding</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>5,058,928</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>4,264,559</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>4,259,115</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>3,553,896</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2>See
accompanying notes.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>4</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=1,SEQ=38,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=351508,FOLIO=4,FILE='DISK039:[00STP2.00STP2032]FG2032A.;5',USER='KLIND',CD='27-APR-2000;15:15 -->
<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<P ALIGN="CENTER"><FONT SIZE=2><B>BIONEBRASKA, INC.<BR>
(a development stage company)<BR>
Statement of Shareholders' Equity</B></FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="15%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="4%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="42%" COLSPAN=17 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Convertible Preferred Stock</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="5%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="5%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="7%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=5><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ROWSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Deficit<BR>
Accumulated<BR>
During<BR>
Development<BR>
Stage</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="7%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="15%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="4%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1> </FONT></TH>
<TH WIDTH="11%" COLSPAN=4 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Voting<BR>
Common Stock</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="7%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="7%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="15%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="4%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" COLSPAN=2 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Par Value<BR>
Series B</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" COLSPAN=2 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Par Value<BR>
Series C</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" COLSPAN=2 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Par Value<BR>
Series D</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" COLSPAN=2 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Par Value<BR>
Series E</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" COLSPAN=2 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Par Value<BR>
Series F</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" COLSPAN=2 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Par Value<BR>
Series G</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1> </FONT></TH>
<TH WIDTH="7%" COLSPAN=2 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Additional<BR>
Paid-in<BR>
Capital</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="7%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="15%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="4%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="7%" COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Total</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="15%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="4%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Number<BR>
of<BR>
Shares</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="5%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Number<BR>
of<BR>
Shares</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="5%" COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Par<BR>
Value<BR>
Amount</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="15%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Amount</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Amount</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Amount</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Amount</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Amount</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="6%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Amount</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="7%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Amount</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Amount</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="7%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Amount</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>INITIAL ISSUANCE</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Issuance of common stock</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>2,085,003</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>20,850</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>703,649</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>724,499</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Debt conversion to common</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>821,992</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>8,220</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,953,443</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,961,663</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>1993 unit common stock offering</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>1,109,750</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>11,097</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>5,470,792</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>5,481,889</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>1995 warrant common stock exercise</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>242,370</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>2,424</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,494,211</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,496,635</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Issuance of 16,365 shares of preferred stock, Series B</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>16,365</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>164</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,472,686</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,472,850</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Issuance of 21,000 shares of preferred stock, Series C</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>21,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>210</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,889,790</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,890,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Issuance of 60,739 shares of preferred stock, Series D</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>60,739</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>607</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>6,021,614</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>6,022,221</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Accretion of preferred stock, Series A, to redemption value</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(315,781</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(315,781</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Net loss for the period from April 15, 1988 (date of incorporation to December 31, 1996)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(17,084,687</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(17,084,687</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="15%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>BALANCE AT DECEMBER 31, 1996</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>98,104</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>164</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>210</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>607</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>4,259,115</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>42,591</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>18,690,404</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(17,084,687</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,649,289</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Issuance of 17,070 shares of preferred stock, Series E</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>17,070</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>170</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,496,130</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,496,300</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Accretion of preferred stock, Series A, to redemption value</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(88,125</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(88,125</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Net loss for the year ended December 31, 1997</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(4,856,670</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(4,856,670</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="15%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>BALANCE AT DECEMBER 31, 1997</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>115,174</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>164</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>210</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>607</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>170</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>4,259,115</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>42,591</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>20,098,409</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(21,941,357</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(1,799,206</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Issuance of 110,118 shares of preferred stock, Series F</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>110,118</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>1,101</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>10,173,899</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>10,175,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Issuance of 50,000 shares of preferred stock, Series G</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>50,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>500</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>4,999,500</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>5,000,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Conversion of bridge notes to common stock</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>65,329</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>653</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>403,600</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>404,253</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Accretion of preferred stock, Series A, to redemption value</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(88,125</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(88,125</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Net loss for the year ended December 31, 1998</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(8,118,329</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(8,118,329</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="15%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>BALANCE AT DECEMBER 31, 1998</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>275,292</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>164</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>210</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>607</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>170</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>1,101</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>500</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>4,324,444</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>43,244</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>35,587,283</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(30,059,686</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>5,573,593</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Conversion of bridge notes to common stock</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>160,478</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>1,605</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>930,228</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>931,833</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Issuance of common stock</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>2,234,311</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>22,343</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>23,826,475</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>23,848,818</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Accretion of preferred stock, Series A, to redemption value</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(88,125</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(88,125</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>Net loss for the year ended December 31, 1999</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(12,133,980</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(12,133,980</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="15%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="15%"><FONT SIZE=1>BALANCE AT DECEMBER 31, 1999</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>275,292</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>164</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>210</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>607</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>170</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>1,101</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>500</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=1>6,719,233</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>67,192</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>60,255,861</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(42,193,666</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>18,132,139</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="15%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="6%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="5%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="7%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=1>See
accompanying notes.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>5</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=1,SEQ=39,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=1004298,FOLIO=5,FILE='DISK039:[00STP2.00STP2032]FI2032A.;23',USER='KLIND',CD='27-APR-2000;16:58 -->
<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<P ALIGN="CENTER"><FONT SIZE=2><B>BIONEBRASKA, INC.</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>Statement of Cash Flows</B></FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="97%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="36%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="37%" COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Year Ended December 31,</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1> </FONT></TH>
<TH WIDTH="22%" COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Cumulative period<BR>
From April 15, 1988<BR>
(date of incorporation)<BR>
to December 31, 1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="36%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1997</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>CASH FLOWS FROM OPERATING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Net loss</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>(12,133,980</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(8,118,329</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(4,856,670</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(42,193,666</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Adjustments to reconcile net loss to net cash</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Used in operating activities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Depreciation and amortization</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>782,897</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>612,051</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>296,610</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>2,445,924</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Change in operating assets and liabilities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Accounts receivable and other current assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>(44,322</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>240,017</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(74,324</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(49,068</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Accounts payable and accrued expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>1,208,912</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>53,028</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>216,711</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>1,637,604</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Net cash used in operating activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>(10,186,493</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(7,213,233</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(4,417,673</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(38,159,206</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1> <BR>
CASH FLOWS FROM INVESTING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=1> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="20%"><FONT SIZE=1> <BR>
</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> <BR> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Purchase of property and equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>(2,498,536</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(721,550</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(344,134</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(4,946,028</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Increase in deposits and other assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>(1,497,622</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(15,078</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(261,078</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(1,842,117</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Increase in patents</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>(109,894</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(47,027</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(538,050</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(719,747</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Net cash used in investing activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>(4,106,052</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(783,655</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(1,143,262</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(7,507,892</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1> <BR>
CASH FLOWS FROM FINANCING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=1> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="20%"><FONT SIZE=1> <BR>
</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> <BR> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Net proceeds from issuance of common stock</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>23,792,651</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>33,448,590</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Net proceeds from issuance of preferred stock</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>15,175,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>1,496,300</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>27,231,371</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Proceeds from bridge notes payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>1,085,500</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>2,680,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>3,765,500</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Payments of bridge notes principal</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>(1,123,750</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(1,240,750</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(2,364,500</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Proceeds from equipment financing loans</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>1,774,791</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>466,272</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>162,954</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>2,648,930</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Payments on equipment financing loans</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>(300,525</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(200,461</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>(112,763</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>(694,226</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Proceeds from other notes payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>25,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>25,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>Net cash provided by financing activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>24,168,167</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>15,285,561</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>4,226,491</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>64,060,665</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1> <BR>
NET INCREASE IN CASH AND CASH EQUIVALENTS</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1> <BR>
9,875,622</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1> <BR>
7,288,673</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1> <BR>
(1,334,444</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1> <BR>
18,393,567</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> <BR> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1> <BR>
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1> <BR>
8,517,945</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1> <BR>
1,229,272</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1> <BR>
2,563,716</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> <BR> </FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1> <BR>
0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> <BR> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="36%"><FONT SIZE=1>CASH AND CASH EQUIVALENTS AT END OF PERIOD</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>18,393,567</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>8,517,945</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>1,229,272</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=1>18,393,567</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1> </FONT></TD>
<TD WIDTH="22%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1> </FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P><FONT SIZE=1>Supplemental cash information:</FONT></P>
<DL compact>
<DT><FONT SIZE=1>1.</FONT></DT><DD><FONT SIZE=1>Non-cash
financing transactions include the conversion of $988,000 of bridge notes, plus accumulated interest of $135,461, to common stock in 1999, and $413,000 of
bridge notes, plus accumulated interest of $44,344 converted to common stock in 1998.
<BR><BR></FONT></DD><DT><FONT SIZE=1>2.</FONT></DT><DD><FONT SIZE=1>Interest
paid was $231,550 in 1999, $275,205 in 1998, and $31,906 in 1997.</FONT>
<BR>
<P ALIGN="CENTER"><FONT SIZE=2>See accompanying notes.</FONT></P>
</DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>6</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=1,SEQ=40,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=676424,FOLIO=6,FILE='DISK039:[00STP2.00STP2032]FK2032A.;6',USER='KLIND',CD='27-APR-2000;15:16 -->
<UL>
</UL>
<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<P ALIGN="CENTER"><FONT SIZE=2><B>BIONEBRASKA, INC.</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>Notes to Financial Statements</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>December 31, 1999 and 1998</B></FONT></P>
<P><FONT SIZE=2><B>Note 1. Summary of Significant Accounting Policies</B></FONT></P>
<P><FONT SIZE=2> </FONT><FONT SIZE=2><B>Principles of Consolidation</B></FONT><FONT SIZE=2>—The financial statements include accounts of BioNebraska, Inc. a
Delaware corporation, and its wholly owned subsidiary GRFCO, Inc. All material intercompany transactions have been eliminated.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Segment information</B></FONT><FONT SIZE=2>—The Company is a developmental stage business with areas of activity in the biological and medical
sciences. These areas include: the development and application of processes for the production by biological means of middle range peptide hormones and the development of pharmaceutical programs for
therapeutic applications of middle-range peptides. Based on this the Company operates and reports in one business segment as biotechnology developments.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Research and development—</B></FONT><FONT SIZE=2>The Company has expensed its research and development and clinical trial costs. These costs have
totaled approximately $32,600,00 since the Company's inception. Since 1997, the Company capitalizes its issued patents and patent licenses.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Collaborative payments—</B></FONT><FONT SIZE=2>The Company has entered into joint ventures and research agreements which have supported research
and development activities (see also Note 9). These payments have been recorded as other income when received.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Cash equivalents—</B></FONT><FONT SIZE=2>The Company considers all highly liquid investment instruments with a maturity of less than three months
when purchased to be "cash equivalents."</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Property Equipment and Leasehold Improvements—</B></FONT><FONT SIZE=2>Property, equipment and leasehold improvements are stated at cost less
accumulated depreciation. Depreciation is determined using both straight-line and accelerated methods over the estimated useful lives of the various asset classes.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Accounts payable—Construction project—</B></FONT><FONT SIZE=2>An ongoing construction project of production facilities and equipment
was in process, and represents approximately $800,000 of accounts payable at December 31, 1999.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Net loss per share—</B></FONT><FONT SIZE=2>Net loss per share is computed by dividing the net loss applicable to common stock by the
weighted-average number of common shares outstanding for the period. Basic and diluted earnings per share are the same because options for 1,526,000, 829,000 and 746,000 shares of common stock are
excluded in 1999, 1998 and 1997, respectively, as all common equivalent shares would be antidilutive due to the losses.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>Use of estimates—</B></FONT><FONT SIZE=2>The preparation of the financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.</FONT></P>
<P><FONT SIZE=2> </FONT><FONT
SIZE=2><B>New accounting pronouncement—</B></FONT><FONT SIZE=2>In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 133 "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 requires companies to record derivatives on the balance sheet
as assets and liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether
it qualifies for hedge accounting. SFAS No. 133 is effective for fiscal years beginning after June 15, 2000, with earlier adoption encouraged. Management has not yet determined what
effect, if any, SFAS No. 133 will have on</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>7</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2>its
financial position or the results of its operations. The Company, however, has no intention, now or in the future, of investing in derivatives.</FONT></P>
<P><FONT SIZE=2><B>Note 2. Disclosure of Fair Value of Financial Instruments</B></FONT></P>
<P><FONT SIZE=2> The carrying value of all financial instruments, except the bridge loan, equipment financing and other notes payable (debt) approximates fair value due to the
short-term nature of the instruments. The carrying value of debt approximates fair value due to the fixed interest rates being consistent with current market rates of interest or because
the debt has variable rates of interest consistent with current market rates.</FONT></P>
<P><FONT SIZE=2> As
part of its ongoing control procedures, the Company monitors concentrations of credit risk associated with financial institutions with which it conducts business. Operating in a
developmental stage, the Company has not yet been exposed to credit risks of its customers in the normal course of business.
Concentrations of credit risk associated with trade receivables are not yet a factor for the same reasons as described above.</FONT></P>
<P><FONT SIZE=2><B>Note 3. Income Taxes</B></FONT></P>
<P><FONT SIZE=2> Differences between the federal income tax statutory rates and effective income tax rates, which include both federal and state income taxes, were as follows:</FONT></P>
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<CENTER><TABLE WIDTH="71%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="49%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="4%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="4%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER"><FONT SIZE=1><B>1997</B></FONT><HR NOSHADE></TH>
<TH WIDTH="4%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER"><FONT SIZE=1><B>Cumulative</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2>Statutory income tax rates</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>35.0</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2> %</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>35.0</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2> %</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>35.0</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2> %</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>35.0</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> %</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2>Increase (decrease):</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2>State income taxes, net of federal benefit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7.5</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2> %</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7.5</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2> %</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7.5</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2> %</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>7.5</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> %</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2>Change in valuation allowance</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(42.5</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>)%</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(42.5</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>)%</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(42.5</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>)%</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(42.5</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)%</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="4%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="4%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="4%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2>Effective income tax rate</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2> %</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2> %</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2> %</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> %</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="4%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="4%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="4%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
</TR>
</TABLE></CENTER>
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<P><FONT SIZE=2> Significant
components of the Company's deferred tax assets for federal and state income taxes are as follows:</FONT></P>
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<CENTER><TABLE WIDTH="70%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="66%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="5%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="66%" ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="29%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>(dollars in thousands)<BR></B></FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>Net federal operating loss carryforwards</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(4,247</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(2,841</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>State taxes, net of federal impact</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(910</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(609</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>Valuation allowance</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>5,157</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>3,450</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>Net deferred tax assets</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
</TABLE></CENTER>
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<P><FONT SIZE=2> The
benefit of deferred tax assets has been offset by a valuation allowance at December 31, 1999 and 1998, because future realization is uncertain. At December 31, 1999,
the Company has federal income tax net operating loss carryforwards of approximately $42,000,000 which expire in years 2005 through 2019. The Company believes that the completion of future stock
offerings, when combined with prior events, may result in an "ownership change" of the Company as defined in Section 382 of the Internal Revenue</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>8</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2>Code.
Under Section 382, the Company's ability to use its net operating loss carryforwards to offset future taxable income, and thereby reduce the Company's tax liability, may be subject to
annual limitations.</FONT></P>
<P><FONT SIZE=2><B>Note 4. Lease Obligations</B></FONT></P>
<P><FONT SIZE=2> The Company has a long-term operating lease for laboratory and administrative space and a short-term renewable operating lease for
equipment. Aggregate minimum annual rentals under non-cancelable long-term leases at December 31, 1999, are as follows:</FONT></P>
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<CENTER><TABLE WIDTH="64%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="79%" ALIGN="LEFT"><FONT SIZE=1><B>Years<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="18%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Operating Leases</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="79%"><FONT SIZE=2>2000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>240,548</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="79%"><FONT SIZE=2>2001</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>240,548</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="79%"><FONT SIZE=2>2002</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>240,548</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="79%"><FONT SIZE=2>2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>240,548</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="79%"><FONT SIZE=2>2004</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>240,548</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="79%"><FONT SIZE=2>Thereafter (through 8/31/2008)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>882,009</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="79%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="79%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>2,084,749</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="79%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P><FONT SIZE=2> Rental
expense for operating leases, both short and long-term was $214,325 in 1999, $175,858 in 1998, $160,596 in 1997, and $1,015,686 for the cumulative period from
April 15, 1988 through December 31, 1999.</FONT></P>
<P><FONT SIZE=2><B>Note 5. Long-Term Liabilities—Equipment Purchase Financing</B></FONT></P>
<P><FONT SIZE=2> The
Company has purchased various equipment through long-term financing arrangements, which can be summarized at December 31, 1999, as follows:</FONT></P>
<P><FONT SIZE=2> Laboratory
equipment purchase agreements:</FONT></P>
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<CENTER><TABLE WIDTH="76%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="39%" ALIGN="LEFT"><FONT SIZE=1><B>Monthly<BR>
Payments<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER"><FONT SIZE=1><B>Interest<BR>
Rate</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="14%" ALIGN="CENTER"><FONT SIZE=1><B>Number of<BR>
Agreements</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER"><FONT SIZE=1><B>Year of<BR>
Final Payt.</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="16%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Principal</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2>$13,399</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10 - 16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>6</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>55,845</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2>8,479</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10 - 17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2001</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>134,470</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2>17,700</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10 - 16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2002</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>406,075</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2>37,859</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10 - 14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2003</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,216,807</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2>3,818</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>10 - 14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2004</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>141,507</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,954,704</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="82%" COLSPAN=7><FONT SIZE=2>Less current portion, due within one year</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>565,335</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,389,369</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P><FONT SIZE=2> At
December 31, 1999, purchased equipment with a net book value of approximately $1,841,500 was pledged as collateral for long-term financing arrangements.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>9</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=3,SEQ=43,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=542907,FOLIO=9,FILE='DISK039:[00STP2.00STP2032]FM2032A.;8',USER='KLIND',CD='27-APR-2000;16:42 -->
<P><FONT SIZE=2> At
December 31, 1999, payments for each of the next five years were as follows:</FONT></P>
<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="67%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="80%" ALIGN="LEFT"><FONT SIZE=1><B>Year Ended<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="18%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1> </FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="80%"><FONT SIZE=2>2000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>565,335</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="80%"><FONT SIZE=2>2001</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>597,110</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="80%"><FONT SIZE=2>2002</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>510,269</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="80%"><FONT SIZE=2>2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>272,721</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="80%"><FONT SIZE=2>2004</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>9,269</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="80%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="80%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,954,704</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="80%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="18%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2>10</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=4,SEQ=44,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=615812,FOLIO=10,FILE='DISK039:[00STP2.00STP2032]FM2032A.;8',USER='KLIND',CD='27-APR-2000;16:42 -->
<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<BR>
<P><FONT SIZE=2><B>Note 6. Recapitalization</B></FONT></P>
<P><FONT SIZE=2> In July 1993, the Company became a Delaware corporation. The authorized capital stock of the Company includes 20 million shares of Common Stock,
$.01 par value, and 3 million shares of Preferred Stock, $.01 par value. Holders of each outstanding share of Common Stock of the predecessor Nebraska corporation received 1,691 shares of
Common Stock of the Delaware corporation. The Board of Directors designated 11,750 shares of the Preferred Stock as Series A Preferred Stock for issuance upon the closing of the private
offering (See Notes 7 and 10).</FONT></P>
<P><FONT SIZE=2> Upon
the closing of the private offering, Hillside Industries Incorporated ("Hillside") exchanged total indebtedness including accrued interest through June 30, 1993
(aggregating $4,325,000) for 613,999 shares of Company Common Stock and 11,750 shares ($1,175,000 face value) of Series A Preferred Stock, and simultaneously exercised certain options to
purchase in the aggregate 207,993 shares of Company Common Stock. Of the 2,906,995 shares of Common Stock outstanding after the exchange and exercise of Hillside options and prior to the private
offering, Hillside and its affiliates owned an aggregate of 1,445,971 shares of Company Common Stock and the other shareholders owned 1,461,024 shares of Company Common Stock.</FONT></P>
<P><FONT SIZE=2> Mr. John
Irwin, the Managing Director and majority shareholder of Hillside Industries Incorporated, holds a currently exercisable option to purchase 93,005 shares of Common
Stock.</FONT></P>
<P><FONT SIZE=2><B>Note 7. Private Placement Offerings</B></FONT></P>
<P><FONT SIZE=2> In 1993, the Company conducted a private placement offering of common shares and issued 1,109,750 units, each unit consisting of one newly issued share of the
Company's Common Stock and an eighteen month warrant to purchase an additional one-half share of newly issued Common Stock for an exercise price of $6.50 per share. The units were sold at
the price of $5.00 per unit, and resulted in gross proceeds to the Company of $5,548,750.</FONT></P>
<P><FONT SIZE=2> In
1995, the Company issued 242,370 common shares, resulting from the exercise of the aforementioned eighteen month warrants. The shares were sold at $6.50 per share, and resulted in
gross proceeds to the Company of $1,575,405.</FONT></P>
<P><FONT SIZE=2> Also
in 1995, the Company undertook additional private offerings of Preferred Shares, Class B and Preferred Shares, Class C. The results of these offerings were as
follows:</FONT></P>
<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="65%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="39%" ALIGN="LEFT"><FONT SIZE=1><B>Type<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="38%" ALIGN="CENTER"><FONT SIZE=1><B>Shares</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="18%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Gross Proceeds</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2>Class B</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="38%"><FONT SIZE=2>16,365 at $100.00 per share</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,636,500</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2>Class C</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="38%"><FONT SIZE=2>17,807 at $100.00 per share</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,780,700</FONT></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P><FONT SIZE=2> In
1996, the Company issued the remainder of Preferred Shares, Class C, and also undertook a private offering of Preferred Shares, Class D. The results of these
offerings were as follows:</FONT></P>
<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="65%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="39%" ALIGN="LEFT"><FONT SIZE=1><B>Type<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="38%" ALIGN="CENTER"><FONT SIZE=1><B>Shares</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="18%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Gross Proceeds</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2>Class C</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="38%"><FONT SIZE=2>3,193 at $100.00 per share</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>319,300</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2>Class D</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="38%"><FONT SIZE=2>60,739 at $100.00 per share</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>6,073,900</FONT></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2>10</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2> In
1997, the Company undertook a private offering of Preferred Shares, Class E. The results of this offering was as follows:</FONT></P>
<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="65%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="39%" ALIGN="LEFT"><FONT SIZE=1><B>Type<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="38%" ALIGN="CENTER"><FONT SIZE=1><B>Shares</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="18%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Gross Proceeds</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2>Class E</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="38%"><FONT SIZE=2>17,070 at $100.00 per share</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>1,707,000</FONT></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P><FONT SIZE=2> In 1998, the Company undertook a private offering of Preferred Shares, Class F, and Preferred Shares, Class G. The results of these offerings were as
follows:</FONT></P>
<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="66%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="37%" ALIGN="LEFT"><FONT SIZE=1><B>Type<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="39%" ALIGN="CENTER"><FONT SIZE=1><B>Shares</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="20%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Gross Proceeds</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="37%"><FONT SIZE=2>Class F</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="39%"><FONT SIZE=2>110,118 at $100.00 per share</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>11,011,800</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="37%"><FONT SIZE=2>Class G</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="39%"><FONT SIZE=2>50,000 at $100.00 per share</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>5,000,000</FONT></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<BR>
<P><FONT SIZE=2><I>Convertible (Bridge) Notes:</I></FONT></P>
<P><FONT SIZE=2> In 1997 and 1998 the Company sold $3,765,500 in principal amount of Subordinated Promissory notes. Each Note holder had the right to convert to Common Stock up
to 50% of the principal amount of the Notes at a price of $7.00 per share. Interest accrued under the Notes at 10% per annum for the first six months and at 12% per annum during the
six-month extension period.</FONT></P>
<P><FONT SIZE=2> As
of December 31, 1998, $413,000 principal plus accrued interest, had been converted into 65,329 shares of common stock and principal of $1,240,750, plus accrued interest had
been repaid by the Company in 1998. Of the remaining $2,111,750 of principal at December 31, 1998, $988,000 principal, plus accrued interest was subsequently converted into 160,478 shares of
common stock in early 1999. The balance of $1,123,750 of principal, plus accrued interest was repaid by the Company also in early 1999.</FONT></P>
<P><FONT SIZE=2><B>Note 8. Stock Options and Incentives</B></FONT></P>
<P><FONT SIZE=2> On December 17, 1993 the Company's Board of Directors approved the 1993 Stock Plan. The Plan, as originally adopted and subsequently amended, authorizes
the grant of options to purchase up to 1,540,000 shares of common stock. Both incentive stock options and non-qualified stock options may be granted under the Stock Plan. All such options
are exercisable at a purchase price equal to the fair market value of Company common shares, on the date of the grant, as then determined by the Board of Directors. At December 31, 1999, there
were outstanding options under the Stock Plan to purchase a total of 1,526,000 shares, of which options to purchase 659,671 shares were exercisable.</FONT></P>
<P><FONT SIZE=2> The
qualified stock options became exercisable in three equal annual installments after the date of grant and expire five years from such date.</FONT></P>
<P><FONT SIZE=2> The
Board of Directors approved the exchange of Stock Appreciation Rights ("SARs"), previously issued to senior employees of the Company, for non-qualified stock options,
covering a total of 116,679 shares. The Company intends to enter into an agreement with each holder to exchange their SARs for stock options. These options will be exercisable at purchase prices equal
to the base value per share of the retired SARs. The term of the substituted non-qualified stock options will be for a period of five years from the date of grant. During 1998, a cash
payment was made on SARs exercised for 20,292 shares, which left a balance of 96,387 shares. The Company's contingent liability for the remaining SARs, if not converted, is $600,491.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>11</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=2,SEQ=46,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=674151,FOLIO=11,FILE='DISK039:[00STP2.00STP2032]FO2032A.;18',USER='KLIND',CD='27-APR-2000;15:16 -->
<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<BR>
<P><FONT SIZE=2><B>Note 8. Stock Options and Incentives (Continued)</B></FONT></P>
<P><FONT SIZE=2> Non-employee Directors of the Company have been granted non-qualified options covering 70,000 shares and non-qualified
stock options have been granted to eight non-employee members of the Scientific Advisory Board and GLP-1 Medical Advisory Board, covering a total of 52,000 shares. Each of
these grants vests ratably over a three year period. The term of each such non-qualified option extends for the shorter of the term of service and thereafter for 180 days (to the
extent vested at the time), or five years. Four non-employee consultants of the Company have been granted non-qualified options covering 55,000 shares with terms consistent
with those as stated above.</FONT></P>
<P><FONT SIZE=2> A
summary of changes in outstanding options for years ended December 31, 1999, 1998 and 1997 are as follows:</FONT></P>
<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="75%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="48%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="16%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="13%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="13%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1997</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Shares under option at beginning of year</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>829,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>746,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>722,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Options granted—1993 Plan</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>755,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>177,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>82,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Options exercised</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(1,100</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Options canceled</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(56,900</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(94,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(58,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Shares under option end of year</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>1,526,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>829,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>746,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Shares exercisable end of year</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>659,671</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>515,352</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>450,679</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Exercise price of options granted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>8.00-12.50</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>8.00</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>7.00</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Exercise price of options exercised</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>7.00</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Market price of options exercised</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>8.00</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Aggregate market value of options exercised</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>8,800</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P><FONT SIZE=2> Stock
option weighted average exercise prices during 1999, 1998 and 1997 are summarized as follows:</FONT></P>
<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="71%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="64%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1997</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="64%"><FONT SIZE=2>Outstanding, beginning of year</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>6.22</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>5.86</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>5.75</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="64%"><FONT SIZE=2>Granted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>8.05</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7.50</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7.00</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="64%"><FONT SIZE=2>Exercised</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7.00</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>—</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="64%"><FONT SIZE=2>Canceled</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7.05</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>5.78</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>6.14</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="64%"><FONT SIZE=2>Outstanding, end of year</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7.09</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>6.22</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>5.86</FONT></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P><FONT SIZE=2> The
following table summarizes information concerning options outstanding and exercisable options as of December 31, 1999:</FONT></P>
<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="82%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="22%" ALIGN="LEFT"><FONT SIZE=1><B>Range of<BR>
Exercise Price<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER"><FONT SIZE=1><B>Shares<BR>
Outstanding<BR>
Exercisable</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="19%" ALIGN="CENTER"><FONT SIZE=1><B>Weighted<BR>
Average<BR>
Remaining Shares<BR>
Contractual<BR>
Life in Yrs.</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Weighted<BR>
Average<BR>
Exercise<BR>
Price</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="12%" ALIGN="CENTER"><FONT SIZE=1><B>Shares<BR>
Exercisable</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Weighted<BR>
Average<BR>
Exercise<BR>
Price</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2>$5 - $8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,518,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>3.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>7.09</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>659,671</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>5.94</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2>$12.50</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>8,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>5.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>12.50</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2>Totals</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,526,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>659,671</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="22%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2>12</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
<!-- ZEQ.=1,SEQ=47,EFW="2012201",CP="BIO NEBRASKA",DN="1",CHK=341389,FOLIO=12,FILE='DISK039:[00STP2.00STP2032]FQ2032A.;10',USER='KLIND',CD='27-APR-2000;15:16 -->
<P><FONT SIZE=2> Effective
January 1, 1997, the Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation." As permitted by SFAS 123, the Company has elected to
continue following the guidance of APB No. 25 for measurement and recognition of stock-based transactions with employees. No compensation cost has been recognized for stock options issued under
the 1993 Plan because the exercise price for all options granted was at least equal to the fair value of the common stock at the grant date except as noted previously in this note. If compensation
cost for the Company's stock option and employee purchase plans had been determined based on the fair value at the grant dates for grants during 1999, 1998 and 1997, consistent with the method
provided by SFAS No. 123, the Company's net loss would have been as follows:</FONT></P>
<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="77%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="40%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="18%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="18%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="16%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1997</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="40%"><FONT SIZE=2>Net loss:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="40%"><FONT SIZE=2>As reported</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(14,906,202</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(10,109,975</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(5,984,525</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="40%"><FONT SIZE=2>Pro forma</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(15,140,571</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(10,267,568</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(6,106,851</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="40%"><FONT SIZE=2>Basic and diluted net loss per share:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="40%"><FONT SIZE=2>As reported</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(2.95</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(2.37</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(1.41</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="40%"><FONT SIZE=2>Pro forma</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(2.99</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>(2.41</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>(1.43</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P><FONT SIZE=2> The fair value of options granted under the various option plans during 1999, 1998 and 1997 was estimated on the date of the grant using the Black-Sholes
option-pricing model with the following weighted average assumptions and results:</FONT></P>
<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="79%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="40%" ALIGN="LEFT"><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="16%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="16%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="16%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1997</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="40%"><FONT SIZE=2>Dividend yield</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>None</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>None</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>None</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="40%"><FONT SIZE=2>Expected volatility</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="40%"><FONT SIZE=2>Risk-free interest rate</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>5</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>5</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="40%"><FONT SIZE=2>Expected life of option</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>60 months</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>60 months</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>60 months</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="40%"><FONT SIZE=2>Fair value of options on grant date</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,279,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>230,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>106,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P><FONT SIZE=2><B>Note 9. Joint Ventures and GRFCO Acquisition</B></FONT></P>
<P><FONT SIZE=2> In July, 1991, the Company entered into a contractual joint venture (referred to as Osteoporosis Therapy Company or "OT Company") with R & C
Enterprises, Inc., of Omaha, Nebraska (owned in part by Dr. Robert R. Recker, Director of the Hard Tissue Clinic of the Creighton University School of Medicine). OT Company was formed to
develop and market Growth Hormone Releasing Factor (GRF) therapy for osteoporosis pursuant to two patents issued in the United States to Dr. Recker and other GRF therapies.</FONT></P>
<P><FONT SIZE=2> The
GRF was to be manufactured exclusively for OT Company by the Company using its proprietary recombinant peptide production and amidation technologies.</FONT></P>
<P><FONT SIZE=2> In
July, 1992, OT Company and the Company entered into a joint venture agreement with Cambridge Biotech Corporation, of Worcester, Massachusetts, to form another joint venture
company, GRF Corporation (GRFCO) to carry out an initial pilot study of GRF therapy for patients with acute osteoporosis and, if successful, to carry out clinical trials with the therapy leading to
the filing of an NDA with the United States Food and Drug Administration. Pursuant to this joint venture agreement, Cambridge contributed $2 million for the initial funding of GRFCO to cover
the cost of the pilot study and other preliminary research activities. For this contribution, Cambridge received 19% of the GRFCO equity shares and OT Company held 81% of these shares.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>13</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<BR>
<P><FONT SIZE=2><B>Note 9. Joint Ventures and GRFCO Acquisition (Continued)</B></FONT></P>
<P><FONT SIZE=2> In 1996 the Company successfully acquired Cambridge's entire 19% interest in GRFCO shares for $500,000. At December 31, 1998 GRFCO, Inc. had
assets of $398, no liabilities and income from debt forgiveness of $197,861. None of these amounts were consolidated with the Company's financial statements.</FONT></P>
<P><FONT SIZE=2> On
January 6, 1999, the Company acquired the remainder of interest of both GRFCO and OT Company for the sum of $700,000. GRFCO will operate as a wholly owned subsidiary of the
Company in 1999.</FONT></P>
<P><FONT SIZE=2> The
acquisition costs paid were expensed as research and development costs.</FONT></P>
<P><FONT SIZE=2><B>Note 10. Convertible Preferred Stock</B></FONT></P>
<P><FONT SIZE=2> The Company's Certificate of Incorporation authorizes the Board of Directors to establish by resolution different classes or series of preferred stock and to
fix the relative rights and preferences of said shares in any class or series.</FONT></P>
<P><FONT SIZE=2><I>Series A Redeemable Convertible Preferred Stock</I></FONT></P>
<P><FONT SIZE=2> The Board has designated 11,750 of the issued preferred shares as Series A Preferred Stock, see also Note 6, above. Series A Preferred
Stockholders have no voting power, except in the event that at least one year's dividends have not been paid on the stock prior to May 31, 2001.</FONT></P>
<P><FONT SIZE=2> The
Series A Preferred Stockholders are entitled to receive cumulative dividends at the rate of $7.50 per share per annum beginning May 31, 1993, payable annually in
preference and priority to any payment of dividends on Common Stock or any other shares ranking junior to the Series A Preferred Stock as to dividends. They have, however, waived their right to
have such dividend paid until May 31, 2001.</FONT></P>
<P><FONT SIZE=2> The
Series A Preferred Stock may be redeemed by the Company at any time at a redemption price equal to the $100 face value per share plus all unpaid and accumulated dividends.
In addition, each holder has the right to require the Company to redeem their Series A Preferred Stock beginning after May 31, 2001 at a redemption price of the face value per share plus
all unpaid and accumulated dividends.</FONT></P>
<P><FONT SIZE=2><I>Series B Convertible Preferred Stock</I></FONT></P>
<P><FONT SIZE=2> Holders of Series B Preferred Stock are entitled to vote on all matters submitted to the shareholders and receive one vote for each share of Common
Stock into which such holder's shares are then convertible (currently 14.286 shares).</FONT></P>
<P><FONT SIZE=2> The
Series B Preferred Stockholders are entitled to receive cumulative dividends at the rate of $9.75 per share per year, payable annually on a parity with the Series A
Preferred Stock and in preference and priority to any payment of any dividend on the Common Stock or any other shares junior to the Series B Stock.</FONT></P>
<P><FONT SIZE=2> Dividends
begin to accrue on the date of the original issue of the shares of Series B Stock.</FONT></P>
<P><FONT SIZE=2> The
holders of the Series B Preferred Stock have the right at any time to convert each share of Series B Preferred Stock into 14.286 shares of Common Stock, which rate
is determined by multiplying the number of shares of Series B Preferred Stock to be converted by $100 and dividing the product thereof by</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>14</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2>the
Conversion Price, which is initially $7.00, subject to anti-dilution adjustment. All outstanding shares of Series B Preferred Stock will automatically convert into Common Stock
if the Company closes an underwritten public offering of its Common Stock with gross proceeds of at least $10,000,000 and all cumulated dividends shall be paid.</FONT></P>
<P><FONT SIZE=2> The
Company may redeem the Series B Preferred Stock, in whole or in part at any time upon 30 days notice on or after December 1, 1997, at its $100 face value plus
all unpaid and cumulated dividends. Holders will have the right to convert to Common Stock any Series B Preferred Stock that the Company seeks to redeem.</FONT></P>
<P><FONT SIZE=2><I>Series C Convertible Preferred Stock</I></FONT></P>
<P><FONT SIZE=2> The holders of the Series C Preferred Stock have the same rights as for Class B, except for the terms of redemption.</FONT></P>
<P><FONT SIZE=2> The
Company may redeem the Series C Preferred Stock, in whole or in part at any time upon 30 days notice on or after January 1, 1999, at its $100 face value plus
all unpaid and cumulated dividends. Holders will have the right to convert to Common Stock any Series C Preferred Stock that the Company seeks to redeem.</FONT></P>
<P><FONT SIZE=2><I>Series D Convertible Preferred Stock</I></FONT></P>
<P><FONT SIZE=2> The holders of Series D Preferred Stock have the same rights as Class B, except for the terms of redemption.</FONT></P>
<P><FONT SIZE=2> The
Company may redeem the Series D Preferred Stock, in whole or in part, at any time upon 30 days notice on or after January 1, 2000, at its $100 face value plus
all unpaid and cumulated dividends. Holders will have the right to convert to Common Stock any Series D Preferred Stock that the Company seeks to redeem.</FONT></P>
<P><FONT SIZE=2><I>Series E Convertible Preferred Stock</I></FONT></P>
<P><FONT SIZE=2> The holders of Series E Preferred Stock have the same rights as Class B, except for the terms of redemption.</FONT></P>
<P><FONT SIZE=2> The
Company may redeem the Series E Preferred Stock, in whole or in part, at any time upon 30 days notice on or after January 1, 2001, at its $100 face value plus
all unpaid and cumulated dividends. Holders will have the right to convert to Common Stock any Series E Preferred Stock that the Company seeks to redeem.</FONT></P>
<P><FONT SIZE=2><I>Series F Convertible Preferred Stock</I></FONT></P>
<P><FONT SIZE=2> The holders of Series F Preferred Stock have the same rights as for Class B, except for the terms of redemption.</FONT></P>
<P><FONT SIZE=2> The
Company may redeem the Series F Preferred Stock, in whole or in part, at any time upon 30 days notice on or after January 1, 2002, at its $100 face value plus
all unpaid and cumulated dividends. Holders</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>15</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<P><FONT SIZE=2>will
have the right to convert to Common Stock any Series F Preferred Stock that the Company seeks to redeem.</FONT></P>
<P><FONT SIZE=2><I>Series G Convertible Preferred Stock</I></FONT></P>
<P><FONT SIZE=2> The holders of Series G Preferred Stock have a right of first refusal to purchase its pro rata share of any New Securities that the Company may issue.</FONT></P>
<P><FONT SIZE=2> Cumulated
dividends on preferred stock can be summarized as of December 31, 1999, as follows:</FONT></P>
<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="76%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="12%" ALIGN="CENTER"><FONT SIZE=1><B>Preferred Stock<BR>
Series</B></FONT><HR NOSHADE></TH>
<TH WIDTH="20%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="25%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Cumulated Dividends<BR>
to 12/31/99</B></FONT><HR NOSHADE></TH>
<TH WIDTH="20%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="17%" ALIGN="CENTER"><FONT SIZE=1><B>Put/Redemption<BR>
Date</B></FONT><HR NOSHADE></TH>
<TH WIDTH="5%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>A</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>580,156</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>(1)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>B</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>810,470</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>expired</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>C</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>992,618</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>expired</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>D</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>1,960,934</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>1/01/00</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>(2)(3)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>E</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>416,080</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>1/01/01</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>(2)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>F</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>1,610,476</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>1/01/02</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>(2)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>G</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>731,250</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>n/a</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="25%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>7,101,984</FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="17%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="25%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="20%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<HR NOSHADE ALIGN=LEFT WIDTH="120">
<DL compact>
<DT><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Dividends
payable when Company has obtained gross proceeds of $15,000,000 from public or private offerings of equity securities. By agreement, this provision may not be activated
until May 31, 2001.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Proceeds
payable on put are in three installments, over 14 months.
<BR><BR></FONT></DD><DT><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>As
of the report date, this right has expired.</FONT></DD></DL>
<BR>
<P><FONT SIZE=2><B>Note 11. Going Concern Considerations</B></FONT></P>
<P><FONT SIZE=2> In accordance with its plans, the Company, from inception, has experienced losses from its activities in research and development, without fully offsetting
revenues. This and the fact that the Company is a development stage business create a substantial doubt as to its ability to continue as a going concern.</FONT></P>
<P><FONT SIZE=2> The
Company has obtained financing through private placement offerings, as described above in Notes 6 and 7. As in the past, the Company is pursuing additional equity placement
offerings and collaborations to fund several of its programs as well as its corporate overhead.</FONT></P>
<P><FONT SIZE=2> The
Company's ability to obtain profitability on substantial portions of its operations will also depend in large part on: obtaining regulatory approvals of some of its products;
entering into satisfactory agreements for product commercialization; making the transition from a developmental stage business to a manufacturing and marketing company; and obtaining additional
financing through development collaborations or equity or debt issues, as necessary.</FONT></P>
<P><FONT SIZE=2> The
financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a going concern.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>16</FONT></P>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<BR>
<P><FONT SIZE=2><B>Listing of Exhibits</B></FONT></P>
<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="99%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>3.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2>Certificate of Incorporation of the Company as filed with the Delaware Secretary of State on June 7, 1993.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
3.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Amended and Restated bylaws of the Company, dated April 25, 2000.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
3.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Certificate of Designation of Rights and Preferences of Series A Preferred Stock as filed with the Delaware Secretary of State on August 30, 1993.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
3.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Certificate of Designation of Rights and Preferences of Series B Convertible Preferred Stock as filed with the Delaware Secretary of State on December 5, 1994 and amended with the Delaware Secretary of State on November 6,
1995.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
3.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Certificate of Designation of Rights and Preferences of Series C Convertible Preferred Stock as filed with the Delaware Secretary of State on November 20, 1995.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
3.6</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Certificate of Designation of Rights and Preferences of Series D Convertible Preferred Stock as filed with the Delaware Secretary of State on June 3, 1996.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
3.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Certificate of Designation of Rights and Preferences of Series E Convertible Preferred Stock as filed with the Delaware Secretary of State on June 19, 1997.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
3.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Certificate of Designation of Rights and Preferences of Series F Convertible Preferred Stock as filed with the Delaware Secretary of State on May 28, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
3.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Certificate of Designation of Rights and Preferences of Series G Convertible Preferred Stock as filed with the Delaware Secretary of State on June 15, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.1*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
BioNebraska, Inc. 1993 Stock Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.2*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Employment Agreement between the Company and Thomas R. Coolidge dated July 1, 1993.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.3*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Employment Agreement between the Company and Fred W. Wagner, dated July 1, 1993.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.4*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Employment Agreement between the Company and Barton Holmquist dated January 1, 1994.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.5*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Employment Agreement between the Company and Mario Ehlers, dated March 1, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.6*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Employment Agreement between the Company and Christopher Hickey, dated July 1, 1997.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Employment Agreement between the Company and Mal Riddell, dated September 18, 1989.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Registration Rights Agreement dated as of July 13, 1989 and amended as of November 22, 1989, between the Company and certain security holders of the Company.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Lease Agreement between the Company and Airport Authority of the City of Lincoln, Nebraska</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
(a) Commercial Net Building and Ground Lease of Lincoln Air Park executed November 16, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
(b) Construction Agreement entered into as of November 16, 1999.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
(c) Lease Agreement between the Airport Authority of the City of Lincoln, Nebraska and BioNebraska, Inc., dated November 18, 1999.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.10**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Novation agreement between the Company and the Board of Regents of the University of Nebraska and Finnish Sugar Co., Ltd., dated April 20, 1989.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
</FONT></TD>
</TR>
</TABLE>
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10.11**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
License and Royalty Agreement by and between the Company and Carlsberg A/S, Prof. Buchardt and Dr. Henriksen, dated April 22, 1993.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.12**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
License Royalty and Development Agreement by and between the Company and Carlsberg A/S dated October 8, 1993.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.13**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
License Agreement between the Company and PolyPeptide Laboratories dated February 27, 1997.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.14**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Settlement Agreement among the Company, Cambridge Biotech Corporation, GRF Corporation and OT Company, dated July 15, 1996.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.15**</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Investment Agreement between the Company and Medtronic, Inc. dated as of June 16, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Registration Rights Agreement between the Company and Medtronic, Inc. dated as of June 16, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Form of Common Stock Warrant issued to R.J. Steichen & Company on September 2, 1993.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.18</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Form of Warrant for purchase of shares of Common Stock of the Company issued to R.J. Steichen & Company on March 13, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.19*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Form of Incentive Stock Option Agreement.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
10.29*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Form of Non-Qualified Stock Option Agreement.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
11.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Statement regarding computation of per share earnings.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
21.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Subsidiaries of Registrant</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
23.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Consent of Loren D. Swanson, Independent Accountant.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2> <BR>
27.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="91%"><FONT SIZE=2> <BR>
Financial Data Schedule</FONT></TD>
</TR>
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<HR NOSHADE ALIGN=LEFT WIDTH="120">
<DL compact>
<DT><FONT SIZE=2>*</FONT></DT><DD><FONT SIZE=2>Indicates
compensatory plan.
<BR><BR></FONT></DD><DT><FONT SIZE=2>**</FONT></DT><DD><FONT SIZE=2>Certain
portions of this exhibit have been redacted and filed on a confidential basis with the Commission.</FONT></DD></DL>
<P><FONT SIZE=2><HR
NOSHADE></FONT></P>
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<UL>
</UL>
<P><FONT SIZE=2> Pursuant
to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.</FONT></P>
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<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="62%" COLSPAN=3><FONT SIZE=2>BIONEBRASKA, INC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2> <BR>
Dated: April 27, 2000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2> <BR>
By</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="59%" ALIGN="CENTER"><FONT SIZE=2> <BR>
/s/ </FONT><FONT SIZE=2>THOMAS R. COOLIDGE</FONT><FONT SIZE=2> </FONT><HR NOSHADE><FONT SIZE=2> Thomas R. Coolidge,<BR></FONT> <FONT SIZE=2><I>Chief Executive Officer</I></FONT></TD>
</TR>
</TABLE>
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<BR>
<H2><FONT SIZE=2><A NAME="00STP2032_1">QuickLinks</A></FONT></H2>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#de2032_item_1._business">Item 1. Business</A></FONT><BR>
<!-- TOC_END -->
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#di2032_item_2._selected_historical_financial_and_other_data">Item 2. Selected Historical Financial and Other Data</A></FONT><BR>
<FONT SIZE=2><A HREF="#di2032_selected_historical_financial___sel03396">Selected Historical Financial and Other Data (Dollars in thousands, except per share data)</A></FONT><BR>
<!-- TOC_END -->
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#dk2032_management_s_discussion_and_an__man03466">MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</A></FONT><BR>
<FONT SIZE=2><A HREF="#dk2032_item_3._properties">Item 3. Properties</A></FONT><BR>
<FONT SIZE=2><A HREF="#dk2032_item_4._security_ownership_of___ite02724">Item 4. Security Ownership of Certain Beneficial Owners and Management</A></FONT><BR>
<!-- TOC_END -->
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#dm2032_item_5._directors_and_executive_officers">Item 5. Directors and Executive Officers</A></FONT><BR>
<!-- TOC_END -->
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#do2032_item_6._executive_compensation.">Item 6. Executive Compensation.</A></FONT><BR>
<!-- TOC_END -->
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#dq2032_item_7._certain_relatio__dq202148">Item 7. Certain Relationships and Related Transactions</A></FONT><BR>
<FONT SIZE=2><A HREF="#dq2032_item_8._legal_proceedings">Item 8. Legal Proceedings</A></FONT><BR>
<FONT SIZE=2><A HREF="#dq2032_item_9._market_price_of_and_di__ite03920">Item 9. Market Price of and Dividends on the Company's Common Equity and Related Stockholder Matters.</A></FONT><BR>
<FONT SIZE=2><A HREF="#dq2032_item_10._recent_sales_of_unregistered_securities.">Item 10. Recent Sales of Unregistered Securities.</A></FONT><BR>
<!-- TOC_END -->
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#ds2032_item_11._description_of_compan__ite02305">Item 11. Description of Company's Securities To Be Registered.</A></FONT><BR>
<!-- TOC_END -->
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#du2032_item_12._indemnification_of_officers_and_directors.">Item 12. Indemnification of Officers and Directors.</A></FONT><BR>
<FONT SIZE=2><A HREF="#du2032_item_13._financial_statements_and_supplementary_data">Item 13. Financial Statements and Supplementary Data</A></FONT><BR>
<FONT SIZE=2><A HREF="#du2032_item_14._changes_in_and_disagr__ite03555">Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</A></FONT><BR>
<FONT SIZE=2><A HREF="#du2032_item_15._financial_statements_and_exhibits">Item 15. Financial Statements and Exhibits</A></FONT><BR>
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<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
BIONEBRASKA, INC.
ARTICLE I
NAME
The name of the corporation is BioNebraska, Inc.
ARTICLE II
REGISTERED OFFICE
The address of the corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
PURPOSES
The nature of the business or purposes to be conducted or promoted by
the corporation shall include any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
ARTICLE IV
CAPITAL STOCK
4.1 AUTHORIZED CAPITAL STOCK. The total number of shares of stock which
the corporation shall have authority to issue is Twenty Three Million
(23,000,000) shares, divided into Twenty Million (20,000,000) shares of common
stock, $).01 par value per share, and Three Million (3,000,000) shares of
preferred stock, having a par value of $.01 per share. The designations, voting
rights, par values, powers, preferences and rights, and the qualifications,
limitations or restrictions of the corporation's preferred stock are to be
determined by resolution of the Board of Directors and a certificate setting
forth such resolutions and the number of shares of such class or series must be
filed and recorded pursuant to Delaware law.
4.2 VOTING RIGHTS. Each holder of record of the common stock or the
corporation shall be entitled to one (1) vote for each share of common stock
held by him or her at each
<PAGE>
meeting of the stockholders and in respect to any matter on which the
stockholders have a right to vote. The right to vote shall be subject to the
provisions of the bylaws of the corporation in effect from time to time with
respect to closing the transfer books and fixing a record date for the
determination of shares entitled to vote.
4.3 PRE-EMPTIVE RIGHTS. Unless otherwise provided by the Board of
Directors, the stockholders of the corporation shall not have the pre-emptive
right of subscription to any shares of capital stock of the corporation to be
issued or sold, or hereafter authorized, or any obligations or securities
exchangeable for or convertible into stock of the corporation which has not yet
been authorized.
4.4 STOCK RIGHTS AND OPTIONS. The Board of Directors shall have the
power to create and issue rights, warrants or options entitling the holders
thereof to purchase from the corporation any shares of its capital stock of any
class or series, upon such terms and conditions and at such times and prices as
the Board of Directors may provide, which terms and conditions shall be
incorporated in an instrument or instruments evidencing such rights as approved
by the Board of Directors.
4.5 DIVIDENDS. The holders of the common stock shall be entitled to
receive, when and as declared by the Board of Directors, out of earnings or
surplus legally available therefor, dividends, payable either in cash, in
property or in shares of the capital stock of the corporation.
ARTICLE V
EXISTENCE
The corporation is to have perpetual existence.
ARTICLE VI
STOCKHOLDER MEETINGS AND BOOKS
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 applicable law) outside the State of Delaware at such place or
places as may be designated from time to time by the Board of Directors or in
the bylaws of the corporation.
ARTICLE VII
DIRECTORS
7.1 In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the bylaws of the corporation.
2
<PAGE>
7.2 Elections of directors need not be by written ballot unless the
bylaws of the corporation shall so provide.
ARTICLE VIII
EXCULPATION AND INDEMNIFICATION
8.1 A director of the corporation shall not be liable to the
corporation or the stockholders of the corporation for monetary damages for a
breach of the fiduciary duty of care as a director, except to the extent such
exception from liability or limitation thereof is not permitted under the
Delaware General Corporation Law as the same currently exists or hereafter is
amended.
8.2 The corporation shall, to the fullest extent permitted under
Delaware General Corporation Law as the same currently exists or hereafter is
amended, indemnify the directors and officers of this corporation. The
provisions of this Article shall not be deemed to limit or preclude
indemnification of a director or officer by the corporation for any liability
which has not been eliminated by the provisions of this Article.
ARTICLE IX
AMENDMENT OF CERTIFICATE
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
ARTICLE X
INCORPORATOR
The name and address of the incorporator is as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Thomas R. Coolidge 3940 Cornhusker Hwy., Suite 600
Lincoln, Nebraska 68504-1503
</TABLE>
3
<PAGE>
I, the undersigned, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this Certificate, hereby declaring and certifying
that this is my act and deed, and the facts stated herein are true, and
accordingly, have hereunto set my hand this 3rd day of June, 1993.
/s/ Thomas R. Coolidge
-------------------------------
Thomas R. Coolidge.
4
<PAGE>
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
BIONEBRASKA, INC.
__________________
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders of
the Corporation shall be held on the date and at the time and place fixed by the
Board of Directors, for the purpose of electing Directors and for the
transaction of such business as may be brought properly before the meeting. To
be properly brought before the meeting, business must be of a nature that is
appropriate for consideration at an annual meeting and must be (i) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (ii) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (iii) otherwise properly
brought before the meeting by a stockholder. In addition to any other
applicable requirements, for business to be properly brought before the annual
meeting by a stockholder, the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation. To be timely, each such notice
must be given, either by personal delivery or by United States mail, postage
prepaid, to the Secretary of the Corporation, not less than 45 days nor more
than 60 days prior to the date the proxy materials for the previous year's
annual meeting were mailed to shareholders of the Corporation. Each such notice
to the Secretary shall set forth as to each matter the shareholder proposes to
bring before the annual meeting (a) a brief description of the business desired
to be brought before the regular meeting and the reasons for conducting such
business at the regular meeting, (b) the name and address of record of the
shareholders proposing such business, (c) the class or series (if any) and
number of shares of the Corporation which are owned by the shareholder, and (d)
any material interest of the shareholder in such business. Notwithstanding
anything in these Bylaws to the contrary, no business shall be transacted at the
annual meeting except in accordance with the procedures set forth in this
Article I, Section 1; provided, however, that nothing in this Article 1, Section
1 shall be deemed to preclude discussion by any shareholder of any business
properly brought before the annual meeting, in accordance with these Bylaws.
The amendment or repeal of this Article I, Section 1 or the adoption of any
provision inconsistent therewith shall require the approval of the holders of
shares representing at least 75% of the general voting power of the
Corporation's capital stock.
SECTION 2. SPECIAL MEETINGS. 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 Board of Directors or the
Chief Executive Officer. The amendment or repeal of this Article
1
<PAGE>
I, Section 2 or the adoption of any provision inconsistent therewith shall
require the approval of the holders of shares representing at least 75% of
the general voting power of the Corporation's capital stock.
SECTION 3. NOTICE OF MEETINGS. Notice of the time and place of every
meeting of the stockholders shall be mailed at least ten (10) days prior thereto
to each stockholder of record entitled to vote thereat, at his last known Post
Office address appearing upon the books of the Corporation. Such further notice
shall be given as may be required by law. Meetings may be held without notice
if all stockholders entitled to vote thereat are present, or if notice is waived
by those not present.
SECTION 4. QUORUM. The holders of two-thirds of the combined voting
power of the capital stock of the Corporation issued and outstanding and
entitled to vote at the meeting, present in person or represented by proxy,
shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such a quorum shall not be present
at any meeting of stockholders, the stockholders entitled to vote, present in
person or represented by proxy, shall have the power to adjourn the meeting from
time to time, without notice if the time and place are announced at the meeting,
until a quorum shall be present. At such adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting. The amendment or repeal of this Article
I, Section 4 or the adoption of any provision inconsistent therewith shall
require the approval of the holders of shares representing at least 75% of the
general voting power of the Corporation's capital stock.
SECTION 5. INSPECTORS OF ELECTION; VOTING.
(a) Inspectors of Election. The Corporation may, and to the extent
required by law, shall, in advance of any meeting of stockholders, appoint one
or more inspectors to act at the meeting and make a written report thereof. The
Corporation may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act at
a meeting of stockholders, the person presiding at the meeting may, and to the
extent required by law, shall, appoint one or more inspectors to act at the
meeting. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his ability. Every vote taken
by ballots shall be counted by an inspector or inspectors appointed by the
chairman of the meeting.
(b) Voting. Subject to the provisions of the Certification of
Incorporation, at every meeting of the stockholders, each stockholder shall be
entitled to one vote, in person or by proxy, for each share of the capital stock
having voting power held by such stockholder. When a quorum is present at any
meeting, the vote of the holders of (i) a majority of the combined voting power
of all outstanding shares of the Corporation's capital stock is required for the
election of directors, and (ii) a majority of the combined voting power of all
outstanding shares of the capital stock of the
2
<PAGE>
Corporation shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of the statutes, the
Certificate of Incorporation or the Bylaws, a different vote is required, in
which case such express provision shall govern. The amendment or repeal of
this Article I, Section 5(b) or the adoption of any provision inconsistent
therewith shall require the approval of the holders of shares representing at
least 75% of the general voting power of the Corporation's capital stock.
SECTION 6. MEETING CHAIR. The meeting of the stockholders shall be
presided over by the Chairman, or if the Chairman is not present, by the
President, or if neither the Chairman nor the President is present, by any
person elected at the meeting. Either the Secretary of the Corporation or the
Treasurer, if present, shall act as secretary of such meetings.
SECTION 7. CONSENTS OF STOCKHOLDERS IN LIEU OF MEETING.
(a) WRITTEN CONSENTS. As provided in Section 228 of the Delaware General
Corporation Law, any action required or permitted to be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting, without prior notice, and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of the number
of shares of outstanding stock entitled to vote on the action that would be
required to approve such action at a duly convened meeting of the stockholders.
Any such consent may be in counterparts and shall bear the date of signature of
each stockholder who signs the consent. No such consent shall be effective to
take any action unless, within sixty days following the date of the earliest
signature thereon, the consent or counterparts thereof, bearing the signatures
of the holders of a sufficient number of shares of outstanding stock entitled to
vote on the action that would be required to approve such action at a duly
convened meeting of the stockholders, are delivered to the Corporation by
delivery to its principal place of business or to the Secretary of the
Corporation. Any action taken pursuant to such consent shall be effective as of
the date of the last signature thereon needed to make it effective unless
otherwise provided in the consent. All counterparts of such consent necessary
to make it effective shall be filed with the minutes of proceedings of the
stockholders. If the action that is consented to is such as would have required
the filing of a certificate under any provisions of the Delaware General
Corporation Law if such action had been voted upon by stockholders at a meeting,
the certificate filed shall state, in lieu of any statement concerning a vote of
stockholders, that written consent has been given in accordance with the
provisions of Section 228 of the Delaware General Corporation Law, and that
written notice has been given as provided in that section.
(b) RECORD DATE. In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which date shall not be more than ten (10) days
after the date upon which the resolution fixing the record date is adopted by
the Board of Directors. Any stockholder of record seeking to have the
stockholders authorize or take corporate action by written consent shall, by
written notice to the Secretary, request the Board of Directors to fix a record
date. The Board of Directors shall promptly, but in all events within ten (10)
days after the date of which
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such a request is received, adopt a resolution fixing the record date. If no
record date has been fixed by the Board of Directors within such ten (10) day
period, when no prior action by the Board of Directors is required by
applicable law, the record date shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its principal place of business
or to the Secretary of the Corporation. Delivery shall be by hand or by
certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by applicable law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be the close of business on the date on which the Board of
Directors adopts the resolution taking such prior action.
SECTION 8 WAIVER. Attendance of a stockholder of the Corporation,
either in person or by proxy, at any meeting, whether annual or special, shall
constitute a waiver of notice of such meeting, except where a stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. A written waiver of notice of any such meeting signed by a
stockholder or stockholders entitled to such notice, whether before, at, or
after the time for notice or the time of the meeting, shall be equivalent to
notice. Neither the business to be transacted at, nor the purpose of, any
meeting need be specified in any written waiver of notice.
ARTICLE II
DIRECTORS
SECTION 1. DIRECTORS. The business and property of the Corporation
shall be managed and controlled by or under the direction of the Board of
Directors. The number of Directors constituting the whole Board of Directors
shall be two unless such number is increased or decreased by the stockholders or
the Board of Directors. All directors shall continue in office until the
election and qualification of their respective successors in office or until
their earlier death, resignation or removal. No decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director.
SECTION 2. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of Directors may be filled
by the stockholders or by a majority of the Directors then in office, although
less than a quorum. The director so elected shall serve for the remainder of
the term of the director being replaced or, in the case of an additional
director, until he or she resigns or is removed or new directors are elected by
the stockholders.
SECTION 3. MEETINGS OF THE BOARD. The annual meeting of the Board of
Directors shall be held in conjunction with the annual meeting of the
stockholders, and such meeting may be held without notice immediately after the
annual meeting of the stockholders at the same place at which such stockholders'
meeting was held. Regular meetings of the Board of Directors may be held at
such times and at such places either within or without the State of Delaware as
may be fixed by
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resolution of the Board from time to time.
Special meetings of the Board of Directors may be held at any time upon
call of the Chairman, President, or any two directors, at the time and place
specified in the call. Oral, telegraphic or written notice of every meeting of
the Board of Directors (except as hereinbefore specified in respect to the
annual meeting ) shall be served on, sent or mailed to each director not less
than two (2) days before such meeting, but meetings of the Board may be held at
any time without notice if all directors are present, or if those not present
waive notice of the meeting in writing either before or after the meeting. A
majority of the Board shall constitute a quorum.
Attendance of a director at a meeting of the Board of Directors shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. A written waiver of notice signed by a director or directors entitled
to such notice, whether before, at, or after the time for notice or the time of
the meeting, shall be equivalent to the giving of such notice.
SECTION 4. TELEPHONIC MEETINGS. Any member or members of the Board of
Directors, or any committee designated by such Board, may participate in a
meeting of the Board of Directors or such committee by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this paragraph shall constitute presence in person at such
meeting.
SECTION 5. COMPENSATION OF DIRECTORS. Each director may receive such
compensation as may be determined from time to time by the Board of Directors,
in addition to reimbursement of his traveling expense, for each meeting of the
Board of Directors or Executive Committee which he shall attend, whether a
quorum be present or not, provided the affairs of the Corporation be discussed
and considered at such meeting.
SECTION 6. NOMINATIONS FOR ELECTION OF DIRECTORS. Subject to the rights
of holders of any class or series of stock having a preference over the common
shares as to dividends or upon liquidation, nominations for the election of
directors may be made by the Board of Directors or a committee appointed by the
Board of Directors or by any shareholder entitled to vote generally in the
election of directors. However, any shareholder entitled to vote generally in
the election of directors may nominate one or more persons for election as
directors at a meeting only if written notice of such shareholder's intent to
make such nomination or nominations has been given, either by personal delivery
or by United States mail, postage prepaid, to the Secretary of the Corporation
not less than 45 days nor more than 60 days prior to the date the proxy
materials for the previous year's annual meeting were mailed to shareholders of
the Corporation. Each such notice to the Secretary shall set forth: (i) the
name and address of record of the shareholder who intends to make the
nomination; (ii) a representation that the shareholder is a holder of record of
shares of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (iii) the name, age, business and
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residence addresses, and principal occupation or employment of each nominee;
(iv) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the shareholder; (v) such other information regarding each nominee
proposed by such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission; and (vi) the consent of each nominee to serve as a director of
the Corporation if so elected. The Corporation may require any proposed
nominee to furnish such other information as may reasonably be required by
the corporation to determine the eligibility of such proposed nominee to
serve as a director of the Corporation. The presiding officer of the meeting
may, if the facts warrant, determine that a nomination was not made in
accordance with the foregoing procedure, and if he should so determine, he
shall so declare to the meeting and the defective nomination shall be
disregarded. The amendment or repeal of this Article II, Section 6 or the
adoption of any provision inconsistent therewith shall require the approval
of the holders of shares representing at least seventy percent (75%) of the
general voting power of the Corporation's capital stock.
ARTICLE III
COMMITTEES
The Board of Directors, by the affirmative vote of a majority of the
whole Board, may establish committees of the Board, which shall have and may
exercise such powers as shall be conferred or authorized by the resolution
appointing them. A majority of any such committee may determine its action and
fix the time and place of its meetings, unless the Board of Directors shall
otherwise provide. The Board shall have power at any time to change the members
of any such committee, to fill vacancies, and to discharge any such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. The Board of Directors shall elect a Chairman,
President and Secretary of the Corporation and may also from time to time elect
or appoint a Treasurer, one or more Vice Presidents and one or more Assistant
Secretaries and Assistant Treasurers. The Board of Directors may also appoint
such other officers, agents and employees as the Board may deem proper. To the
extent permitted by law, the same person may hold more than one office. Either
the Chairman or the President, as designated by the Board of Directors from time
to time, shall be the Chief Executive Officer of the Corporation.
SECTION 2. TERM OF OFFICE. The term of office of all officers shall be
until their respective death or resignation; provided, however, that any officer
may be removed by the affirmative vote of a majority of the Board of Directors.
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SECTION 3. POWERS AND DUTIES. The officers of the Corporation shall
have such powers and duties as generally pertain to their offices, respectively,
as well as such powers and duties as from time to time shall be conferred by the
Board of Directors.
SECTION 4. SIGNING OF INSTRUMENTS FOR PAYMENT OF MONEY. All checks and
drafts on the Corporation's bank accounts and all bills of exchange and
promissory notes, and all acceptances, obligations and other instruments for the
payment of money, shall be signed by such officer or officers, agent or agents
as shall be thereunto authorized from time to time by the Board of Directors.
ARTICLE V
CAPITAL STOCK
SECTION 1. CERTIFICATE OF STOCK. The interest of each stockholder of
the Corporation shall be evidenced by certificates for shares of stock in such
form as the Board of Directors may from time to time prescribe. The shares of
stock shall be transferable or assignable on the books of the Corporation by the
holder in person or by attorney upon surrender for cancellation of certificates
for the same number of shares, with an assignment and power of transfer endorsed
thereon or attached thereto, duly executed, with such proof of the authenticity
of the signature as the Corporation or its agents may reasonable require. The
legend on the reverse side of all certificates for shares of the Corporation
shall read:
A full statement of the designations, preferences, limitations,
and relative rights of the shares of each class or series
authorized to be issued, so far as they have been determined, and
a statement of the authority of the Board of Directors to
determine the relative rights and preferences of subsequent
classes or series are on file with the Corporation and will be
furnished to any shareholder upon request and without charge.
No certificate shall be valid unless it is executed by the Chairman, the Chief
Executive Officer, the President or a Vice President and also by the Treasurer
or an Assistant Treasurer or the Secretary or an Assistant Secretary, and unless
countersigned and registered in such manner, if any, as the Board of Directors
may by resolution prescribe; provided that, if such certificate is countersigned
(1) by a transfer agent other than the Corporation or its employee, or, (2) by a
registrar other than the Corporation or its employee, any other signature on the
certificate may be a 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 were such officer, transfer agent, or registrar at the date
of issue.
SECTION 2. FIXING OF RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders, or to receive payment
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of any dividend or other distribution or allotment of any rights or 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
a record date, which record date shall not precede the date on which the
resolution fixing the record date is adopted and which record date shall not
be more than sixty (60) nor less than ten (10) days before the date of any
meeting of stockholders. 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.
ARTICLE VI
CORPORATE SEAL
This corporation shall have no seal.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be set by the Board of Directors
from time to time.
ARTICLE VIII
AMENDMENTS TO THE BYLAWS
Subject to the provisions of the Certificate of Incorporation and to the
specific provisions of the Bylaws, the Board of Directors, by majority vote of
those directors present at any meeting at which a quorum is present, or the
stockholders, by the affirmative vote of a majority of the stock issued and
outstanding having voting power at any annual meeting or at any special meeting
called for that purpose, may make, alter, amend, or repeal the By-laws.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. EXPENSES FOR ACTIONS OTHER THAN BY OR IN THE RIGHT OF THE
CORPORATION. Any person who at any time shall serve or shall have served as a
director, officer, employee or agent of the Corporation, and the heirs,
executors and administrators of such person shall be indemnified by the
corporation in accordance with, and to the fullest extent permitted by, the
provisions of the Delaware General Corporation Law, as it may be amended from
time to time. Without limiting the generality of the foregoing, the Corporation
shall indemnify any person who was or is a party or is
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threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he or she is or was a director, officer employee or
agent of the Corporation, or, while a director, officer, employee or agent of
the Corporation, is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, association, or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such
action, suit, or proceeding, if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his or her conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which he or she reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, that he or she had reasonable cause to
believe that his or her conduct was unlawful.
SECTION 2. EXPENSES FOR ACTIONS BY OR IN THE RIGHT OF THE CORPORATION IN
ACCORDANCE WITH, AND TO THE FULLEST EXTENT PERMITTED BY, THE PROVISIONS OF THE
DELAWARE GENERAL CORPORATION LAW, AS IT MAY BE AMENDED FROM TIME TO TIME. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Corporation, or, while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, association, or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit, if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery of the State of Delaware or such other court shall deem proper.
SECTION 3. SUCCESSFUL DEFENSE. To the extent that any person referred
to in the preceding two sections of this Article IX has been successful on the
merits or otherwise in defense of any action, suit, or proceeding referred to in
such sections, or in defense of any claim, issue, or matter therein, he or she
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
SECTION 4. DETERMINATION TO INDEMNIFY. Any indemnification under the
first two
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sections of this Article IX (unless ordered by a court) shall be made
by the Corporation only as authorized in the specific case upon a determination
that indemnification of the director or officer is proper in the circumstances
because he or she has met the applicable standard of conduct set forth therein.
Such determination shall be made (i) by a majority vote of the directors who are
not parties to such action, suit or proceeding, even though less than a quorum,
or (ii) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (iii) by the stockholders.
SECTION 5. EXPENSE ADVANCES. Expenses (including attorneys' fees)
incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit, or proceeding may 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 the director or
officer to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the Corporation as authorized in this
Article IX.
SECTION 6. PROVISIONS NONEXCLUSIVE. The indemnification and advancement
of expenses provided by, or granted pursuant to, the other sections of this
Article IX shall not be deemed exclusive of any other rights to which any person
seeking indemnification or advancement of expenses may be entitled, under the
Certificate of Incorporation or under any other bylaw, agreement, insurance
policy, vote of stockholders or disinterested directors, statute, or otherwise,
both as to action in his or her official capacity and as to action in another
capacity while holding such office.
SECTION 7. INSURANCE. By action of the board of directors,
notwithstanding any interest of the directors in the action, the Corporation
shall have power to purchase and maintain insurance, in such amounts as the
board of directors deems appropriate, on behalf of any person who is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee, or agent of another
Corporation, partnership, joint venture, trust, association, or other
enterprise, against any liability asserted against him or her and incurred by
him or her in any such capacity, or arising out of his or her status as such,
whether or not he or she is indemnified against such liability or expense under
the provisions of this Article IX and whether or not the Corporation would have
the power or would be required to indemnify him or her against such liability
under the provisions of this Article IX or of the Delaware General Corporation
Law or by any other applicable law.
SECTION 8. SURVIVING CORPORATION. The Board of Directors may provide by
resolution that references to "the Corporation" in this Article IX shall
include, in addition to this Corporation, all constituent corporations absorbed
in a merger with this Corporation so that any person who was a director or
officer of such a constituent corporation or is or was serving at the request of
such constituent corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, association, or other
entity shall stand in the same position under the provisions of this Article IX
with respect to this Corporation as he or she would if he or she had served this
Corporation in the same capacity or is or was so serving such other entity at
the request of this
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Corporation, as the case may be.
SECTION 9. INUREMENT. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article IX shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors, and administrators of such person.
IN WITNESS WHEREOF, the undersigned Secretary hereby certifies that the
foregoing Amended and Restated Bylaws were adopted as the complete Bylaws of the
Corporation by an Action in Writing of the Board of Directors of the
Corporation.
Dated: April 25, 2000 /s/ Thomas R. Coolidge
-----------------------------
Thomas R. Coolidge, Secretary
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Exhibit 3.3
CERTIFICATE OF DESIGNATION OF THE VOTING POWERS, PREFERENCES, AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE
CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE
SERIES A PREFERRED STOCK
($.01 PAR VALUE)
OF
BIONEBRASKA, INC.
--------------------
Pursuant to Section 1.51 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors of BioNebraska, Inc., a Delaware
corporation (hereinafter called the "Corporation"):
"RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors hereby provides for and authorizes the issuance of a series of
Preferred Stock of the Corporation to consist of 11,750 shares having a par
value of $.0l per share (the "par value") and a face value of $100 per share
(the "face value"), and hereby fixes the voting powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of such
series, in addition to those set forth in the Certificate of Incorporation, as
follows:
1. DESIGNATION AND AMOUNT. This series of Preferred Stock shall consist
of 11,750 shares and shall be designated as, and is hereinafter referred to as
"Series A Preferred Stock," with the rights, privileges and preferences
specified herein.
2. VOTING RIGHTS. The holders of shares of Series A Preferred Stock
shall have no voting rights, except those granted in the events described in
Articles 4 and 7 of this Certificate of Designation.
3. DIVIDENDS.
3.1 DIVIDEND AMOUNT. The holders of the Series A Preferred
Stock shall be entitled to receive cumulative dividends, when, as and
if declared by the Board of
<PAGE>
Directors, out of any funds legally available therefor, at the rate
of $7.50 per share in each year beginning on or after May 31, 1993,
payable annually on May 31 of each such year, in preference and
priority to any payment of any dividend on the Common Stock or any
other shares junior to the Series A Preferred Stock as to dividends.
Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock beginning as of May 31, 1993. The
Corporation shall be required to begin paying dividends on Series A
Preferred Stock only on the May 31 immediately following either of
the following events: (i) the Corporation shall have net income for
two consecutive fiscal years in an amount exceeding $4,000,000 per
year; or (ii) the Corporation has obtained total gross proceeds in
excess of $15,000,000 in cash from public or private offerings of
any form of its equity securities after the adoption of this
Certificate of Designation (excluding the private placement to be
conducted by R. J. Steichen beginning in July 1993, any exercise of
the warrants included in the Units sold in such private placement,
any exercise of the Agent's option granted in such private
placement, any exercise of the Corporation's options or warrants
which are outstanding as of the completion of such private
placement, or any exercise of options hereafter granted under the
Corporation's 1993 Stock Plan). Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares
at the time outstanding. If at least one year's dividends have not
been paid to the holders of Series A Preferred Stock prior to May
31, 2000, the holders of the Series A Preferred Stock shall be
entitled to elect one-third (1/3) of the members of the Board of
Directors in accordance with Section 4 below.
3.2 PRIORITY. Except for dividends paid solely in the form of
Common Stock on a pro rata basis to holders of Common Stock, no
dividend or other distribution shall be paid on any shares of Common
Stock of the Corporation or any other shares of the Corporation junior
to Series A Preferred Stock as to dividends or the distribution of
assets upon liquidation (herein called "junior shares"), nor shall any
such shares of Common Stock or junior shares be purchased or otherwise
acquired by the Corporation, unless prior to or concurrently with any
such payment with respect to the Common Stock or junior shares, payment
in full of the amount of all cumulative dividends to which the holders
of the Series A Preferred Stock shall then be entitled shall have been
paid. Subject to the above limitations, dividends may be paid on Common
Stock or junior shares out of any funds legally available for such
purpose when and as declared by the Board of Directors.
4. ELECTION OF DIRECTORS. In the event at least one year's dividends
have not been paid on the Series A Preferred Stock on or before May 31, 2000,
the holders of a majority of the outstanding Series A Preferred Stock, voting
separately as a class, shall be entitled to elect one-third (1/3) of the members
of the Board of Directors of the Corporation (the "Preferred Stock Directors"),
and shall have the exclusive right to remove any Preferred Stock Director until
all accrued dividends are paid in full. A vacancy created in the Board by the
death, resignation or
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removal of any Preferred Stock Director may only be filled by vote of the
holders of a majority of the Series A Preferred Stock, voting separately as a
class. The holders of Series A Preferred Stock are not entitled to cumulative
voting.
5. REDEMPTION OF SERIES A PREFERRED STOCK. The Series A Preferred Stock
shall be subject to redemption by the Corporation in accordance with the
following provisions:
5.1. REDEMPTION AT OPTION OF CORPORATION. The Corporation may
redeem the Series A Preferred Stock, in whole or in part in accordance
with the provision of paragraph 5.2, at any time, beginning on May 31,
1993, at the face value per share plus all unpaid and accumulated
dividends to the redemption date (the "Optional Redemption Price").
5.2 PRO RATA REDEMPTIONS. If less than all the outstanding
shares of Series A Preferred Stock are to be redeemed pursuant to 5.1
above, a pro rata amount of such shares shall be redeemed from each of
the holders of Series A Preferred Stock.
5.3 NOTICE. Notice of any proposed redemption of Series A
Preferred Stock pursuant to this Section 5 shall be given by the
Corporation by sending by certified mail, postage prepaid, a copy of
such notice at least 30 but not more than 90 days prior to the date
fixed for such redemption to the holders of record of the Series A
Preferred Stock, at their respective addresses appearing on the books
of the Corporation or given by such holder to the Corporation for the
purposes of notice, or if no such address appears or is given, at the
principal office of the Corporation. Such notice shall state the date
fixed for redemption, the number of shares of Series A Preferred Stock
to be redeemed from all holders thereof and from such holder and the
Optional Redemption Price per share, and shall call upon such holder to
surrender to the Corporation on said date at the place designated in
the notice such holder's certificate or certificates representing the
shares to be redeemed. On or before the date fixed for redemption and
stated in such notice, each holder of shares of Series A Preferred
Stock called for redemption shall surrender the certificate evidencing
such shares to the Corporation at the place designated in such notice
and shall thereupon be entitled to receive payment of the Optional
Redemption Price therefor. If less than all the shares represented by
any such surrendered certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares. From and after the date
fixed in such notice of redemption (unless default be made by the
Corporation in providing moneys for the payment of the Optional
Redemption Price and any accrued but unpaid dividends) then,
notwithstanding that the certificates evidencing any shares of Series A
Preferred Stock so called for redemption shall not have been
surrendered, all rights of the holders thereof with respect to the
shares so called for redemption shall forthwith after such date cease
and terminate, except only the right of the holders to receive the
Optional Redemption Price, without interest, upon surrender of their
certificates therefor.
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5.4 MANDATORY REDEMPTION AT OPTION OF HOLDER. Subject to
Subsection 5.5, each holder of the Series A Preferred Stock shall have
the right to require the Corporation to redeem all, but not a portion
of, his, hers or its shares of Series A Preferred Stock beginning after
May 31, 2000, at a redemption price of the face value per share plus
all unpaid and accumulated dividends to the date of redemption (the
"Mandatory Redemption Price"). Notice of mandatory redemption must be
sent by a holder to the Corporation no later than May 31 in any
calendar year to be effective for that calendar year. Upon receipt of
such notice, accompanied by certificates representing the number of
shares to be redeemed duly endorsed for transfer, the Corporation must
redeem the shares subject to the notice prior to August 31 of the
calendar year of the notice at the Mandatory Redemption Price. All
rights of the holders of the Series A Preferred Stock with respect to
shares surrendered pursuant to this Subsection 5.4 shall continue to
the date of redemption.
5.5 The Corporation shall have the right to pay all or part of
the Mandatory Redemption Price in cash and to issue a two-year
promissory note in the amount of the Mandatory Redemption Price or any
portion thereof which is not paid in cash. Such promissory note shall
have a principal amount equal to the balance of the Mandatory
Redemption Price, shall bear interest at twelve percent (12%) per annum
payable at maturity, shall become due and payable in one lump sum on
the second anniversary of the date of redemption and shall be an
unsecured obligation of the Corporation.
6. REACQUIRED SHARES. Any shares of Series A Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall
constitute authorized but unissued shares of Preferred Stock and may be reissued
as part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
7. LIQUIDATION, DISSOLUTION OR WINDING UP.
7.1 The Series A Preferred Stock shall rank on a parity with
any other series of preferred stock with respect to the distribution of
assets upon liquidation, dissolution or winding up of the Corporation.
Upon the voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, holders of the Series A Preferred Stock shall be
entitled to receive the face value plus all unpaid and accumulated
dividends in cash per share before any distribution of assets is made
to the holders of the Common Stock or any class of stock ranking junior
to the Series A Preferred Stock. If, upon such liquidation, dissolution
or winding up, the assets distributable to the holders of Series A
Preferred Stock shall be insufficient to permit the payment in full to
such holders of the preferential amounts to which they are entitled,
then such assets shall be distributed ratably among the shares of
Series A Preferred Stock. After payment in full of all amounts due to
the holders of Series A Preferred Stock, the remaining assets of the
Corporation available for payment and distribution to shareholders
shall be paid and
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<PAGE>
distributed to the holders of Common Stock and junior shares. The
consolidation or merger of the Corporation, a transfer of all or
substantially all of its assets for cash or securities or a share
exchange will not be considered a liquidation, dissolution or winding
up of the Corporation.
7.2 So long as any shares of Series A Preferred Stock shall be
outstanding, the Corporation shall not, without first obtaining the
affirmative vote or written consent of the holders of not less than
two-thirds of the outstanding shares of Series A Preferred Stock,
voting as a separate class, authorize or create any shares of any class
of stock having a liquidation preference or priority superior to the
liquidation preference and priority of the Series A Preferred Stock."
IN WITNESS WHEREOF, BIONEBRASKA, INC. has caused this certificate to be
signed by Fred W. Wagner, its President, and the same to be attested by Thomas
R. Coolidge, its Secretary, effective as of August 27, 1993.
BIONEBRASKA, INC.
By: /s/ Fred W. Wagner
----------------------------
Fred W. Wagner, President
ATTEST:
By: /s/ Thomas R. Coolidge
---------------------------------
Thomas R. Coolidge, Secretary
5
<PAGE>
Exhibit 3.4
11/10/94
CERTIFICATE OF DESIGNATION OF THE VOTING POWERS, PREFERENCES, AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE
CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE
SERIES B CONVERTIBLE PREFERRED STOCK
($.01 Par Value)
OF
BIONEBRASKA, INC.
------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors of BioNebraska, Inc., a Delaware
corporation (hereinafter called the "Corporation"):
"RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors hereby provides for and authorizes the issuance of a series of
Preferred Stock of the Corporation to consist of 15,000 shares having a par
value of $.01 per share (the "par value") and a face value of $100 per share
(the "face value"), and hereby fixes the voting powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of such
series, in addition to those set forth in the Certificate of Incorporation, as
follows:
1. DESIGNATION AND AMOUNT. This series of Preferred Stock shall consist
of 15,000 shares and shall be designated as, and is hereinafter referred to as
"Series B Convertible Preferred Stock," with the rights, privileges and
preferences specified herein.
<PAGE>
2. VOTING RIGHTS.
2.1 GENERAL VOTING RIGHTS. Each holder of Series B Convertible
Preferred Stock shall have that number of votes on all matters submitted to the
shareholders that is equal to the number of shares of Common Stock into which
such holder's shares of Series B Convertible Preferred Stock are then
convertible, as hereinafter provided. The holders of Series B Convertible
Preferred Stock shall in addition have the special voting rights set forth in
Section 2.2 below. Except as otherwise required by law, or as otherwise provided
below or the Certificate of Designation of Series A Preferred Stock (the "Series
A Certificate"), the shares of Common Stock and Series B Convertible Preferred
Stock of the Corporation shall vote as a single class on all matters submitted
to the shareholders.
2.2 SPECIAL VOTING RIGHTS. Without the affirmative vote of the
holders (acting together as a class) of at least a majority of the shares of
Series B Convertible Preferred Stock at the time outstanding given in person or
by proxy at any annual meeting, or at such special meeting called for that
purpose, or, if permitted by law, in writing without a meeting, the Corporation
shall not:
(a) authorize any additional shares of Series B Convertible
Preferred Stock or authorize or issue any shares of stock having priority over
the Series B Convertible Preferred Stock as to the payment or distribution of
assets upon the liquidation or dissolution, voluntary or involuntary, of the
Corporation; or
(b) amend the Certificate of Incorporation of the Corporation
or this resolution so as to alter any existing provision of the Articles of
Incorporation or this resolution relating to the Series B Convertible Preferred
Stock.
3. DIVIDENDS.
3.1 DIVIDEND AMOUNT. The holders of the Series B Convertible
Preferred Stock shall be entitled to receive cumulative dividends, when, as and
if declared by the Board of Directors, out of any funds legally available
therefor, at the rate of $9.75 per share per year, pro rated for partial years,
payable annually on December 31 of each such year, in preference and priority to
any payment of any dividend on the Common Stock or any other shares junior to
the Series B Convertible Preferred Stock as to dividends. Dividends shall begin
to accrue and cumulate on shares of Series B Convertible Preferred Stock on the
date of the original issue of the shares in question. Accrued but unpaid
dividends shall not bear interest. Dividends paid on shares of Series B
Convertible Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
3.2 PARITY WITH SERIES A PREFERRED STOCK. Shares of Series B
Convertible Preferred Stock shall be on parity with shares of Series A Preferred
Stock as to payment of
2
<PAGE>
cumulated dividends in all circumstances not involving any redemption of
capital stock. No dividend or other distribution shall be paid with respect
to either Series B Convertible Preferred Stock or Series A Preferred Stock
(except in the case of a redemption) unless a comparable payment (but
allowing for the difference in the cumulative dividend rate of the two
classes of Preferred Stock) is made on a per share basis as to the other.
Nothing in this Section 3 shall limit or impair the rights of the Corporation
or any holder of Series B Convertible Preferred Stock under Section 5 of this
Certificate of Designation.
3.3 PRIORITY OVER COMMON STOCK. Except for dividends paid
solely in the form of Common Stock on a pro rata basis to holders of Common
Stock, no dividend or other distribution shall be paid on any shares of Common
Stock of the Corporation or any other shares of the Corporation junior to Series
B Convertible Preferred Stock as to dividends or the distribution of assets upon
liquidation (herein called "junior shares"), nor shall any such shares of Common
Stock or junior shares be purchased or otherwise acquired by the Corporation,
unless prior to or concurrently with any such payment with respect to the Common
Stock or junior shares, payment in full of the amount of all cumulative
dividends to which the holders of the Series B Convertible Preferred Stock shall
then be entitled shall have been paid. Subject to the above limitations,
dividends may be paid on Common Stock or junior shares out of any funds legally
available for such purpose when and as declared by the Board of Directors.
4. CONVERSION TO COMMON STOCK.
4.1 RIGHT TO CONVERT. The holder of any shares of Series B
Convertible Preferred Stock shall have the right at any time to convert said
shares into the number of shares of Common Stock determined by multiplying the
number of shares of Series B Preferred stock to be converted by $100.00 and
dividing the product thereof by the Conversion Price, as defined below, in
effect at the time of conversion. The Conversion Price shall initially be $7.00,
subject to adjustment as provided below.
4.2 PROCEDURE FOR VOLUNTARY CONVERSION. In order to convert
shares of Series B Convertible Preferred Stock, the holder thereof shall
surrender at the principal offices of the Corporation the certificate or
certificates therefor, duly endorsed to the Corporation or in blank, and give
written notice to the Corporation at such office that such holder elects to
convert such shares. Shares of Series B Convertible Preferred Stock shall be
deemed to have been converted immediately prior to the close of business on the
day of the surrender of such shares for conversion as herein provided, and the
person entitled to receive the shares of Common Stock of the Corporation
issuable upon such conversion shall be treated for all purposes as the record
holder of such shares of Common Stock at such time. As promptly as practicable
on or after the conversion date, the Corporation shall issue and deliver or
cause to be issued and delivered at such office a certificate or certificates
for the number of shares of Common Stock of the Corporation issuable upon such
conversion.
3
<PAGE>
4.3 AUTOMATIC CONVERSION. All outstanding shares of Series B
Convertible Preferred Stock shall be automatically converted into Common Stock,
upon the election of the Corporation and delivery of written notice of such
election to the holders of the Series B Convertible Preferred Stock (which
election and notice may be delivered within ninety (90) days before or after the
automatic conversion event described below without effecting the effective time
of such automatic conversion), if the Corporation closes the issuance and sale
of Common Stock in an underwritten public offering, pursuant to an effective
registration statement under the Securities Act of 1933, as amended, in which
the gross proceeds received by Corporation equal or exceed $7,000,000.
4.4 ADJUSTMENT OF CONVERSION PRICE FOR DIVIDENDS, SPLITS OR
COMBINATIONS. In case the Corporation shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares or declare
any dividend payable in Common Stock, the Conversion Price in effect immediately
prior to such subdivision shall be proportionately reduced, and conversely, in
case the outstanding shares of Common Stock of the Corporation shall be combined
into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination shall be proportionately increased.
4.5 PROVISION FOR CAPITAL REORGANIZATIONS, RECLASSIFICATIONS,
CONSOLIDATIONS, MERGERS OR SALES. If any capital reorganization or
reclassification of the capital stock of the Corporation, or consolidation or
merger of the Corporation with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be effected in such
a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provision shall be made whereby the holders of Series
B Convertible Preferred Stock shall thereafter have the right to receive upon
the basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock of the Corporation immediately theretofore receivable
upon the conversion hereof, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore receivable upon the conversion of Series B Convertible
Preferred Stock had such reorganization, reclassification, consolidation, merger
or sale not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of the holders of Series B
Convertible Preferred Stock to the end that the provisions hereof (including
without limitation provisions for adjustments of the Conversion Price and of the
number of shares receivable upon conversion) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter receivable upon the conversion of Series B Convertible Preferred
Stock.
4.6 OTHER ADJUSTMENTS. If any event occurs as to which the
other provisions of this Section 4 are not strictly applicable or if strictly
applicable would not fairly protect the rights of the holders of Series B
Convertible Preferred Stock in accordance with the essential intent and
principles of such provisions, then the Board of Directors of the Corporation
shall
4
<PAGE>
make an adjustment in the application of such provisions, in accordance with
such essential intent and principles, so as to protect such rights as
aforesaid.
4.7 NOTICE OF CHANGES IN CONVERSION PRICE. Upon any adjustment
of the Conversion Price, then and in each case the Corporation shall give
written notice thereof, by first-class mail, postage prepaid, addressed to the
holders of the Series B Convertible Preferred Stock at the address of such
holders as shown on the books of the Corporation, which notice shall state the
Conversion Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares receivable at such price upon the conversion
hereof, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
4.8 NOTICE OF CERTAIN OTHER EVENTS. In case any time:
(i) there shall be any capital reorganization,
reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with, or sale of all or
substantially all of its assets to another corporation; or
(ii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give written
notice, by first-class mail, postage prepaid, addressed to the holders of the
Series B Convertible Preferred Stock at the address of such holders as shown on
the books of the Corporation, of the date on which such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record shall participate in
such dividend distribution or shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such written notice shall be at least 30 days
prior to the action in question and not less than 30 days prior to the record
date or the date on which the Corporation's transfer books are closed in respect
thereto.
4.9 DEFINITION OF COMMON STOCK. As used in this Section 4, the
term "Common Stock" shall mean and include the Corporation's presently
authorized shares of $.01 par value common capital stock and shall also include
any capital stock of any class of the Corporation hereafter authorized which
shall not be limited to a fixed sum or percentage of par value in respect of the
rights of the holders thereof to participate in dividends or in the distribution
of assets upon the voluntary or involuntary liquidation, dissolution or winding
up of the Corporation; provided that the shares receivable pursuant to
conversion of shares of the Series B Convertible Preferred Stock shall include
shares designated as Common Stock of the Corporation as of the date of issuance
of such shares of Series B Convertible Preferred Stock, or, in the case of any
reclassification of the outstanding shares thereof, the stock, securities or
assets provided for above.
5
<PAGE>
5. REDEMPTION OF SERIES B CONVERTIBLE PREFERRED STOCK. The Series B
Convertible Preferred Stock shall be subject to redemption by the Corporation in
accordance with the following provisions:
5.1 REDEMPTION AT OPTION OF CORPORATION. The Corporation may
redeem the Series B Convertible Preferred Stock, in whole or in part in
accordance with the provision of Section 5.2, at any time on or after December
1, 1997, at the face value per share plus all unpaid and accumulated dividends
to the redemption date (the "Optional Redemption Price").
5.2 PRO RATA REDEMPTIONS. If less than all the outstanding
shares of Series B Convertible Preferred Stock are to be redeemed pursuant to
Section 5.1 above, a pro rata amount of such shares shall be redeemed from each
of the holders of Series B Convertible Preferred Stock.
5.3 NOTICE. Notice of any proposed redemption of Series B
Convertible Preferred Stock pursuant to Section 5.1 shall be given by the
Corporation by, sending by certified mail, postage prepaid, a copy of such
notice at least 20 but not more than 90 days prior to the date fixed for such
redemption to the holders of record of the Series B Convertible Preferred Stock,
at their respective addresses appearing on the books of the Corporation or given
by such holder to the Corporation for the purposes of notice, or if no such
address appears or is given, at the principal office of the Corporation. Such
notice shall state the date fixed for redemption, the number of shares of Series
B Convertible Preferred Stock to be redeemed from all holders thereof and from
such holder and the Optional Redemption Price per share, and shall call upon
such holder to surrender to the Corporation on said date at the place designated
in the notice such holder's certificate or certificates representing the shares
to be redeemed. On or before the date fixed for redemption and stated in such
notice, each holder of shares of Series B Convertible Preferred Stock called for
redemption shall either (i) convert to Common Stock pursuant to Section 4 all of
the shares called for redemption, or (ii) surrender the certificate evidencing
such shares to the Corporation at the place designated in such notice and
thereupon be entitled to receive payment of the Optional Redemption Price
therefor. If less than all the shares represented by any such surrendered
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares. From and after the date fixed in such notice of redemption
(unless default be made by the Corporation in providing moneys for the payment
of the Optional Redemption Price) then, notwithstanding that the certificates
evidencing any shares of Series B Convertible Preferred Stock so called for
redemption shall not have been called surrendered, all rights of the holders
thereof with respect to the shares so for redemption shall forthwith after such
date cease and terminate, except only the right of the holders to receive the
Optional Redemption Price, without interest, upon surrender of their
certificates therefor.
5.4 MANDATORY REDEMPTION AT OPTION OF HOLDER. Subject to
Section 5.5, each holder of Series B Convertible Preferred Stock shall have the
right, for a period of three months commencing December 1, 1997, to require the
Corporation to redeem all, but not a portion of,
6
<PAGE>
his, hers or its shares of Series B Convertible Preferred Stock at a
redemption price of the face value per share plus all unpaid and accumulated
dividends to the date of redemption (the "Mandatory Redemption Price").
Notice of mandatory redemption must be sent by a holder to the Corporation no
later than February 28, 1998 to be effective. Upon receipt of such notice,
accompanied by certificates representing the number of shares to be redeemed
duly endorsed for transfer, the Corporation shall redeem the shares subject
to the notice at the Mandatory Redemption Price within 60 days after the
Corporation's receipt of the holder's notice. All rights of the holders of
the Series B Convertible Preferred Stock with respect to shares surrendered
pursuant to this Section 5.4 shall continue to the date of redemption.
5.5 METHOD OF PAYMENT. The Corporation shall have the right
to pay all or not less than 33 1/3% of the Mandatory Redemption Price in cash
and to issue a one-year promissory note in the amount of the portion of the
Mandatory Redemption Price not paid in cash. Such promissory note shall be
due and payable in two equal installments on the sixth month and one year
anniversary of the date of redemption and shall bear interest at a
fluctuating rate at all times equal to the prime or base rate of Citibank,
N.A. with accrued interest to date payable with each installment. The
promissory note shall be an unsecured obligation of the Corporation.
6. REACQUIRED SHARES. Any shares of Series B Convertible Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall constitute authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
7. LIQUIDATION PREFERENCE. The Series B Convertible Preferred Stock
shall rank on a parity with the Series A Preferred Stock and any other series of
Preferred Stock with respect to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation. Upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, holders of Preferred
Stock shall be entitled to receive the face value plus all unpaid and
accumulated dividends in cash per share before any distribution of assets is
made to the holders of the Common Stock or any class of stock ranking junior to
Preferred Stock. If, upon such liquidation, dissolution or winding up, the
assets distributable to the holders of Preferred Stock shall be insufficient to
permit the payment in full to such holders of the preferential amounts to which
they are entitled, then such assets shall be distributed ratably among the
shares of Preferred Stock. After payment in full of all amounts due to the
holders of Preferred Stock, the remaining assets of the Corporation available
for payment and distribution to shareholders shall be paid and distributed to
the holders of Common Stock and junior shares. The consolidation or merger of
the Corporation, a transfer of all or substantially all of its assets for cash
or securities or a share exchange will not be considered a liquidation,
dissolution or winding up of the Corporation.
IN WITNESS WHEREOF, BIONEBRASKA, INC. has caused this certificate to be
signed by Fred W. Wagner, its President, and the same to be attested by Thomas
R. Coolidge, its Secretary, effective as of this 10th day of November, 1994.
7
<PAGE>
BIONEBRASKA, INC.
By: /s/ Fred W. Wagner
--------------------------------
Fred W. Wagner, President
ATTEST:
By: /s/ Thomas R. Coolidge
---------------------------------
Thomas R. Coolidge, Secretary
8
<PAGE>
CERTIFICATE OF AMENDMENT
OF
BIONEBRASKA, INC.,
A DELAWARE CORPORATION
The undersigned, Fred W. Wagner and Thomas R. Coolidge, hereby certify
that:
ONE: They are the duly elected and acting President and Secretary,
respectively, of BioNebraska, Inc.
TWO: The Corporation's Certificate of Designation of the Series B
Convertible Preferred Stock (the "Series B Certificate") was filed with the
Secretary of State of the State of Delaware on December 5, 1994.
THREE: This Certificate of Amendment amends the Series B Certificate
and has been duly adopted in accordance with Section 242 and written notice has
been given to the holders of the Corporation's Series B Convertible Preferred
Stock pursuant to Section 228 of the General Corporation Law of the State of
Delaware.
FOUR: The text of the Series B Certificate is hereby amended by
changing Article 1 thereof so that, as amended, such Article shall read as
follows:
1. DESIGNATION AND AMOUNT. This series of Preferred Stock
shall consist of 16,500 shares and shall be designated as, and is
hereinafter referred to as "Series B Convertible Preferred Stock," with
the rights, privileges and preferences specified herein.
IN WITNESS WHEREOF, BioNebraska, Inc. has caused this certificate to be
signed by Fred W. Wagner, its President, and the same to be attested by Thomas
R. Coolidge, its Secretary, effective as of November 3, 1995.
By: /s/ Fred W. Wagner
------------------------
Fred W. Wagner, President
ATTEST:
By: /s/ Thomas R. Coolidge
-------------------------------
Thomas R.Coolidge, Secretary
<PAGE>
Exhibit 3.5
11/6/95
CERTIFICATE OF DESIGNATION OF THE VOTING POWERS, PREFERENCES, AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE
CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE
SERIES C CONVERTIBLE PREFERRED STOCK
($.01 Par Value)
OF
BIONEBRASKA, INC.
--------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors of BioNebraska, Inc., a Delaware
corporation (hereinafter called the "Corporation"):
"RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors hereby provides for and authorizes the issuance of a series of
Preferred Stock of the Corporation to consist of 50,000 shares having a par
value of $.01 per share (the "par value") and a face value of $100 per share
(the "face value"), and hereby fixes the voting powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of such
series, in addition to those set forth in the Certificate of Incorporation, as
follows:
1. DESIGNATION AND AMOUNT. This series of Preferred Stock shall
consist of 50,000 shares and shall be designated as, and is hereinafter
referred to as "Series C Convertible Preferred Stock," with the rights,
privileges and preferences specified herein.
2. VOTING RIGHTS.
2.1 GENERAL VOTING RIGHTS. Each holder of Series C Convertible
Preferred Stock shall have that number of votes on all matters submitted to the
shareholders that is equal to the number of shares of Common Stock into which
such holder's shares of Series C Convertible
<PAGE>
Preferred Stock are then convertible, as hereinafter provided. The holders of
Series C Convertible Preferred Stock shall in addition have the special
voting rights set forth in Section 2.2 below. Except as otherwise required by
law, or as otherwise provided below or in the Certificate of Designation of
Series A Preferred Stock (the "Series A Certificate") or the Certificate of
Designation of Series B Preferred Stock (the "Series B Certificate"), the
shares of Common Stock, Series B Convertible Preferred Stock and Series C
Convertible Preferred Stock of the Corporation shall vote as a single class
on all matters submitted to the shareholders.
2.2 SPECIAL VOTING RIGHTS. Without the affirmative vote of the
holders (acting together as a class) of at least a majority of the shares of
Series C Convertible Preferred Stock at the time outstanding given in person or
by proxy at any annual meeting, or at such special meeting called for that
purpose, or, if permitted by law, in writing without a meeting, the Corporation
shall not:
(a) authorize any additional shares of Series C Convertible
Preferred Stock or authorize or issue any shares of stock having priority over
the Series C Convertible Preferred Stock as to the payment or distribution of
assets upon the liquidation or dissolution, voluntary or involuntary, of the
Corporation; or
(b) amend the Certificate of Incorporation of the Corporation
or this resolution so as to alter any existing provision of the Articles of
Incorporation or this resolution relating to the Series C Convertible Preferred
Stock.
3. DIVIDENDS.
3.1 DIVIDEND AMOUNT. The holders of the Series C Convertible
Preferred Stock shall be entitled to receive cumulative dividends,
when, as and if declared by the Board of Directors, out of any funds
legally available therefor, at the rate of $9.75 per share per year,
pro rated for partial years, payable annually on December 31 of each
such year, in preference and priority to any payment of any dividend on
the Common Stock or any other shares junior to the Series C Convertible
Preferred Stock as to dividends. Dividends shall begin to accrue and
cumulate on shares of Series C Convertible Preferred Stock on the date
of the original issue of the shares in question. Accrued but unpaid
dividends shall not bear interest. Dividends paid on shares of Series C
Convertible Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding.
3.2 PARITY WITH SERIES A PREFERRED STOCK AND SERIES B
CONVERTIBLE PREFERRED STOCK. Shares of Series C Convertible Preferred
Stock shall be on parity with shares of Series A Preferred Stock and
the Series B Convertible Preferred Stock as to payment of cumulated
dividends in all circumstances not involving any redemption of capital
stock. No dividend or other distribution shall be paid with respect to
any of the Series C
2
<PAGE>
Convertible Preferred Stock, Series B Convertible Preferred Stock or
Series A Preferred Stock (except in the case of a redemption) unless a
comparable payment (but allowing for the difference in the cumulative
dividend rate of the three classes of Preferred Stock) is made on a
per share basis as to the other. Nothing in this Section 3 shall
limit or impair the rights of the Corporation or any holder of Series
C Convertible Preferred Stock under Section 5 of this Certificate of
Designation.
3.3 PRIORITY OVER COMMON STOCK. Except for dividends paid
solely in the form of Common Stock on a pro rata basis to holders of
Common Stock, no dividend or other distribution shall be paid on any
shares of Common Stock of the Corporation or any other shares of the
Corporation junior to Series C Convertible Preferred Stock as to
dividends or the distribution of assets upon liquidation (herein called
"junior shares"), nor shall any such shares of Common Stock or junior
shares be purchased or otherwise acquired by the Corporation, unless
prior to or concurrently with any such payment with respect to the
Common Stock or junior shares, payment in full of the amount of all
cumulative dividends to which the holders of the Series C Convertible
Preferred Stock shall then be entitled shall have been paid. Subject to
the above limitations, dividends may be paid on Common Stock or junior
shares out of any funds legally available for such purpose when and as
declared by the Board of Directors.
4. CONVERSION TO COMMON STOCK.
4.1 RIGHT TO CONVERT. The holder of any shares of Series C
Convertible Preferred Stock shall have the right at any time to convert said
shares into the number of shares of Common Stock determined by multiplying the
number of shares of Series C Convertible Preferred Stock to be converted by
$100.00 and dividing the product thereof by the Conversion Price, as defined
below, in effect at the time of conversion. The Conversion Price shall initially
be $7.00, subject to adjustment as provided below.
4.2 PROCEDURE FOR VOLUNTARY CONVERSION. In order to convert
shares of Series C Convertible Preferred Stock, the holder thereof shall
surrender at the principal offices of the Corporation the certificate or
certificates therefor, duly endorsed to the Corporation or in blank, and give
written notice to the Corporation at such office that such holder elects to
convert such shares. Shares of Series C Convertible Preferred Stock shall be
deemed to have been converted immediately prior to the close of business on the
day of the surrender of such shares for conversion as herein provided, and the
person entitled to receive the shares of Common Stock of the Corporation
issuable upon such conversion shall be treated for all purposes as the record
holder of such shares of Common Stock at such time. As promptly as practicable
on or after the conversion date, the Corporation shall issue and deliver or
cause to be issued and delivered at such office a certificate or certificates
for the number of shares of Common Stock of the Corporation issuable upon such
conversion.
3
<PAGE>
4.3 AUTOMATIC CONVERSION. All outstanding shares of Series C
Convertible Preferred Stock shall be automatically converted into Common Stock,
upon the election of the Corporation and delivery of written notice of such
election to the holders of the Series C Convertible Preferred Stock (which
election and notice may be delivered within ninety (90) days before or after the
automatic conversion event described below without effecting the effective time
of such automatic conversion), if the Corporation closes the issuance and sale
of Common Stock in an underwritten public offering, pursuant to an effective
registration statement under the Securities Act of 1933, as amended, in which
the gross proceeds received by the Corporation equal or exceed $7,000,000.
4.4 ADJUSTMENT OF CONVERSION PRICE FOR DIVIDENDS, SPLITS OR
COMBINATIONS. In case the Corporation shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares or declare
any dividend payable in Common Stock, the Conversion Price in effect immediately
prior to such subdivision shall be proportionately reduced, and conversely, in
case the outstanding shares of Common Stock of the Corporation shall be combined
into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination shall be proportionately increased.
4.5 PROVISION FOR CAPITAL REORGANIZATIONS, RECLASSIFICATIONS,
CONSOLIDATIONS, MERGERS OR SALES. If any capital reorganization or
reclassification of the capital stock of the Corporation, or consolidation or
merger of the Corporation with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be effected in such
a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provision shall be made whereby the holders of Series
C Convertible Preferred Stock shall thereafter have the right to receive upon
the basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock of the Corporation immediately theretofore receivable
upon the conversion hereof, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore receivable upon the conversion of Series C Convertible
Preferred Stock had such reorganization, reclassification, consolidation, merger
or sale not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of the holders of Series C
Convertible Preferred Stock to the end that the provisions hereof (including
without limitation provisions for adjustments of the Conversion Price and of the
number of shares receivable upon conversion) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter receivable upon the conversion of Series C Convertible Preferred
Stock.
4.6 OTHER ADJUSTMENTS. If any event occurs as to which the
other provisions of this Section 4 are not strictly applicable or if strictly
applicable would not fairly protect the rights of the holders of Series C
Convertible Preferred Stock in accordance with the essential intent and
principles of such provisions, then the Board of Directors of the Corporation
shall
4
<PAGE>
make an adjustment in the application of such provisions, in accordance with
such essential intent and principles, so as to protect such rights as
aforesaid.
4.7 NOTICE OF CHANGES IN CONVERSION PRICE. Upon any adjustment
of the Conversion Price, then and in each case the Corporation shall give
written notice thereof, by first-class mail, postage prepaid, addressed to the
holders of the Series C Convertible Preferred Stock at the address of such
holders as shown on the books of the Corporation, which notice shall state the
Conversion Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares receivable at such price upon the conversion
hereof, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
4.8 NOTICE OF CERTAIN OTHER EVENTS. In case any time:
(i) there shall be any capital
reorganization, reclassification of the capital stock
of the Corporation, or consolidation or merger of the
Corporation with, or sale of all or substantially all
of its assets to another corporation; or
(ii) there shall be a voluntary or
involuntary dissolution, liquidation or winding up of
the Corporation;
then, in any one or more of said cases, the Corporation shall give written
notice, by first-class mail, postage prepaid, addressed to the holders of the
Series C Convertible Preferred Stock at the address of such holders as shown on
the books of the Corporation, of the date on which such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record shall participate in
such dividend distribution or shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such written notice shall be at least 30 days
prior to the action in question and not less than 30 days prior to the record
date or the date on which the Corporation's transfer books are closed in respect
thereto.
4.9 DEFINITION OF COMMON STOCK. As used in this Section 4, the
term "Common Stock" shall mean and include the Corporation's presently
authorized shares of $.01 par value common capital stock and shall also include
any capital stock of any class of the Corporation hereafter authorized which
shall not be limited to a fixed sum or percentage of par value in respect of the
rights of the holders thereof to participate in dividends or in the distribution
of assets upon the voluntary or involuntary liquidation, dissolution or winding
up of the Corporation; provided that the shares receivable pursuant to
conversion of shares of the Series C Convertible Preferred Stock shall include
shares designated as Common Stock of the Corporation as of the date of issuance
of such shares of Series C Convertible Preferred Stock, or,
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<PAGE>
in the case of any reclassification of the outstanding shares thereof, the
stock, securities or assets provided for above.
5. REDEMPTION OF SERIES C CONVERTIBLE PREFERRED STOCK. The Series C
Convertible Preferred Stock shall be subject to redemption by the Corporation in
accordance with the following provisions:
5.1 REDEMPTION AT OPTION OF CORPORATION. The Corporation may
redeem the Series C Convertible Preferred Stock, in whole or in part in
accordance with the provision of Section 5.2, at any time on or after
January 1, 1999, at the face value per share plus all unpaid and
accumulated dividends to the redemption date (the "Optional Redemption
Price").
5.2 PRO RATA REDEMPTIONS. If less than all the outstanding
shares of Series C Convertible Preferred Stock are to be redeemed
pursuant to Section 5.1 above, a pro rata amount of such shares shall
be redeemed from each of the holders of Series C Convertible Preferred
Stock.
5.3 NOTICE. Notice of any proposed redemption of Series C
Convertible Preferred Stock pursuant to Section 5.1 shall be given by
the Corporation by sending by certified mail, postage prepaid, a copy
of such notice at least 20 but not more than 90 days prior to the date
fixed for such redemption to the holders of record of the Series C
Convertible Preferred Stock, at their respective addresses appearing on
the books of the Corporation or given by such holder to the Corporation
for the purposes of notice, or if no such address appears or is given,
at the principal office of the Corporation. Such notice shall state the
date fixed for redemption, the number of shares of Series C Convertible
Preferred Stock to be redeemed from all holders thereof and from such
holder and the Optional Redemption Price per share, and shall call upon
such holder to surrender to the Corporation on said date at the place
designated in the notice such holder's certificate or certificates
representing the shares to be redeemed. On or before the date fixed for
redemption and stated in such notice, each holder of shares of Series C
Convertible Preferred Stock called for redemption shall either (i)
convert to Common Stock pursuant to Section 4 all of the shares called
for redemption, or (ii) surrender the certificate evidencing such
shares to the Corporation at the place designated in such notice and
thereupon be entitled to receive payment of the Optional Redemption
Price therefor. If less than all the shares represented by any such
surrendered certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. From and after the date fixed in
such notice of redemption (unless default be made by the Corporation in
providing moneys for the payment of the Optional Redemption Price)
then, notwithstanding that the certificates evidencing any shares of
Series C Convertible Preferred Stock so called for redemption shall not
have been surrendered, all rights of the holders thereof with respect
to the shares so called for redemption shall forthwith after
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such date cease and terminate, except only the right of the holders to
receive the Optional Redemption Price, without interest, upon surrender
of their certificates therefor.
5.4 MANDATORY REDEMPTION AT OPTION OF HOLDER. Subject to
Section 5.5, each holder of Series C Convertible Preferred Stock shall
have the right, for a period of three months commencing January 1,
1999, to require the Corporation to redeem all, but not a portion of,
his, hers or its shares of Series C Convertible Preferred Stock at a
redemption price of the face value per share plus all unpaid and
accumulated dividends to the date of redemption (the "Mandatory
Redemption Price"). Notice of mandatory redemption must be sent by a
holder to the Corporation no later than March 31, 1999 to be effective.
Upon receipt of such notice, accompanied by certificates representing
the number of shares to be redeemed duly endorsed for transfer, the
Corporation shall redeem the shares subject to the notice at the
Mandatory Redemption Price within 60 days after the Corporation's
receipt of the holder's notice. All rights of the holders of the Series
C Convertible Preferred Stock with respect to shares surrendered
pursuant to this Section 5.4 shall continue to the date of redemption.
5.5 METHOD OF PAYMENT. The Corporation shall have the right to
pay all or not less than 33 1/3% of the Mandatory Redemption Price in
cash and to issue a one-year promissory note in the amount of the
portion of the Mandatory Redemption Price not paid in cash. Such
promissory note shall be due and payable in two equal installments on
the sixth month and one year anniversary of the date of redemption
and shall bear interest at a fluctuating rate at all times equal to
the prime or base rate of Citibank, N.A. with accrued interest to
date payable with each installment. The promissory note shall be an
unsecured obligation of the Corporation.
6. REACQUIRED SHARES. Any shares of Series C Convertible Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall constitute authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
7. LIQUIDATION PREFERENCE. The Series C Convertible Preferred Stock
shall rank on a parity with the Series A Preferred Stock, the Series B
Convertible Preferred Stock and any other series of Preferred Stock with respect
to the distribution of assets upon liquidation, dissolution or winding up of the
Corporation. Upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, holders of Preferred Stock shall be entitled to
receive the face value plus all unpaid and accumulated dividends in cash per
share before any distribution of assets is made to the holders of the Common
Stock or any class of stock ranking junior to Preferred Stock. If, upon such
liquidation, dissolution or winding up, the assets distributable to the holders
of Preferred Stock shall be insufficient to permit the payment in full to such
holders of the preferential amounts to which they are entitled, then such assets
shall be distributed ratably among the shares of Preferred Stock. After payment
in full of all amounts due to the holders of
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<PAGE>
Preferred Stock, the remaining assets of the Corporation available for
payment and distribution to shareholders shall be paid and distributed to the
holders of Common Stock and junior shares. The consolidation or merger of the
Corporation, a transfer of all or substantially all of its assets for cash or
securities or a share exchange will not be considered a liquidation,
dissolution or winding up of the Corporation.
IN WITNESS WHEREOF, BIONEBRASKA, INC. has caused this certificate to be
signed by Fred W. Wagner, its President, and the same to be attested by Thomas
R. Coolidge, its Secretary, effective as of this 16th day of November, 1995.
BIONEBRASKA, INC.
By: /s/ Fred W.Wagner
----------------------------
Fred W. Wagner, President
ATTEST:
By: /s/ Thomas R. Coolidge
--------------------------------
Thomas R. Coolidge, Secretary
8
<PAGE>
Exhibit 3.6
05/24/96
CERTIFICATE OF DESIGNATION OF THE VOTING POWERS, PREFERENCES, AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE
CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE
SERIES D CONVERTIBLE PREFERRED STOCK
($.01 Par Value)
OF
BIONEBRASKA, INC.
--------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors of BioNebraska, Inc., a Delaware
corporation (hereinafter called the "Corporation"):
"RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors hereby provides for and authorizes the issuance of a series of
Preferred Stock of the Corporation to consist of 100,000 shares having a par
value of $.01 per share (the "par value") and a face value of $100 per share
(the "face value"), and hereby fixes the voting powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of such
series, in addition to those set forth in the Certificate of Incorporation, as
follows:
1. DESIGNATION AND AMOUNT. This series of Preferred Stock shall
consist of 100,000 shares and shall be designated as, and is hereinafter
referred to as "Series D Convertible Preferred Stock," with the rights,
privileges and preferences specified herein.
2. VOTING RIGHTS.
2.1 GENERAL VOTING RIGHTS. Each holder of Series D Convertible
Preferred Stock shall have that number of votes on all matters submitted to the
shareholders that is equal to the number of shares of Common Stock into which
such holder's shares of Series D Convertible
<PAGE>
Preferred Stock are then convertible, as hereinafter provided. The holders of
Series D Convertible Preferred Stock shall in addition have the special
voting rights set forth in Section 2.2 below. Except as otherwise required by
law, or as otherwise provided below or in the Certificate of Designation of
Series A Preferred Stock (the "Series A Certificate"), the Certificate of
Designation of Series B Convertible Preferred Stock (the "Series B
Certificate") or the Certificate of Designation of Series C Convertible
Preferred Stock (the "Series C Certificate"), the shares of Common Stock,
Series B Convertible Preferred Stock, Series C Convertible Preferred Stock
and Series D Convertible Preferred Stock of the Corporation shall vote as a
single class on all matters submitted to the shareholders.
2.2 SPECIAL VOTING RIGHTS. Without the affirmative vote of the
holders (acting together as a class) of at least a majority of the shares of
Series D Convertible Preferred Stock at the time outstanding given in person or
by proxy at any annual meeting, or at such special meeting called for that
purpose, or, if permitted by law, in writing without a meeting, the Corporation
shall not:
(a) authorize any additional shares of Series D Convertible
Preferred Stock or authorize or issue any shares of stock having priority over
the Series D Convertible Preferred Stock as to the payment or distribution of
assets upon the liquidation or dissolution, voluntary or involuntary, of the
Corporation; or
(b) amend the Certificate of Incorporation of the Corporation
or this resolution so as to alter any existing provision of the Articles of
Incorporation or this resolution relating to the Series D Convertible Preferred
Stock.
3. DIVIDENDS.
3.1 DIVIDEND AMOUNT. The holders of the Series D Convertible
Preferred Stock shall be entitled to receive cumulative dividends,
when, as and if declared by the Board of Directors, out of any funds
legally available therefor, at the rate of $9.75 per share per year,
pro rated for partial years, payable annually on December 31 of each
such year, in preference and priority to any payment of any dividend on
the Common Stock or any other shares junior to the Series D Convertible
Preferred Stock as to dividends. Dividends shall begin to accrue and
cumulate on shares of Series D Convertible Preferred Stock on the date
of the original issue of the shares in question. Accrued but unpaid
dividends shall not bear interest. Dividends paid on shares of Series D
Convertible Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding.
3.2 PARITY WITH SERIES A PREFERRED STOCK AND SERIES B AND
SERIES C CONVERTIBLE PREFERRED STOCK. Shares of Series D Convertible
Preferred Stock shall be on parity with shares of Series A Preferred
Stock, Series B Preferred Stock and the Series C
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<PAGE>
Convertible Preferred Stock as to payment of cumulated dividends in
all circumstances not involving any redemption of capital stock. No
dividend or other distribution shall be paid with respect to any of
the Series D Convertible Preferred Stock, Series C Convertible
Preferred Stock, Series B Convertible Preferred Stock or Series A
Preferred Stock (except in the case of a redemption) unless a
comparable payment (but allowing for the difference in the cumulative
dividend rate of the various classes of Preferred Stock) is made on a
per share basis as to the other. Nothing in this Section 3 shall limit
or impair the rights of the Corporation or any holder of Series D
Convertible Preferred Stock under Section 5 of this Certificate of
Designation.
3.3 PRIORITY OVER COMMON STOCK. Except for dividends paid
solely in the form of Common Stock on a pro rata basis to holders of
Common Stock, no dividend or other distribution shall be paid on any
shares of Common Stock of the Corporation or any other shares of the
Corporation junior to Series D Convertible Preferred Stock as to
dividends or the distribution of assets upon liquidation (herein called
"junior shares"), nor shall any such shares of Common Stock or junior
shares be purchased or otherwise acquired by the Corporation, unless
prior to or concurrently with any such payment with respect to the
Common Stock or junior shares, payment in full of the amount of all
cumulative dividends to which the holders of the Series D Convertible
Preferred Stock shall then be entitled shall have been paid. Subject to
the above limitations, dividends may be paid on Common Stock or junior
shares out of any funds legally available for such purpose when and as
declared by the Board of Directors.
4. CONVERSION TO COMMON STOCK.
4.1 RIGHT TO CONVERT. The holder of any shares of Series D
Convertible Preferred Stock shall have the right at any time to convert said
shares into the number of shares of Common Stock determined by multiplying the
number of shares of Series D Convertible Preferred Stock to be converted by
$100.00 and dividing the product thereof by the Conversion Price, as defined
below, in effect at the time of conversion. The Conversion Price shall initially
be $7.00, subject to adjustment as provided below.
4.2 PROCEDURE FOR VOLUNTARY CONVERSION. In order to convert
shares of Series D Convertible Preferred Stock, the holder thereof shall
surrender at the principal offices of the Corporation the certificate or
certificates therefor, duly endorsed to the Corporation or in blank, and give
written notice to the Corporation at such office that such holder elects to
convert such shares. Shares of Series D Convertible Preferred Stock shall be
deemed to have been converted immediately prior to the close of business on the
day of the surrender of such shares for conversion as herein provided, and the
person entitled to receive the shares of Common Stock of the Corporation
issuable upon such conversion shall be treated for all purposes as the record
holder of such shares of Common Stock at such time. As promptly as practicable
on or after the conversion date, the Corporation shall issue and deliver or
cause to be issued and delivered at
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<PAGE>
such office a certificate or certificates for the number of shares of Common
Stock of the Corporation issuable upon such conversion.
4.3 AUTOMATIC CONVERSION. All outstanding shares of Series D
Convertible Preferred Stock shall be automatically converted into Common Stock,
upon the election of the Corporation and delivery of written notice of such
election to the holders of the Series D Convertible Preferred Stock (which
election and notice may be delivered within ninety (90) days before or after the
automatic conversion event described below without effecting the effective time
of such automatic conversion), if the Corporation closes the issuance and sale
of Common Stock in an underwritten public offering, pursuant to an effective
registration statement under the Securities Act of 1933, as amended, in which
the gross proceeds received by the Corporation equal or exceed $7,000,000.
4.4 ADJUSTMENT OF CONVERSION PRICE FOR DIVIDENDS, SPLITS OR
COMBINATIONS. In case the Corporation shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares or declare
any dividend payable in Common Stock, the Conversion Price in effect immediately
prior to such subdivision shall be proportionately reduced, and conversely, in
case the outstanding shares of Common Stock of the Corporation shall be combined
into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination shall be proportionately increased.
4.5 PROVISION FOR CAPITAL REORGANIZATIONS, RECLASSIFICATIONS,
CONSOLIDATIONS, MERGERS OR SALES. If any capital reorganization or
reclassification of the capital stock of the Corporation, or consolidation or
merger of the Corporation with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be effected in such
a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provision shall be made whereby the holders of Series
D Convertible Preferred Stock shall thereafter have the right to receive upon
the basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock of the Corporation immediately theretofore receivable
upon the conversion hereof, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore receivable upon the conversion of Series D Convertible
Preferred Stock had such reorganization, reclassification, consolidation, merger
or sale not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of the holders of Series D
Convertible Preferred Stock to the end that the provisions hereof (including
without limitation provisions for adjustments of the Conversion Price and of the
number of shares receivable upon conversion) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter receivable upon the conversion of Series D Convertible Preferred
Stock.
4
<PAGE>
4.6 OTHER ADJUSTMENTS. If any event occurs as to which the
other provisions of this Section 4 are not strictly applicable or if strictly
applicable would not fairly protect the rights of the holders of Series D
Convertible Preferred Stock in accordance with the essential intent and
principles of such provisions, then the Board of Directors of the Corporation
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such rights as
aforesaid.
4.7 NOTICE OF CHANGES IN CONVERSION PRICE. Upon any adjustment
of the Conversion Price, then and in each case the Corporation shall give
written notice thereof, by first-class mail, postage prepaid, addressed to the
holders of the Series D Convertible Preferred Stock at the address of such
holders as shown on the books of the Corporation, which notice shall state the
Conversion Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares receivable at such price upon the conversion
hereof, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
4.8 NOTICE OF CERTAIN OTHER EVENTS. In case any time:
(i) there shall be any capital
reorganization, reclassification of the capital stock
of the Corporation, or consolidation or merger of the
Corporation with, or sale of all or substantially all
of its assets to another corporation; or
(ii) there shall be a voluntary or
involuntary dissolution, liquidation or winding up of
the Corporation;
then, in any one or more of said cases, the Corporation shall give written
notice, by first-class mail, postage prepaid, addressed to the holders of the
Series D Convertible Preferred Stock at the address of such holders as shown on
the books of the Corporation, of the date on which such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record shall participate in
such dividend distribution or shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such written notice shall be at least 30 days
prior to the action in question and not less than 30 days prior to the record
date or the date on which the Corporation's transfer books are closed in respect
thereto.
4.9 DEFINITION OF COMMON STOCK. As used in this Section 4, the
term "Common Stock" shall mean and include the Corporation's presently
authorized shares of $.01 par value common capital stock and shall also include
any capital stock of any class of the Corporation hereafter authorized which
shall not be limited to a fixed sum or percentage of par value in respect of the
rights of the holders thereof to participate in dividends or in the distribution
of assets upon the voluntary or involuntary liquidation, dissolution or winding
up of
5
<PAGE>
the Corporation; provided that the shares receivable pursuant to conversion
of shares of the Series D Convertible Preferred Stock shall include shares
designated as Common Stock of the Corporation as of the date of issuance of
such shares of Series D Convertible Preferred Stock, or, in the case of any
reclassification of the outstanding shares thereof, the stock, securities or
assets provided for above.
5. REDEMPTION OF SERIES D CONVERTIBLE PREFERRED STOCK. The Series D
Convertible Preferred Stock shall be subject to redemption by the Corporation in
accordance with the following provisions:
5.1 REDEMPTION AT OPTION OF CORPORATION. The Corporation may
redeem the Series D Convertible Preferred Stock, in whole or in part in
accordance with the provision of Section 5.2, at any time on or after
January 1, 2000, at the face value per share plus all unpaid and
accumulated dividends to the redemption date (the "Optional Redemption
Price").
5.2 PRO RATA REDEMPTIONS. If less than all the outstanding
shares of Series D Convertible Preferred Stock are to be redeemed
pursuant to Section 5.1 above, a pro rata amount of such shares shall
be redeemed from each of the holders of Series D Convertible Preferred
Stock.
5.3 NOTICE. Notice of any proposed redemption of Series D
Convertible Preferred Stock pursuant to Section 5.1 shall be given by
the Corporation by sending by certified mail, postage prepaid, a copy
of such notice at least 20 but not more than 90 days prior to the date
fixed for such redemption to the holders of record of the Series D
Convertible Preferred Stock, at their respective addresses appearing on
the books of the Corporation or given by such holder to the Corporation
for the purposes of notice, or if no such address appears or is given,
at the principal office of the Corporation. Such notice shall state the
date fixed for redemption, the number of shares of Series D Convertible
Preferred Stock to be redeemed from all holders thereof and from such
holder and the Optional Redemption Price per share, and shall call upon
such holder to surrender to the Corporation on said date at the place
designated in the notice such holder's certificate or certificates
representing the shares to be redeemed. On or before the date fixed for
redemption and stated in such notice, each holder of shares of Series D
Convertible Preferred Stock called for redemption shall either (i)
convert to Common Stock pursuant to Section 4 all of the shares called
for redemption, or (ii) surrender the certificate evidencing such
shares to the Corporation at the place designated in such notice and
thereupon be entitled to receive payment of the Optional Redemption
Price therefor. If less than all the shares represented by any such
surrendered certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. From and after the date fixed in
such notice of redemption (unless default be made by the Corporation in
providing moneys for the payment of the Optional Redemption Price)
then, notwithstanding that the certificates evidencing any shares of
Series D Convertible
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<PAGE>
Preferred Stock so called for redemption shall not have been
surrendered, all rights of the holders thereof with respect to the
shares so called for redemption shall forthwith after such date cease
and terminate, except only the right of the holders to receive the
Optional Redemption Price, without interest, upon surrender of their
certificates therefor.
5.4 MANDATORY REDEMPTION AT OPTION OF HOLDER. Subject to
Section 5.5, each holder of Series D Convertible Preferred Stock shall
have the right, for a period of three months commencing January 1,
2000, to require the Corporation to redeem all, but not a portion of,
his, hers or its shares of Series D Convertible Preferred Stock at a
redemption price of the face value per share plus all unpaid and
accumulated dividends to the date of redemption (the "Mandatory
Redemption Price"). Notice of mandatory redemption must be sent by a
holder to the Corporation no later than March 31, 2000 to be effective.
Upon receipt of such notice, accompanied by certificates representing
the number of shares to be redeemed duly endorsed for transfer, the
Corporation shall redeem the shares subject to the notice at the
Mandatory Redemption Price within 60 days after the Corporation's
receipt of the holder's notice. All rights of the holders of the Series
D Convertible Preferred Stock with respect to shares surrendered
pursuant to this Section 5.4 shall continue to the date of redemption.
5.5 METHOD OF PAYMENT. The Corporation shall have the right to
pay all or not less than 33 1/3% of the Mandatory Redemption Price in
cash and to issue a one-year promissory note in the amount of the
portion of the Mandatory Redemption Price not paid in cash. Such
promissory note shall be due and payable in two equal installments on
the sixth month and one year anniversary of the date of redemption
and shall bear interest at a fluctuating rate at all times equal to
the prime or base rate of Citibank, N.A. with accrued interest to
date payable with each installment. The promissory note shall be an
unsecured obligation of the Corporation.
6. REACQUIRED SHARES. Any shares of Series D Convertible Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall constitute authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
7. LIQUIDATION PREFERENCE. The Series D Convertible Preferred Stock
shall rank on a parity with the Series A Preferred Stock, the Series B
Convertible Preferred Stock, the Series C Convertible Preferred Stock and any
other series of Preferred Stock with respect to the distribution of assets upon
liquidation, dissolution or winding up of the Corporation. Upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, holders
of Preferred Stock shall be entitled to receive the face value plus all unpaid
and accumulated dividends in cash per share before any distribution of assets is
made to the holders of the Common Stock or any class of stock ranking junior to
Preferred Stock. If, upon such liquidation, dissolution or winding up, the
assets distributable to the holders of Preferred Stock shall be
7
<PAGE>
insufficient to permit the payment in full to such holders of the
preferential amounts to which they are entitled, then such assets shall be
distributed ratably among the shares of Preferred Stock. After payment in
full of all amounts due to the holders of Preferred Stock, the remaining
assets of the Corporation available for payment and distribution to
shareholders shall be paid and distributed to the holders of Common Stock and
junior shares. The consolidation or merger of the Corporation, a transfer of
all or substantially all of its assets for cash or securities or a share
exchange will not be considered a liquidation, dissolution or winding up of
the Corporation.
IN WITNESS WHEREOF, BIONEBRASKA, INC. has caused this certificate to be
signed and attested by Thomas R. Coolidge, its Chairman of the Board and
Secretary, effective as of this 24th day of May, 1996.
BIONEBRASKA, INC.
By: /s/ Thomas R. Coolidge
-------------------------------
Thomas R. Coolidge, Chairman
ATTEST:
By: /s/ Thomas R. Coolidge
----------------------------------
Thomas R. Coolidge, Secretary
8
<PAGE>
Exhibit 3.7
05/09/97
CERTIFICATE OF DESIGNATION OF THE VOTING POWERS, PREFERENCES, AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE
CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE
SERIES E CONVERTIBLE PREFERRED STOCK
($.01 Par Value)
OF
BIONEBRASKA, INC.
--------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors of BioNebraska, Inc., a Delaware
corporation (hereinafter called the "Corporation"):
"RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors hereby provides for and authorizes the issuance of a series of
Preferred Stock of the Corporation to consist of 200,000 shares having a par
value of $.01 per share (the "par value") and a face value of $100 per share
(the "face value"), and hereby fixes the voting powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of such
series, in addition to those set forth in the Certificate of Incorporation, as
follows:
1. DESIGNATION AND AMOUNT. This series of Preferred Stock shall
consist of 200,000 shares and shall be designated as, and is hereinafter
referred to as "Series E Convertible Preferred Stock," with the rights,
privileges and preferences specified herein.
2. VOTING RIGHTS.
2.1 GENERAL VOTING RIGHTS. Each holder of Series E Convertible
Preferred Stock shall have that number of votes on all matters submitted to the
shareholders that is equal to the number of shares of Common Stock into which
such holder's shares of Series E Convertible
<PAGE>
Preferred Stock are then convertible, as hereinafter provided. The holders of
Series E Convertible Preferred Stock shall in addition have the special
voting rights set forth in Section 2.2 below. Except as otherwise required by
law, or as otherwise provided below or in the Certificate of Designation of
Series A Preferred Stock (the "Series A Certificate"), the Certificate of
Designation of Series B Convertible Preferred Stock (the "Series B
Certificate"), the Certificate of Designation of Series C Convertible
Preferred Stock (the "Series C Certificate") or the Certificate of
Designation of Series D Convertible Preferred Stock (the "Series D
Certificate"), the shares of Common Stock, Series B Convertible Preferred
Stock, Series C Convertible Preferred Stock, Series D Convertible Preferred
Stock and Series E Convertible Preferred Stock of the Corporation shall vote
as a single class on all matters submitted to the shareholders.
2.2 SPECIAL VOTING RIGHTS. Without the affirmative vote of the
holders (acting together as a class) of at least a majority of the shares of
Series E Convertible Preferred Stock at the time outstanding given in person or
by proxy at any annual meeting, or at such special meeting called for that
purpose, or, if permitted by law, in writing without a meeting, the Corporation
shall not:
(a) authorize any additional shares of Series E Convertible
Preferred Stock or authorize or issue any shares of stock having priority over
the Series E Convertible Preferred Stock as to the payment or distribution of
assets upon the liquidation or dissolution, voluntary or involuntary, of the
Corporation; or
(b) amend the Certificate of Incorporation of the Corporation
or this resolution so as to alter any existing provision of the Articles of
Incorporation or this resolution relating to the Series E Convertible Preferred
Stock.
3. DIVIDENDS.
3.1 DIVIDEND AMOUNT. The holders of the Series E Convertible
Preferred Stock shall be entitled to receive cumulative dividends,
when, as and if declared by the Board of Directors, out of any funds
legally available therefor, at the rate of $9.75 per share per year,
pro rated for partial years, payable annually on December 31 of each
such year, in preference and priority to any payment of any dividend on
the Common Stock or any other shares junior to the Series E Convertible
Preferred Stock as to dividends. Dividends shall begin to accrue and
cumulate on shares of Series E Convertible Preferred Stock on the date
of the original issue of the shares in question. Accrued but unpaid
dividends shall not bear interest. Dividends paid on shares of Series E
Convertible Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding.
2
<PAGE>
3.2 PARITY WITH SERIES A PREFERRED STOCK, SERIES B, SERIES C
AND SERIES D CONVERTIBLE PREFERRED STOCK. Shares of Series E
Convertible Preferred Stock shall be on parity with shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Convertible
Preferred Stock and Series D Convertible Preferred Stock as to payment
of cumulated dividends in all circumstances not involving any
redemption of capital stock. No dividend or other distribution shall be
paid with respect to any of the Series E Convertible Preferred Stock,
Series D Convertible Preferred Stock, Series C Convertible Preferred
Stock, Series B Convertible Preferred Stock or Series A Preferred Stock
(except in the case of a redemption) unless a comparable payment (but
allowing for the difference in the cumulative dividend rate of the
various classes of Preferred Stock) is made on a per share basis as to
the other. Nothing in this Section 3 shall limit or impair the rights
of the Corporation or any holder of Series E Convertible Preferred
Stock under Section 5 of this Certificate of Designation.
3.3 PRIORITY OVER COMMON STOCK. Except for dividends paid
solely in the form of Common Stock on a pro rata basis to holders of
Common Stock, no dividend or other distribution shall be paid on any
shares of Common Stock of the Corporation or any other shares of the
Corporation junior to Series E Convertible Preferred Stock as to
dividends or the distribution of assets upon liquidation (herein called
"junior shares"), nor shall any such shares of Common Stock or junior
shares be purchased or otherwise acquired by the Corporation, unless
prior to or concurrently with any such payment with respect to the
Common Stock or junior shares, payment in full of the amount of all
cumulative dividends to which the holders of the Series E Convertible
Preferred Stock shall then be entitled shall have been paid. Subject to
the above limitations, dividends may be paid on Common Stock or junior
shares out of any funds legally available for such purpose when and as
declared by the Board of Directors.
4. CONVERSION TO COMMON STOCK.
4.1 RIGHT TO CONVERT. The holder of any shares of Series E
Convertible Preferred Stock shall have the right at any time to convert said
shares into the number of shares of Common Stock determined by multiplying the
number of shares of Series E Convertible Preferred Stock to be converted by
$100.00 and dividing the product thereof by the Conversion Price, as defined
below, in effect at the time of conversion. The Conversion Price shall initially
be $7.00, subject to adjustment as provided below.
4.2 PROCEDURE FOR VOLUNTARY CONVERSION. In order to convert
shares of Series E Convertible Preferred Stock, the holder thereof shall
surrender at the principal offices of the Corporation the certificate or
certificates therefor, duly endorsed to the Corporation or in blank, and give
written notice to the Corporation at such office that such holder elects to
convert such shares. Shares of Series E Convertible Preferred Stock shall be
deemed to have been converted immediately prior to the close of business on the
day of the surrender of such shares for conversion as herein provided, and the
person entitled to receive the shares of Common Stock of
3
<PAGE>
the Corporation issuable upon such conversion shall be treated for all
purposes as the record holder of such shares of Common Stock at such time. As
promptly as practicable on or after the conversion date, the Corporation
shall issue and deliver or cause to be issued and delivered at such office a
certificate or certificates for the number of shares of Common Stock of the
Corporation issuable upon such conversion.
4.3 AUTOMATIC CONVERSION. All outstanding shares of Series E
Convertible Preferred Stock shall be automatically converted into Common Stock,
upon the election of the Corporation and delivery of written notice of such
election to the holders of the Series E Convertible Preferred Stock (which
election and notice may be delivered within ninety (90) days before or after the
automatic conversion event described below without effecting the effective time
of such automatic conversion), if the Corporation closes the issuance and sale
of Common Stock in an underwritten public offering, pursuant to an effective
registration statement under the Securities Act of 1933, as amended, in which
the gross proceeds received by the Corporation equal or exceed $7,000,000.
4.4 ADJUSTMENT OF CONVERSION PRICE FOR DIVIDENDS, SPLITS OR
COMBINATIONS. In case the Corporation shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares or declare
any dividend payable in Common Stock, the Conversion Price in effect immediately
prior to such subdivision shall be proportionately reduced, and conversely, in
case the outstanding shares of Common Stock of the Corporation shall be combined
into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination shall be proportionately increased.
4.5 PROVISION FOR CAPITAL REORGANIZATIONS, RECLASSIFICATIONS,
CONSOLIDATIONS, MERGERS OR SALES. If any capital reorganization or
reclassification of the capital stock of the Corporation, or consolidation or
merger of the Corporation with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be effected in such
a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provision shall be made whereby the holders of Series
E Convertible Preferred Stock shall thereafter have the right to receive upon
the basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock of the Corporation immediately theretofore receivable
upon the conversion hereof, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore receivable upon the conversion of Series E Convertible
Preferred Stock had such reorganization, reclassification, consolidation, merger
or sale not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of the holders of Series E
Convertible Preferred Stock to the end that the provisions hereof (including
without limitation provisions for adjustments of the Conversion Price and of the
number of shares receivable upon conversion) shall thereafter be applicable, as
nearly as may be,
4
<PAGE>
in relation to any shares of stock, securities or assets thereafter
receivable upon the conversion of Series E Convertible Preferred Stock.
4.6 OTHER ADJUSTMENTS. If any event occurs as to which the
other provisions of this Section 4 are not strictly applicable or if strictly
applicable would not fairly protect the rights of the holders of Series E
Convertible Preferred Stock in accordance with the essential intent and
principles of such provisions, then the Board of Directors of the Corporation
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such rights as
aforesaid.
4.7 NOTICE OF CHANGES IN CONVERSION PRICE. Upon any adjustment
of the Conversion Price, then and in each case the Corporation shall give
written notice thereof, by first-class mail, postage prepaid, addressed to the
holders of the Series E Convertible Preferred Stock at the address of such
holders as shown on the books of the Corporation, which notice shall state the
Conversion Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares receivable at such price upon the conversion
hereof, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
4.8 NOTICE OF CERTAIN OTHER EVENTS. In case any time:
(i) there shall be any capital
reorganization, reclassification of the capital stock
of the Corporation, or consolidation or merger of the
Corporation with, or sale of all or substantially all
of its assets to another corporation; or
(ii) there shall be a voluntary or
involuntary dissolution, liquidation or winding up of
the Corporation;
then, in any one or more of said cases, the Corporation shall give written
notice, by first-class mail, postage prepaid, addressed to the holders of the
Series E Convertible Preferred Stock at the address of such holders as shown on
the books of the Corporation, of the date on which such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record shall participate in
such dividend distribution or shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such written notice shall be at least 30 days
prior to the action in question and not less than 30 days prior to the record
date or the date on which the Corporation's transfer books are closed in respect
thereto.
4.9 DEFINITION OF COMMON STOCK. As used in this Section 4, the
term "Common Stock" shall mean and include the Corporation's presently
authorized shares of $.01 par value common capital stock and shall also include
any capital stock of any class of the
5
<PAGE>
Corporation hereafter authorized which shall not be limited to a fixed sum or
percentage of par value in respect of the rights of the holders thereof to
participate in dividends or in the distribution of assets upon the voluntary
or involuntary liquidation, dissolution or winding up of the Corporation;
provided that the shares receivable pursuant to conversion of shares of the
Series E Convertible Preferred Stock shall include shares designated as
Common Stock of the Corporation as of the date of issuance of such shares of
Series E Convertible Preferred Stock, or, in the case of any reclassification
of the outstanding shares thereof, the stock, securities or assets provided
for above.
5. REDEMPTION OF SERIES E CONVERTIBLE PREFERRED STOCK. The Series E
Convertible Preferred Stock shall be subject to redemption by the Corporation in
accordance with the following provisions:
5.1 REDEMPTION AT OPTION OF CORPORATION. The Corporation may
redeem the Series E Convertible Preferred Stock, in whole or in part in
accordance with the provision of Section 5.2, at any time on or after
January 1, 2001, at the face value per share plus all unpaid and
accumulated dividends to the redemption date (the "Optional Redemption
Price").
5.2 PRO RATA REDEMPTIONS. If less than all the outstanding
shares of Series E Convertible Preferred Stock are to be redeemed
pursuant to Section 5.1 above, a pro rata amount of such shares shall
be redeemed from each of the holders of Series E Convertible Preferred
Stock.
5.3 NOTICE. Notice of any proposed redemption of Series E
Convertible Preferred Stock pursuant to Section 5.1 shall be given by
the Corporation by sending by certified mail, postage prepaid, a copy
of such notice at least 20 but not more than 90 days prior to the date
fixed for such redemption to the holders of record of the Series E
Convertible Preferred Stock, at their respective addresses appearing on
the books of the Corporation or given by such holder to the Corporation
for the purposes of notice, or if no such address appears or is given,
at the principal office of the Corporation. Such notice shall state the
date fixed for redemption, the number of shares of Series E Convertible
Preferred Stock to be redeemed from all holders thereof and from such
holder and the Optional Redemption Price per share, and shall call upon
such holder to surrender to the Corporation on said date at the place
designated in the notice such holder's certificate or certificates
representing the shares to be redeemed. On or before the date fixed for
redemption and stated in such notice, each holder of shares of Series E
Convertible Preferred Stock called for redemption shall either (i)
convert to Common Stock pursuant to Section 4 all of the shares called
for redemption, or (ii) surrender the certificate evidencing such
shares to the Corporation at the place designated in such notice and
thereupon be entitled to receive payment of the Optional Redemption
Price therefor. If less than all the shares represented by any such
surrendered certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. From and after the
6
<PAGE>
date fixed in such notice of redemption (unless default be made by the
Corporation in providing moneys for the payment of the Optional
Redemption Price) then, notwithstanding that the certificates
evidencing any shares of Series E Convertible Preferred Stock so called
for redemption shall not have been surrendered, all rights of the
holders thereof with respect to the shares so called for redemption
shall forthwith after such date cease and terminate, except only the
right of the holders to receive the Optional Redemption Price, without
interest, upon surrender of their certificates therefor.
5.4 MANDATORY REDEMPTION AT OPTION OF HOLDER. Subject to
Section 5.5, each holder of Series E Convertible Preferred Stock shall
have the right, for a period of three months commencing January 1,
2001, to require the Corporation to redeem all, but not a portion of,
his, hers or its shares of Series E Convertible Preferred Stock at a
redemption price of the face value per share plus all unpaid and
accumulated dividends to the date of redemption (the "Mandatory
Redemption Price"). Notice of mandatory redemption must be sent by a
holder to the Corporation no later than March 31, 2001 to be effective.
Upon receipt of such notice, accompanied by certificates representing
the number of shares to be redeemed duly endorsed for transfer, the
Corporation shall redeem the shares subject to the notice at the
Mandatory Redemption Price within 60 days after the Corporation's
receipt of the holder's notice. All rights of the holders of the Series
E Convertible Preferred Stock with respect to shares surrendered
pursuant to this Section 5.4 shall continue to the date of redemption.
5.5 METHOD OF PAYMENT. The Corporation shall have the right to
pay all or not less than 33 1/3% of the Mandatory Redemption Price in
cash and to issue a one-year promissory note in the amount of the
portion of the Mandatory Redemption Price not paid in cash. Such
promissory note shall be due and payable in two equal installments on
the sixth month and one year anniversary of the date of redemption and
shall bear interest at a fluctuating rate at all times equal to the
prime or base rate of Citibank, N.A. with accrued interest to date
payable with each installment. The promissory note shall be an
unsecured obligation of the Corporation.
6. REACQUIRED SHARES. Any shares of Series E Convertible Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall constitute authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
7. LIQUIDATION PREFERENCE. The Series E Convertible Preferred Stock
shall rank on a parity with the Series A Preferred Stock, the Series B
Convertible Preferred Stock, the Series C Convertible Preferred Stock, the
Series D Convertible Preferred Stock and any other series of Preferred Stock
with respect to the distribution of assets upon liquidation, dissolution or
winding up of the Corporation. Upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, holders of Preferred Stock shall
be entitled to receive the face value plus all
7
<PAGE>
unpaid and accumulated dividends in cash per share before any distribution of
assets is made to the holders of the Common Stock or any class of stock
ranking junior to Preferred Stock. If, upon such liquidation, dissolution or
winding up, the assets distributable to the holders of Preferred Stock shall
be insufficient to permit the payment in full to such holders of the
preferential amounts to which they are entitled, then such assets shall be
distributed ratably among the shares of Preferred Stock. After payment in
full of all amounts due to the holders of Preferred Stock, the remaining
assets of the Corporation available for payment and distribution to
shareholders shall be paid and distributed to the holders of Common Stock and
junior shares. The consolidation or merger of the Corporation, a transfer of
all or substantially all of its assets for cash or securities or a share
exchange will not be considered a liquidation, dissolution or winding up of
the Corporation.
IN WITNESS WHEREOF, BIONEBRASKA, INC. has caused this certificate to be
signed and attested by Thomas R. Coolidge, its Chairman of the Board and
Secretary, effective as of this 5th day of May, 1997.
BIONEBRASKA, INC.
By: /s/ Thomas R. Coolidge
------------------------------
Thomas R. Coolidge, Chairman
ATTEST:
By: /s/ Thomas R. Coolidge
----------------------------------
Thomas R. Coolidge, Secretary
8
<PAGE>
Exhibit 3.8
05/07/98
CERTIFICATE OF DESIGNATION OF THE VOTING POWERS, PREFERENCES, AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE
CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE
SERIES F CONVERTIBLE PREFERRED STOCK
($.01 Par Value)
OF
BIONEBRASKA, INC.
--------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors of BioNebraska, Inc., a Delaware
corporation (hereinafter called the "Corporation"):
"RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors hereby provides for and authorizes the issuance of a series of
Preferred Stock of the Corporation to consist of 200,000 shares having a par
value of $.01 per share (the "par value") and a face value of $100 per share
(the "face value"), and hereby fixes the voting powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of such
series, in addition to those set forth in the Certificate of Incorporation, as
follows:
1. DESIGNATION AND AMOUNT. This series of Preferred Stock shall
consist of 200,000 shares and shall be designated as, and is hereinafter
referred to as "Series F Convertible Preferred Stock," with the rights,
privileges and preferences specified herein.
2. VOTING RIGHTS.
2.1 GENERAL VOTING RIGHTS. Each holder of Series F Convertible
Preferred Stock shall have that number of votes on all matters submitted to the
shareholders that is equal to the number of shares of Common Stock into which
such holder's shares of Series F Convertible
<PAGE>
Preferred Stock are then convertible, as hereinafter provided. The holders of
Series F Convertible Preferred Stock shall in addition have the special
voting rights set forth in Section 2.2 below. Except as otherwise required by
law, or as otherwise provided below or in the Certificate of Designation of
Series A Preferred Stock (the "Series A Certificate"), the Certificate of
Designation of Series B Convertible Preferred Stock (the "Series B
Certificate"), the Certificate of Designation of Series C Convertible
Preferred Stock (the "Series C Certificate") or the Certificate of
Designation of Series D Convertible Preferred Stock (the "Series D
Certificate") or the Certificate of Designation of Series E Convertible
Preferred Stock (the "Series E Certificate"), the shares of Common Stock,
Series B Convertible Preferred Stock, Series C Convertible Preferred Stock,
Series D Convertible Preferred Stock, Series E Convertible Preferred Stock
and Series F Convertible Preferred Stock of the Corporation shall vote as a
single class on all matters submitted to the shareholders.
2.2 SPECIAL VOTING RIGHTS. Without the affirmative vote of the
holders (acting together as a class) of at least a majority of the shares of
Series F Convertible Preferred Stock at the time outstanding given in person or
by proxy at any annual meeting, or at such special meeting called for that
purpose, or, if permitted by law, in writing without a meeting, the Corporation
shall not:
(a) authorize any additional shares of Series F Convertible
Preferred Stock or authorize or issue any shares of stock having priority over
the Series F Convertible Preferred Stock as to the payment or distribution of
assets upon the liquidation or dissolution, voluntary or involuntary, of the
Corporation; or
(b) amend the Certificate of Incorporation of the Corporation
or this resolution so as to alter any existing provision of the Articles of
Incorporation or this resolution relating to the Series F Convertible Preferred
Stock.
3. DIVIDENDS.
3.1 DIVIDEND AMOUNT. The holders of the Series F Convertible
Preferred Stock shall be entitled to receive cumulative dividends,
when, as and if declared by the Board of Directors, out of any funds
legally available therefor, at the rate of $9.75 per share per year,
pro rated for partial years, payable annually on December 31 of each
such year, in preference and priority to any payment of any dividend on
the Common Stock or any other shares junior to the Series F Convertible
Preferred Stock as to dividends. Dividends shall begin to accrue and
cumulate on shares of Series F Convertible Preferred Stock on the date
of the original issue of the shares in question. Accrued but unpaid
dividends shall not bear interest. Dividends paid on shares of Series F
Convertible Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding.
2
<PAGE>
3.2 PARITY WITH SERIES A PREFERRED STOCK, SERIES B, SERIES C,
SERIES D, AND SERIES E CONVERTIBLE PREFERRED STOCK. Shares of Series F
Convertible Preferred Stock shall be on parity with shares of Series A
Preferred Stock, Series B Convertible Preferred Stock, Series C
Convertible Preferred Stock, Series D Convertible Preferred Stock, and
Series E Convertible Preferred Stock as to payment of cumulated
dividends in all circumstances not involving any redemption of capital
stock. No dividend or other distribution shall be paid with respect to
any of the Series F Convertible Preferred Stock, Series E Convertible
Preferred Stock, Series D Convertible Preferred Stock, Series C
Convertible Preferred Stock, Series B Convertible Preferred Stock or
Series A Preferred Stock (except in the case of a redemption) unless a
comparable payment (but allowing for the difference in the cumulative
dividend rate of the various classes of Preferred Stock) is made on a
per share basis as to the other. Nothing in this Section 3 shall limit
or impair the rights of the Corporation or any holder of Series F
Convertible Preferred Stock under Section 5 of this Certificate of
Designation.
3.3 PRIORITY OVER COMMON STOCK. Except for dividends paid
solely in the form of Common Stock on a pro rata basis to holders of
Common Stock, no dividend or other distribution shall be paid on any
shares of Common Stock of the Corporation or any other shares of the
Corporation junior to Series F Convertible Preferred Stock as to
dividends or the distribution of assets upon liquidation (herein called
"junior shares"), nor shall any such shares of Common Stock or junior
shares be purchased or otherwise acquired by the Corporation, unless
prior to or concurrently with any such payment with respect to the
Common Stock or junior shares, payment in full of the amount of all
cumulative dividends to which the holders of the Series F Convertible
Preferred Stock shall then be entitled shall have been paid. Subject to
the above limitations, dividends may be paid on Common Stock or junior
shares out of any funds legally available for such purpose when and as
declared by the Board of Directors.
4. CONVERSION TO COMMON STOCK.
4.1 RIGHT TO CONVERT. The holder of any shares of Series F
Convertible Preferred Stock shall have the right at any time to convert said
shares into the number of shares of Common Stock determined by multiplying the
number of shares of Series F Convertible Preferred Stock to be converted by
$100.00 and dividing the product thereof by the Conversion Price, as defined
below, in effect at the time of conversion. The Conversion Price shall initially
be $8.00, subject to adjustment as provided below.
4.2 PROCEDURE FOR VOLUNTARY CONVERSION. In order to convert
shares of Series F Convertible Preferred Stock, the holder thereof shall
surrender at the principal offices of the Corporation the certificate or
certificates therefor, duly endorsed to the Corporation or in blank, and give
written notice to the Corporation at such office that such holder elects to
convert such shares. Shares of Series F Convertible Preferred Stock shall be
deemed to have been converted immediately prior to the close of business on the
day of the surrender of such shares for
3
<PAGE>
conversion as herein provided, and the person entitled to receive the shares
of Common Stock of the Corporation issuable upon such conversion shall be
treated for all purposes as the record holder of such shares of Common Stock
at such time. As promptly as practicable on or after the conversion date, the
Corporation shall issue and deliver or cause to be issued and delivered at
such office a certificate or certificates for the number of shares of Common
Stock of the Corporation issuable upon such conversion.
4.3 AUTOMATIC CONVERSION. All outstanding shares of Series F
Convertible Preferred Stock shall be automatically converted into Common Stock,
upon the election of the Corporation and delivery of written notice of such
election to the holders of the Series F Convertible Preferred Stock (which
election and notice may be delivered within ninety (90) days before or after the
automatic conversion event described below without effecting the effective time
of such automatic conversion), if the Corporation closes the issuance and sale
of Common Stock in an underwritten public offering, pursuant to an effective
registration statement under the Securities Act of 1933, as amended, in which
the gross proceeds received by the Corporation equal or exceed $7,000,000. At
such time, all cumulated dividends on the shares of Series F Convertible Stock
will be paid.
4.4 ADJUSTMENT OF CONVERSION PRICE FOR DIVIDENDS, SPLITS OR
COMBINATIONS. In case the Corporation shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares or declare
any dividend payable in Common Stock, the Conversion Price in effect immediately
prior to such subdivision shall be proportionately reduced, and conversely, in
case the outstanding shares of Common Stock of the Corporation shall be combined
into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination shall be proportionately increased.
4.5 PROVISION FOR CAPITAL REORGANIZATIONS, RECLASSIFICATIONS,
CONSOLIDATIONS, MERGERS OR SALES. If any capital reorganization or
reclassification of the capital stock of the Corporation, or consolidation or
merger of the Corporation with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be effected in such
a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provision shall be made whereby the holders of Series
F Convertible Preferred Stock shall thereafter have the right to receive upon
the basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock of the Corporation immediately theretofore receivable
upon the conversion hereof, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore receivable upon the conversion of Series F Convertible
Preferred Stock had such reorganization, reclassification, consolidation, merger
or sale not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of the holders of Series F
Convertible Preferred Stock to the end that the provisions hereof (including
without limitation provisions for adjustments of the Conversion Price and of the
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<PAGE>
number of shares receivable upon conversion) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter receivable upon the conversion of Series F Convertible Preferred
Stock.
4.6 OTHER ADJUSTMENTS. If any event occurs as to which the
other provisions of this Section 4 are not strictly applicable or if strictly
applicable would not fairly protect the rights of the holders of Series F
Convertible Preferred Stock in accordance with the essential intent and
principles of such provisions, then the Board of Directors of the Corporation
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such rights as
aforesaid.
4.7 NOTICE OF CHANGES IN CONVERSION PRICE. Upon any adjustment
of the Conversion Price, then and in each case the Corporation shall give
written notice thereof, by first-class mail, postage prepaid, addressed to the
holders of the Series F Convertible Preferred Stock at the address of such
holders as shown on the books of the Corporation, which notice shall state the
Conversion Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares receivable at such price upon the conversion
hereof, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
4.8 NOTICE OF CERTAIN OTHER EVENTS. In case any time:
(i) there shall be any capital reorganization,
reclassification of the capital stock of the
Corporation, or consolidation or merger of the
Corporation with, or sale of all or substantially all
of its assets to another corporation; or
(ii) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the
Corporation;
then, in any one or more of said cases, the Corporation shall give written
notice, by first-class mail, postage prepaid, addressed to the holders of the
Series F Convertible Preferred Stock at the address of such holders as shown on
the books of the Corporation, of the date on which such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record shall participate in
such dividend distribution or shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such written notice shall be at least 30 days
prior to the action in question and not less than 30 days prior to the record
date or the date on which the Corporation's transfer books are closed in respect
thereto.
4.9 DEFINITION OF COMMON STOCK. As used in this Section 4, the
term "Common Stock" shall mean and include the Corporation's presently
authorized shares of $.01
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par value common capital stock and shall also include any capital stock of
any class of the Corporation hereafter authorized which shall not be limited
to a fixed sum or percentage of par value in respect of the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding up of
the Corporation; provided that the shares receivable pursuant to conversion
of shares of the Series F Convertible Preferred Stock shall include shares
designated as Common Stock of the Corporation as of the date of issuance of
such shares of Series F Convertible Preferred Stock, or, in the case of any
reclassification of the outstanding shares thereof, the stock, securities or
assets provided for above.
5. REDEMPTION OF SERIES F CONVERTIBLE PREFERRED STOCK. The Series F
Convertible Preferred Stock shall be subject to redemption by the Corporation in
accordance with the following provisions:
5.1 REDEMPTION AT OPTION OF CORPORATION. The Corporation may
redeem the Series F Convertible Preferred Stock, in whole or in part in
accordance with the provision of Section 5.2, at any time on or after
January 1, 2002, at the face value per share plus all unpaid and
accumulated dividends to the redemption date (the "Optional Redemption
Price").
5.2 PRO RATA REDEMPTIONS. If less than all the outstanding
shares of Series F Convertible Preferred Stock are to be redeemed
pursuant to Section 5.1 above, a pro rata amount of such shares shall
be redeemed from each of the holders of Series F Convertible Preferred
Stock.
5.3 NOTICE. Notice of any proposed redemption of Series F
Convertible Preferred Stock pursuant to Section 5.1 shall be given by
the Corporation by sending by certified mail, postage prepaid, a copy
of such notice at least 20 but not more than 90 days prior to the date
fixed for such redemption to the holders of record of the Series F
Convertible Preferred Stock, at their respective addresses appearing on
the books of the Corporation or given by such holder to the Corporation
for the purposes of notice, or if no such address appears or is given,
at the principal office of the Corporation. Such notice shall state the
date fixed for redemption, the number of shares of Series F Convertible
Preferred Stock to be redeemed from all holders thereof and from such
holder and the Optional Redemption Price per share, and shall call upon
such holder to surrender to the Corporation on said date at the place
designated in the notice such holder's certificate or certificates
representing the shares to be redeemed. On or before the date fixed for
redemption and stated in such notice, each holder of shares of Series F
Convertible Preferred Stock called for redemption shall either (i)
convert to Common Stock pursuant to Section 4 all of the shares called
for redemption, or (ii) surrender the certificate evidencing such
shares to the Corporation at the place designated in such notice and
thereupon be entitled to receive payment of the Optional Redemption
Price therefor. If less than all the shares represented by any such
surrendered certificate are redeemed, a
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new certificate shall be issued representing the unredeemed shares.
From and after the date fixed in such notice of redemption (unless
default be made by the Corporation in providing moneys for the payment
of the Optional Redemption Price) then, notwithstanding that the
certificates evidencing any shares of Series F Convertible Preferred
Stock so called for redemption shall not have been surrendered, all
rights of the holders thereof with respect to the shares so called for
redemption shall forthwith after such date cease and terminate, except
only the right of the holders to receive the Optional Redemption Price,
without interest, upon surrender of their certificates therefor.
5.4 MANDATORY REDEMPTION AT OPTION OF HOLDER. Subject to
Section 5.5, each holder of Series F Convertible Preferred Stock shall
have the right, for a period of three months commencing January 1,
2002, to require the Corporation to redeem all, but not a portion of,
his, hers or its shares of Series F Convertible Preferred Stock at a
redemption price of the face value per share plus all unpaid and
accumulated dividends to the date of redemption (the "Mandatory
Redemption Price"). Notice of mandatory redemption must be sent by a
holder to the Corporation no later than March 31, 2002 to be effective.
Upon receipt of such notice, accompanied by certificates representing
the number of shares to be redeemed duly endorsed for transfer, the
Corporation shall redeem the shares subject to the notice at the
Mandatory Redemption Price within 60 days after the Corporation's
receipt of the holder's notice. All rights of the holders of the Series
F Convertible Preferred Stock with respect to shares surrendered
pursuant to this Section 5.4 shall continue to the date of redemption.
5.5 METHOD OF PAYMENT. The Corporation shall have the right
to pay all or not less than 33 1/3% of the Mandatory Redemption Price
in cash and to issue a one-year promissory note in the amount of the
portion of the Mandatory Redemption Price not paid in cash. Such
promissory note shall be due and payable in two equal installments on
the sixth month and one year anniversary of the date of redemption
and shall bear interest at a fluctuating rate at all times equal to
the prime or base rate of Citibank, N.A. with accrued interest to date
payable with each installment. The promissory note shall be an
unsecured obligation of the Corporation.
6. REACQUIRED SHARES. Any shares of Series F Convertible Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall constitute authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
7. LIQUIDATION PREFERENCE. The Series F Convertible Preferred Stock
shall rank on a parity with the Series A Preferred Stock, the Series B
Convertible Preferred Stock, the Series C Convertible Preferred Stock, the
Series D Convertible Preferred Stock, the Series E Convertible Preferred Stock
and any other series of Preferred Stock with respect to the distribution of
assets upon liquidation, dissolution or winding up of the Corporation. Upon the
voluntary or
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<PAGE>
involuntary liquidation, dissolution or winding up of the Corporation,
holders of Preferred Stock shall be entitled to receive the face value plus
all unpaid and accumulated dividends in cash per share before any
distribution of assets is made to the holders of the Common Stock or any
class of stock ranking junior to Preferred Stock. If, upon such liquidation,
dissolution or winding up, the assets distributable to the holders of
Preferred Stock shall be insufficient to permit the payment in full to such
holders of the preferential amounts to which they are entitled, then such
assets shall be distributed ratably among the shares of Preferred Stock.
After payment in full of all amounts due to the holders of Preferred Stock,
the remaining assets of the Corporation available for payment and
distribution to shareholders shall be paid and distributed to the holders of
Common Stock and junior shares. The consolidation or merger of the
Corporation, a transfer of all or substantially all of its assets for cash or
securities or a share exchange will not be considered a liquidation,
dissolution or winding up of the Corporation.
IN WITNESS WHEREOF, BIONEBRASKA, INC. has caused this certificate to be
signed and attested by Thomas R. Coolidge, its Chairman of the Board and
Secretary, effective as of this 28th day of May, 1998.
BIONEBRASKA, INC.
By: /s/ Thomas R. Coolidge
--------------------------------
Thomas R. Coolidge, Chairman
ATTEST:
By:
---------------------------
8
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Exhibit 3.9
05/13/98
CERTIFICATE OF DESIGNATION OF THE VOTING POWERS, PREFERENCES, AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE
CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE
SERIES G CONVERTIBLE PREFERRED STOCK
($.01 Par Value)
OF
BIONEBRASKA, INC.
--------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors of BioNebraska, Inc., a Delaware
corporation (hereinafter called the "Corporation"):
"RESOLVED, that pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors hereby provides for and authorizes the issuance of a series of
Preferred Stock of the Corporation to consist of 50,000 shares having a par
value of $.01 per share (the "par value") and a face value of $100 per share
(the "face value"), and hereby fixes the voting powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of such
series, in addition to those set forth in the Certificate of Incorporation, as
follows:
1. DESIGNATION AND AMOUNT. This series of Preferred Stock shall
consist of 50,000 shares and shall be designated as, and is hereinafter
referred to as "Series G Convertible Preferred Stock," with the rights,
privileges and preferences specified herein.
2. VOTING RIGHTS.
2.1 GENERAL VOTING RIGHTS. Each holder of Series G Convertible
Preferred Stock shall have that number of votes on all matters submitted to the
shareholders that is equal to the number of shares of Common Stock into which
such holder's shares of Series G Convertible
<PAGE>
Preferred Stock are then convertible, as hereinafter provided. The holders of
Series G Convertible Preferred Stock shall in addition have the special
voting rights set forth in Section 2.2 below. Except as provided below or in
the Certificate of Designation of Series A Preferred Stock, Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock, Series D
Convertible Preferred Stock, Series E Convertible Preferred Stock, or Series
F Convertible Preferred Stock, or except as otherwise required by law, the
shares of Common Stock, Series B Convertible Preferred Stock, Series C
Convertible Preferred Stock, Series D Convertible Preferred Stock, Series E
Convertible Preferred Stock, Series F Convertible Preferred Stock and Series
G Convertible Preferred Stock of the Corporation shall vote as a single class
on all matters submitted to the shareholders.
2.2 SPECIAL VOTING RIGHTS. Without the affirmative vote of the
holders (acting together as a class) of at least a majority of the shares of
Series G Convertible Preferred Stock at the time outstanding given in person or
by proxy at any annual meeting, or at such special meeting called for that
purpose, or, if permitted by law, in writing without a meeting, the Corporation
shall not:
(a) authorize any additional shares of Series G Convertible
Preferred Stock or authorize or issue any shares of stock having priority over
the Series G Convertible Preferred Stock as to the payment or distribution of
assets upon the liquidation or dissolution, voluntary or involuntary, of the
Corporation; or
(b) amend the Certificate of Incorporation of the Corporation
or this resolution so as to alter any existing provision of the Articles of
Incorporation or this resolution relating to the Series G Convertible Preferred
Stock.
3. DIVIDENDS.
3.1 DIVIDEND AMOUNT. The holders of the Series G Convertible
Preferred Stock shall be entitled to receive cumulative dividends,
when, as and if declared by the Board of Directors, out of any funds
legally available therefor, at the rate of $9.75 per share per year,
pro rated for partial years, payable annually on December 31 of each
such year, in preference and priority to any payment of any dividend on
the Common Stock or any other shares junior to the Series G Convertible
Preferred Stock as to dividends. Dividends shall begin to accrue and
cumulate on shares of Series G Convertible Preferred Stock on the date
of the original issue of the shares in question. Accrued but unpaid
dividends shall not bear interest. Dividends paid on shares of Series G
Convertible Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding.
3.2 PARITY WITH SERIES A PREFERRED STOCK, SERIES B, SERIES C,
SERIES D, SERIES E AND SERIES F CONVERTIBLE PREFERRED STOCK. Shares of
Series G Convertible Preferred Stock
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shall be on parity with shares of Series A Preferred Stock, Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock,
Series D Convertible Preferred Stock, Series E Convertible Preferred
Stock and Series F Convertible Preferred Stock as to payment of
cumulated dividends in all circumstances not involving any redemption
of capital stock. No dividend or other distribution shall be paid with
respect to any of the Series G Convertible Preferred Stock, Series F
Convertible Preferred Stock, Series E Convertible Preferred Stock,
Series D Convertible Preferred Stock, Series C Convertible Preferred
Stock, Series B Convertible Preferred Stock or Series A Preferred Stock
(except in the case of a redemption) unless a comparable payment (but
allowing for the difference in the cumulative dividend rate of the
various classes of Preferred Stock) is made on a per share basis as to
the other. Nothing in this Section 3 shall limit or impair the rights
of the Corporation or any holder of Series A, B, C, D, E or F
Convertible Preferred Stock with respect to redemption under the
applicable Certificates of Designation for such Series.
3.3 PRIORITY OVER COMMON STOCK. Except for dividends paid
solely in the form of Common Stock on a pro rata basis to holders of
Common Stock, no dividend or other distribution shall be paid on any
shares of Common Stock of the Corporation or any other shares of the
Corporation junior to Series G Convertible Preferred Stock as to
dividends or the distribution of assets upon liquidation (herein called
"junior shares"), nor shall any such shares of Common Stock or junior
shares be purchased or otherwise acquired by the Corporation, unless
prior to or concurrently with any such payment with respect to the
Common Stock or junior shares, payment in full of the amount of all
cumulative dividends to which the holders of the Series G Convertible
Preferred Stock shall then be entitled shall have been paid. Subject to
the above limitations, dividends may be paid on Common Stock or junior
shares out of any funds legally available for such purpose when and as
declared by the Board of Directors.
4. CONVERSION TO COMMON STOCK.
4.1 RIGHT TO CONVERT. The holder of any shares of Series G
Convertible Preferred Stock shall have the right at any time to convert said
shares into the number of shares of Common Stock determined by multiplying the
number of shares of Series G Convertible Preferred Stock to be converted by
$100.00 and dividing the product thereof by the Conversion Price, as defined
below, in effect at the time of conversion. The Conversion Price shall initially
be $7.75, subject to adjustment as provided below.
4.2 PROCEDURE FOR VOLUNTARY CONVERSION. In order to convert
shares of Series G Convertible Preferred Stock, the holder thereof shall
surrender at the principal offices of the Corporation the certificate or
certificates therefor, duly endorsed to the Corporation or in blank, and give
written notice to the Corporation at such office that such holder elects to
convert such shares. Shares of Series G Convertible Preferred Stock shall be
deemed to have been converted immediately prior to the close of business on the
day of the surrender of such shares for conversion as herein provided, and the
person entitled to receive the shares of Common Stock of
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<PAGE>
the Corporation issuable upon such conversion shall be treated for all
purposes as the record holder of such shares of Common Stock at such time. As
promptly as practicable on or after the conversion date, the Corporation
shall issue and deliver or cause to be issued and delivered at such office a
certificate or certificates for the number of shares of Common Stock of the
Corporation issuable upon such conversion.
4.3 AUTOMATIC CONVERSION. All outstanding shares of Series G
Convertible Preferred Stock shall be automatically converted into Common Stock,
upon the election of the Corporation and delivery of written notice of such
election to the holders of the Series G Convertible Preferred Stock (which
election and notice may be delivered within ninety (90) days before or after the
automatic conversion event described below without effecting the effective time
of such automatic conversion), if the Corporation closes the issuance and sale
of Common Stock in an underwritten public offering, pursuant to an effective
registration statement under the Securities Act of 1933, as amended, in which
the gross proceeds received by the Corporation equal or exceed $7,000,000. At
such time, all cumulated dividends on the shares of Series G Convertible Stock
will be paid.
4.4 ADJUSTMENT OF CONVERSION PRICE FOR DIVIDENDS, SPLITS OR
COMBINATIONS. In case the Corporation shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares or declare
any dividend payable in Common Stock, the Conversion Price in effect immediately
prior to such subdivision shall be proportionately reduced, and conversely, in
case the outstanding shares of Common Stock of the Corporation shall be combined
into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination shall be proportionately increased.
4.5 PROVISION FOR CAPITAL REORGANIZATIONS, RECLASSIFICATIONS,
CONSOLIDATIONS, MERGERS OR SALES. If any capital reorganization or
reclassification of the capital stock of the Corporation, or consolidation or
merger of the Corporation with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be effected in such
a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provision shall be made whereby the holders of Series
G Convertible Preferred Stock shall thereafter have the right to receive upon
the basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock of the Corporation immediately theretofore receivable
upon the conversion hereof, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore receivable upon the conversion of Series G Convertible
Preferred Stock had such reorganization, reclassification, consolidation, merger
or sale not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of the holders of Series G
Convertible Preferred Stock to the end that the provisions hereof (including
without limitation provisions for adjustments of the Conversion Price and of the
number of shares receivable upon conversion) shall thereafter be applicable, as
nearly as may be,
4
<PAGE>
in relation to any shares of stock, securities or assets thereafter
receivable upon the conversion of Series G Convertible Preferred Stock.
4.6 OTHER ADJUSTMENTS. If any event occurs as to which the
other provisions of this Section 4 are not strictly applicable or if strictly
applicable would not fairly protect the rights of the holders of Series G
Convertible Preferred Stock in accordance with the essential intent and
principles of such provisions, then the Board of Directors of the Corporation
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such rights as
aforesaid.
4.7 NOTICE OF CHANGES IN CONVERSION PRICE. Upon any adjustment
of the Conversion Price, then and in each case the Corporation shall give
written notice thereof, by first-class mail, postage prepaid, addressed to the
holders of the Series G Convertible Preferred Stock at the address of such
holders as shown on the books of the Corporation, which notice shall state the
Conversion Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares receivable at such price upon the conversion
hereof, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
4.8 NOTICE OF CERTAIN OTHER EVENTS. In case any time:
(i) there shall be any capital reorganization,
reclassification of the capital stock of the Corporation, or
consolidation or merger of the Corporation with, or sale of
all or substantially all of its assets to another corporation;
or
(ii) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give written
notice, by first-class mail, postage prepaid, addressed to the holders of the
Series G Convertible Preferred Stock at the address of such holders as shown on
the books of the Corporation, of the date on which such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record shall participate in
such dividend distribution or shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such written notice shall be at least 30 days
prior to the action in question and not less than 30 days prior to the record
date or the date on which the Corporation's transfer books are closed in respect
thereto.
4.9 DEFINITION OF COMMON STOCK. As used in this Section 4, the
term "Common Stock" shall mean and include the Corporation's presently
authorized shares of $.01 par value common capital stock and shall also include
any capital stock of any class of the
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<PAGE>
Corporation hereafter authorized which shall not be limited to a fixed sum or
percentage of par value in respect of the rights of the holders thereof to
participate in dividends or in the distribution of assets upon the voluntary
or involuntary liquidation, dissolution or winding up of the Corporation;
provided that the shares receivable pursuant to conversion of shares of the
Series G Convertible Preferred Stock shall include shares designated as
Common Stock of the Corporation as of the date of issuance of such shares of
Series G Convertible Preferred Stock, or, in the case of any reclassification
of the outstanding shares thereof, the stock, securities or assets provided
for above.
5. REACQUIRED SHARES. Any shares of Series G Convertible Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall constitute authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
6. LIQUIDATION PREFERENCE. The Series G Convertible Preferred Stock
shall rank on a parity with the Series A Preferred Stock, the Series B
Convertible Preferred Stock, the Series C Convertible Preferred Stock, the
Series D Convertible Preferred Stock, the Series E Convertible Preferred Stock,
the Series F Convertible Preferred Stock and any other series of Preferred Stock
with respect to the distribution of assets upon liquidation, dissolution or
winding up of the Corporation. Upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, holders of Preferred Stock shall
be entitled to receive the face value plus all unpaid and accumulated dividends
in cash per share before any distribution of assets is made to the holders of
the Common Stock or any class of stock ranking junior to Preferred Stock. If,
upon such liquidation, dissolution or winding up, the assets distributable to
the holders of Preferred Stock shall be insufficient to permit the payment in
full to such holders of the preferential amounts to which they are entitled,
then such assets shall be distributed ratably among the shares of Preferred
Stock. After payment in full of all amounts due to the holders of Preferred
Stock, the remaining assets of the Corporation available for payment and
distribution to shareholders shall be paid and distributed to the holders of
Common Stock and junior shares. The consolidation or merger of the Corporation,
a transfer of all or substantially all of its assets for cash or securities or a
share exchange will not be considered a liquidation, dissolution or winding up
of the Corporation.
6
<PAGE>
IN WITNESS WHEREOF, BIONEBRASKA, INC. has caused this certificate to be
signed and attested by Thomas R. Coolidge, its Chairman of the Board and
Secretary, effective as of this 15th day of June, 1998.
BIONEBRASKA, INC.
By:/s/ Thomas R. Coolidge
---------------------------------------
Thomas R. Coolidge, Chairman & CEO
ATTEST:
By:
-----------------------
7
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Exhibit 10.1
As Amended
July 21, 1998
BIONEBRASKA, INC.
1993 STOCK PLAN
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
The name of this plan is the BioNebraska, Inc. 1993 Stock Plan (the
"Plan"). The purpose of the Plan is to enable BioNebraska, Inc. (the "Company")
and its Subsidiaries to retain and attract executives, key employees (whether
full or part-time), consultants and non-employee directors who contribute to the
Company's success by their ability, ingenuity and industry, and to enable such
individuals to participate in the long-term success and growth of the Company by
giving them a proprietary interest in the Company.
For purposes of the Plan, the following terms shall be defined as set
forth below:
a. "BOARD" means the Board of Directors of the Company.
b. "CAUSE" means a felony conviction of a participant, the
failure of a participant to contest prosecution for a felony,
or a participant's willful misconduct or dishonesty which is
materially harmful to the business or reputation of the
Company.
c. "CODE" means the Internal Revenue Code of 1986, as amended.
d. "COMMITTEE" means the Committee referred to in Section 2 of
the Plan. If at any time no Committee shall be in office, then
the functions of the Committee specified in the Plan shall be
exercised by the Board.
e. "COMPANY" means BioNebraska, Inc., a corporation organized
under the laws of the State of Delaware (or any successor
corporation).
f. "DISABILITY" means permanent and total disability as
determined by the Committee.
g. "DISINTERESTED PERSON" shall have the meaning set forth in
Rule 16b-3 as promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, or any
successor definition adopted by the Commission.
<PAGE>
h. "EARLY RETIREMENT" means retirement, with consent of the
Committee at the time of retirement, from active employment
with the Company and any Subsidiary or Parent Corporation of
the Company.
i. "FAIR MARKET VALUE" means the value of the Stock on a given
date as determined by the Committee in accordance with the
applicable Treasury Department regulations under Section 422
of the Code with respect to "incentive stock options."
j. "INCENTIVE STOCK OPTION" means any Stock Option intended to be
and designated as an "Incentive Stock Option" within the
meaning of Section 422 of the Code.
k. "NON-QUALIFIED STOCK OPTION" means any Stock Option that is
not an Incentive Stock Option, and is intended to be and is
designated as a "Non-Qualified Stock Option."
l. "NON-EMPLOYEE DIRECTOR" means any member of the Board who is
not an employee of the Company, any Parent Corporation or
Subsidiary.
m. "NORMAL RETIREMENT" means retirement from active employment
with the Company, any Subsidiary or Parent Corporation of the
Company on or after age 65.
n. "PARENT CORPORATION" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the
Company if each of the corporations (other than the Company)
owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations
in the chain.
o. "RETIREMENT" means Normal Retirement or Early Retirement.
p. "STOCK" means the Common Stock, $.01 par value per share,
of the Company.
q. "STOCK OPTION" means any option to purchase shares of Stock
granted pursuant to Section 5 below.
r. "SUBSIDIARY" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company
if each of the corporations (other than the last corporation
in the unbroken chain) owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one
of the other corporations in the chain.
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SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Board of Directors or by a
Committee of not less than two directors, all of whom are Disinterested Persons,
who shall be appointed by the Board of Directors of the Company and who shall
serve at the pleasure of the Board.
The Committee shall have the power and authority to grant Stock Options
to eligible persons, pursuant to the terms of this Plan. In particular, the
Committee shall have the authority:
(i) to select the officers and other key employees of the
Company or its Subsidiaries, and consultants and
other persons having a contractual relationship with
the Company or its Subsidiaries, to whom Stock
Options may from time to time be granted hereunder;
(ii) to determine whether and to what extent Incentive
Stock Options or Non-Qualified Stock Options, or a
combination thereof, are to be granted hereunder;
(iii) to determine the number of shares to be covered by
each such award granted hereunder;
(iv) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award
granted hereunder (including, but not limited to, any
restriction on any Stock Option and/or the shares of
Stock relating thereto) and to amend such terms and
conditions (including, but not limited to, any
amendment which accelerates the vesting of any
award); and
(v) to determine whether, to what extent, and under what
circumstances, Stock Options may be exercised
following termination of employment.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan. The Committee may
delegate its authority to the President and/or the Chief Executive Officer of
the Company for the purpose of selecting employees who are not officers of the
Company for purposes of (i) above.
All decisions made by the Committee pursuant to the provisions of the
Plan shall be final and binding on all persons, including the Company and Plan
participants.
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SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for
distribution under the Plan shall be 1,500,000 shares, subject to increase or
decrease in the event of any adjustment required in the paragraph below. Such
shares may consist, in whole or in part, of authorized and unissued shares. If
any shares that have been optioned cease to be subject to Options, are forfeited
or such award otherwise terminates without a payment being made to the
participant, such shares shall again be available for distribution in connection
with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split (reverse or other), other change
in corporate structure affecting the Stock, or spinoff or other distribution of
assets to stockholders, such substitution or adjustment shall be made in the
aggregate number of shares reserved for issuance under the Plan and in the
number and option price of shares subject to outstanding options granted under
the Plan as may be determined to be appropriate by the Committee, in its sole
discretion, provided that the number of shares subject to any award shall always
be a whole number.
SECTION 4. ELIGIBILITY.
Officers, other employees of the Company or its Subsidiaries,
Non-Employee Directors, consultants and other persons having a contractual
relationship with the Company or its Subsidiaries who are responsible for or
contribute to the management, growth and/or profitability of the business of the
Company and its Subsidiaries are eligible to be granted Stock Options under the
Plan. The optionees under the Plan shall be selected from time to time by the
Committee, in its sole discretion, from among those eligible, and the Committee
shall determine, in its sole discretion, the number of shares covered by each
award.
SECTION 5. STOCK OPTIONS.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock
Options shall be granted under the Plan after June 26, 2008.(1)
- ---------------------
(1) As a result of the Board of Directors approval of the increase
in number of shares reserved for issuance of the Plan on June 26, 1998 (which
was approved by the Shareholders on July 21, 1998), this date has been
extended from June 29, 2003 to June 26, 2008.
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The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of options. To the
extent that any option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify either the Plan or any Incentive Stock Option
under Section 422 of the Code. The preceding sentence shall not preclude any
modification or amendment to an outstanding Incentive Stock Option, whether or
not such modification or amendment results in disqualification of such Option as
an Incentive Stock Option, provided the optionee consents in writing to the
modification or amendment.
Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(a) OPTION PRICE. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant. In no
event shall the option price per share of Stock purchasable under an Incentive
Stock Option be less than 100% of the Fair Market Value of the Stock on the date
of the grant of the option. If an employee owns or is deemed to own (by reason
of the attribution rules applicable under Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
Parent Corporation or Subsidiary and an Incentive Stock Option is granted to
such employee, the option price shall be no less than 110% of the Fair Market
Value of the Stock on the date the option is granted.
(b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 425(4) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
Parent Corporation or Subsidiary and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.
(c) EXERCISABILITY. Stock Options shall be exercisable at such time or
times as determined by the Committee, in its discretion, at or after grant. If
the Option is exercisable in installments, the Committee may waive such
installment exercise provisions at any time. Installment exercise restrictions
may be based upon the lapse of time, the attainment of specified performance
goals, or a combination of each. Notwithstanding the foregoing, unless the Stock
Option Agreement provides otherwise, any Stock Option granted under this Plan
shall be exercisable in full, without regard to any installment exercise
provisions, for a period specified by the Company, but not to exceed sixty (60)
days, prior to the occurrence of any of the following events: (i) dissolution or
liquidation of the Company other than in conjunction with a bankruptcy of the
Company or any similar occurrence, (ii) any merger, consolidation,
5
<PAGE>
acquisition, separation, reorganization, or similar occurrence, where the
Company will not be the surviving entity or (iii) the transfer of
substantially all of the assets of the Company or 75% or more of the
outstanding Stock of the Company.
(d) METHOD OF EXERCISE. Stock Options may be exercised to the extent
the Options are vested at any time during the option period by giving written
notice of exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price, either by certified or bank check, or by any other form of legal
consideration deemed sufficient by the Committee and consistent with the Plan's
purpose and applicable law, including promissory notes or a properly executed
exercise notice together with irrevocable instructions to a broker acceptable to
the Company to promptly deliver to the Company the amount of sale or loan
proceeds to pay the exercise price. As determined by the Committee, in its sole
discretion, payment in full or in part may also be made in the form of
unrestricted Stock already owned by the optionee (based on the Fair Market Value
of the Stock on the date the option is exercised, as determined by the
Committee); provided, however, that, in the case of an Incentive Stock Option,
the right to make a payment in the form of already owned shares may be
authorized only at the time the option is granted. If the terms of an option so
permit, or the Committee so provides, an optionee may select to pay all or part
of the option exercise price by having the Company withhold from the shares of
Stock that would otherwise be issued upon exercise that number of shares of
Stock having a Fair Market Value equal to the aggregate option exercise price
for the shares with respect to which such election is made. No shares of Stock
shall be issued until full payment therefor has been made. An optionee shall
generally have the rights to dividends and other rights of a stockholder with
respect to shares subject to the option when the optionee has given written
notice of exercise, has paid in full for such shares, and, if requested, has
given the representation described in paragraph (a) of Section 9.
(e) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee.
(f) TERMINATION BY DEATH. If an optionee's employment by the Company
and any Subsidiary or Parent Corporation terminates by reason of death, the
Stock Option may thereafter be immediately exercised, to the extent then
exercisable (or on such accelerated basis as the Committee shall determine at or
after grant), by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of two years (or such
shorter period as the Committee shall specify at grant) from the date of such
death or until the expiration of the stated term of the option, whichever period
is shorter.
(g) TERMINATION BY REASON OF DISABILITY. If an optionee's employment by
the Company and any Subsidiary or Parent Corporation terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be exercised,
to the extent it was exercisable at the time of termination due to Disability
(or on such accelerated basis as the Committee shall
6
<PAGE>
determine at or after grant), but may not be exercised after two years (or
such shorter period as the Committee shall specify at grant) from the date of
such termination of employment or the expiration of the stated term of the
option, whichever period is the shorter. In the event of termination of
employment by reason of Disability, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of
Section 422 of the Code, the option will thereafter be treated as a
Non-Qualified Stock Option.
(h) TERMINATION BY REASON OF RETIREMENT. If an optionee's employment by
the Company and any Subsidiary or Parent Corporation terminates by reason of
Retirement, any Stock Option held by such optionee may thereafter be exercised
to the extent it was exercisable at the time of such Retirement, but may not be
exercised after two years (or such shorter period as Committee shall specify at
grant) from the date of such termination of employment or the expiration of the
stated term of the option, whichever period is the shorter. In the event of
termination of employment by reason of Retirement, if any Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for purpose
of Section 422 of the Code, the option will thereafter be treated as a
Non-Qualified Stock Option.
(i) OTHER TERMINATION. Unless otherwise determined by the Committee, if
an optionee's employment by the Company, any Subsidiary or Parent corporation
terminates for any reason other than death, Disability or Retirement, any Stock
Option held by such optionee may thereafter be exercised to the extent it was
exercisable at such termination for the lesser of three months or the balance of
the option's term if the optionee is involuntarily terminated without Cause by
the Company, any Subsidiary or Parent Corporation; provided, however, that if
the optionee's employment is terminated for Cause, all rights under the Stock
Option shall terminate and expire upon such termination.
(j) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. The aggregate Fair Market
Value (determined as of the time the option is granted) of the Common Stock with
respect to which an Incentive Stock Option under this Plan or any other plan of
the Company, any Subsidiary or Parent Corporation is exercisable for the first
time by an optionee during any calendar year shall not exceed $100,000.
(k) NON-EMPLOYEE DIRECTOR OPTIONS. All Options granted to Non-Employee
Directors hereunder shall be designated as Non-Qualified Options and shall be
subject to the same terms and provisions as are then in effect with respect to
granting of Non-Qualified Options to officers and key employees of the Company.
No other Options shall be granted to Non-Employee Directors under the Plan or
any other Stock Plan of the Company. All provisions of this Plan not
inconsistent with the terms of this Section 5(k) shall apply to Non-Qualified
Options granted to Non-Employee Directors.
7
<PAGE>
SECTION 6. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer of an employee from the Company to a Parent Corporation
or Subsidiary, or from a Parent Corporation or Subsidiary to the Company, or
from one Subsidiary to another;
(b) a leave of absence, approved in writing by the Committee, for
military service or sickness, or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days (or such longer
period as the Committee may approve, in its sole discretion); and
(c) a leave of absence in excess of ninety (90) days, approved in
writing by the Committee, but only if the employee's right to re-employment is
guaranteed either by a statute or by contract, and provided that, in the case of
any leave of absence, the employee returns to work within 30 days after the end
of such leave.
SECTION 7. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made (i) which would impair the rights
of an optionee under a Stock Option award theretofore granted, without the
optionee's consent, or (ii) which without the approval of the stockholders of
the Company would cause the Plan to no longer comply with rules promulgated by
the Securities and Exchange Commission under authority granted in Section 16 of
the Securities Exchange Act of 1934, as amended, Section 422 of the Code or any
other regulatory requirements.
The Committee may amend the terms of any award or option theretofore
granted, prospectively or retroactively, but, subject to Section 3 above, no
such amendment shall impair the rights of any holder without his consent. The
Committee may also substitute new Stock Options for previously granted options,
including previously granted options having higher option prices.
SECTION 8. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder, provided,
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<PAGE>
however, that the existence of such trusts or other arrangements is
consistent with the unfunded status of the Plan.
SECTION 9. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares pursuant to
a Stock Option under the Plan to represent to and agree with the Company in
writing that the optionee is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer. All
certificates for shares of Stock delivered under the Plan pursuant to any Option
shall be subject to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed, and any applicable Federal or state securities
laws, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any employee of the Company or any Subsidiary
any right to continued employment with the Company or a Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or a
subsidiary to terminate the employment of any of its employees at any time.
(c) Each participant shall, no later than the date as of which any part
of the value of an award first becomes includible as compensation in the gross
income of the participant for Federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Committee regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements and the Company and Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant. With respect to
any award under the Plan, if the written terms of such award so permit, a
participant may elect by written notice to the Company to satisfy part or all of
the withholding tax requirements associated with the award by (i) authorizing
the Company to retain from the number of shares of Stock that would otherwise be
deliverable to the participant, or (ii) delivering to the Company from shares of
Stock already owned by the participant, that number of shares having an
aggregate Fair Market Value equal to part or all of the tax payable by the
participant under this Section 9(c). Any such election shall be in accordance
with, and subject to, applicable tax and securities laws, regulations and
rulings.
(d) At the time of grant, the Committee may provide in connection with
any grant made under this Plan that the shares of Stock received as a result of
such grant shall be subject to a repurchase right in favor of the Company,
pursuant to which the participant shall be required to
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offer to the Company upon termination of employment for any reason any shares
that the then Fair Market Value of the Stock or, in the case of a termination
for Cause, an amount equal to the cash consideration paid for the Stock,
subject to such other terms and conditions as the Committee may specify at
the time of grant. The Committee may, at the time of the grant of an award
under the Plan, provide the Company with the right to repurchase shares of
Stock acquired pursuant to the Plan by any participant who, at any time
within two years after termination of employment with the Company directly or
indirectly competes with, or is employed by a competitor of, the Company.
SECTION 10. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on June 29, 1993, subject to approval by a
vote of the holders of a majority of the Stock present and entitled to vote at
the next Annual or Special Meeting of the Company's stockholders and shall
expire (unless terminated earlier) as of June 26, 2008. Awards may be granted
under the Plan prior to stockholder approval, provided such awards are made
subject to stockholder approval.
10
<PAGE>
Exhibit 10.2
EMPLOYMENT AGREEMENT
Employment Agreement, dated as of July 1, 1993 between Bio-Nebraska,
Inc., a corporation incorporated and existing under the laws of Delaware
(formerly Nebraska) and having its office at 3940 Cornhusker Highway in Lincoln,
Nebraska (hereinafter referred to as "Company"), and THOMAS R. COOLIDGE,
residing at Beebe Hill Road, Falls Village, CT 06031 (hereinafter referred to as
the "Executive").
WHEREAS the Company desires to employ the Executive as its Chairman of
the Board, member of the Company's Board of Directors and Chief Executive
Officer; and the Executive desires to be so employed.
NOW THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT: POWERS AND DUTIES.
The Company hereby employs the Executive as its Chairman of the Board,
member of its Board of Directors and Chief Executive Officer pursuant to the
provisions of this Agreement. The Executive shall perform services in such
capacities for the Company and for any of its affiliates or subsidiaries with
such authority and with such powers and duties as may be prescribed or assigned
to him from time to time by the Board of Directors of the Company and as may be
appropriately attributed to his service in the foregoing capacities by law and
custom.
2. EXCLUSIVITY.
During the term of his employment hereunder, the Executive will devote
his best efforts, energy, skill and resources to his duties hereunder and to the
affairs and interests of the Company and its affiliates and subsidiaries and
will not, without the approval of the Board of the Company, actively engage in
the conduct of any other business in the biotech or medical field.
3. DIRECT COMPENSATION
During the period from July 1 through December 31, 1993 he shall be
paid $120,000 in equal monthly installments after required deductions are made
from such installments. During the year, 1994, the Executive shall be paid
$175,000, also in equal monthly installments after required deductions are made.
At the end of the calendar year, 1994, the performance of the Executive shall be
reviewed. In the event that performance has been satisfactory as determined by
the Board of Directors of the Company, the Executive shall receive a substantial
positive adjustment to his compensation level over that obtaining in calendar,
1994 in order to reflect his contributions to the
<PAGE>
2
Company and to bring his compensation in line with other executives of
comparable position, accomplishment and potential. The Board of Directors of
the Company, in addition, shall establish an appropriate and substantial
incentive program to provide additional incentive compensation to the
Executive in the event certain goals, to be mutually agreed upon by the
Company and the Executive, are met during 1995. Thereafter, during the term
of this Agreement, the Company shall perform a similar review of the
Executive's performance annually and new incentive payments to be based on
new performance goals will be mutually determined for the subsequent year.
The Executive may also receive compensation from the Company's subsidiaries
and affiliates.
4. ADDITIONAL BENEFITS.
(A) The Executive shall be provided with health, accident,
hospitalization, disability, life and other insurance benefits as are generally
provided under the Company's and/or its affiliates group policies.
(B) When and if instituted, the Executive shall be provided with such
savings and retirement plan benefits as may be provided in general for employees
under the Company's plans, as adopted or amended from time to time.
(C) The Executive may also receive certain special life insurance,
retirement and/or deferred compensation benefits, as mutually agreed upon by the
Company and the Executive from time to time.
5. LONG-TERM INCENTIVES.
The Executive shall be considered favorably for the receipt from time
to time of stock options under the Company's Stock Plan, as the same may be in
effect from time to time.
6. EXPENSES.
The Company shall reimburse to the Executive all reasonable travel,
hotel, entertainment and other out-of-pocket expenses as well as the reasonable
expenses of his office in Connecticut, which he may from time to time incur in
the course of carrying out his duties for the Company and any of its affiliates
or subsidiaries.
7. NON COMPETITION.
The Executive agrees that during the term of his employment hereunder,
and for a one-year period thereafter (in the event the Company shall continue
compensation to the Executive after
<PAGE>
3
termination of employment equal to the total level received during the last
year prior to the Termination of this Agreement), the Executive shall not do
any of the following, without first receiving the Company's written consent:
(i) Engage in, be employed by or finance any business
activity that is competitive with the business which
is being conducted by the Company or any affiliate or
subsidiary;
(ii) Compete with, divert, disrupt or otherwise interfere
with any business relationship of the Company or any
affiliate or subsidiary with any of the clients,
customers or business contacts of the Company or any
affiliate or subsidiary; or
(iii) Solicit for employment for his own or another's
benefit (as employee, partner, independent contractor
or otherwise) any person who has been employed by the
Company or any affiliate within the two year period
in question.
8. RESTRICTIONS ON THE EXECUTIVE.
(A) As between the Company or any of its affiliates or subsidiaries, as
the case may be, and the Executive, all products, methods, processes,
discoveries, materials, ideas, creations, inventions and properties pertaining
to the business of the Company or any affiliate or subsidiary, whether or not
developed or invented by the Executive and whether or not developed or
discovered during regular working hours, shall be the sole and absolute property
of the Company or the particular affiliate or subsidiary, for any and all
purposes. The Executive shall not claim to have, under this Agreement or
otherwise, any right, title or interest of any kind or nature in any of the
foregoing.
(B) The Executive acknowledges that in the course of his employment
hereunder he will make use of, acquire and add to confidential information of
the Company and its affiliates and subsidiaries of a special and unique nature
and value relating to such matters as trade secrets, technical systems and
procedures, inventions, manuals, confidential reports and customer business. The
Executive agrees that with respect to any of the foregoing, during and following
the term hereof, for so long as same remains confidential (and beyond should
loss of confidentiality be caused by the Executive), he will not, for any
purposes, divulge or disclose any of such information or let others use such
information for any purpose other than for the benefit of the Company or its
affiliate or subsidiaries, as the case may be.
<PAGE>
4
9. TERM OF EMPLOYMENT.
The term of this Agreement shall initially continue until June 30,
1995. It shall continue indefinitely thereafter, unless and until terminated by
either party upon delivery, thereafter, of one year's prior written notice of
termination to the other party.
Notwithstanding the foregoing, the Company shall be entitled by notice
in writing to the Executive to terminate forthwith his employment with the
Company under this Agreement if he shall be guilty of any misconduct or commit
any material breach of his obligations to the Company hereunder; and the
Executive shall be entitled by notice in writing to the Company to terminate his
employment within 30 days if the Company shall be in material breach of its
obligations hereunder.
10. VACATION.
The Executive shall be entitled to four weeks of vacation in each year.
11. RETURN OF DOCUMENTS.
The Executive shall promptly, upon the termination of his employment
with the Company hereunder, deliver to the Company all office copies of reports,
memoranda, accounts, notebooks, and correspondence which may have been prepared
by him or have come into his possession or control in the course of his
employment hereunder.
12. NOTICES.
All notices hereunder shall be in writing and delivered personally or
by registered or certified mail which shall be addressed to the Company at its
principal office and to the Executive at the address stated in the first
paragraph of this Agreement, or in either case at such other address as shall be
designated in writing by the party to whom the notice is to be sent. Any such
communication so sent by mail shall be deemed made or given upon mailing.
13. MISCELLANEOUS.
This Agreement constitutes the entire agreement of the parties hereto
relating to the subject matter hereof and there are no written or oral terms or
representations made by either party other than those contained herein. All of
the terms and provisions of this Agreement shall be binding upon and shall inure
to the benefit of and be enforceable by and against the parties to this
Agreement and the respective heirs, executors, and successors in interest. The
provisions of Sections 7, 8, 11 and 14 hereunder shall survive the termination
of this Agreement to the extent necessary to accomplish the purposes of such
provisions.
<PAGE>
5
l4. GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
laws of Nebraska.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the date first written above.
BIONEBRASKA, INC.
By /s/ Fred W. Wagner
---------------------------
President
/s/ Thomas R. Coolidge
- -----------------------------------
THOMAS R. COOLIDGE
(the Executive)
<PAGE>
Exhibit 10.3
EMPLOYMENT AGREEMENT
Employment Agreement, dated as of July 1, 1993 between Bio-Nebraska,
Inc., a corporation incorporated and existing under the laws of Delaware
(formerly Nebraska) and having its office at 3940 Cornhusker Highway in Lincoln,
Nebraska (hereinafter referred to as "Company") , and FRED W. WAGNER, residing
at RR 1, Box 77B, Walton, Nebraska 68461 (hereinafter referred to as the
"Executive").
WHEREAS the Company desires to employ the President, Chief Scientist
and member of the Company's Board of Directors; and the Executive desires to be
so employed.
NOW THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT: POWERS AND DUTIES.
The Company hereby employs the Executive as its President, Chief
Scientist and member of its Board of Directors pursuant to the provisions of
this Agreement. The Executive shall perform services in such capacities for the
Company and for any of its affiliates or subsidiaries with such authority and
with such powers and duties as may be prescribed or assigned to him from time to
time by the Board of Directors of the Company and as may be appropriately
attributed to his service in the foregoing capacities by law and custom.
2. EXCLUSIVITY.
During the term of his employment hereunder, the Executive will devote
his best efforts, energy, skill and resources to his duties hereunder and to the
affairs and interests of the Company and its affiliates and subsidiaries and
will not, without the approval of the Board of the Company, actively engage in
the conduct of any other business in the biotech or medical field, except as he
may be required to carry out his duties as a Professor of Biochemistry at the
University of Nebraska.
It is fully understood and agreed to by the Company that the Executive
shall serve as a Professor of Biochemistry at the University of Nebraska
representing the dedication of one half of his business hours; and that he will
be required to carry out a full range of appropriate duties and incur
appropriate obligations in that connection.
3. DIRECT COMPENSATION
During the period from July 1 through December 31, 1993 he shall be
paid $60,000 in equal monthly installments after required deductions are made
from such installments. During the year,
<PAGE>
2
1994, the Executive shall be paid $106,000, also in equal monthly
installments after required deductions are made. At the end of the calendar
year, 1994, the performance of the Executive shall be reviewed. In the event
that performance has been satisfactory as determined by the Board of
Directors of the Company, the Executive shall receive a substantial positive
adjustment to his compensation level over that obtaining in calendar, 1994 in
order to reflect his contributions to the Company and to bring his
compensation in line with other executives of comparable position,
accomplishment and potential. In the event that the Executive shall elect to
relinquish his active role as a Professor, as aforesaid, and dedicate his
full business hours to the Company, his compensation in 1994 shall be
$150,000, to be paid in equal monthly installments. In the event that such a
change in status for the Executive shall take place during 1994, his monthly
compensation payments shall be adjusted accordingly.
The Board of Directors of the Company, in addition, shall establish an
appropriate and substantial incentive program to provide additional incentive
compensation to the Executive in the event certain goals, to be mutually agreed
upon by the Company and the Executive, are met during 1995. Thereafter, during
the term of this Agreement, the Company shall perform a similar review of the
Executive's performance annually and new incentive payments to be based on new
performance goals will be mutually determined for the subsequent year. The
Executive may also receive compensation from the Company's subsidiaries and
affiliates.
4. ADDITIONAL BENEFITS.
(A) To the extent not received as a Professor of the University of
Nebraska, the Executive shall be provided with health, accident,
hospitalization, disability, life and other insurance benefits as are generally
provided under the Company's and/or its affiliates group policies.
(B) When and if instituted, the Executive shall be provided with such
savings and retirement plan benefits as may be provided in general for employees
under the Company's plans, as adopted or amended from time to time, based on his
compensation received from the Company from time to time.
(C) The Executive may also receive certain special life insurance,
retirement and/or deferred compensation benefits, as mutually agreed upon by the
Company and the Executive from time to time.
5. LONG-TERM INCENTIVES.
The Executive shall be considered favorably for the receipt from time
to time of stock options under the Company's Stock Plan, as the same may be in
effect from time to time.
<PAGE>
3
6. EXPENSES.
The Company shall reimburse to the Executive all reasonable travel,
hotel, entertainment and other out-of-pocket expenses which he may from time to
time incur in the course of carrying out his duties for the Company and any of
its affiliates or subsidiaries.
7. NON COMPETITION.
The Executive agrees that during the term of his employment hereunder,
and for a one-year period thereafter (in the event the Company shall continue
compensation to the Executive after termination of employment equal to the total
level received during the last year prior to the Termination of this Agreement),
the Executive shall not do any of the following, without first receiving the
Company's written consent:
(i) Engage in, be employed by or finance any business
activity that is competitive with the business which
is being conducted by the Company or any affiliate or
subsidiary;
(ii) Compete with, divert, disrupt or otherwise interfere
with any business relationship of the Company or any
affiliate or subsidiary with any of the clients,
customers or business contacts of the Company or any
affiliate or subsidiary; or
(iii) Solicit for employment for his own or another's
benefit (as employee, partner, independent contractor
or otherwise) any person who has been employed by the
Company or any affiliate within the two year period
in question.
8. RESTRICTIONS ON THE EXECUTIVE.
(A) As between the Company or any of its affiliates or subsidiaries, as
the case may be, and the Executive, all products, methods, processes,
discoveries, materials, ideas, creations, inventions and properties pertaining
to the business of the Company or any affiliate or subsidiary, whether or not
developed or invented by the Executive and whether or not developed or
discovered during regular working hours, shall be the sole and absolute property
of the Company or the particular affiliate or subsidiary, for any and all
purposes. The Executive shall not claim to have, under this Agreement or
otherwise, any right, title or interest of any kind or nature in any of the
foregoing.
(B) The Executive acknowledges that in the course of his employment
hereunder he will make use of, acquire and add to confidential information of
the Company and its affiliates and subsidiaries of a special and unique nature
and value relating to such matters as trade secrets,
<PAGE>
4
technical systems and procedures, inventions, manuals, confidential reports
and customer business. The Executive agrees that with respect to any of the
foregoing, during and following the term hereof, for so long as same remains
confidential (and beyond should loss of confidentiality be caused by the
Executive), he will not, for any purposes, divulge or disclose any of such
information or let others use such information for any purpose other than for
the benefit of the Company or its affiliate or subsidiaries, as the case may
be.
9. TERM OF EMPLOYMENT.
The term of this Agreement shall initially continue until June 30,
1995. It shall continue indefinitely thereafter, unless and until terminated by
either party upon delivery, thereafter, of one year's prior written notice of
termination to the other party.
Notwithstanding the foregoing, the Company shall be entitled by notice
in writing to the Executive to terminate forthwith his employment with the
Company under this Agreement if he shall be guilty of any misconduct or commit
any material breach of his obligations to the Company hereunder; and the
Executive shall be entitled by notice in writing to the Company to terminate his
employment within 30 days if the Company shall be in material breach of its
obligations hereunder.
10. VACATION.
The Executive shall be entitled to four weeks of vacation in each year.
11. RETURN OF DOCUMENTS.
The Executive shall promptly, upon the termination of his employment
with the Company hereunder, deliver to the Company all office copies of reports,
memoranda, accounts, notebooks, and correspondence which may have been prepared
by him or have come into his possession or control in the course of his
employment hereunder.
12. NOTICES.
All notices hereunder shall be in writing and delivered personally or
by registered or certified mail which shall be addressed to the Company at its
principal office and to the Executive at the address stated in the first
paragraph of this Agreement, or in either case at such other address as shall be
designated in writing by the party to whom the notice is to be sent. Any such
communication so sent by mail shall be deemed made or given upon mailing.
<PAGE>
5
13. MISCELLANEOUS.
This Agreement constitutes the entire agreement of the parties hereto
relating to the subject matter hereof and there are no written or oral terms or
representations made by either party other than those contained herein. All of
the terms and provisions of this Agreement shall be binding upon and shall inure
to the benefit of and be enforceable by and against the parties to this
Agreement and the respective heirs, executors, and successors in interest. The
provisions of Sections 7, 8, 11 and 14 hereunder shall survive the termination
of this Agreement to the extent necessary to accomplish the purposes of such
provisions.
14. GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
laws of Nebraska.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the date first written above.
BIONEBRASKA, INC.
By /s/ Thomas R. Coolidge
-------------------------------
Chairman of the Board
/s/ Fred W. Wagner
- ------------------------------------
FRED W. WAGNER
(the Executive)
<PAGE>
Exhibit 10.4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of January 1, 1994 between
Bio-Nebraska, Inc., a corporation incorporated and existing under the laws of
Delaware (formerly Nebraska) and having its office at 3820 NW 46th Street in
Lincoln, Nebraska (hereinafter referred to as "Company"), and DR. BARTON
HOLMQUIST, residing at 335 Prospect Hill Road, Waltham, Massachusetts 02154
(hereinafter referred to as the "Executive").
WHEREAS the Company desires to employ the Executive as Vice President
of Research and Development; and the Executive desires to be so employed:
NOW THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT: POWERS AND DUTIES.
The Company hereby employs the Executive as its Vice President,
Research and Development, pursuant to the provisions of this Agreement. The
Executive shall perform services in such capacity for the Company and for any of
its affiliates or subsidiaries with such authority and with such powers and
duties as may be prescribed or assigned to him from time to time by the Board of
Directors of the Company and by the Chairman of the Board and the President of
the Company. In performing his services hereunder, he shall report to the
President of the Company.
2. EXCLUSIVITY.
During the term of his employment hereunder, the Executive will devote
his best efforts, energy, skill and resources to his duties hereunder and to the
affairs and interests of the Company and its affiliates and subsidiaries and
will not, without the approval of the Board of the Company or the Chairman of
the Board or the President, actively engage in the conduct of any other business
in the biotech or medical field, except as he may be required to carry out in
accordance with his duties as an adjunct professor of biochemistry at the
University of Nebraska.
It is understood and agreed to by the Company that the Executive may
serve as an adjunct professor of biochemistry at the University of Nebraska and
may dedicate insubstantial portion of his business hours to this activity, and
that he will be required to carry out certain duties in this connection.
3. DIRECT COMPENSATION
During his employment hereunder, the Executive shall receive salary at
the annual rate of not less than $105,000, to be paid in equal monthly
installments after required tax and other deductions
<PAGE>
are made from such installments. At the end of each calendar year under this
Agreement, the performance of the Executive will be reviewed. In the event
that his performance and contributions to the Company have been in accordance
with or exceeding expectations for the particular year, as determined by the
Chairman of the Board and President, it is anticipated that the Executive
will receive a positive adjustment to his salary level over that obtained in
the previous year.
In addition, assuming the Company's situation permits, the Board of
Directors of the Company is expected to establish an appropriate incentive
program to provide additional incentive compensation to the Executive in the
event certain goals, to be mutually agreed upon by the Company and the
Executive, are met during calendar, 1995 and subsequent calendar years. The
Executive may also receive additional compensation from the Company's
subsidiaries and affiliates.
4. ADDITIONAL BENEFITS.
(A) The Executive shall be provided with such health, accident,
hospitalization, disability, life and other insurance benefits as are generally
provided under the Company's and/or its affiliates group policies.
This will include life insurance coverage of at least $100,000 for him.
(B) When and if instituted, the Executive shall (subject to the
provision of Subsection (D) below) be provided with such savings and retirement
plan benefits as may be provided in general for employees under the Company's
plans, as adopted or amended from time to time, based on his compensation
received from the Company from time to time.
(C) It is the Company's intention to establish, beginning in 1994, a
"401(K) Plan" for retirement savings for all employees including the Executive.
Initial Company contributions are expected to be modest until the Company
becomes substantially profitable in its operations. Reference is made to
Subsection D below.
(D) The Company, for each full year of employment of the Executive,
will provide for him a retirement benefit of at least $8,500. This amount will
be paid, at the Executive's election, into his current retirement program if
this can be continued; or if this plan cannot be continued, the Company will
explore with the Executive in good faith and implement an alternative retirement
arrangement which will entail yearly contributions by the Company, of at least
the amount of such retirement benefit. In the event the Executive becomes
covered under any future Company's retirement, savings or other plans (if any)
and to the extent the Company shall make contributions for the Executive's
benefit under the company's 401(k) savings and retirement plan, the cost of any
and all such coverage, as the case may be, will be offset against the Company's
obligations to pay the yearly retirement benefit as set forth in the first
sentence of this Subsection (D).
5. LONG-TERM STOCK OPTION INCENTIVES.
The Executive shall be allotted an incentive stock option under the
Company's 1993 Stock Plan covering a total of 40,000 shares of the Company's
Common Stock. This option will be vested and become exercisable thereafter in
three equal annual installments over the three years, beginning
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<PAGE>
on January 1, 1995. The option price will be the fair market value of the
shares at the time the options are granted, as determined by the Board of
Directors.
The Executive will be eligible for participation in additional stock
plans of the Company if and to the extent that the Board of Directors at the
relevant time, it its sole discretion, shall consider that the work and
contributions of the Executive merit such participation.
6. EXPENSES.
The Company shall reimburse to the Executive all reasonable travel,
hotel, entertainment and other out-of-pocket expenses which he may from time to
time incur in the course of carrying out his duties for the Company and any of
its affiliates or subsidiaries. In addition, the Company shall reimburse to the
Executive his reasonable travel costs, including airfare and lodging, for up to
one weekend trip for each month during the calendar year, 1994 to Boston, Mass.
The Company shall also reimburse the Executive's reasonable costs of moving his
household to Lincoln, not to exceed $3,000, unless the Executive and the Company
shall agree to a larger amount.
7. NON-COMPETITION.
During the term of his employment hereunder, and for a two-year period
thereafter, the Executive agrees that, unless he obtains written consent from
the Company covering a particular planned competitive activity, and (in the
event the Company shall continue compensation to the Executive after termination
of employment equal to at least one half of the total level of salary received
during the last year prior to the termination of the Executive's employment
hereunder), the Executive shall not engage in, be employed by or finance any
business activity that is competitive with the business which is being conducted
by the Company or by any affiliate or subsidiary of the Company.
In no event will the Executive at any time, without receiving the
Company's prior written consent:
(i) divert, disrupt or otherwise interfere with any business
relationship of the Company or any affiliate or subsidiary
with any of the clients, customers or business contacts of the
Company or any affiliate or subsidiary; or
(ii) solicit for employment for his own or another's benefit (as
employee, partner, independent contractor or otherwise) any
person who has been employed by the Company or any affiliate
within the two year period in question.
8. INTELLECTUAL PROPERTY RIGHTS.
(A) As between the Company or any of its affiliates or subsidiaries, as
the case may be, and the Executive, all products, know-how, methods, processes,
discoveries, materials, ideas, strategies, creations, inventions and properties
pertaining or relating to the business of the Company, or of any affiliate or
subsidiary of the Company, which the Executive may create by himself or with
3
<PAGE>
others or to which he may become exposed, whether or not developed or invented
by the Executive and whether or not developed or discovered during regular
working hours, shall be the sole and absolute property of the Company or the
particular affiliate or subsidiary, for any and all purposes. The Executive
shall not claim to have, under this Agreement or otherwise, any right, title or
interest of any kind or nature in any of the foregoing. The foregoing
notwithstanding, it is recognized that the Executive may have intellectual
property obligations to the University of Nebraska in connection with his duties
as an adjunct professor and these will not be covered by the provisions of this
Subsection (A).
(B) The Executive acknowledges that in the course of his employment
hereunder he will make use of, acquire and add to confidential information of
the Company and its affiliates and subsidiaries of a special and unique nature
and value relating to such matters as trade secrets, products, technical
systems, processes and procedures, know-how, inventions, manuals, confidential
reports, plans, properties, strategies and customer business. The Executive
agrees that with respect to any of the foregoing, during and following the term
hereof, for so long as same remains confidential (and beyond should loss of
confidentiality be caused by the Executive), he will not, for any purposes
(unless otherwise agreed to by the Company in writing) divulge or disclose any
of such information or let others use such information for any purpose other
than for the benefit of the Company or its affiliate or subsidiaries, as the
case may be.
9. TERM OF EMPLOYMENT.
The Executive's employment hereunder shall commence on February 1,
1994. It shall continue indefinitely thereafter, unless and until terminated by
either party upon delivery of one year's prior written notice of termination to
the other party.
Notwithstanding the foregoing, the Company shall be entitled by notice
in writing to the Executive to terminate forthwith his employment with the
Company under this Agreement if he shall be guilty of any willful misconduct or
misconduct involving gross negligence or commit any material breach of his
obligations to the Company hereunder; and the Executive shall be entitled by
notice in writing to the Company to terminate his employment within 30 days if
the Company shall be in material breach of its obligations hereunder.
10. VACATION.
The Executive shall be entitled to four weeks of vacation in each
calendar year.
11. RETURN OF DOCUMENTS.
The Executive shall promptly, upon the termination of his employment
with the Company hereunder, deliver to the Company all office copies of reports,
memoranda, accounts, notebooks, and correspondence which may have been prepared
by him or have come into his possession or control in the course of his
employment hereunder.
4
<PAGE>
12. NOTICES.
All notices hereunder shall be in writing and delivered personally or
by registered or certified mail which shall be addressed to the Company at its
principal office and to the Executive at the address stated in the first
paragraph of this Agreement, or in either case at such other address as shall be
designated in writing by the party to whom the notice is to be sent. Any such
communication so sent by mail shall be deemed made or given upon mailing.
13. MISCELLANEOUS.
The BioNebraska Employee Handbook has been furnished to the Executive
and shall form part of this Agreement. The Executive agrees to comply with
operational rules of the Company as adopted from time to time and set forth in
the Company's Handbook. This Agreement constitutes the entire agreement of the
parties hereto relating to the subject matter hereof and there are no written or
oral terms or representations made by either party other than those contained
herein. All of the terms and provisions of this Agreement shall be binding upon
and shall inure to the benefit of and be enforceable by and against the parties
to this Agreement and the respective heirs, executors, and successors in
interest. The provisions of Sections 7, 8, 11 and 14 hereunder shall survive the
termination of this Agreement to the extent necessary to accomplish the purposes
of such provisions.
14. GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
laws of Nebraska.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the date first written above.
BIONEBRASKA, INC.
By /s/ Thomas R. Coolidge
----------------------------
Chairman of the Board
/s/ Barton Holmquist, PhD
- ------------------------------------
BARTON HOLMQUIST, PhD
(the Executive)
5
<PAGE>
Exhibit 10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of March 1, 1998 between
BioNebraska, Inc., a corporation incorporated and existing under the laws of
Delaware (formerly Nebraska) and having its office at 3820 NW 46th Street in
Lincoln, Nebraska (hereinafter referred to as "Company"), and MARIO R.W. EHLERS,
MB.CHB.,PH.D., residing currently at 244 B. Presidential Drive, Greenville,
Delaware 19807 (hereinafter referred to as the "Scientific Executive").
WHEREAS the Company desires to employ the Scientific Executive as its
Vice President and Chief Medical Officer and, as such, as a member of its
management group; and the Scientific Executive desires to be so employed:
NOW THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT: POWERS AND DUTIES.
The Company hereby employs the Scientific Executive as its Vice
President and Chief Medical Officer, pursuant to the provisions of this
Agreement. The Scientific Executive shall generally have the
responsibilities, duties and functions as set forth in Annex A attached. The
Scientific Executive shall perform services in such capacity for the Company
and for any of its affiliates or subsidiaries with such authority and with
such powers and duties as may be prescribed or assigned to him from time to
time by the Board of Directors of the Company, by the Chairman of the Board
and the C.E.O. In performing his services hereunder, he shall report to the
Chairman of the Board and C.E.O., and also to the President on scientific
matters.
2. EXCLUSIVITY.
During the term of his employment hereunder, the Scientific Executive
will devote his best efforts, energy, skill and resources to his duties
hereunder and to the affairs and interests of the Company and its affiliates and
subsidiaries and will not, without the approval of the Board of Directors of the
Company or the Chairman of the Board an C.E.O., actively engage in consulting
for or in the conduct of any other business in the chemical, biotech or medical
fields.
The foregoing notwithstanding, consistent with his over-all
responsibilities, the Scientific Executive shall be afforded the opportunity and
encouraged to supervise and carry on research programs at an appropriate
institution on one or more topics of interest to the Scientific Executive and
the Company.
<PAGE>
3. DIRECT COMPENSATION
During his employment hereunder, the Scientific Executive shall receive
salary at the annual rate of one hundred twenty-five thousand dollars
($125,000), to be paid in equal monthly installments after required tax and
other deductions are made from such installments. At the end of each calendar
year under this Agreement, the performance of the Scientific Executive will be
reviewed. In the event that his performance and contributions to the Company
have been in accordance with or exceeding expectations for the particular year,
as determined by the Chairman of the Board and C.E.O. and the President, it is
anticipated that the Scientific Executive will receive a positive adjustment to
his salary level over that obtained in the previous year.
In addition, assuming the Company's situation permits, the Board of
Directors of the Company may establish an appropriate incentive program to
provide additional incentive compensation to the Scientific Executive in the
event certain goals, to be mutually agreed upon by the Company and the
Scientific Executive, are met during a particular calendar year of his service
hereunder. The Scientific Executive may also receive additional compensation
from the Company's subsidiaries and affiliates.
4. ADDITIONAL BENEFITS.
(A) The Scientific Executive shall be provided with such health,
sickness, accident, hospitalization, disability, life and other insurance
benefits as are generally provided under the Company's and/or its affiliates'
group policies. This will include life insurance coverage of at least $100,000
for the Scientific Executive.
(B) When and if instituted, the Scientific Executive shall be provided
with such savings and retirement plan benefits as may be provided in general for
employees under the Company's plans, as adopted or amended from time to time,
based on his compensation received from the Company from time to time. The
Company has established a 401(K) Plan for retirement savings for all employees
including the Scientific Executive. Initial Company contributions to this Plan
are expected to be small or non-existent until funding of the Company permits
(as determined in the sole discretion of the Board of Directors) one or more
significant contributions and to be modest thereafter until the Company becomes
substantially profitable in its operations.
5. LONG-TERM STOCK OPTION INCENTIVES.
The Scientific Executive shall be allotted an incentive stock option
under the Company's 1993 Stock Plan, as amended in 1996, covering a total of
forty thousand (40,000) shares of the Company's Common Stock. This option will
be vested and become exercisable thereafter in three equal annual installments
over the three years, beginning as of a date which is one year after the date of
this Agreement. The option price will be $7.00 per share being the fair market
value of the shares at the time the options are granted, as determined by the
Board of Directors.
2
<PAGE>
The Scientific Executive will be eligible for participation in
additional stock plans of the Company if and to the extent that the Board of
Directors at the relevant time, in it its sole discretion, shall consider that
the work and contributions of the Scientific Executive merit such participation.
6. EXPENSES.
The Company shall reimburse to the Scientific Executive all reasonable
travel, hotel, entertainment and other out-of-pocket expenses which he may from
time to time incur in the course of carrying out his duties for the Company and
any of its affiliates or subsidiaries.
The Company shall reimburse the Scientific Executive's reasonable costs
of moving his household to Lincoln from another U. S. location. The Company will
also reimburse the reasonable costs for the Scientific Executive and/or his wife
to make trips to Lincoln from Wilmington to locate housing.
7. NON-COMPETITION.
(A) During the term of his employment hereunder, and for a two-year
period thereafter, but only in the event that the Company shall in its
discretion continue to pay compensation to the Scientific Executive after
termination of employment equal to at least one half of the total level of
salary received during the last year prior to the termination of the Scientific
Executive's employment hereunder, the Scientific Executive agrees that, unless
he obtains written consent from the Company covering a particular planned
competitive activity, the Scientific Executive shall not directly or indirectly
engage in, consult for, be employed by or finance any business activity that is
competitive with the businesses which are being conducted by the Company or by
any affiliate or subsidiary or customer of the Company. For purposes of the
foregoing, activities other than the production and sale of regulatory peptide
hormone therapies, such as GRF, GLP-1 and PTH and their analogs and mimics, and
related activities, would not be considered competitive to the Company's
business. The foregoing notwithstanding, the Company shall have no obligation,
in the event of his termination of employment, to pay any continuing
compensation to the Scientific Executive in which case the foregoing
restrictions on competitive activity after termination of employment shall not
apply.
(B) In no event will the Scientific Executive at any time during or
within a period which is two years after termination of his employment
hereunder, without receiving the Company's prior written consent:
(i) preempt, divert, disrupt or otherwise interfere with any
business relationship of the Company, or of any of its
affiliates or subsidiaries, with any of the clients, customers
or business contacts of the Company or of any of its
affiliates or subsidiaries; or
(ii) solicit for employment for his own or another's benefit, as
employee, partner, consultant, independent contractor or
otherwise, or directly or indirectly suggest to others for
solicitation for employment, any person who is or has been
employed by the Company or by any affiliate or subsidiary of
the Company during the term of the employment hereunder.
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<PAGE>
8. INTELLECTUAL PROPERTY RIGHTS.
(A) As between the Company or any of its affiliates or subsidiaries, as
the case may be, and the Scientific Executive, all products, know-how, methods,
processes, discoveries, materials, ideas, strategies, creations, inventions,
medical or clinical ideas, results or innovations and properties pertaining or
relating to the businesses of the Company, or of any affiliate or subsidiary of
the Company, which the Scientific Executive may create by himself or with others
or to which he may become exposed, whether or not developed or invented by the
Scientific Executive and whether or not developed or discovered during regular
working hours, shall be the sole and absolute property of the Company or the
particular affiliate or subsidiary, for any and all purposes. The Scientific
Executive shall not claim to have, under this Agreement or otherwise, any right,
title or interest of any kind or nature in any of the foregoing.
(B) The Scientific Executive acknowledges that in the course of his
employment hereunder he will make use of, acquire and add to confidential
information of the Company and its affiliates and subsidiaries of a special and
unique nature and value relating to such matters as trade secrets, products,
technical systems, processes and procedures, clinical ideas, results or
innovations, know-how, inventions, manuals, confidential reports, plans,
properties, strategies and customer business. The Scientific Executive agrees
that with respect to any of the foregoing, during and following the term hereof,
for so long as same remains confidential (and beyond should loss of
confidentiality be caused by the Scientific Executive), he will not, for any
purposes (unless otherwise agreed to by the Company in writing) divulge or
disclose any of such information or let others use such information for any
purpose other than for the benefit of the Company or its affiliate or
subsidiaries, as the case may be.
9. TERM OF EMPLOYMENT.
The Scientific Executive's employment shall continue indefinitely
hereunder, unless and until terminated by either party upon delivery of six
months' prior written notice of termination to the other party.
Notwithstanding the foregoing, the Company shall be entitled by notice
in writing to the Scientific Executive to terminate forthwith his employment
with the Company under this Agreement if he shall have engaged in any willful
misconduct or misconduct involving negligence or commit any material breach of
his obligations to the Company hereunder.
10. VACATION.
The Scientific Executive shall be entitled to four weeks of vacation in
each calendar year.
11. RETURN OF DOCUMENTS.
The Scientific Executive shall promptly, upon the termination of his
employment with the Company hereunder, deliver to the Company all office copies
of reports, memoranda, accounts,
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<PAGE>
laboratory, clinical and other notebooks, records and correspondence which
may have been prepared by him or have come into his possession or control in
the course of his employment hereunder.
12. NOTICES.
All notices hereunder shall be in writing and delivered personally or
by registered or certified mail which shall be addressed to the Company at its
principal office and to the Scientific Executive at the address stated in the
first paragraph of this Agreement, or in either case at such other address as
shall be designated in writing by the party to whom the notice is to be sent.
Any such communication so sent by mail shall be deemed made or given upon
mailing.
13. MISCELLANEOUS.
The BioNebraska Employee Handbook has been furnished to the Scientific
Executive and shall form part of this Agreement. The Scientific Executive agrees
to comply with operational rules of the Company as adopted from time to time and
set forth in the Company's Handbook. This Agreement constitutes the entire
agreement of the parties hereto relating to the subject matter hereof and there
are no written or oral terms or representations made by either party other than
those contained herein. All of the terms and provisions of this Agreement shall
be binding upon and shall inure to the benefit of and be enforceable by and
against the parties to this Agreement and their respective heirs, executors, and
successors in interest. The provisions of Sections 7, 8, 11, 13 and 14 hereunder
shall survive the termination of this Agreement to the extent necessary to
accomplish the purposes of the provisions in such Sections.
14. GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
laws of Nebraska.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Scientific Executive has
executed this Agreement as of the date first written above.
BIONEBRASKA, INC.
By /s/ Thomas R. Coolidge
-----------------------------------
Thomas R. Coolidge
Chairman of the Board and C.E.O.
/s/ Mario Ehlers
- -----------------------------------------
MARIO R.W. EHLERS, MB.ChB.,Ph.D.
(the Scientific Executive)
5
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Exhibit 10.6
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of July 1, 1997 between
BioNebraska, Inc., a corporation incorporated and existing under the laws of
Delaware (formerly Nebraska) and having its office at 3820 NW 46th Street in
Lincoln, Nebraska (hereinafter referred to as "Company"), and CHRISTOPHER S.
HICKEY, residing at 4473 Scarsdale Place, Boulder, Colorado 80301 (hereinafter
referred to as the "Manager").
WHEREAS the Company desires to employ the Manager at its Lincoln,
Nebraska facilities as Vice President, Production Management and, as such, as a
member of its management group; and the Manager desires to be so employed:
NOW THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT: POWERS AND DUTIES.
The Company hereby employs the Manager as its Vice President,
Production Management and its Manager of Industrial Manufacturing pursuant to
the provisions of this Agreement. The Manager shall be responsible for the
conception, design, equipment selection, start-up and operations of pilot and
commercial production facilities for the larger scale application of the
Company's peptide production technologies and the development of
manufacturing systems and protocols to be used in these facilities. The
Manager shall perform services in such capacity for the Company and for any
of its affiliates or subsidiaries with such authority and with such powers
and duties as may be prescribed or assigned to him from time to time by the
Board of Directors of the Company and by the Chairman of the Board and the
President of the Company. In performing his services hereunder, he shall
report to the Senior Vice President of Research and Development.
2. EXCLUSIVITY.
During the term of his employment hereunder, the Manager will devote
his best efforts, energy, skill and resources to his duties hereunder and to the
affairs and interests of the Company and its affiliates and subsidiaries and
will not, without the approval of the Board of Directors of the Company or the
Chairman of the Board or the President, actively engage in consulting for or in
the conduct of any other business in the chemical, biotech or medical fields.
3. DIRECT COMPENSATION
During his employment hereunder, the Manager shall receive salary at
the annual rate of ninety-five thousand dollars ($95,000), to be paid in equal
monthly installments after required tax and other deductions are made from such
installments. At the end of each calendar year under this
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Agreement, the performance of the Manager will be reviewed. In the event that
his performance and contributions to the Company have been in accordance with
or exceeding expectations for the particular year, as determined by the
Chairman of the Board and President, it is anticipated that the Manager will
receive a positive adjustment to his salary level over that obtained in the
previous year.
In addition, assuming the Company's situation permits, the Board of
Directors of the Company may establish an appropriate incentive program to
provide additional incentive compensation to the Manager in the event certain
goals, to be mutually agreed upon by the Company and the Manager, are met during
a particular calendar year of his service hereunder. The Manager may also
receive additional compensation from the Company's subsidiaries and affiliates.
4. ADDITIONAL BENEFITS.
(A) The Manager shall be provided with such health, sickness, accident,
hospitalization, disability, life and other insurance benefits as are generally
provided under the Company's and/or its affiliates' group policies. This will
include life insurance coverage of at least $100,000 for the Manager.
The Company will also reimburse to the Manager any costs incurred by
him for maintenance of COBRA health insurance coverage after July 1st of this
year in the event and to the extent coverage for him under the Company's health
plan is delayed after that date.
(B) When and if instituted, the Manager shall be provided with such
savings and retirement plan benefits as may be provided in general for employees
under the Company's plans, as adopted or amended from time to time, based on his
compensation received from the Company from time to time. The Company has
established a 401(K) Plan for retirement savings for all employees including the
Manager. Initial Company contributions to this Plan are expected to be small or
non-existent until funding of the Company permits (as determined in the sole
discretion of the Board of Directors) significant contributions and to be modest
thereafter until the Company becomes substantially profitable in its operations.
5. LONG-TERM STOCK OPTION INCENTIVES.
The Manager shall be allotted an incentive stock option under the
Company's 1993 Stock Plan, as amended, covering a total of forty thousand
(40,000) shares of the Company's Common Stock. This option will be vested and
become exercisable thereafter in three equal annual installments over the three
years, beginning as of a date which is one year after the date of this
Agreement. The option price will be $7.00 per share being the f air market value
of the shares at the time the options are granted, as determined by the Board of
Directors.
The Manager will be eligible for participation in additional stock plans
of the Company if and to the extent that the Board of Directors at the relevant
time, in it its sole discretion, shall consider that the work and contributions
of the Manager merit such participation.
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6. EXPENSES.
The Company shall reimburse to the Manager all reasonable travel,
hotel, entertainment and other out-of-pocket expenses which he may from time to
time incur in the course of carrying out his duties for the Company and any of
its affiliates or subsidiaries.
The Company shall reimburse the Manager's reasonable costs of moving
his household to Lincoln, such expenses being estimated to be in the range of
$5,000. The Company will reimburse the reasonable costs for the Manager and his
wife to make up to three trips to Lincoln from Boulder to locate housing. Also,
the Company will pay the reasonable cost of a furnished apartment during the
time (estimated not to exceed three months) it may take the Manager to sell his
current house and relocate to Lincoln. In the event the Manager is unable to
locate permanent housing during that three month period (or in the event his
current house is sold and his new house in Lincoln is not available for
occupancy), the Company will reimburse the Manager for costs of obtaining
appropriate storage for his household effects for a period of up to three
months. Finally, the Company will reimburse to the Manager any IRS income tax
payment effect he may incur relative to the Company's reimbursement to him of
reasonable expenses of moving to Lincoln pursuant to this Agreement after he has
taken whatever business deductions are available to him under the Internal
Revenue Code for such expenses.
7. NON-COMPETITION.
(A) During the term of his employment hereunder, and for a two-year
period thereafter, the Manager agrees that, unless he obtains written consent
from the Company covering a particular planned competitive activity, (and in the
event of termination of the Manager's employment hereunder for any reason the
Company shall in its discretion continue to pay compensation to the Manager
after such termination equal to at least one half of the total level of salary
received during the last year prior to the termination of the Manager's
employment hereunder) the Manager shall not directly or indirectly engage in,
consult for, be employed by or finance any business activity that is competitive
with the businesses which are being conducted by the Company or by any affiliate
or subsidiary or customer of the Company. For purposes of the foregoing,
activities other than the production and sale of regulatory peptide hormones,
such as GRF, GLP-1 and PTH and their analogs and mimics, would not be considered
competitive to the Company's business. Specifically, the production and sale of
large proteins or small chemical molecules which are used for treating the same
indications that the Company and its customers would expect to treat with
regulatory peptide hormones will not be considered competitive. The foregoing
notwithstanding, the Company shall have no obligation, in the event of
termination of employment, to pay any continuing compensation.
(B) In no event will the Manager at any time during or within a period
which is two years after termination of his employment hereunder, without
receiving the Company's prior written consent:
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(i) preempt, divert, disrupt or otherwise interfere with any
business relationship of the Company, or of any of its
affiliates or subsidiaries, with any of the clients, customers
or business contacts of the Company or of any of its
affiliates or subsidiaries; or
(ii) solicit for employment for his own or another's benefit (as
employee, partner, consultant, independent contractor or
otherwise) any person who has been employed by the Company or
by any affiliate or subsidiary of the Company.
8. INTELLECTUAL PROPERTY RIGHTS.
(A) As between the Company or any of its affiliates or subsidiaries, as
the case may be, and the Manager, all products, know-how, methods, processes,
discoveries, materials, ideas, strategies, creations, inventions and properties
pertaining or relating to the businesses of the Company, or of any affiliate or
subsidiary of the Company, which the Manager may create by himself or with
others or to which he may become exposed, whether or not developed or invented
by the Manager and whether or not developed or discovered during regular working
hours, shall be the sole and absolute property of the Company or the particular
affiliate or subsidiary, for any and all purposes. The Manager shall not claim
to have, under this Agreement or otherwise, any right, title or interest of any
kind or nature in any of the foregoing.
(B) The Manager acknowledges that in the course of his employment
hereunder he will make use of, acquire and add to confidential information of
the Company and its affiliates and subsidiaries of a special and unique nature
and value relating to such matters as trade secrets, products, technical
systems, processes and procedures, know-how, inventions, manuals, confidential
reports, plans, properties, strategies and customer business. The Manager agrees
that with respect to any of the foregoing, during and following the term hereof,
for so long as same remains confidential (and beyond should loss of
confidentiality be caused by the Manager), he will not, for any purposes (unless
otherwise agreed to by the Company in writing) divulge or disclose any of such
information or let others use such information for any purpose other than for
the benefit of the Company or its affiliate or subsidiaries, as the case may be.
9. TERM OF EMPLOYMENT.
The Manager's employment shall continue indefinitely hereunder, unless
and until terminated by either party upon delivery of six months' prior written
notice of termination to the other party.
Notwithstanding the foregoing, the Company shall be entitled by notice
in writing to the Manager to terminate forthwith his employment with the Company
under this Agreement if he shall have engaged in any willful misconduct or
misconduct involving negligence or commit any material breach of his obligations
to the Company hereunder.
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10. VACATION.
The Manager shall be entitled to fifteen business days of vacation in
each calendar year.
11. RETURN OF DOCUMENTS.
The Manager shall promptly, upon the termination of his employment with
the Company hereunder, deliver to the Company all office copies of reports,
memoranda, accounts, laboratory and other notebooks, and correspondence which
may have been prepared by him or have come into his possession or control in the
course of his employment hereunder.
12. NOTICES.
All notices hereunder shall be in writing and delivered personally or
by registered or certified mail which shall be addressed to the Company at its
principal office and to the Manager at the address stated in the first paragraph
of this Agreement, or in either case at such other address as shall be
designated in writing by the party to whom the notice is to be sent. Any such
communication so sent by mail shall be deemed made or given upon mailing.
13. MISCELLANEOUS.
The BioNebraska Employee Handbook has been furnished to the Manager and
shall form part of this Agreement. The Manager agrees to comply with operational
rules of the Company as adopted from time to time and set forth in the Company's
Handbook. This Agreement constitutes the entire agreement of the parties hereto
relating to the subject matter hereof and there are no written or oral terms or
representations made by either party other than those contained herein. All of
the terms and provisions of this Agreement shall be binding upon and shall inure
to the benefit of and be enforceable by and against the parties to this
Agreement and their respective heirs, executors, and successors in interest. The
provisions of Sections 7, 8, 11, 13 and 14 hereunder shall survive the
termination of this Agreement to the extent necessary to accomplish the purposes
of the provisions in such Sections.
14. GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
laws of Nebraska.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Manager has executed this
Agreement as of the date first written above.
BIONEBRASKA, INC.
By/s/ Thomas R. Coolidge
-------------------------------------
Thomas R. Coolidge
Chairman of the Board and C.E.O.
/s/ Christopher S. Hickey
- ---------------------------------
CHRISTOPHER S. HICKEY
(The Manager)
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Exhibit 10.7
BIO NEBRASKA, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement, dated as of September 18, 1989, between Bio
Nebraska, Inc., a corporation incorporated and existing under the laws of
Nebraska and having its office in Lincoln, Nebraska (hereinafter referred to
along with its subsidiaries and affiliates as the "Company" unless the context
otherwise requires), and Mal Riddell, residing at 29 Robin Road, Moorestown,
N.J. 08057 (hereinafter referred to as the "Executive").
WHEREAS, the Company desires to employ the Executive to manage the
start-up of certain new businesses, generally as described in a Memorandum,
dated August 24, 1989, from Tom Coolidge to the Executive, a copy of which is
attached hereto as Appendix A (being referred to herein as the "Memorandum") and
the Executive desires to be so employed.
NOW THEREFORE in consideration of the foregoing and of the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT AND TITLE, POWERS, DUTIES, FUNCTIONS AND OBJECTIVES.
The Company shall employ the Executive and the Executive shall perform
services for the Company and any of its subsidiaries or affiliates with such
authority and with such powers and duties as may be described or assigned to him
by the Board of Directors of the Company and by the Chairman of the Board.
The Executive's title shall be Managing Director. He shall also be made
President of any subsidiaries or divisions of the Company which may be
established, and which the Executive shall be assigned to manage, for the
purpose of commercializing elements of the Company's technologies. The Executive
shall also be invited to attend and participate in meetings of the Board of
Directors of the Company and of the Company's Advisory Board with respect to
which the Executive shall be an EX OFFICIO member.
Generally, the Executive's functions and objectives in his employment with
the Company are expected to be as described in paragraphs 2, 3 and 5 of the
Memorandum, but these may be modified as the Company's business develops.
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2. REPORTING AND SUPERVISION.
In carrying out his functions, the Executive shall report to the
Chairman of the Board of the Company on all matters, but will work closely with
the President of the Company on all scientific development. He will be
ultimately responsible to the Board of Directors and the shareholders of the
Company.
3. EXCLUSIVITY.
The Executive agrees that during the term of his employment hereunder
he will devote his entire business time, energy, skill and resources to his
duties hereunder and to the affairs and interests of the Company and its
subsidiaries and affiliates; and he will not, without the prior written consent
of the Board of Directors of the Company, directly or indirectly (a) engage in
any compensated activity for any person other than the Company or any affiliate
or (b) engage in any business or professional activity other than on behalf of
the Company, whether or not such activity is pursued for financial gain.
4. COMPENSATION.
During the Executive's employment with the Company, the Company shall
pay to the Executive a base salary at the rate of one hundred thousand (100,000)
dollars per year, to be paid in equal monthly installments at the end of each
month.
5. ADDITIONAL BENEFITS.
(A) The Executive shall be provided with health, hospitalization and
accident insurance benefits as generally provided under the Company's and its
affiliates' group policies.
(B) The Executive shall be provided with savings and retirement plan
benefits as generally provided under the Company's and its affiliates' plans.
6. VACATION.
The Executive shall be entitled to six weeks of vacation for each full
year of his employment hereunder, with the understanding that he will use his
best efforts to see that any vacation taken by him will not adversely impact the
businesses he is managing for the Company.
7. BONUS COMPENSATION.
In the event the objectives which the Company and the Executive will
set out for the near term progress of the business to be managed by the
Executive (referred to herein as the "Objectives") are accomplished by him as
determined by the Board of Directors, he will be entitled to receive bonus
compensation relative to the net cash flow of the new OPE and PP Businesses in
accordance with paragraph 10 of the Memorandum which is incorporated herein by
reference. He may also
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become entitled to additional bonus compensation based on the net cash flow
of other new businesses as contemplated in such paragraph 10.
8. EQUITY INCENTIVES.
Assuming the Objectives are accomplished by the Executive as determined
by the Board of Directors, he will be entitled, on a progressively vesting
basis, to both (i) a Designated Interest in the net book/market value of the OPE
Business and of the SM Business (as those terms are used in the Memorandum) and
(ii) stock appreciation rights (referred to as "SAR's) in the Company, all as
set forth in paragraph 11 of the Memorandum which is incorporated herein by
reference. In the event that there is a material change in the federal income
tax laws relative to the treatment of long term capital gains so that the form
of incentive provided by an SAR is substantially disadvantaged from a tax
standpoint compared with the ownership of shares of stock, then the parties
shall revisit the SAR form of incentive with a view towards providing an
incentive to the Executive which will have some or all of the advantages for
long term capital gains available under any such new tax laws.
9. SUPPORT FACILITIES AND EXPENSES.
The Company shall provide support facilities to the Executive,
generally as described in paragraph 6 of the Memorandum.
The Company shall reimburse to the Executive all reasonable travelling,
hotel, entertainment and other out-of-pocket expenses which he may from time to
time be authorized to incur in the execution of his duties hereunder.
10. NON COMPETITION.
The Executive agrees that during the term of his employment hereunder
and for a one-year period thereafter the Executive shall not directly or
indirectly do any of the following:
(i) Engage in, be employed by or affiliated with, finance or
assist others to operate, establish or acquire any business activity
that is competitive with the business which is being conducted by the
Company or by any of its affiliates or subsidiaries or with any
business for which substantial planning is made by the Company or by
any of its affiliates or subsidiaries;
(ii) Divert, disrupt or otherwise interfere in any way with
any business relationship of the Company or any of its affiliates or
subsidiaries with any of their respective clients, customers or
business contacts;
(iii) Solicit for employment for his own or another's benefit
(as employee, partner, independent contractor or otherwise) any person
who has been employed by the Company or any affiliate within the two
year period prior to the date in question.
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During any such one year period after termination of this Agreement
during which the Executive is required to adhere to the foregoing
restrictions, and during which the Executive has no bonus, DI or SAR rights
which could result in payments to him during or after such period, the
Executive shall be paid a fee at the end of such year period, assuming full
compliance with this Paragraph 8, equal to 25% of the basic salary which he
received during the last full year of employment with the Company.
11. CONFIDENTIALITY AND OTHER REQUIREMENTS.
(A) As between the Company or any of its subsidiaries or affiliates, as
the case may be, and the Executive, all products, methods, processes,
discoveries, materials, ideas, creations, inventions, plans, strategies and
other intellectual properties pertaining to the business of the Company or any
of its subsidiaries or affiliates, developed or invented by the Executive or by
others affiliated with the Company, whether or not developed or discovered
during regular working hours, shall be the sole and absolute property of the
Company or its respective subsidiary or affiliate, for any and all purposes. The
Executive shall not claim to have, under this Agreement or otherwise, any right,
title or interest of any kind or nature in any of the foregoing.
(B) The Executive acknowledges that in the course of his employment
hereunder he will make use of, acquire and add to proprietary information of the
Company and its subsidiaries and affiliates which shall be of a special and
unique nature and value relating to such matters as plans, strategies, trade
secrets, technical systems and procedures, inventions, manuals, confidential
reports, customer business and similar matters. The Executive agrees that with
respect to any of the foregoing, during and following the term hereof, for so
long as the same remains confidential (and beyond should loss of confidentiality
be caused by the Executive), he will not, for any purpose, divulge or disclose
any of such proprietary information to others or let others use such information
for any purpose other than for the benefit of the Company or its subsidiaries or
affiliates, as the case may be. The Executive shall promptly, whenever requested
by the Company and in any event upon the termination of his employment with the
Company hereunder, deliver to the Company all reports, laboratory notes,
correspondence and all other documents, papers and records which may have been
prepared by him or have come into his possession in the course of his employment
hereunder; and, after termination of this agreement, the Executive shall not be
entitled to and shall not retain any copies thereof unless otherwise agreed to
in writing by the Company.
(C) In the event any of the Executive's activities or services give
rise to the creation of an idea or invention which by itself, or in combination
with the efforts of others, may be, in the judgement of the Company,
appropriately the subject of an application for patent, copyright, trademark or
tradename or similar intellectual property right, the Executive shall, at the
Company's request and expense, prepare and execute all such documents (including
assignments of all of his interests therein to the Company) and take all such
other action as may in the opinion of the Company or its advisors be necessary
or advisable to secure property and other rights therein for the Company and to
obtain the issuance of any such patent, copyright, trademark, trade name or
other right in any jurisdiction on behalf of the Company.
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12. TERM OF EMPLOYMENT.
This Agreement shall initially be for a term of one year, and shall
continue thereafter for successive one year terms unless terminated by either
party by giving six months' notice thereof prior to the end of any such term.
Notwithstanding the foregoing, the Company shall be entitled, by giving
notice in writing to the Executive, to terminate forthwith this Agreement and
his employment hereunder for cause including any misconduct on the part of the
Executive or any material breach of his obligations to the Company hereunder or
otherwise.
Any termination of this Agreement shall in no manner relieve the
Executive of his obligations under Paragraphs 10 and 11 hereof. Any termination
of this Agreement other than for cause shall not impair any vested right the
Executive may have achieved relative to bonuses and equity incentives pursuant
to Paragraphs 7 and 8 hereof.
13. NOTICES.
All notices hereunder shall be in writing and delivered personally or
by registered or certified mail. Such notices shall be addressed to the Company
at its principal office and to the Executive at the address stated in the first
paragraph of this Agreement, or in either case at such other address as shall be
designated in writing by the party to whom the notice is to be sent. Any such
communication so sent by mail shall be deemed given three days after mailing and
immediately upon delivery.
14. MISCELLANEOUS.
This Agreement constitutes the entire agreement of the parties hereto
relating to the subject matter covered hereunder and there are no written or
oral terms or representations made by either party other than those contained
herein. All of the terms and provisions of this Agreement shall be binding upon
and shall inure to the benefit of and be enforceable by and against the parties
to this Agreement and their respective heirs, executors and successors in
interest.
16. GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
laws of Nebraska which shall be deemed to be the primary locus of activities
hereunder. The courts, both federal and state, in that State shall have full
jurisdiction over all matters hereunder and the parties herewith submit to
service of process and to the appropriate venue of such courts with respect to
any actions brought hereunder.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the date first written above.
BIO NEBRASKA, INC.
By: /s/ Thomas R. Coolidge /s/ Mal Riddell
-------------------------------- -------------------------------
Chairman of the Board Mal Riddell, the Executive
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Exhibit 10.8
BIO NEBRASKA, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of July 13, 1989, is made
by and among Bio Nebraska, Inc., a Nebraska corporation with its principal place
of business at 1695 Brower Road, Lincoln, Nebraska 68502 (the "Company"); John
N. Irwin III, an individual with an address at 405 Park Avenue, New York, New
York 10022 (the "Purchaser"); Fred Wagner, an individual with an address at c/o
Bio Nebraska, Inc., 1695 Brower Road, Lincoln, Nebraska 68502 ("Wagner");
Sheldon Schuster, an individual with an address at c/o Bio Nebraska, Inc., 1695
Brower Road, Lincoln, Nebraska 68502 ("Schuster"); Dwane Wylie, an individual
with an address at c/o Bio Nebraska, Inc., 1695 Brower Road, Lincoln, Nebraska
68502 ("Wylie"); Thomas R. Coolidge, an individual with an address at c/o Bio
Nebraska, Inc., 1695 Brower Road, Lincoln, Nebraska 68502 ("Coolidge"; Wagner,
Schuster, Wylie and Coolidge are sometimes referred to herein collectively as
the "Managers"); and Cultor, Ltd., a Finnish corporation with a principal place
of business in Finland ("Cultor"; the Purchaser, Cultor and the Managers are
sometimes referred to herein collectively as "Holders").
RECITALS:
A. The Company is issuing 110 shares of its Common Stock (the "Initial
Purchaser Shares") to the Purchaser pursuant to a Common Stock Purchase
Agreement of even date herewith (the "Purchase Agreement") and is granting the
Purchaser an option to purchase an additional 55 shares of Common Stock (the
"Purchaser Option Shares") pursuant to an Option Agreement of even date herewith
(the "Option Agreement"). (The Initial Purchaser Shares and the Purchaser Option
Shares are sometimes collectively referred to herein as the "Purchaser Shares.")
B. Each of Wagner, Schuster and Wylie is the holder of 67 shares of the
Company's Common Stock and it is contemplated by that certain Bio Nebraska, Inc.
Shareholder Agreement, dated as of January 1, 1989, that each of them will be
issued an additional 66 of such shares on December 31, 1989 (all of the
foregoing shares, whether previously or to be hereafter issued, are sometimes
referred to herein as the "Founder Shares").
C. Coolidge will be the holder of 100 shares of the Company's common
stock (such shares, together with the Founder Shares, are sometimes referred to
herein collectively as the "Manager Shares").
D. Cultor will be the holder of 501 shares of the Company's Common
Stock (the "Cultor Shares"; the Purchaser Shares, the Manager Shares and the
Cultor Shares, together with any and all other shares of the Company's Common
Stock acquired by the Holders prior to the
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first underwritten public offering of the Company's Common Stock, are sometimes
referred to herein collectively as the "Registrable Securities").
E. The Holders desire to set forth the registration rights to be
granted to the Holders in connection with the securities of the Company held by
them.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants, and conditions set forth in this
Agreement and in the agreements pursuant to which the Holders acquired or will
acquire their securities in the Company, the parties mutually agree as follows:
1. REQUESTED REGISTRATION. (a) In case the Company shall receive from
the Purchaser, from Cultor or from the Managers a written request, signed by the
Purchaser, Cultor or all of the Managers, as the case may be, that the Company
effect a registration under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the Registrable Securities of any such Holder,
the Company will as soon as practicable, use its best efforts to effect such
registration (including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualification under applicable blue
sky or other state securities laws (provided that the Company shall not be
required in connection therewith to qualify to do business or to file a general
consent to service of process in any such state or jurisdiction) and appropriate
compliance with applicable regulations issued under the Securities Act) as may
be so requested and as would permit or facilitate the sale and distribution of
all or such portion of such Registrable Securities as are specified in such
request; provided that the Company shall not be obligated to take any action to
effect any such registration, qualification or compliance pursuant to this
Section 1:
(i) Within 6 years of the date of this Agreement;
(ii) Within the one hundred eighty (180) day period immediately
following the effective date of the registration statement pertaining to the
first underwritten public offering of securities of the Company for its own
account;
(iii) In the case of a request by either the Managers or Cultor, after
the Company has effected two (2) registrations pursuant to this Section 1 on
behalf of the Managers as a group or on behalf of Cultor, as the case may be,
and such registration have been declared or ordered effective or, in the case of
a request by the Purchaser, after the Company has effected one (1) such
registration on behalf of the Purchaser and such registration has been declared
or ordered effective;
(iv) If within thirty (30) days of such request the Company gives
notice that it is engaged or has fixed plans to engage in an initial firmly
underwritten registered public offering
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pursuant to a registration statement to be filed with the Securities and
Exchange Commission (the "Commission") within thirty (30) days;
(v) If at the time of the request, the Holder or Holders making the
request could sell all of the Registrable Securities requested to be registered
under Rule 144 promulgated under the Securities Act ("Rule 144") during the
three-month period following such request;
(vi) If at the time of the request the Holder or Holders making the
request own, in the aggregate, less than five percent (5%) of the Company's then
outstanding shares of Common Stock (without giving effect to shares issuable
upon exercise or conversion of outstanding securities); or
(vii) If the aggregate offering to the public of the Registrable
Securities requested to be registered would not be at least $2,500,000.
Subject to the foregoing clauses (i) through (vii) and to Section (c),
the Company shall file a registration statement covering the Registrable
Securities so requested to be registered as soon as practicable after receipt of
the request of the Purchaser, Cultor or the Managers.
(b) UNDERWRITING. If the Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request. If the underwriter has not
limited the number of Registrable Securities to be underwritten, the Company may
include securities for its own account or the account of others 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.
(c) DELAY OF REGISTRATION. If the Company shall furnish to the Holders
making the request a certificate signed by the President or the Chairman of the
Board of the Company stating that, in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its shareholders to proceed with such registration statement at that time, then
the Company may direct that such request for registration be delayed for a
period not in excess of one hundred twenty (120) days, such right to delay a
request to be exercised by the Company not more than twice in any one-year
period.
2. COMPANY REGISTRATION.
(a) If at any time or from time to time the Company shall determine to
register any of its Common Stock, for its own account or for the account of
others, other than (I) a registration relating solely to employee benefit plans,
(II) a registration relating solely to a Commission Rules 145 transaction, (III)
a registration relating to the first underwritten public offering of securities
of the Company or (IV) a registration on any registration form which does not
include
3
<PAGE>
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities, the
Company will:
(i) promptly give to each Holder written notice thereof (which shall
include a list of the jurisdictions in which the Company intends to attempt to
qualify such securities under the applicable blue sky or other state securities
laws); and
(ii) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved therein,
all the Registrable Securities specified in a written request or requests, made
within twenty (20) days after receipt of such written notice from the Company,
by any Holder or Holders, PROVIDED, HOWEVER, that the Company shall not be
required to effect any such registration if at the time of the request such
Holder or Holders could legally sell all of the Registrable Securities requested
to be registered under Rule 144 during the 12-month period following such
request.
(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 part of the written notice given pursuant to Section
2(a)(i). In such event the right of any Holder to registration pursuant to this
Section 2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their 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, if the underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten, the
underwriter may exclude some or all of such Holders' Registrable Securities from
such registration and underwriting. The Company shall so advise all Holders
(except those Holders who have indicated to the Company their decision not to
distribute any of their Registrable Securities through such underwriting), and
the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among such Holders in
proportion, as nearly as practicable, to the respective amounts of the aggregate
number of shares of Common Stock and Registrable Securities owned by such
Holders and such other shareholders at the time of filing the registration
statement. No Registrable Securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
If any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities and/or other securities so withdrawn
from such underwriting shall also be withdrawn from such registration; provided,
however, that, if by the withdrawal of such Registrable Securities a greater
number of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriter),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include
4
<PAGE>
additional Registrable Securities in the same proportion used above in
determining the underwriter limitation.
3. EXPENSES OF REGISTRATION. Unless and to the extent otherwise
required, in the judgment of counsel to the Company, in order to comply with
applicable state blue sky or securities laws and regulations, all expenses
incurred by the Company in complying with Sections 1 and 2 hereof, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company, blue sky fees and expenses, and
the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company) shall be borne by the Company;
PROVIDED, HOWEVER, that all underwriting discounts, selling commissions and
registration or filing fees applicable to the sale of Registrable Securities and
fees and disbursements of counsel to participating Holders shall be borne by the
Holders of the securities so registered pro-rata on the basis of the number of
shares so registered. The Company shall not, however, be required to pay for
expenses of any registration proceeding begun pursuant to Section 1, the request
of which has been subsequently withdrawn by the Holder making the request
(unless the withdrawal is based upon material adverse information concerning the
Company of which the Holder was not aware at the time of such request or the
Company's failure to provide the legal opinion or accountants' letter described
in paragraph 4(g)), in which case such expenses shall be borne by the Holder.
4. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to Sections 1 or 2,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At the Company's expense (unless and to the extent otherwise required,
in the judgment of counsel to the Company, in order to comply with applicable
state blue sky or securities laws and regulations), the Company will:
(a) Use its best efforts to keep such registration, qualification or
compliance effective for a period of ninety (90) days or until the Holder or
Holders have completed the distribution described in the registration statement
relating thereto, whichever first occurs.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such 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 Registrable Securities owned by them.
5
<PAGE>
(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Holders, provided
that the Company shall not be required in connection therewith to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to Sections 1 or 2, 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 accountants of the Company,
in form and substance as is customarily given by independent accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
5. INDEMNIFICATION.
(a) Except as otherwise provided below, the Company will indemnify each
Holder, each of its officers, directors, partners and legal counsel, and each
person controlling such Holder, participating in any registration, qualification
or compliance effected pursuant to this Agreement with respect to Registrable
Securities held by such Holder, and each underwriter, if any, and each person
who controls any underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, to which they
may become subject under the Securities Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or other federal or state law, arising
out of or based on (i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other similar
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
6
<PAGE>
misleading in the light of the circumstances under which they were made, or
(ii) any violation by the Company of any federal, state or common law rule or
regulation applicable to the Company in connection with any such
registration, qualification or compliance, and will reimburse each such
Holder, each of its officers, directors, partners and legal counsel, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, as incurred, provided that the
Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission, made in reliance on and in conformity with
written information furnished to the Company by an instrument duly executed
by such Holder or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify 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 or such
underwriter within the meaning of the Securities Act, and each other Holder,
each of its officers, directors, and partners and each person controlling such
Holder, against all claims, losses, 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 such registration
statement, prospectus, offering circular or other similar document, or 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 in the
light of the circumstances under which they were made, and will reimburse the
Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, as incurred, 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 by an instrument duly executed by such
Holder and stated to be specifically for use therein; provided, however, that
the obligations of such Holders hereunder shall be limited to an amount equal to
the proceeds to each such Holder of Registrable Securities sold as contemplated
herein.
(c) Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has received written notice of any claim as to which indemnity may be sought,
and shall 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
unreasonably be withheld). The Indemnified Party may participate in such defense
at such party's expense; provided, however, that the
7
<PAGE>
Indemnifying Party shall bear the expense of such defense of the Indemnified
Party if representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicts of interest. The failure
of any Indemnified Party to give notice as provided herein shall relieve the
Indemnifying Party of its obligations under this Section 5 only to the extent
that such failure to give notice shall materially adversely prejudice the
Indemnifying Party in the defense of any such claim or any such litigation.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
6. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
7. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to:
(a) Use its best efforts to facilitate the sale of the Registrable
Securities to the public, without registration under the Securities Act,
pursuant to Rule 144 under the Securities Act, provided that this shall not
require the Company to file reports under the Securities Act and the Exchange
Act at any time prior to the Company's being otherwise required to file such
reports;
(b) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act at all times after
ninety (90) days after the effective date of the first registration under the
Securities Act filed by the Company for an offering of its securities to the
general public;
(c) Use its best efforts to then file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements);
(d) So long as the Holders own any Registrable Securities to furnish to
the Holders forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time after
ninety (90) days after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general 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 the Holders may
8
<PAGE>
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holders to sell any such securities without
registration.
8. "MARKET STAND-OFF" AGREEMENT. Each Holder agrees that if, at the
time, he or it holds more than 5% of the Company's voting stock (giving effect
to the exercise or conversions of all securities held by such Holder exercisable
for or convertible into voting stock within 180 days), such Holder will not sell
or otherwise transfer or dispose of any Common Stock (or other securities) of
the Company held by him or it during the one hundred eighty (180) day period
following the effective date of a registration statement of the Company filed
under the Securities Act if so requested by the Company and/or underwriter of
Common Stock (or other securities) of the Company, provided that:
(a) all officers and directors of the Company and all other holders of
at least 5% of the Company's voting securities 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 such period;
and
(b) such time period may be (i) waived or shortened by such
underwriter, or (ii) extended by written agreement among such underwriter and
the holders of a majority in interest of Registrable Securities.
9. TRANSFER OF REGISTRATION RIGHTS. The registration rights granted
under Section 1 of this Agreement may be assigned or otherwise transferred by
any Holder to a transferee or all of such Holder's Registrable Securities and
the registration rights granted under Section 2 of this Agreement may be
transferred by any Holder to a transferee of all or any part of such Holder's
Registrable Securities; provided, however, that the Company is given (i) written
notice by such transferee at the time of or within a reasonable time after said
transfer, stating the name and address of said transferee and (ii) said
transferee's agreement to be bound by the provisions of this Agreement.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nebraska applicable to contracts
between Nebraska residents entered into and to be performed entirely within the
State of Nebraska.
11. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
12. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
13. NOTICES, ETC. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy or similar writing) and
shall be given to such
9
<PAGE>
party at the address or telecopy number indicated for such party below or at
such other address or telecopy number as such party may hereafter specify by
notice to the other parties. Each such notice, request or other communication
shall be effective (i) if given by mail, 72 hours (but 120 hours in the case
of a communication to Cultor) after such communication is deposited in the
mails with first-class postage prepaid, addressed as aforesaid, (ii) if given
by telecopy, when such telecopy is transmitted to the telecopy number
specified in this paragraph and the party to which such telecopy is
transmitted orally confirms receipt, or (iii) if given by any other means,
when delivered at the address specified in this paragraph.
(a) If to the Company, to:
Bio Nebraska, Inc.
1695 Brower Road
Lincoln, Nebraska 68502
Telecopy number: not applicable
With a copy to:
Thomas R. Coolidge, Esq.
Beebe Hill Road
Falls Village, Connecticut 06031
Telecopy number: (203) 824-5770
(b) If to the Purchaser, to:
c/o Hillside Capital Incorporated
405 Park Avenue
New York, New York 10022
Telecopy number: (212) 759-4831
(c) If to Wagner, Schuster or Wylie, to:
c/o Bio Nebraska, Inc.
1695 Brower Road
Lincoln, Nebraska 68502
Telecopy number: not applicable
10
<PAGE>
(d) If to Coolidge, to:
Beebe Hill Road
Falls Village, Connecticut 06031
Telecopy number: (203) 824-5770
(e) If to Cultor, to:
14. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing upon any breach or default under this agreement, shall
be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereunder 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. Any waiver, permit,
consent or approval of any kind or character of any breach or default under this
agreement, or any waiver 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. All remedies, either under this agreement, or by law or
otherwise afforded to any holder, shall be cumulative and not alternative.
15. COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the parties,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
16. SEVERABILITY. In the 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.
17. AMENDMENTS. The provisions of this Agreement may be amended at any
time and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by the
Company and by the holders of eighty-five percent (85%) of the number of shares
of Registrable Securities outstanding as of the date of such amendment or
waiver. Each Holder acknowledges that by the operation of this Section the
holders of eighty-five percent (85%) of the outstanding Registrable Securities
may have the right and power to diminish or eliminate certain rights of such
Holder under this Agreement.
11
<PAGE>
The foregoing Registration Rights Agreement is hereby executed as of
the date first above written.
BIO NEBRASKA, INC.
By:/s/ Thomas R. Coolidge
----------------------------------------
Name:
Title: Chairman of the Board
/s/ John N. Irwin III
-------------------------------------------
John N. Irwin III
CULTOR LTD.
By:/s/ Juha Koivurinta
----------------------------------------
Name:
Title:
/s/ Fred W. Wagner
-------------------------------------------
Fred Wagner
/s/ Sheldon Schuster
-------------------------------------------
Sheldon Schuster
/s/ Dwane Wylie
-------------------------------------------
Dwane Wylie
/s/ Thomas R. Coolidge
-------------------------------------------
Thomas R. Coolidge
12
<PAGE>
AMENDMENT
TO
BIO NEBRASKA, INC. REGISTRATION RIGHTS AGREEMENT
This Amendment, dated as of November 22, 1989, is entered into among
Bio Nebraska, Inc., a Nebraska corporation having its principal place of
business at 1695 Brower Road, Lincoln, Nebraska 68502 (the "Company"); Hillside
Industries Incorporated, a Delaware corporation having its principal place of
business at 405 Park Avenue, New York, New York 10022 ("Hillside"); John N.
Irwin III, an individual with an address at 405 Park Avenue, New York, New York
10022 (the "Irwin"); Fred Wagner, an individual with an address at c/o Bio
Nebraska, Inc., 1695 Brower Road, Lincoln, Nebraska 68502; Sheldon Schuster, an
individual with an address at c/o Bio Nebraska, Inc., 1695 Brower Road, Lincoln,
Nebraska 68502; Thomas R. Coolidge, an individual with an address at c/o Bio
Nebraska, Inc., 1695 Brower Road, Lincoln, Nebraska 68502 ("Coolidge"); Dwane
Wylie, an individual with an address at c/o Bio Nebraska, Inc. 1695 Brower Road,
Lincoln, Nebraska 68502; and Cultor, Ltd., a Finnish corporation having its
principal place of business in Finland ("Cultor").
RECITAL:
A. The Company is issuing 123 shares of its Common Stock to Hillside
pursuant to a Securities Purchase Agreement, dated the date hereof;
B. Cultor is selling to Hillside 136 shares of the Company's Common
Stock pursuant to a Common Stock Purchase Agreement, dated the date hereof (the
"Cultor Agreement") (such 136 shares, together with the 123 shares being
acquired by Hillside from the Company and any and all other shares of the
Company's Common Stock acquired by Hillside prior to the first underwritten
public offering of the Company's Common Stock, are referred to herein as the
"Hillside Shares");
C. Cultor is selling to Coolidge 90 shares of the Company's Common
Stock pursuant to the Cultor Agreement (such 90 shares, together with any and
all other shares of the Company's Common Stock acquired by Coolidge from Cultor
after the date hereof and prior to the first underwritten public offering of the
Company's Common Stock, are referred to herein as the "Coolidge Investment
Shares");
D. The Holders desire to set forth the registration rights to be
granted to Hillside and Coolidge in connection with the securities of the
Company to be held by Hillside and Coolidge.
AGREEMENT:
NOW, THEREFORE, the parties (being the holders of at least 85% of the
Registrable Securities of the Company outstanding as of the date of this
Amendment) do, for good and
<PAGE>
valuable consideration, hereby mutually agree to the following amendments to
the Registration Rights Agreement of the Company, dated as of July 13, 1989
(the "Agreement"):
1.(a) The registration rights granted to the Holders pursuant to
Sections 1 and 2 of the Agreement are extended to Hillside as the holder of the
Hillside Shares, all on the same terms and conditions of the Agreement as are
applicable to the Registrable Securities held by Cultor (such that Hillside is
entitled to two requested registrations pursuant to Section 1 of the Agreement).
1.(b) The registration rights granted to the Holders pursuant to
Sections 1 and 2 of the Agreement are extended to Coolidge as the holder of the
Coolidge Investment Shares (but to Coolidge only in respect of the Coolidge
Investment Shares and not in respect of share of the Company's Common Stock held
by Coolidge that are included with the term "Manager Shares" as defined in the
Agreement), all on the same terms and conditions of the Agreement as are
applicable to the Registrable Securities held by Irwin (such that Coolidge is
entitled to one requested registration pursuant to Section 1 of the Agreement in
respect of the Coolidge Investment Shares).
2. Any reference in the Agreement to the term "Registrable Securities"
shall be deemed to include the Hillside Shares and the Coolidge Investment
Shares, provided that, wherever the term "Registrable Securities" is used in the
Agreement with reference to Coolidge as an individual Holder (and not as one of
the Managers), the term "Registrable Securities" shall be deemed to include only
the Coolidge Investment Shares and not those shares of the Company's Common
Stock held by Coolidge that are included within the term "Manager Shares" as
defined in the Agreement.
3. Any reference in the Agreement to the term "Holders" shall be deemed
to include Hillside as the holder of the Hillside Shares and Coolidge as the
holder of the Coolidge Investment Shares.
4. All capitalized terms used and not defined herein shall the meanings
ascribed to them in the Agreement.
5. This Amendment may be executed in counterparts, each of which shall
be an original, but all of which together shall constitute one and the same
agreement.
6. This Amendment shall be governed by and construed in accordance with
the laws of the State of Nebraska applicable to contracts between Nebraska
residents entered into and to be performed entirely within the State of
Nebraska.
7. Except as amended hereby, the Agreement shall continue in full force
and effect in accordance with the provisions thereof in effect on the date of
execution and delivery of this Amendment. As used in the Agreement, all
references to the terms "Agreement", "hereof",
2
<PAGE>
"hereby" or the like shall mean the Agreement as amended by this Amendment
unless the context specifically requires otherwise.
IN WITNESS WHEREOF, this Amendment has been executed by each of the
parties hereto (or their duly authorized officers) all as of the year and day
first above written.
BIO NEBRASKA, INC.
By:/s/ Thomas R. Coolidge
---------------------------------
Name:
Title: Chairman of the Board
HILLSIDE INDUSTRIES INCORPORATED
By: /s/ John N. Irwin III
----------------------------------
Name: John N. Irwin III
Title: Managing Director
CULTOR LTD.
By:
---------------------------------
Name:
Title:
/s/ John N. Irwin III
------------------------------------
John N. Irwin III
/s/ Thomas R. Coolidge
------------------------------------
Thomas R. Coolidge
------------------------------------
Fred Wagner
------------------------------------
Sheldon Schuster
------------------------------------
Dwane Wylie
3
<PAGE>
Exhibit 10.9(a)
COMMERCIAL NET BUILDING AND GROUND LEASE
OF
LINCOLN AIR PARK WEST
This Lease Agreement is executed in duplicate this 16th day of Nov.,
1999, between Airport Authority of the City of Lincoln, Nebraska, hereinafter
referred to as "Authority", and BioNebraska, Inc., a corporation, hereinafter
referred to as "Lessee".
WITNESSETH:
WHEREAS, in accordance with Article 5, Chapter 3 of the Statutes of
Nebraska, the City Council of the City of Lincoln, Nebraska, by appropriate
action in 1959, created an Airport Authority and transferred to the Authority
the right to use, occupy and manage certain real estate owned by or acquired in
the name of the City of Lincoln, including the land leased herein, located on
Lincoln Airport in an area denominated "Lincoln Air Park West"; and
WHEREAS, the Authority deems it advantageous to the support, operation
and public purpose of the Airport to lease to Lessee that certain building and
parcel of land described herein; and
WHEREAS, this Lease will supersede and cancel the prior Lease between
the parties, originally effective August 1, 1996; and
WHEREAS, the Lessee proposes to lease on a net basis from the
Authority, as herein provided, the ground area and building all as herein
described.
NOW, THEREFORE, it is mutually agreed between the parties as follows:
1. Authority, in consideration of the rents to be paid by Lessee
as hereinafter set forth, and of the covenants and agreements hereinafter
stipulated to be mutually kept and performed by the parties hereto, does
hereby lease unto Lessee the following described premises situated in Lincoln
Air Park West upon Lincoln Airport, Lincoln, Nebraska, to-wit:
Building No. 2274 consisting of approximately 15,435 square feet and
4,913 square feet of tenant additions to date and 108,045 square feet
of adjacent sidewalks, drives and grounds as outlined in red on the
attached Exhibit "A"; and 21,060 square feet of land as shown outlined
in blue on the attached Exhibit "A."
together with the improvements and appurtenances thereunto belonging or in any
wise appertaining, including the right of ingress and egress thereto and
therefrom at all times. Authority agrees to keep a street open from the leaned
premises to a public street or highway.
<PAGE>
2. Lessee shall have and hold said premises for the basic term of
fourteen (14) years beginning November 1, 1999, and ending October 31, 2013,
unless sooner terminated as hereinafter provided.
3. Lessee shall pay Authority, as rent for the premises herein leased
as follows:
a. For the term of November 1, 1999, through March 31, 2003, as
base rental at the rate of $2.41 per square foot per year
for 15,435 square feet for the sum of Three Thousand One
Hundred Three Dollars and Nine Cents ($3,103.09) per month,
and in addition thereto, Lessee shall pay Authority as
reimbursement of construction costs advanced by Authority
the sum of Four Thousand Three Hundred One Dollars and
Ninety-one Cents ($4,301.91) per month for a total payment
of Seven Thousand Four Hundred Five Dollars ($7,405.00) per
month, and in addition thereto, 21,060 square feet of land
at the rate of $.12 per square foot for a sum of Two
Hundred Ten Dollars and Sixty Cents ($210.60) per month,
payable in advance on the first day of each month beginning
November 1, 1999, and ending March 31, 2003; and
b. For the term of April 1, 2003, through March 31, 2008, at the
rate of $2.77 per square foot per year, for 15,435 square feet
for the sum of Three Thousand Five Hundred Sixty-eight Dollars
and Forty-five Cents ($3,568.45) per month, and in addition
thereto, 21,060 square feet of land at the rate of $.13 per
square foot for a sum of Two Hundred Twenty-eight Dollars and
Fifteen Cents ($228.15) per month, payable in advance on the
first day of each month beginning April 1, 2003, and ending
March 31, 2008; and
c. For the term of April 1, 2008, through October 31, 2013, at
the rate of $3.92 per square foot per year, for 15,435 square
feet for the sum of Five Thousand Forty-nine Dollars
($5,049.00) per month, and in addition thereto, 21,060 square
feet of land at the rate of $.14 per square foot for a sum of
Two Hundred Forty-five Dollars and Seventy Cents ($245.70) per
month, payable in advance on the first day of each month
beginning April 1, 2008, and ending October 31, 2013; and
d. Authority has advanced funds for construction costs to
Lessee upon Lessee's agreement for reimbursement. The
parties wish to consolidate two prior loans together with
one new loan. The loans for consolidation are a loan dated
July 16, 1996, which has a current principal balance of
$286,644.26, and a loan dated July 21, 1998, which has a
current principal balance of $279,184.64, and a new loan as
of November 1, 1999, with a current principal balance of
$395,000.00. The total combined principal balance of all
loans is $960,828.90. Lessee agrees to reimburse Authority
$960,828.90 plus interest at eight and three-quarters
percent (8 3/4%) over fourteen (14) years, payable at the
rate of Nine Thousand Nine Hundred Thirty-eight Dollars and
Sixty-eight Cents ($9,938.68) per month payable in advance
on the first day of each month beginning November 1, 1999,
and ending October 31, 2013.
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<PAGE>
4. In the event that Lessee has complied with all of the terms and
provisions of this Lease, then, in that event, Authority further gives and
grants to Lessee the right, privilege and option of renewing this Lease at the
expiration of the fourteen (14) year term hereinabove provided, for an
additional term of five (5) years beginning November 1, 2013, and ending October
31, 2018, upon the same terms, conditions and agreements herein set forth,
excepting the rental rate. Lessee shall pay Authority for the option term at the
rate of $4.51 per square foot for 20,348 square feet for the sum of Seven
Thousand Six Hundred Forty-seven Dollars and Forty-six Cents ($7,647.46) per
month, payable in advance on the first day of each month beginning November 1,
2013, and ending October 31, 2018. This option shall be exercised by Lessee
giving Authority at least ninety (90) days written notice prior to the
expiration of the current term of Lessee's intention to renew the Lease for the
additional term. This Lease shall expire in any event no later than October 31,
2018.
5. Authority acknowledges receipt of Five Thousand Two Hundred Dollars
($5,200.00) that Authority is to retain as security for the faithful performance
of the terms and conditions of this Lease. In no event shall Authority be
obligated to apply the deposit on rents or other charges in arrears or on
damages for failure to perform the terms and conditions of this Lease by Lessee.
Application of the security deposit sum to the rental payments in arrears or to
damages shall be at the sole option of Authority and the right to possession of
the premises by Authority for nonpayment of rent or for any other reason shall
not in any event be affected by this security deposit. The security deposit will
be returned to Lessee when this Lease is terminated, according to the terms of
this Lease, if not applied toward payment of rent or toward payment of damages
suffered by Authority by reason of any breach of the terms and conditions of
this Lease by Lessee. In no event is the security to be returned until Lessee
has vacated the premises in good condition and delivered possession to
Authority. The security deposit will draw no interest and Authority shall not be
obligated to hold the deposit in a separate fund.
6. All rentals due under this lease shall be paid, without notice to
the Lessee, to the Airport Authority of the City of Lincoln, Nebraska. An
additional charge of fifteen percent (15%) per annum on unpaid items shall be
made by Authority from the first day of the month due, of any amounts due under
this lease which shall remain unpaid for more than ten (10) days after due date.
Such charge shall not accrue upon any item about which there exists a bona fide
dispute.
7. It is understood and agreed that as of the initial date of this
Lease, the leased premises are not subject to real estate taxes and are not
subject to a payment in lieu of taxes. However, it is agreed that if a law or
ordinance is passed whereby the leased premises become subject to real estate
tax or subject to a payment in lieu of tax, then Lessee shall pay the said tax
or payment in lieu of tax, in addition to any rental fees specified in this
Lease.
8. Lessee will use the premises for the purpose of the business of
research and production of bio-technology and other scientific products, for
offices and such other uses as may be incidental and related thereto.
9. Except as herein otherwise specifically provided, this Lease, in
every sense, shall be without cost to Authority for the development, maintenance
and improvement of the leased premises and Lessee shall, at its sole cost,
except as herein otherwise specifically provided, keep, maintain
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<PAGE>
and repair the entirety of the leased premises, and all improvements and
facilities placed thereon, in good order, condition and repair as may be
required by ordinary and reasonable use or fault on the part of the Lessee.
By entry hereunder, Lessee accepts the premises as being in good order,
condition and repair and agrees, upon termination of this Lease, to surrender
the premises and appurtenances to Authority in the same condition as
received, reasonable use and wear thereof and damage by fire, act of God or
the elements excepted.
10. Lessee shall have the right, during the term of this Lease, to make
alterations, attach fixtures and erect signs in or upon the premises hereby
leased (provided any exterior signs shall be erected only after written approval
of plans by Authority), and all improvements, appliances, fixtures and all other
property, of whatever nature made to or placed upon said premises by Lessee,
shall be and remain the property of Lessee and may be removed prior to the
termination of this Lease, provided only that Lessee shall restore the premises
to the same condition as existing at the time of entry under this Lease,
ordinary wear and tear excepted.
11. Lessee, beginning on November 1, 1999, and during the full term or
until earlier termination of this Lease, shall cause the premises and all
improvements owned by the Authority on the demised premises to be kept insured
in an amount not less than Two Million Dollars ($2,000,000.00), thereof against
perils of fire and extended coverage. Either party may, at not less than one (1)
year intervals, demand a reappraisal of the actual cash value to be determined
by mutual agreement, but on failure to agree, appraisal to be made by a third
party selected by the parties. If there are pressure vessels on the demised
premises now or during the term of this Lease, Lessee will cause insurance to be
placed to protect the property against the hazards of the operation or location
of this equipment on the premises. The proceeds of any such insurance paid on
account of the perils aforesaid will be used to defray the costs of repairing
the damage done to said improvement. If Lessee cancels the Lease or if Authority
cancels the Lease due to total destruction or destruction of more than fifty
percent (50%) of the value of the premises, such proceeds need not be devoted to
such repair, restoration, or reconstruction but may be retained by Authority.
Lessee agrees to pay the costs of such insurance in addition to the rents herein
provided to be paid by Lessee. The policy or policies will be in the name of the
Lincoln Airport Authority and Lessee as their interests may appear, and
Authority agrees to release Lessee from liability for damage covered under the
above-mentioned policies. The policy shall contain a provision that Authority
shall be notified by the insurance company of such non-renewal, material change,
modification or cancellation of such insurance coverage by at least ten (10)
days notice to Authority and the policy shall contain a provision waiving any
subrogation right of the insurance company to recover damages against either
Lessee or Authority by reason of any sums paid by the insurance company under
said insurance policy.
12. If the building leased hereunder is destroyed, damaged or taken by
fire or the elements or other casualty, or by condemnation, and the destruction
or taking is such that, in the exercise of reasonable effort, it cannot be
repaired or replaced by Authority within one hundred twenty (120) days or, if it
is such as to exceed fifty percent (50%) of the value of the premises, Lessee or
Authority may cancel this Lease by written notice mailed to the other party
thirty (30) or more days before the effective date of cancellation and at any
time within sixty (60) days after the damage or destruction. If the premises are
totally destroyed or taken, Lessee or Authority may
4
<PAGE>
cancel this Lease by written notice mailed to the other party within thirty
(30) days of the destruction or taking. If this Lease is not canceled as
provided, Authority, as its expense, shall, with diligence, repair, rebuild
or restore the improvements as nearly as possible to the conditions existing
just prior to the destruction or damage. Lessee's rental, during the period
from the date of fire, or other casualty or taking, to the date of complete
restoration, shall be abated either in whole or pro rata in part, according
to the percentage of interference with the conduct of Lessee's business in
the premises.
13. Lessee shall defend, indemnify and hold Authority and its agents,
officers and employees harmless from and against any and all claims, suits,
demands, actions, liabilities, losses, damages, judgments or fines arising by
reason of injury or death of any person, or damage to any property, including
all reasonable costs for investigation and defense thereof (including, but not
limited to, attorney fees, court costs, investigator fees, and expert fees) of
any nature whatsoever arising out of Lessee's activities on Authority's
property, or in its use or occupancy of the leased premises, regardless of where
the injury, death or damage may occur, except to the extent such injury, death
or damage is caused by the negligent act or omission or willful misconduct of
Authority. Authority shall give Lessee reasonable notice of, and an opportunity
to defend against, any such claims or actions. Notwithstanding the above
indemnification, Lessee shall give Authority reasonable notices of any matter
covered herein and shall forward to Authority a copy of every demand, notice,
summons or other process received in any claim or legal proceeding covered
hereby. Lessee agrees to obtain liability insurance in the amount of One Million
Dollars ($1,000,000.00) including the Airport Authority as an additional
insured. Said insurance policy shall contain a provision to notify the Airport
Authority in writing thirty (30) days prior to any cancellation or reduction of
coverage.
14. Lessee shall pay for all water, sewer, gas, heat, light, power and
telephone service supplied to the said premises, including standard metering
devices for the measurement of such services. In the event it shall become
necessary, as a condition of service, to make changes upon the premises, or
within the building covered by this Lease, of any wiring, plumbing or similar
installations, Lessee will make such changes and installations, at its expense,
as directed and required by the utility organizations. It is further agreed that
Authority shall have the right, without cost to Lessee, to install and maintain
in, on or across the leased premises, sewer, water, gas, electric, steam and
telephone lines, or other installations necessary to the operation of the
Airport or to service required by other tenants of the Authority; provided,
however, that Authority shall carry out such work and locate any above-ground
structures in a manner so as not to unreasonably interfere with Lessee's use of
the premises.
15. Lessee agrees that all storage of equipment, materials or supplies
will be maintained within the building (temporary storage for loading or
unloading excepted), and Lessee will cause to be removed, at its own expense,
all junk, waste, garbage and rubbish and perform necessary mowing and snow
removal and agrees not to deposit the same on any part of the Airport except,
Lessee may deposit the same temporarily on the leased premises in connection
with collection for removal.
16. Lessee shall, in the use of the premises, comply with all
applicable requirements of all municipal, state and Federal authorities now in
force, or which may hereafter be in force, and will
5
<PAGE>
observe all applicable municipal ordinances, state and Federal statutes now
in force, or hereafter to be in force, and Lessee and its tenants, employees,
agents and servants shall obey such reasonable rules and regulations as may
from time to time be promulgated by Authority, or its authorized agents in
charge of the Airport, to insure the safe or orderly conduct of operations of
the Airport and traffic to, from and upon the leased premises.
17. Authority reserves the right to take any action it considers
necessary to protect the aerial approaches of the Airport against obstruction,
together with the right to prevent Lessee from erecting, or permitting to be
erected, any building or other structure on the Airport which, in the opinion of
Authority, would limit the usefulness of the Airport or constitute a hazard to
aircraft.
18. It is understood and agreed that the rights granted by this
Agreement will not be exercised in such a way as to interfere with or adversely
affect the use, operation, maintenance or development of the Airport.
19. There is hereby reserved to Authority, its successors and assigns,
for the use and benefit of the public, a free and unrestricted right of flight
for the passage of aircraft in the airspace above the surface of the premises
herein conveyed, together with the right to cause in said airspace such noise as
may be inherent in the operation of aircraft, now known or hereafter used for
navigation of or flight in the air, using said airspace or landing at, taking
off from, or operating on or about the Airport.
20. Lessee shall not assign this Lease, or any interest therein, and
shall not sublet the premises in whole or in part and any such assignment or
subletting shall be void and shall, at the option of Authority, terminate this
Lease.
21. Authority shall have free access to the leased premises at all
reasonable times for the purposes of examining or inspecting the conditions
thereof relevant to any right or power reserved by Authority pursuant to the
terms of this Lease.
22. The failure of Lessee to surrender the leased premises on the date
provided herein for the termination of this Lease term, and the subsequent
holding over by Lessee, with or without the consent of Authority, shall result
in the creation of a tenancy from month-to-month. This holding over shall not
result in a renewal or extension of this Lease. All other terms and conditions
of this Lease shall remain in full force and effect during any month-to-month
tenancy hereunder, except rental rate, which may be increased by Authority after
notice to Lessee.
23. Authority may elect to terminate all of the rights of Lessee
hereunder by giving ten (10) days written notice of termination to Lessee when
any of the following shall occur:
a. Institution of voluntary bankruptcy proceedings by Lessee;
b. Institution of involuntary bankruptcy proceedings in which Lessee
thereafter is adjudged a bankrupt;
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<PAGE>
c. Assignment for benefit of creditors of the interest of Lessee
under this Lease;
d. Appointment of a receiver for the property or affairs of Lessee;
e. Failure or refusal to pay rent as per the terms of this Agreement;
f. Breach of covenants and terms of this Agreement.
Any occurrence set forth above shall constitute a breach of this Lease
by Lessee and Authority shall, in that event, be entitled to exercise all
remedies herein provided for a breach by Lessee, as well as any and all remedies
provided by law or in equity. It is further agreed that upon said breach and
after notice as provided above, Authority may re-enter the leased premises and
remove all property of Lessee therefrom.
24. Lessee agrees that it will, by Lease Addendum, agree to such
additional provisions as may be required by the FAA as a condition of granting
to Authority funds for Airport improvement projects as or FAA or Authority deem
necessary for the operations, safety and security of the Airport.
25. Lessee shall not cause or permit any hazardous substance or
material to be brought upon, kept or used in or about the premises by Lessee,
its agents, employees, contractors or invitees, except for such use as is in
compliance with all laws, ordinances and regulations.
26. Lessee shall comply with all regulations promulgated by the Federal
Aviation Agency, Environmental Protection Agency, Nebraska Department of
Environmental Quality, Nebraska Department of Health, the Lincoln-Lancaster
County Department of Health and any other agency of municipal, state or Federal
government which regulates Lessee's use of the premises.
27. Lessee shall not cause or permit any hazardous substance or
material to be brought upon, kept or used in or about the premises by Lessee,
its agents, employees, contractors or invitees, except for such Hazardous
Substance or Material as is necessary for Lessee's business.
28. Any Hazardous Substance or Material permitted on the Premises and
all containers therefore, shall be used, kept, stored, and disposed of in a
manner that complies with all federal, state, and local laws or regulations
applicable to any such Hazardous substances or Materials.
29. Lessee shall not discharge, leak, or emit, or permit to be
discharged, leaked, or emitted, any substance or material into the atmosphere,
ground, sewer system, or any body of water, if such material (as determined by
the Authority or any governmental authority) does or may pollute or contaminate
the same, or may adversely affect (a) the health, welfare, or safety of persons,
whether located on the Premises or elsewhere; or (b) the condition, use, or
enjoyment of the building or any other real or personal property.
30. At the commencement of each Lease Year, Lessee shall disclose to
Authority the names and approximate amounts of all Hazardous substances or
Materials which Tenant intends to
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store, use, or dispose of on the Premises in the coming Lease Year. In
addition, at the commencement of each Lease Year, beginning with the second
Lease Year, Lessee shall disclose to Authority the names and amounts of all
Hazardous Substances or Materials which were actually used, stored, or
disposed of on the Premises if such materials were not previously identified
to Authority at the commencement of the previous Lease Year.
31. As used herein, the term "Hazardous Substance or Material" means:
a. Any "hazardous waste" as defined by the Resource
Conservation and Recovery Act of 1976, as amended from time
to time, and regulations promulgated thereunder;
b. Any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, and regulations
promulgated thereunder;
c. Any glycol, oil, petroleum products, and their byproducts;
and
d. Any material or substance which is or becomes regulated by
any federal, state, or local governmental authority.
32. Lessee agrees that it shall be fully liable for all costs and
expenses related to the use, storage, and disposal of Hazardous Substance or
Material kept on the Premises by the Lessee, and the Lessee shall give immediate
notice to the Authority of any violation or potential violation of the
provisions of this Lease. Lessee shall defend, indemnify, and hold harmless
Authority and its Agents from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs, or expenses (including, without
limitation, attorneys' and consultant fees, court costs, and litigation
expenses) of whatever kind or nature, known or unknown, contingent or otherwise,
arising out of our in any way related to:
a. The presence, disposal, release, or threatened release of any such
Hazardous Substance or Material which is on, from, or affects
soil, water, vegetation, buildings, personal property, persons,
animals, or otherwise;
b. Any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to such Hazardous
Substance or Material;
c. Any lawsuit brought or threatened, settlement reached, or
government order relating to such Hazardous Substance or Material;
or
d. Any violation of any laws applicable thereto. The provisions of
this Lease shall be in addition to any other obligations and
liabilities Lessee may have to Authority at law or equity and
shall survive the transactions contemplated herein and shall
survive the termination of this Lease.
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33. Lessee shall comply with all regulations promulgated by the Federal
Aviation Agency, Environmental Protection Agency, Nebraska Department of
Environmental Control, Nebraska Department of Health, the Lincoln-Lancaster
County Department of Health and any other agency of municipal, state or Federal
government which regulates Lessee's use of the premises.
34. All notices to be given pursuant to this Lease shall be addressed
to the Airport Authority, Lincoln Airport, P.O. Box 80407, Lincoln, Nebraska
68501, or to the Lessee herein named at 3820 SW 46th Street, Lincoln, Nebraska
68524, notice shall be deemed to have been fully given if and when enclosed in a
properly sealed envelope or wrapper addressed as aforesaid and deposited,
postage prepaid, in a post office regularly maintained by the United States
Government.
9
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands the day
and year first above written.
Attest:
AIRPORT AUTHORITY OF THE CITY OF
LINCOLN, NEBRASKA, Lessor
/s/ Steve Glenn By: /s/ Ed Raines
- --------------------------------------- ---------------------------------
Secretary Chairman
Attest: BIONEBRASKA, INC., a Corporation,
Lessee
- ---------------------------------------
Secretary
By: /s/ Thomas R. Coolidge
--------------------------------
APPROVED AS TO FORM:
/s/ Michael R. Johnson
- ---------------------------------------
Johnson & Baker, P.C.
Legal Counsel for the Airport Authority
of the City of Lincoln, Nebraska
10
<PAGE>
Exhibit 10.9(b)
CONSTRUCTION AGREEMENT
This Agreement made and entered into as of this 16th day of Nov. 1999,
by and between Airport Authority of the City of Lincoln, Nebraska, a body
politic and corporate, hereinafter referred to as "Authority" and BioNebraska,
Inc., a corporation, hereinafter referred to as "BioNebraska".
WITNESSETH:
WHEREAS, BioNebraska has entered into a Commercial Net Building and
Ground Lease for Building No. 2274 located in Lincoln Air Park West, Lincoln
Municipal Airport, Lincoln, Nebraska; and
WHEREAS, BioNebraska desires to construct a certain addition and
improvements to the building; and
WHEREAS, Authority agrees to fund said construction up to a maximum
sum of Three Hundred Ninety-five Thousand Dollars ($395,000.00).
NOW, THEREFORE, it is agreed as follows:
1. BioNebraska shall submit plans and specifications for the
construction of a 652 square foot mechanical room addition to Building No.
2274, and the finish of approximately 1,522 square feet of existing
unfinished area and various associated work to Authority for Authority's
approval prior to initiation of construction, such approval to be acted on in
a timely fashion and not to be unreasonably withheld. After Authority's
approval of said plans, BioNebraska shall submit said plans to City Codes
Administration for their review and approval. All construction of the said
addition and improvements shall be conducted in such a manner as to not
impair, interfere or interrupt any utility or other services for Lincoln Air
Park West and shall comply with all municipal, state and federal codes and
regulations. Construction costs shall include any costs required for the
relocation of or additions to any utility services.
2. As work is completed and invoices received, BioNebraska shall submit
them to Authority for payment. All invoices submitted shall be approved by
BioNebraska and Authority agrees to make payment up to a maximum sum of Three
Hundred Ninety-five Thousand Dollars ($395,000.00). It is understood and agreed
that this fund will be used solely for the costs of construction of the said
addition and improvements and shall not include equipment other than restroom
and other such plumbing fixtures, lighting, electrical, heating, venting and
standard air conditioning equipment, communications switchgear and wiring.
<PAGE>
3. BioNebraska shall supervise all construction and will insure that
all work is completed in a good workmanlike manner. BioNebraska agrees to pay
all costs of construction in excess of Three Hundred Ninety-five Thousand
Dollars ($395,000.00). If construction costs funded by Authority are less than
Three Hundred Ninety-five Thousand Dollars ($395,000.00) the parties shall
execute a lease addendum setting forth the corrected amount.
4. BioNebraska shall pay for any and all off-site improvements directly
required by the construction of the said addition and improvements on the
demised premises.
5. All contractors hired by BioNebraska for the construction of the
said addition and improvements shall maintain liability insurance in a minimum
amount of One Million Dollars ($1,000,000.00).
6. Upon completion of construction, BioNebraska shall convey to
Authority all interest it may have in the said addition and improvements except
for the equipment and systems described below free and clear of all
encumbrances. Said addition and improvements shall be and remain the property of
Authority, however, BioNebraska shall keep, maintain and repair the said
addition and improvements at its sole cost during the term of its Lease.
7. Authority grants to BioNebraska the option to remove the following
equipment from the premises provided that after removal BioNebraska shall repair
and restore the premises to a condition acceptable to Authority and provided
that if the HVAC unit and/or the boiler is removed, then BioNebraska shall
provide a replacement HVAC and boiler to provide heat and air conditioning to a
standard acceptable to Authority, but not a "clean room environment." The
equipment which may be removed in addition to any process equipment installed
separately by BioNebraska is as follows:
a. HVAC - entire roof-top unit including HEPA filters, filter
housings and diffusers,
b. Temperature/pressure monitoring, recording and control system,
c. Clean steam generators and distribution piping systems,
d. DI water system and WFI system,
e. Nitrogen, oxygen, ammonia and compressed air systems,
f. Chemical fume hoods and biosafety hoods with controls, sound
attenuators and all roof-top exhaust blowers, and
g. Security system components excluding in-wall wiring.
-2-
<PAGE>
8. It is understood and agreed that BioNebraska is entering into a
lease extension for Building No. 2274 through October 31, 2013. Authority is
willing to fund construction of the addition and improvements itemized in
this agreement, due to BioNebraska's commitment to this Lease. BioNebraska
shall reimburse Authority the sum of Three Hundred Ninety-five Thousand
Dollars ($395,000.00) plus interest at the rate of eight and three-quarters
percent (8 3/4%) per annum payable in the amount of Four Thousand Eighty-five
Dollars and Seventy-nine Cents ($4,085.91) per month payable in advance on
the first day of each month beginning November 1, 1999, and ending October
31, 2013. This payment is included in the consolidated loan payment set forth
in the Lease. In the event that BioNebraska should fail to perform the terms
of the said Lease and not remain as a tenant for the entire term, then,
BioNebraska agrees to pay to Authority a sum equal to the net balance of the
unamortized principal amount of actual construction costs funded by
Authority, up to Three Hundred Ninety-five Thousand Dollar eight and
three-quarters ($395,000.00) eight and three-quarters/s/ TRC /s/ Jamortized
at percent (8 3/4 %) interest over fourteen (14) years, (November 1, 1999,
through October 31, 2013) for the term of years remaining on the said Lease.
Said sum shall be paid by BioNebraska no later than thirty (30) days from
date of billing by Authority.
9. In the event that BioNebraska shall be in breach of the terms of
this Agreement and that BioNebraska shall fail to commence reasonable steps
to correct such breach within thirty (30) days of receiving written notice of
such breach from Authority, then Authority may elect, upon ten (10) days
prior written notice to BioNebraska, to declare the entire amount of the
construction costs funded by Authority immediately due and payable.
IN WITNESS WHEREOF, the parties have hereunto executed this agreement
the day and year first above written.
AIRPORT AUTHORITY OF THE CITY
ATTEST: OF LINCOLN, NEBRASKA
/s/ Steve Glenn By: /s/ Ed Raines
- ---------------------------------- -------------------------------
Secretary Chairman
ATTEST: BIONEBRASKA, INC.
By /s/ Thomas R. Coolidge
- --------------------------------- -------------------------------
Secretary Chairman of the Board & CEO
-3-
<PAGE>
APPROVED AS TO FORM:
/s/ Michael R. Johnson of
- -------------------------------------
Johnson & Baker, P.C.
Legal Counsel for the Airport
Authority of the City of Lincoln,
Nebraska
-4-
<PAGE>
Exhibit 10.9(c)
LEASE AGREEMENT BETWEEN THE AIRPORT AUTHORITY
OF THE CITY OF LINCOLN, NEBRASKA
AND
BIONEBRASKA, INC.
1. This will confirm that the Airport Authority has, effective November
1, 1999, rented to you Building No. 2378, in Lincoln Air Park West as outlined
in red on the attached Exhibit "A". Tenancy will be from month to month with
payment due on the first of each calendar month, beginning November 1, 1999.
Notice of termination must be given a month in advance on or before the first of
the month.
2. Lessee shall pay Authority as rent for the premises leased, the sum
of $190.00 per month payable in advance on the first day of each month. Lessee
shall use the premises for storage.
3. This lease shall in every sense be without cost to Authority. Lessee
shall pay for all utility services supplied to said premises including standard
metering devices for the measurement of such services, and shall arrange for
initiation of such services. Lessee shall, at its own cost, keep and maintain
the premises in good order, condition, and repair. Lessee acknowledges that the
premises are in good order, condition, and repair upon entry and agrees upon
termination of this agreement to surrender the premises to Authority in the same
condition as received, reasonable use and wear thereof and damage by fire, act
of God, or the elements excepted. The condition and service life of the
building's roof is unknown. The Lessee is relieved from responsibility to repair
the roof. The Airport Authority will use reasonable and cost effective measures
to make repairs to the roof if necessary. The Airport Authority reserves
the right to terminate this lease if repair costs are not economically feasible.
Lessee will completely remove all of its property from the premises upon
termination of the rental period.
4. Lessee agrees that all storage of equipment, materials or supplies
will be maintained within the building (temporary storage for loading and
unloading accepted) and Lessee will cause to be removed at its own expense all
junk, waste, garbage and rubbish and perform necessary mowing and snow removal
and agrees not to deposit the same on any part of the Airport, except Lessee may
deposit the same temporarily on the demised premise in connection with
collection for removal.
5. Lessee agrees to hold harmless and indemnify the Airport Authority
from any and all claims of liability for bodily injury or property damage
resulting from Lessee's occupation or use of the described premises except
resulting from the sole negligence of Authority. Lessee agrees to obtain
liability insurance in the amount of One Million Dollars ($1,000,000) including
the Airport Authority as an additional insured. Said insurance policy shall
contain a provision to
<PAGE>
2
notify the Airport Authority in writing thirty (30) days prior to any
cancellation or reduction of coverage.
6. All rentals due under this Agreement shall be paid, without notice
to the Lessee, to the Airport Authority of the City of Lincoln, Nebraska. An
additional charge of fifteen percent (15%) per annum on unpaid items shall be
made by Authority, for such period as any amount due under this agreement shall
remain unpaid for more than ten (10) days after billing. Such charge shall not
accrue upon any item about which there exists a bona fide dispute.
7. It is understood and agreed that Authority reserves the right to
increase the rental rate for the premises, upon at least thirty (30) days prior
written notice from the first day of the month.
8. All notices to be given pursuant to the lease shall be addressed to
the Airport Authority, P.O. Box 80407, Lincoln, Nebraska 68501, or to the Lessee
herein named at: 3820 N.W. 46th Street, Lincoln, Nebraska 68524.
Phone: (402) 470-2100; 1-800-786-2580; FAX (402) 470-2345.
Notice shall be deemed to have been duly given if and when enclosed in a
properly sealed envelope or wrapper addressed as aforesaid and deposited,
postage prepaid, in a post office regularly maintained by the United States
Government.
9. It is understood and agreed that Lessee shall not assign the lease
or sublet the premises in whole or in part.
10. Lessee shall comply with all applicable requirements of all
municipal, federal and state authorities now in force or which may hereafter be
in force, and will observe in the use of the premises all applicable municipal
ordinances, state and federal statutes now in force or hereafter to be in force
and Lessee and its tenants, employees, agents and servants shall obey such
reasonable rules and regulations as may from time to time be promulgated by the
Airport Authority or its authorized agents.
11. The Lessee for himself, his heirs, personal representatives,
successors in interest and assigns, as a part of the consideration hereof, does
hereby covenant and agree as a covenant running with the land that in the event
facilities are constructed, maintained, or otherwise operated on the said
property described in this lease for a purpose for which a Department of
Transportation program or activity is extended or for another purpose involving
the provision of similar services or benefits, the Lessee shall maintain and
operate such facilities and services in compliance with all other requirements
imposed pursuant to 49 CFR Part 21, Nondiscrimination in Federally Assisted
Programs of the Department of Transportation, and as said regulations may be
amended.
<PAGE>
3
12. The Lessee for himself, his personal representative, successors in
interest, and assigns, as a part of the consideration hereof, does hereby
covenant and agree as a covenant running with the land that: (1) no person on
the grounds of race, color or national origin shall be excluded from
participation in, denied the benefits of, or be otherwise subjected to
discrimination in the use of said facilities, (2) that in the construction of
any improvements on, over, or under such land and the furnishing of services
thereon, no person on the grounds of race, color or national origin shall be
excluded from participation in, denied the benefits of, or otherwise be subject
to discrimination, (3) that the Lessee shall use the premises in compliance with
all other requirements, imposed by or pursuant to 49 CFR Part 21,
Nondiscrimination in Federally Assisted Programs of the Department of
Transportation, and as said regulations may be amended.
13. Authority reserves the right (but shall not be obligated to Lessee)
to maintain and keep in repair the landing area of the airport, together with
the right to direct and control all activities of the Lessee in this regard.
14. Authority reserves the right further to develop or improve the
landing area and all publicly-owned air navigation facilities of the airport as
it sees fit, regardless of the desires or views of Lessee, and without
interference or hindrance.
15. Authority reserves the right to take any action it considers
necessary to protect the aerial approaches of the airport against obstruction,
together with the right to prevent Lessee from erecting, or permitting to be
erected, any building or other structure on the airport which in the opinion of
Authority would limit the usefulness of the airport or constitute a hazard to
aircraft.
16. During the time of war or national emergency, Authority shall have
the right to enter into an agreement with the United States Government for
military or naval use of part or all of the landing area, the publicly-owned air
navigation facilities the provisions of this instrument, insofar as they are
inconsistent with the provisions of the agreement with the Government, shall be
suspended.
17. It is understood and agreed that the rights granted by this
agreement will not be exercised in such a way as to interfere with or adversely
affect the use, operation, maintenance or development of the airport.
18. There is hereby reserved to the Authority, its successors and
assigns, for the use and benefit of the public, a free and unrestricted right of
flight for the passage of aircraft in the airspace above the surface of the
premises herein conveyed together with the right to cause in said airspace such
noise as may be inherent in the operation of aircraft, now known or hereafter
<PAGE>
4
used for navigation of or flight in the air, using said airspace or landing at,
taking off from or operating on or about the airport.
19. This lease shall become subordinate to provisions of any existing
or future agreement between the Authority and the United States of America or
any agency thereof relative to the operation development, or maintenance of the
airport, the execution of which has been or may be required as a condition
precedent to the expenditure of federal funds for the development of the
airport.
AIRPORT AUTHORITY OF THE CITY
OF LINCOLN, NEBRASKA
By: /s/ J. Wood
------------------------------
John Wood, Executive Director
I HEREBY AGREE TO THE FOREGOING TERMS.
Dated this 18th day of November, 1999.
BIONEBRASKA, INC.
By: /s/ Roger Kramer
------------------------------
Lessee
<PAGE>
Exhibit 10.10
CERTAIN INFORMATION HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24b-2.
NOVATION
This agreement is made on the first day of January, 1989 (the "Effective
Date"), by and between the BOARD OF REGENTS OF THE UNIVERSITY OF NEBRASKA, a
public body corporate of the State of Nebraska, having a place of business at
Varner Hall, 3835 Holdrege Street, Lincoln, Nebraska (hereinafter referred to
as "Board"), FINNISH SUGAR CO., LTD., a corporation organized and existing
under the laws of Finland, with a principal place of business at
Kyllinkinportti 2, Helsinki, Finland (hereinafter referred to as "Finnsugar")
and BIO NEBRASKA, INC., a corporation of the State of Nebraska (hereinafter
referred to as "BioNebraska").
W I T N E S S E T H
WHEREAS, Fred W. Wagner, William Lewis, Sheldon M. Schuster and Dwane E.
Wylie of the University of Nebraska (hereinafter referred to as Inventors)
have developed, while employed by the Board, certain technology, which is
believed by the parties hereto to be novel and useful (hereinafter referred
to as Inventions) relating to: (1) products and techniques for the detection
of heavy metals; (2) modification of carboxy terminus for immobilization of
antibodies including the immobilization of gamma ray emitting compounds with
antibodies; (3) cloning of chicken egg white lysozyme; (4) purification of
synthetic oligonucleotides and synthetic peptides by antigenic capping; and
(5) mutants of ASPERGILLUS NIGER.
WHEREAS, the Board, BioNebraska and Finnsugar desire that the Inventors
continue their work on the novel and useful technology referred to above and
to further enhance the existing techniques and methods with further
proprietary techniques and methods.
WHEREAS, the Board and Finnsugar entered into a cooperative agreement
dated January 9, 1986 , ("the Cooperative Agreement") providing for certain
sponsored research and disposition of rights to inventions, including the
first two Inventions listed above which were made in the course of that
sponsored research and identified as resulting from an approved Task under
the Cooperative Agreement.
WHEREAS, Finnsugar does not wish to obtain the right of first refusal to
the first two inventions mentioned above made using the results of research
covered by an approved Task under the Cooperative Agreement but instead
wishes Board to transfer an exclusive license to Finnsugar under Inventions
funded as approved Tasks by the Cooperative Agreement and also wishes an
exclusive license under the Inventions mentioned above but not developed as
approved Tasks with the express condition as to all Inventions that Finnsugar
transfer all of its rights to Inventions to BioNebraska as part consideration
for stock in BioNebraska.
WHEREAS, BioNebraska is expected to: (a) do contract research; (b)
transfer rights to others to manufacture; and (c) manufacture and sell
products itself related to at least some of the Inventions.
<PAGE>
WHEREAS, BioNebraska wishes to obtain an exclusive license under said
Inventions.
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants and agreements contained herein, the parties agree as follows:
ARTICLE I
TABLE OF CONTENTS AND DEFINITIONS
Section 1 Table of Contents
<TABLE>
<S> <C> <C>
a. Parties page 1
b. Purposes pages 1 to 3
c. Table of Contents pages 4 to 5
d. Definitions pages 5 to 9
e. University of Nebraska Inventions page 5
f. Covered Products pages 5 to 6
g. Covered Process page 6
h. Net Selling Price pages 7 to 8
i. Fair Market Value page 8
j. Finnsugar page 8
k. Accrued Royalties page 9
l. Paid Royalties page 9
m. Reimbursable Royalties pages 8 to 9
n. Scope of Grant pages 9 to 10
o. Transfer of Rights pages 9 to 10
p. Filing of Applications pages 11 to 12
2
<PAGE>
q. Royalties pages 12 to 18
r. Reporting pages 16 to 17
s. Limitations on Grant pages 17 to 18
(Diligence Requirements)
t. Funds for Research page 20
u. Commercialization page 18
v. Minimums pages 17 to 18
w. Term pages 18 to 19
x. Termination pages 19 to 20
y. Past agreements page 20
z. Warranties and Use of Names pages 20 to 21 and 22
aa. Notices pages 21 to 22
ab. Force Majeure page 23
ac. Modification of Agreement page 23
ad. severability pages 23 to 24
ae. Signatures page 25
</TABLE>
Section 2. Definitions
As used in this license:
1. "University of Nebraska Inventions" means Inventions owned by Board
which Board has the right to license and/or assign and only of the scope and
to the extent that Board has the right to license and/or assign them.
2. "Covered Products" means Products incorporating or requiring the
use of or being specifically designed for using or being made using any of
the University of Nebraska Inventions either: (a) made by or for BioNebraska
or any of its subsidiaries or affiliated companies; or (b) used, leased or
sold by BioNebraska or any of its subsidiaries or affiliated companies.
3
<PAGE>
3. "Covered Process" means any process using said University of
Nebraska Inventions as an integral part thereof to make and use said Covered
Products.
4. "Licensed Products" means Products incorporating or requiring the
use of or being specifically designed for using or being made using any of
the University of Nebraska Inventions either: (a) made by or for BioNebraska
or any of its subsidiaries or affiliated companies; or (b) used, leased or
sold by a licensee of BioNebraska or any of its subsidiaries or affiliated
companies.
5. "Subsidiary" means any corporation, company or association, more
than 50 percent of the outstanding shares of stock of which is owned outright
or beneficially by some corporation, company or association, or the
management or policy of which is directed, directly or indirectly, by some
corporation, company or association.
6. "Affiliated Company" means any company, corporation or firm in
which a party has a material financial interest or as to which the parties'
relationship is such that, the parties substantially influence its business
policies and activities.
7. "Net Selling Price" means: (a) if a Covered Product or Licensed
Product is sold for a specified consideration payable in money to a party
other than a Subsidiary or Affiliated Company of or a company of which
BioNebraska or a licensee of BioNebraska is a Subsidiary or Affiliated
Company, the amount invoiced by the corresponding one of BioNebraska or the
licensee of BioNebraska to its customer; and (b) the fair market value in the
case of other transactions. To determine the "Net Selling Price" certain
deductions shall be made from BioNebraska's list price. These deductions
shall consist of all applicable rebates, allowances adjustments, trade and
cash discounts, packing, freight, and insurance charges, customs and related
charges and all sales, use or similar taxes except if such rebates,
allowances, adjustments, trade or cash discounts are the result of
BioNebraska's or the licensee of BioNebraska's sale to a party which is a
Subsidiary, affiliated or related party of BioNebraska or the licensee and
the same are not offered to any customers which are not a subsidiary or an
affiliated or related party of BioNebraska.
8. "Fair Market Value" means the Net Selling Price which BioNebraska
or a licensee of BioNebraska hereunder would realize from an unaffiliated
buyer in an arm's length sale of the substantially identical covered Products
or Licensed Products in the same country, in the same quantity and at the
same time as the transaction subject to royalty; provided, however, that it
shall not be lower than the complete cost. Complete cost shall consist of
all properly allocatable direct costs and indirect expenses necessary or
incidental to the sale, manufacture or distribution of such Covered Products
or Licensed Products. There shall be no royalties on free samples to
unaffiliated parties.
9. "Finnsugar" means Finnsugar as defined above and also its
Affiliated Companies and Subsidiaries including Finnsugar Biochemical, Inc.
4
<PAGE>
10. "Reimbursable Royalties" means royalties that would be payable to
Board except for a provision of this agreement that permits payment of the
royalties to Finnsugar as a reimbursement for no more than [CONFIDENTIAL
TREATMENT REQUESTED] of the direct costs for the filing, maintenance and
prosecution of patent applications Inventions and the funds advanced by
Finnsugar pursuant to the Cooperative Agreement, as amended and extended for
approved Tasks (until a total of [CONFIDENTIAL TREATMENT REQUESTED] plus the
direct patent expenses spent by Finnsugar are recovered by Finnsugar).
11. "Paid Royalties" are royalties which are to be paid to Board
hereunder.
12. "Accrued Royalties" means the sum of Reimbursable Royalties and
Paid Royalties hereunder.
ARTICLE II
GRANTS
Section 1. Board hereby grants and transfers to Finnsugar and Finnsugar
hereby accepts from Board upon terms and conditions herein an exclusive
license under University of Nebraska Inventions to manufacture, have
manufactured for it, lease, use, vend and sublicense Covered Processes and
Covered Products under the terms hereunder. No assignment of these rights
and no sublicense of such rights to manufacture shall be granted without
prior approval of Board, but such approval shall not be unreasonably
withheld. The rights granted in this article to Finnsugar must be assigned
and transferred to BioNebraska within three months of the date of this
agreement subject to the terms and conditions herein.
Section 2. The rights granted in this agreement and the obligations
incurred do not nor will they apply to any invention developed by Fred W.
Wagner, William Lewis, Sheldon M. Schuster or Dwane E. Wylie or owned by
Board in the future except as provided elsewhere in this agreement.
Section 3. The grant of rights under section 1, article II, shall not
be transferable or assignable except as provided elsewhere in this agreement.
Section 4. Finnsugar, BioNebraska and the Board agree to cooperate
fully in the filing of any United States or foreign patent applications with
respect to the University of Nebraska Inventions, including but not limited
to, the execution of any and all documents necessary for the filing and
prosecution of said applications. Finnsugar and Board shall agree on which
party will file, prosecute and maintain patent applications and patents on
University of Nebraska Inventions and the time of such filing, prosecution
and maintaining.
Section 5. Finnsugar and Board each agree to furnish the other with
copies of any such applications, prosecution papers and correspondence with
the United States Patent and Trademark Office relating to such prosecution
which originate with them or are sent to them from an agency.
5
<PAGE>
Section 6. If agreement is not reached to file a patent application in
the United States on any University of Nebraska Invention within six months
of the effective date of any statutory bar, Board has the right but not the
obligation to file such applications. The party that filed the application
shall have the primary responsibility to prosecute and maintain the patent
applications or patents in the United States. If that party decides to
discontinue such prosecution or maintenance it shall notify the other party
and the other party shall have the right but not the obligation to continue
such prosecution or maintenance.
Section 7. Board and Finnsugar shall promptly and mutually determine in
which countries it is desirable to file foreign patent applications (other
than the United States) corresponding to any University of Nebraska
Inventions covered by this agreement and who shall file them. If an
agreement is not reached within eleven months after initial filing in the
United States Patent and Trademark office of the corresponding United States
patent application Board shall have the right but not the obligation to file
as outlined above; and if the party handling a foreign application decides to
discontinue prosecution of the pending foreign patent application filed under
agreement or the maintenance of any foreign patent issuing thereon, that
party shall notify the other party of such decision at least sixty days prior
to the time deadline for continuing such prosecution or maintenance, as the
case may be, and the other party shall have the option to continue such
prosecution or maintenance as outlined above with respect to United States
applications and patents.
ARTICLE III
ROYALTIES
Section 1. In consideration of the grants set forth herein, BioNebraska
agrees, to pay a continuing royalty consisting of:
(a) Reimbursable Royalties to Finnsugar up to [CONFIDENTIAL TREATMENT
REQUESTED] ([CONFIDENTIAL TREATMENT REQUESTED] maximum deductible
for patent expenses and [CONFIDENTIAL TREATMENT REQUESTED]
reimbursable from research funds as Reimbursable Royalties) at the
rate of [CONFIDENTIAL TREATMENT REQUESTED] of the Net Selling price
of any Covered Product embodying the University of Nebraska
Inventions in the country where the manufacture, commercial use or
sale of said product takes place and [CONFIDENTIAL TREATMENT
REQUESTED] of all royalties received from sublicensing so that
the total of Accrued Royalties is [CONFIDENTIAL TREATMENT REQUESTED];
(b) Paid Royalties to Board at the percentages of the net selling price
of Covered Products and/or fractions of royalties received by
BioNebraska from sublicensing specified below:
(i) after Reimbursable Royalties are paid and until Paid
Royalties equal [CONFIDENTIAL TREATMENT REQUESTED], (A) for
the first 39 months from the effective date of the agreement
whether a patent covering the process or
6
<PAGE>
product has been granted or not, [CONFIDENTIAL TREATMENT
REQUESTED] of all royalties received from sublicensing and
[CONFIDENTIAL TREATMENT REQUESTED] of the net selling price
of Covered Products and (B) for the remainder of the time
after the 39 months have passed but before the Paid Royalties
reach [CONFIDENTIAL TREATMENT REQUESTED], [CONFIDENTIAL
TREATMENT REQUESTED] of all royalties received from
sublicensing and [CONFIDENTIAL TREATMENT REQUESTED] of the
net selling price of Covered Products covered by a granted
patent together with [CONFIDENTIAL TREATMENT REQUESTED] of
the net selling price of Covered Products not covered by a
granted patent for a total period of 60 months from the
effective date of the agreement or until aggregate Paid
Royalties equal [CONFIDENTIAL TREATMENT REQUESTED] whichever
occurs earlier;
(ii) after Paid Royalties have equaled [CONFIDENTIAL TREATMENT
REQUESTED] and until Paid Royalties equal [CONFIDENTIAL
TREATMENT REQUESTED], [CONFIDENTIAL TREATMENT REQUESTED] of
all royalties received from sublicensing a patent on a
Covered Product or Covered Process and [CONFIDENTIAL
TREATMENT REQUESTED] of the net selling price of Covered
Products but only for those Covered Products covered by a
patent;
(iii) after Paid Royalties have equaled [CONFIDENTIAL TREATMENT
REQUESTED] [CONFIDENTIAL TREATMENT REQUESTED] of one percent
of Net Selling Price of Covered Products, Covered Processes
and Licensed Products on which patents have been granted.
(iv) In the event Licensee, with Board concurrence, shall decide
to withdraw a patent application in any jurisdiction and
market the invention without patent protection, the Licensee
shall enter into a separate license agreement covering that
application.
Section 2. The date of sale of any products shall be the date of
shipment or the date of payment, whichever is latest. A sale shall include
any transfer, lease or other demonstration, test, stock or otherwise.
However, only one royalty shall be paid on any Covered Product or Covered
Process.
Section 3. BioNebraska shall keep full, true and accurate books of
account containing all particulars which may be necessary for the purpose of
showing the amount payable to the Board by way of royalties as provided
herein. The books of account shall be kept at BioNebraska's principal place
of business, and the books or the supporting data therefor shall be available
for inspection by the Board or its representatives during BioNebraska's
normal business hours during the term of this Agreement, and for three years
following the expiration or termination of this Agreement for any reason.
The Board shall give BioNebraska prior written notice of any inspection
7
<PAGE>
of books of account and any such inspection shall be for the limited purpose
of verifying BioNebraska's royalty statements.
Section 4. BioNebraska shall, within thirty days of each one year
anniversary of the Effective Date deliver to the Board a true and accurate
report of all transactions relating to the calculation and payment of
royalties pursuant to this Agreement. Such report shall include, INTER ALIA,
the period of time covered by the report, a description of all products sold
by BioNebraska or its permitted assigns and/or licensees upon which royalties
are due and payable, the number and Net Selling Price of all said products,
all deductions from royalties, and the computation of any royalties due and
payable to the Board by BioNebraska. Simultaneously with the delivery of
each report, BioNebraska shall pay to the Board the royalty accrued for the
period covered by such report. If no royalties are due, it shall be so
reported.
Section 5. Board, BioNebraska and Finnsugar agree that all rights under
this license shall revert back to Board effective one month after
notification by Board if neither of the following have occurred:
(a) Covered Products or Licensed Products are offered for sale by
BioNebraska or by a sublicensee of BioNebraska within two years
after the date of this agreement or for any two consecutive years
thereafter; or
(b) funds are made available to Board to continue work at facilities of
Board within six months of Effective Date at a level of at least
[CONFIDENTIAL TREATMENT REQUESTED] semiannually and continue for at
least two years.
Section 6. If at any time during the term of this agreement after the
quarterly report occurring after the fourth anniversary date (beginning of
fifth year) of the agreement and before the end of the ninth year, the amount
of yearly Paid Royalties on a cumulative basis falls below that indicated in
the following table after the year to which it applies, Board may upon thirty
days written notice convert this license to a non-exclusive license and seek
other non-exclusive licensees. In such an event, all other terms of this
agreement remain the same:
Fifth year [CONFIDENTIAL TREATMENT REQUESTED]
Sixth year [CONFIDENTIAL TREATMENT REQUESTED]
Seventh year [CONFIDENTIAL TREATMENT REQUESTED]
Eighth year [CONFIDENTIAL TREATMENT REQUESTED]
Ninth year [CONFIDENTIAL TREATMENT REQUESTED]
This section 6 of article III shall not apply after such time as the
Board has received not less than [CONFIDENTIAL TREATMENT REQUESTED] in Paid
Royalties.
8
<PAGE>
Section 7. BioNebraska shall exercise best efforts to commercialize
University of Nebraska Inventions in Nebraska or to locate a licensee that
will commercialize the University of Nebraska Inventions in Nebraska.
ARTICLE IV
TERM AND TERMINATION
Section 1. This Agreement shall remain in full force and effect for the
longer of ten years or the life of any patent (issued in the United States or
elsewhere) which embodies the University of Nebraska Inventions which are the
subject of this Agreement.
Section 2. If Finnsugar or BioNebraska shall become bankrupt or
insolvent and/or the business of Finnsugar or BioNebraska shall be placed in
the hands of a receiver, assignee or trustee, whether by the voluntary act of
BioNebraska or otherwise, this Agreement shall become void effective thirty
days following the effective date of such written notice, unless the breach
or default is cured prior to the expiration of this thirty-day period. It
shall be considered a breach or default to fail to pay money owed to the
Board by BioNebraska, or to use the Board's name by BioNebraska or by
Finnsugar in a manner that is not approved of by the Board and which may call
into question the propriety of any of the Board's actions.
Section 3. Termination of this Agreement shall not affect the
obligations of BioNebraska to pay any royalty or other payments which may be
due and unpaid at the date of termination, nor shall it prejudice any other
right of the Board under this Agreement. Within sixty days after
termination, BioNebraska shall render to the Board a written statement of the
kind required in article III hereof respecting the due and unpaid royalties
and shall accompany such a statement with a payment to cover the same.
ARTICLE IV
MISCELLANEOUS
Section 1. To the extent the terms of this agreement are inconsistent
with any earlier agreements with respect to research funded by Finnsugar and
conducted by the Board, the terms of this agreement shall apply.
Section 2. Nothing contained in this Agreement shall be construed as:
(a) a warranty or representation of any party as to the validity or
scope of any patent obtained on the University of Nebraska
Inventions, except that the parties warrant that they will act in
good faith without fraud with respect to the filing and prosecution
of any patent applications;
9
<PAGE>
(b) a warranty or representation that any manufacture, sale, lease or
use of any products embodied by the University of Nebraska
Inventions will be free from infringement of patents owned by any
third party;
(c) an agreement to bring or prosecute actions or suits against third
parties for infringement, the right to bring or prosecute said
actions or suits residing solely in BioNebraska or in Board or in
Finnsugar; or
(d) conferring to either party any right to use in advertising,
publicity, or otherwise any name, trade name, or trademark, or any
contraction, abbreviation or simulation thereof of the other party.
Section 3. The construction and performance of this agreement shall be
governed by the laws of the State of Nebraska.
Section 4. Any notice, request or statement hereunder shall be deemed
to be sufficiently given when sent by electronic transmission followed by
registered mail addressed to Finnsugar or to BioNebraska or to the Board at
the addresses herein below specified or at such changed address as the
addressee shall specify by written notice:
IF TO THE BOARD:
Patent Administrator
University of Nebraska
303 Administration Building
3835 Holdrege Street
Lincoln, NE 68583-0743
IF TO FINNSUGAR:
Legal Department
Finnish Sugar Co., Ltd.
Kyllinkinportti 2
Helsinki, Finland
IF TO BIO NEBRASKA:
President
BioNebraska, Inc.
P.O. Box 94834
Lincoln, Nebraska 68509
10
<PAGE>
with a copy to:
Secretary
BioNebraska, Inc.
c/o Finnsugar Biochemicals, Inc.
1400 N. Meacham Road
Schaumburg, Il. 60173-4808
Section 5. The headings of this Agreement are intended merely to
facilitate reference and shall have no bearing upon the interpretation of any
terms of this Agreement.
Section 6. Nothing in this Agreement constitutes permission to use the
name of the University of Nebraska or the Board of Regents of the University
of Nebraska or the names of the Inventors without the express written
permission of the Board, except as expressly authorized in this Agreement.
Section 7. Neither party shall be liable to the other for any loss,
damage or default occasioned by strike, civil disorder, governmental decree
or regulation, acts of God or any other force majeure. In the event of the
occurrence of such force majeure, the term of this Agreement will be
suspended and extended for the duration of such force majeure.
Section 8. This Agreement may not be modified and limited and none of
its terms may be waived except by agreement in writing signed by both
parties. The failure of either party to enforce, or the delay by either party
in enforcing any of their rights shall not be deemed a continuous waiver or
modification of this Agreement.
Section 9. This agreement is severable. If any term of it is found to
be illegal or unenforceable, the contract shall be interpreted as though that
term was omitted and the contract shall remain valid to the extent possible.
In determining severability, the rights in article II are consideration for
the duty to file patent applications, transfer rights from Finnsugar to
BioNebraska, and the requirements to pay certain minimum amounts of royalties.
Section 10. The parties hereto specifically contemplate and agree that
within three months of the Effective Date and without any further permission
or action required from the parties hereto:
(1) Finnsugar shall transfer all of its rights under this Agreement
including its rights to Inventions to BioNebraska and that
henceforth after such transfer BioNebraska shall be substituted for
Finnsugar as to such rights and shall exclusively thereafter enjoy
all of the rights conferred herein upon Finnsugar; and
(2) the obligations of Finnsugar to Board created by this agreement
except those created by virtue of Finnsugar's ownership of stock in
BioNebraska or Finnsugar's control of BioNebraska or the obligation
to pay patent expenses under article II, sections 4-7,
11
<PAGE>
shall be transferred to BioNebraska and henceforth after such
transfer BioNebraska shall be substituted for Finnsugar as to such
obligations and shall exclusively thereafter bear all of the
obligations to Board conferred herein upon Finnsugar.
THE BOARD OF REGENTS OF FINNISH SUGAR CO- LTD.
THE UNIVERSITY OF NEBRASKA
By: /s/ W. E. Splinter By: /s/ Juha Koivurinta /s/ Juha Kurkinen
------------------------------ ----------------------------------------
Name: W. E. Splinter Name Juha Koivurinta Juha Kurkinen
--------------------------- --------------------------------------
Title: Assoc. V. Chancellor - Res. Title: Director, Corp. Dev. General Counsel
--------------------------- -------------------------------------
Date: 4/20/89 Date: 4/3/89
---------------------------- -------------------------------------
12
<PAGE>
BioNebraska, Inc.
By: /s/ Thomas A. Coolidge
------------------------------
Name: Thomas A. Coolidge
----------------------------
Title: Chairman of the Board
---------------------------
Date: 4/7/89
---------------------------
13
<PAGE>
Exhibit 10.11
CERTAIN INFORMATION HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24b-2.
LICENSE AND ROYALTY AGREEMENT
AGREEMENT, dated as of the 1st day of July, 1992, by and between
BIONEBRASKA, INC. (hereinafter referred to as "BN") being a corporation under
the laws of the State of Nebraska, U.S.A., and CARLSBERG A/S, Professor OLE
BUCHARDT and Dr. DENNIS HENRIKSEN (referred to collectively as the
"Licensors").
W I T N E S S E T H:
WHEREAS, Licensors have invented methods for amidating peptides using
transpeptidation techniques and a photo-nucleophile and other nucleophiles,
as more fully described below (referred to herein as the "Technologies"),
which are substantially embodied in and covered by Prof. Buchardt's Patent
Application (Danish Patent Application No. 2208/90) and all foreign or Danish
applications, and all extensions or continuations in part of, under or
derived from such Application (collectively referred herein as the
"Applications"); and
WHEREAS, the intention of BN is to develop and commercialize certain
technologies and know-how which are to be applied relative to the recombinant
expression and production of peptides, including amidated peptides.
NOW THEREFORE, in consideration of the past and future contributions of
the Licensors to the Technologies and the mutual agreements herein contained,
the parties hereto hereby agree as follows:
1. DEFINITIONS.
Whenever used in this Agreement, the following terms shall have
the following respective meanings, unless and except to the extent otherwise
indicated by the context hereof:
(a) "Net Sales" shall mean all revenues realized by BN from the sale
of products and services to customers utilizing the Technologies covered by
the Applications in the applicable jurisdictions, less in each case all
returns, allowances, the costs of freight, packaging and insurance and any
VAT or other turnover or sales taxes levied by any jurisdiction on the BN's
manufacture or sale of the product or service. For purposes of determining
"Net Sales", a sale shall be deemed to have been made when payments are
received from the customer by BN or by one of its distributors, marketers or
controlled affiliates. The revenues received by BN in each applicable
jurisdiction from the sale of (i) a service which is wholly, or substantially
in part, attributable to the use of the Technologies covered by the
Applications or (ii) a product which is, in whole or in substantial part,
created through the use of the Technologies covered by the Applications shall
be deemed to be Net Sales for the purposes hereof. For the purpose of this
Agreement it is assumed that
<PAGE>
the invoiced prices are such prices as would be fixed by bona fide sellers
and buyers negotiating at arm's length for the sale and purchase of products
and services.
(b) "Net Licensing Revenues" shall mean all licensing revenues,
whether as downpayments, prepaid royalties or current royalties fees, which
shall be received from independent sublicensees by BN relative to the
licensing of the Technologies covered by the Applications in the applicable
jurisdictions, less any income or other tax withheld or otherwise paid to any
jurisdiction in respect of the same (other than income taxes paid in respect
to the general operations of BN).
(c) "Royalty Year" shall mean a calendar year, except that the first
"Royalty Year" shall commence on the date that the aggregate of the Net Sales
and Net Licensing Revenues of BN, as defined above, exceed the equivalent of
[CONFIDENTIAL TREATMENT REQUESTED] on a cumulative basis.
2. THE LICENSE. Upon the terms and conditions set forth herein, the
Licensors hereby grant to BN, and BN hereby accepts, the exclusive right and
license to utilize the Applications and the Technologies in the rendering of
services, the manufacture and sale of products and the further licensing of
the Applications and Technologies to others.
BN shall exert reasonable efforts to obtain allowance and issuance of
patents from the Applications and to maintain such patents and will pay all
fees, costs and taxes necessary in this respect and to prevent lapse of any
such patent. In the event that for any reason BN shall determine not to
pursue further any one or more applications which are part of the
Applications or not to pay for the issuance or maintenance of one or more
patents which may issue pursuant to the Applications, then BN shall surrender
all ownership of any such application or patent to the Licensors, in each
case using reasonable efforts to afford the Licensors an opportunity to
further pursue or maintain any such application or patent for their own
accounts.
3. ROYALTY PAYMENTS.
(a) During the term hereof, BN shall pay to the Licensors
royalties (referred to as "Royalties") during each Royalty Year equal to:
(i) [CONFIDENTIAL TREATMENT REQUESTED] of the Net Sales of services
by BN during the Royalty Year;
(ii) [CONFIDENTIAL TREATMENT REQUESTED] of Net Sales of Human Growth
Hormone Releasing Factor;
(iii) [CONFIDENTIAL TREATMENT REQUESTED] of Net Sales of Calcitonin and
derivatives, modifications and fragments thereof.
With respect to the manufacture and sale of each other product covered by the
license conferred hereunder the parties shall negotiate Royalties in good
faith (up to a maximum of [CONFIDENTIAL
2
<PAGE>
TREATMENT REQUESTED] of Net Sales), bearing in mind the other royalty burdens
on the manufacture of the product and the relative competitive position
created with the use of the Technologies, as opposed to other factors. In
the event of any failure to agree on a royalty rate for the product, upon
application of either party hereto, that royalty rate shall be determined by
arbitration as herein provided.
(b) Also, during the term hereof, BN shall pay to Licensors
during each Royalty year Royalties equal to [CONFIDENTIAL TREATMENT REQUESTED]
of the Net Licensing Revenues received by BN during the Royalty Year.
(c) The foregoing notwithstanding, no royalties shall be paid
under this Section until BN has realized Net Sales and Net Licensing Revenues
in the aggregate of [CONFIDENTIAL TREATMENT REQUESTED] on a cumulative basis.
BN hereby assumes all responsibilities of Licensors for payments in respect
of the Technologies and their development to (i) the Industri og
Handelsstyrelsen (referred to as the "IOH") and (ii) the Danish Inventor's
Office. BN understands the amount of these payments to be approximately
[CONFIDENTIAL TREATMENT REQUESTED] ([CONFIDENTIAL TREATMENT REQUESTED] to the
IOH and [CONFIDENTIAL TREATMENT REQUESTED] to the Danish Inventor's Office)
and payable essentially out of revenues from the Technologies. In addition,
BN estimates its expenditures for prosecuting the Applications to exceed
[CONFIDENTIAL TREATMENT REQUESTED], being over and above what has already
been expended by the Danish Inventor's Office and by BN.
(d) The Royalties, payable pursuant to paragraphs (a), (b) and
(c) of this Section 3 shall be paid by BN to the Licensors at the principal
office of Carlsberg A/S within a period of 150 days after the end of each
Royalty Year. Simultaneously with each such payment of Royalties, BN shall
furnish to Licensors a statement setting forth in reasonable detail the bases
and data for the calculation of the Royalties being paid.
(e) BN shall maintain appropriate books and records, in
accordance with generally accepted accounting procedures, to document the
calculation of Royalties payable hereunder for each Royalty Year. From time
to time, the Licensors shall have the right, upon ten days' prior notice, to
inspect such books and records at the place where such books and records
shall be regularly kept, but only for the purpose of verifying such
calculations and the amount of Royalties due to Licensors for the particular
Royalty Year or Years and for no other purpose.
(f) If and when it becomes necessary for BN to obtain licenses
under one or more existing patents and patent applications belonging to a
third party in order to practice the Technologies under this Agreement BN
shall inform Licensors thereof including the terms of such license.
Licensors agree to negotiate in good faith a reasonable reduction of the
royalty rates under this Agreement to lessen such unforeseen financial burden
provided, however, that such reasonable reduction shall never exceed
[CONFIDENTIAL TREATMENT REQUESTED] of the applicable rates without reduction.
3
<PAGE>
4. TERM.
(a) This Agreement shall continue and remain in full force and
effect in each jurisdiction where one or more patents have issued under the
Applications for the duration of any such patents. In the event that no
patents shall issue in a particular jurisdiction, this Agreement shall have
full force and effect for a period of ten years after the date hereof or a
period of four years after the first commercial sale in such jurisdiction,
whichever is the longer period, and shall terminate at the end of such period
with respect to that jurisdiction. In the event that, after the elapse of
five years from the date hereof, the Technologies are not covered by
substantial claims under an issued patent in a particular jurisdiction, and
one or more third parties shall manufacture or sell products or services
which would infringe the patent applications or patent rights which were
expected to be obtained under the Applications or otherwise substantially
compete with the products and services being offered by BN, or distributors
or sublicensees of BN, in such jurisdiction, the provisions of this Agreement
shall continue in full force and effect as provided herein; provided,
however, that in any such situation the parties shall negotiate in good faith
a reduction of the royalty fees provided for in Section 3 (a) and (b) hereof
in light of such new circumstances.
(b) In the event that (i) the Technologies hereunder are
covered by substantial claims under issued patents in either the U.S. or in
two or more of France, Germany and the U.K. and (ii) Licensors shall have
received royalty payments hereunder of less than an average of
[CONFIDENTIAL TREATMENT REQUESTED]per year over a period of six years from
the date hereof, BN, in order to maintain its position under this Agreement,
shall be obligated to pay to Licensors (i) a minimum Royalty or maintenance
fee (referred to herein as the "Minimum Payment") totalling
[CONFIDENTIAL TREATMENT REQUESTED] for each subsequent Royalty Year or (ii)
in the alternative a one time lump sum payment in lieu of the requirement to
make a Minimum Payment for each Royalty Year (referred to as a "Single
Maintenance Payment") in the amount of [CONFIDENTIAL TREATMENT REQUESTED],
minus the aggregate amount of any Minimum Payments and Royalties previously
paid hereunder. The making of Minimum Payments or a Single Maintenance
Payment hereunder shall not diminish the obligation to pay Royalties pursuant
to the provisions of this Agreement.
5. LAW AND ARBITRATION. Unless otherwise agreed, this Agreement
shall be governed by the laws of Denmark. Any controversy or dispute arising
out of or relating to matters covered by, or the application of, this
Agreement shall be settled by arbitration. Such arbitration shall be
conducted in the English language and shall be carried out by three
arbitrators (unless the parties can agree upon one arbitrator in which case
there shall be one arbitrator) in Copenhagen, Denmark in accordance with the
Rules of the International Chamber of Commerce, existing at the time of the
arbitration. The fees and expenses of the arbitrators and the arbitration
shall be shared equally by the parties. Pending completion of the
arbitration, the parties shall proceed in good faith with the implementation
of the programs contemplated by this Agreement and in accordance with this
Agreement without prejudice to their respective positions in the arbitration.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
FOR THE LICENSORS: 22 April 1993
4
<PAGE>
CARLSBERG A/S
By /s/ Sven Petersen
-----------------------------------
(Authorized Signatory)
BIONEBRASKA, INC.
By /s/ Thomas R. Coolidge
-----------------------------------
(Authorized Signatory)
Chairman of the Board
5
<PAGE>
Exhibit 10.12
CERTAIN INFORMATION HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24b-2.
LICENSE, ROYALTY AND DEVELOPMENT AGREEMENT
AGREEMENT, dated as of the 1st day of September, 1993, by and between
BIONEBRASKA, INC. (hereinafter referred to as "BN"), being a corporation
under the laws of the State of Delaware, U.S.A., and CARLSBERG A/S (referred
to as the "Licensor").
W I T N E S S E T H:
WHEREAS, Licensor has invented novel methods for modifying proteins at
the carboxyl terminus, including the amidation of peptides with
transpeptidation techniques using genetically altered analogs of
carboxypeptidase enzymes as more fully described in Appendix A hereto
(referred to herein as the "Technologies"); and
WHEREAS, the intention of BN is to develop and commercialize certain
technologies and know-how which are to be applied relative to the expression
and production of recombinant peptides, including amidated peptides; and
WHEREAS, BN is prepared to take appropriate steps at its expense to file
and prosecute in important jurisdictions, including the E.E.C. and the U.S.,
patent applications in Carlsberg's name (the "Applications") covering the
novel inventions incorporated in the Technologies and to support further
research programs at Carlsberg for the purpose of further developing the
Technologies; and
WHEREAS, Carlsberg is prepared to license to BN on an exclusive basis
all of the novel Technologies which may be covered by patents (the "Patents")
issued under the Applications in any and all jurisdictions where the
Applications have been filed for use in the creation, production or other
manipulation of proteins which are produced by genetically altered
micro-organisms, plants or animals (referred to as the "Licensed Activities").
NOW THEREFORE, in consideration of the past and future contributions of
the Licensor to the Technologies and the mutual agreements herein contained,
the parties hereto hereby agree as follows:
1. DEFINITIONS.
Whenever used in this Agreement, the following terms shall
have the following respective meanings, unless and except to the extent
otherwise indicated by the context hereof:
(a) "Net Sales" shall mean all revenues realized by BN from
the sale of products and services to customers utilizing the Technologies
covered by the Applications and the Patents for the Licensed Activities in
the applicable jurisdictions, less in each case all returns, allowances, the
costs of freight, packaging and insurance and any VAT or other turnover or
sales
<PAGE>
taxes levied by any Jurisdiction on the BN's manufacture or sale of the
product or service. For purposes of determining "Net Sales", a sale shall be
deemed to have been made when payments are received from the customer by BN
or by one of its distributors, marketers or controlled affiliates. The
revenues received by BN in each applicable jurisdiction from the sale of (i)
a service which is wholly, or substantially in part, attributable to the use
of the Technologies covered by the Applications and the Patents for the
Licensed Activities or (ii) a product which is, in whole or in substantial
part, created through the use of the Technologies covered by the Applications
and the Patents for the Licensed Activities shall be deemed to be Net Sales
for the purposes hereof. For the purpose of this Agreement it is assumed
that the invoiced prices are such prices as would be fixed by bona fide
sellers and buyers negotiating at arm's length for the sale and purchase of
products and services.
(b) "Net Licensing Revenues" shall mean all licensing
revenues, whether as down-payments, prepaid royalties or current royalties
fees, which shall be received from independent sublicensees by BN relative to
the licensing of the Technologies covered by the Applications and the Patents
for the Licensed Activities in the applicable jurisdictions, less any income
or other tax withheld or otherwise paid to any jurisdiction in respect of the
same (other than income taxes paid in respect of the general operations of
BN).
(c) "Royalty Year" shall mean a calendar year, except that
the first "Royalty Year" shall commence on the date that the aggregate of the
Net Sales and Net Licensing Revenues of BN, as defined above, exceed the
equivalent of [CONFIDENTIAL TREATMENT REQUESTED] on a cumulative basis.
2. THE LICENSE. Upon the terms and conditions set forth herein,
the Licensor hereby grants to BN, and BN hereby accepts, the exclusive right
and license to utilize the Technologies covered by the Applications and the
Patents in the rendering of services, the manufacture and sale of products
and the further licensing of the Technologies under the Applications and the
Patents for the Licensed Activities to others.
BN shall exert reasonable efforts to obtain allowance and issuance
of Patents from the Applications and to maintain such Patents and will pay
all fees, costs and taxes necessary in this respect and to prevent lapse of
any such Patent. In the event that for any reason BN shall determine not to
pursue further any one or more applications which are part of the
Applications or not to pay for the issuance or maintenance of one or more
Patents which may issue pursuant to the Applications, then BN shall surrender
all ownership of any such Application or Patent to the Licensor, in each case
using reasonable efforts to afford the Licensor an opportunity to further
pursue or maintain any such Application or Patent for their own accounts.
3. ROYALTY PAYMENTS.
a) During the term hereof, BN shall pay to the Licensor
royalties (referred to as "Royalties") during each Royalty Year equal to:
2
<PAGE>
(i) [CONFIDENTIAL TREATMENT REQUESTED] of the Net Sales of services by
BN during the Royalty Year;
(ii) [CONFIDENTIAL TREATMENT REQUESTED] of Net Sales of Human Growth
Hormone Releasing Factor;
(ii) [CONFIDENTIAL TREATMENT REQUESTED] of Net Sales of other proteins,
such royalties to be negotiated in each case based upon the expected profit
and royalty burdens expected to be realized and encountered. In the event of
any failure to agree on a royalty rate for the particular product, upon
application of either party hereto, that royalty rate shall be determined by
arbitration as herein provided.
(b) Also, during the term hereof, BN shall pay to Licensor
during each Royalty year Royalties equal to [CONFIDENTIAL TREATMENT REQUESTED]
of the Net Licensing Revenues received by BN during the Royalty Year.
(c) The Royalties, payable pursuant to paragraphs (a) and (b)
of this Section 3, shall be paid by BN to the Licensor at its principal
office within a period of 150 days after the end of each Royalty Year.
Simultaneously with each such payment of Royalties, BN shall furnish to
Licensor a statement setting forth in reasonable detail the bases and data
for the calculation of the Royalties being paid.
(d) BN shall maintain appropriate books and records, in
accordance with generally accepted accounting procedures, to document the
calculation of Royalties payable hereunder for each Royalty Year. From time
to time, the Licensor shall have the right, upon ten days' prior notice, to
inspect such books and records at the place where such books and records
shall be regularly kept, but only for the purpose of verifying such
calculations and the amount of Royalties due to Licensor for the particular
Royalty Year or Years and for no other purpose.
(e) If and when it becomes necessary for BN to obtain
licenses under one or more existing patents and patent applications belonging
to a third party in order to practice the Technologies under this Agreement,
BN shall inform Licensor thereof including the terms of such license.
Licensor agrees to negotiate in good faith a reasonable reduction of the
royalty rates under this Agreement to lessen such unforeseen financial burden
provided, however, that such reasonable reduction shall never exceed
[CONFIDENTIAL TREATMENT REQUESTED] of the applicable rates without reduction.
4. TERM AND RESEARCH SUPPORT.
(a) This Agreement shall continue and remain in full force
and effect in each jurisdiction where one or more Patents have issued under
the Applications for the duration of any such Patents. In the event that no
Patents shall issue in a particular jurisdiction, this Agreement shall have
full force and effect for a period of ten years after the date hereof or a
period of four years
3
<PAGE>
after the first commercial sale in such jurisdiction, whichever is the longer
period, and shall terminate at the end of such period with respect to that
jurisdiction. In the event that, after the elapse of five years from the
date hereof, the Technologies are not covered by substantial claims under an
issued Patent in a particular jurisdiction, and one or more third parties
shall manufacture or sell products or services which would infringe the
Applications or Patents which were expected to be obtained under the
Applications or otherwise substantially compete with the products and
services being offered by BN, or distributors or sublicensees of BN, in such
jurisdiction, the provisions of this Agreement shall continue in full force
and effect as provided herein; provided, however, that in any such situation
the parties shall negotiate in good faith a reduction of the royalty fees
provided for in Section 3 (a) and (b) hereof in light of such new
circumstances.
(b) For a period of at least five years from the date hereof,
BN shall support a research program at Carlsberg Laboratory (the "Program")
which shall cover the salary and benefit costs of one post doctorate
scientist (the "Scientist") and the laboratory and travel expenses of the
Scientist (such costs and such expenses not to exceed $45,000 and $15,000 per
year respectively) The Program shall generally encompass research and
development to enhance the utility of the Technologies in and for the
Licensed Activities.
5. LAW AND ARBITRATION. Unless otherwise agreed, this Agreement
shall be governed by the laws of Denmark. Any controversy or dispute arising
out of or relating to matters covered by, or the application of, this
Agreement shall be settled by arbitration. Such arbitration shall be
conducted in the English language and shall be carried out by three
arbitrators (unless the parties can agree upon one arbitrator in which case
there shall be one arbitrator) in Copenhagen, Denmark in accordance with the
Rules of the International Chamber of Commerce, existing at the time of the
arbitration. The fees and expenses of the arbitrators and the arbitration
shall be shared equally by the parties. Pending completion of the
arbitration, the parties shall proceed in good faith with the implementation
of the programs contemplated by this Agreement and in accordance with this
Agreement without prejudice to their respective positions in the arbitration.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
FOR THE LICENSOR:
CARLSBERG A/S 8 October 1993
By /s/ Sven Petersen
-----------------------------------
(Authorized Signatory)
BIONEBRASKA, INC.
By /s/ Thomas R. Coolidge
-----------------------------------
(Authorized Signatory)
4
<PAGE>
APPENDIX A
LICENSE, ROYALTY AND DEVELOPMENT AGREEMENT
DESCRIPTION OF THE TECHNOLOGIES
Carlsberg has developed virtually all the technological understanding
concerning the enzyme Carboxypeptidase Y. Most importantly workers at
Carlsberg have purified the enzyme free of proteases and they have elucidated
the bond specificity in the P1 and P1's positions. Furthermore, they have
developed the utility of this enzyme for transpeptidation reactions which are
useful in peptide synthesis.
Recently, Professor James Remington at the University of Oregon in
collaboration with Dr. Klaus Breddam has elucidated the x-ray structure of
the enzyme and now has a clear understanding of the three dimensional
structure of the active and catalytic sites of the enzyme. This information,
which is planned to be submitted for publication soon, has allowed Dr. Klaus
Breddam and coworkers to begin to develop site specific genetic mutants of
the enzyme, in which a single amino acid is changed in the active site.
These mutants may or may not have altered catalytic activities. When many
mutants are generated at a time by random genetic mutagenesis, mutant enzymes
with unique specificities can be selected by screening the mutant organisms
which produce the enzyme with specific substrates. Using this method,
Breddam and his associates have produced mutants of CPDY having specificity
for substrates poorly used by wild type CPDY.
This same technology has been used by others to prepare mutants of other
serine and cysteine proteases with altered activities for peptide substrates.
What is new is that the mutants of CPDY also have altered specificities
for transpeptidation reactions. Thus it is now possible to prepare
genetically derived enzymes that will perform transpeptidation reactions
having unique utility in preparing recombinant peptides.
It may also be possible to prepare unique proteases mutants that will
transfer small organic moieties other than L-amino acids or L-amino acid
amides onto peptides and especially recombinant peptides.
5
<PAGE>
Exhibit 10.13
CERTAIN INFORMATION HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24b-2.
LICENSE AGREEMENT
regarding
US PATENTS ON TRANSPEPTIDATION
between
PolyPeptide Laboratories A/S
Herredsvejen 2
3400 Hillerod
Denmark
and
BioNebraska, Inc.
3820 NW 46th Street
Lincoln
Nebraska 68524
USA
<PAGE>
LICENSE AGREEMENT
(Transpeptidation)
THIS AGREEMENT is entered in to on the 17th day of February 1997, between:
(1) PolyPeptide Laboratories A/S, a Danish company incorporated under the
laws of Denmark, with its registered offices at Herredsvejen 2, 3400
Hillerod, Denmark, hereinafter referred to as "the Licensor" and
(2) BioNebraska, Inc., a company incorporated under the laws of the United
States, with its registered offices at 3820 NW 46th Street, Lincoln,
Nebraska 68524, USA, hereinafter referred to as "the Licensee".
WHEREAS:
A. The Licensor has developed a patented invention on Transpeptidation
relating to the manufacture and testing of pharmaceutical peptides;
B. The parties wish to enter this Agreement for the purpose of licensing
the use of the US Transpeptidation patents upon the terms and
conditions hereafter contained.
The parties agree as follows:
1. DEFINITIONS
In this Agreement:
1.1 "the Patents" shall mean the US Patent No. 4,339,534 expiring July 13,
1999 and US Patent No. 4,806,473 expiring February 21, 2006, both
registered in the name of the Licensor, and all divisions,
continuations, continuations in part, re-issues, renewals, extensions
or editions to any such Patent.
1.2 "the Territory" shall mean United States of America
1.3 "the Patented Technology" shall mean the technology for the production
and use of peptides and proteins produced with DNA recombinant
technology as covered by the Patents and includes all matters required
to be confidential according to Article 6.
1.4 "a Product" shall mean any pharmaceutical product comprised in whole or
in part of peptides or proteins produced with the use of the Patented
Technology.
<PAGE>
1.5 "controlling interest" shall mean with reference to a party hereto or
an assignee the interest in that body of a person, firm, or
corporation who or which:
(i) is able to exercise or is entitled to acquire control (whether
direct or indirect) over the body's affairs and in particular
(but without prejudice to the generality of the preceding words)
if he or it possesses or is entitled to acquire the greater part
of the issued share capital or voting power in the body or
(ii) in the event of the dissolution or liquidation of the body would
be entitled to the greater part of the assets available for
distribution among its shareholders.
1.6 "Net Sales" shall mean gross proceeds resulting from sales of a
Product in the Territory by Licensee less:
(i) trade and/or cash discounts actually allowed and taken,
(ii) forwarding expenses, freight, postage and duties actually paid
or allowed and taxes imposed on the seller with respect to such
sales, and
(iii) credits for goods returned and any credit given for reduction in
price.
1.7 Where the context so admits the singular includes the plural and vice
versa.
1.8 The clause headings shall not form part hereof for the purpose of
construction.
2. GRANT OF RIGHTS
In consideration of the fees and royalty payments hereinafter referred
to, the Licensor hereby grants to the Licensee under the Patents, the
Patented Technology and all other rights held by the Licensor an
exclusive license to a restricted use of the Patented Technology,
namely for the production and use of peptides and proteins produced
with DNA recombinant technologies in the Territory. The Licensee shall
not directly or indirectly use the Patents or Patented Technology for
any purpose other than expressly granted hereunder, whereas the
licensor retains its right to make use of the patents within the
Territory for non-recombinant use.
3. PAYMENTS
3.1 Fees
Upon signing this Agreement, the Licensee will pay the Licensor a fee of
[CONFIDENTIAL TREATMENT REQUESTED] for obtaining the exclusive license
as described in Article 2. One year after having received the first
regulatory approval for the marketing of a Product,
2
<PAGE>
the Licensee shall pay to the Licensor a further fee of [CONFIDENTIAL
TREATMENT REQUESTED].
3.2 Royalty
The Licensee agrees to pay to the Licensor royalties for the rights
granted to it hereunder at the rate of [CONFIDENTIAL TREATMENT
REQUESTED] of the Net Sales by the Licensee of a Product until the last
of the Patents expires. Forty five (45) days after the end of each
calendar quarter, the Licensee shall furnish to the Licensor a
calculation of Net Sales and the royalties payable hereunder for such
calendar quarter and shall accompany each such report with the payment
of royalties then due. Calendar quarters shall be the periods ending on
March 31, June 30, September 30 and December 31. The Licensor shall
have the right, through its duly authorised representatives, and at its
expense, to examine the books and records of the Licensee during
reasonable business hours for the purpose of verifying the correctness
of the calculation of Net Sales and royalties payable.
3.3 Currency
Fees and Royalties accrued pursuant to this Agreement shall be payable
to the Licensor in US Dollars. If direct remittance to the Licensor in
US Dollars of such fees and royalties is not lawful or practicable,
payment thereof shall be made by deposit, within the period provided
for in Section 3.1, - upon execution of the Agreement and 1 year after
occurrence of the first regulatory approval - and Section 3.2 - 45 days
after the end of each calendar quarter.
4. TRANSFER OF PATENTED TECHNOLOGY
The Licensor shall promptly disclose to the Licensee all particulars
and details of the Patented Technology sufficient for the Licensee to
use it for the production and use of peptides and proteins produced
with DNA recombinant technology.
5. CONFIDENTIAL INFORMATION
During the continuance of this Agreement and at all times thereafter
the Licensee shall (except to fulfil the purposes of this Agreement)
keep confidential the Patented Technology, the improvements and
information related thereto and shall not disclose or use any part of
it and the Licensee shall (except to fulfil the purposes of this
Agreement) keep confidential and shall not disclose or use any
information received by it from the Licensor whether under this
Agreement or otherwise (except to the extent that such information is
published by the Licensor or is contained in a published patent
specification or is generally known otherwise than by a breach of this
Agreement) and shall ensure by securing and enforcing suitable
contractual provisions that its employees and all other persons or
companies to whom such information is communicated shall be similarly
bound.
3
<PAGE>
6. PATENT INFRINGEMENTS
(a) If either of the parties hereto shall come to know of any infringement
or threatened infringement of the Patents then it shall immediately
inform the other party thereof and both parties shall discuss what
action shall be taken.
(b) Should either party decide for any reason that it is not willing to
take legal proceedings in respect of such infringement then the other
party may at its own expense take any such action as it considers
desirable and the inactive party shall on reimbursement of its expenses
lend its name and give the party taking such action all such assistance
whether legal or technical as such other party requests of it.
7. ASSIGNMENT
Neither the Licensor nor the Licensee may assign this Agreement except:
(a) to an assignee in which that party has a controlling interest; or
(b) with the consent of the other party which consent shall not be
unreasonably withheld.
8. WARRANTIES
8.1 Exclusivity
The Licensor warrants to the Licensee that the Licensor will not use
the Patented Technology for the production and use of peptides and
proteins produced by nonrecombinant technologies in the Territory, nor
that the Licensor has granted or will grant any other license for the
herein described use of the Patented Technology during the term of this
Agreement.
8.2 Restricted Use
The Licensee warrants to the Licensor that the Licensee will not use
the Patented Technologies for any other purpose than for peptides and
proteins produced with DNA recombinant technologies, and especially
will not use the Patented Technologies for the product Calcitonin.
9. PERIOD OF AGREEMENT
Subject to the provisions of Clause 10 hereof, this Agreement shall
continue for the life of the last Patent to expire.
10. TERMINATION
This Agreement may be terminated at any time in any of the following
ways:
4
<PAGE>
(a) if either of the parties shall become insolvent or shall have a
receiver or trustee appointed in charge of the whole or any part
of its assets or shall enter into liquidation (other than for the
purposes of reorganisation), then the other party may by notice in
writing served upon it terminate this Agreement with immediate
effect.
(b) if either of the parties shall commit a material breach of its
obligations under this Agreement, the other may send to it notice
in writing specifying the breach complained of and calling upon
it to remedy the same within a specified period of not less than
ninety days, and if the party in default shall not have remedied
the breach within the said period, then the party serving the
notice may terminate this Agreement by a further 14 days' notice
in writing served upon the party in default.
11. NOTICES
Any notice or other communication authorised or required to be given
hereunder or for the purposes hereof shall be deemed to be sufficiently
given to either party if left at or forwarded by registered post,
recorded delivery service, or facsimile addressed to such party at its
last known address or its registered office and every notice or other
such communication shall be deemed to have been received and given at
the time when in the ordinary course of transmission it would have been
delivered at the address to which it was sent.
12. LAW
This Agreement shall in all respects be governed by the laws of
England.
13. ARBITRATION
All disputes between the parties relating to this Agreement, including
its interpretation that cannot be settled amicably by the parties,
shall be referred to and finally resolved by arbitration under the
Rules of the London Court of International Arbitration in England,
which Rules are deemed to be incorporated by reference to this Article.
5
<PAGE>
PolyPeptide Laboratories, A/S BioNebraska, Inc.
/s/ Erik Lorentsen /s/ Thomas R. Coolidge
- --------------------------------- -------------------------------
Hillerod, February 17, 1997 Falls Village, 2/27 1997
General Manager Chairman of the Board and CEO
6
<PAGE>
Exhibit 10.14
CERTAIN INFORMATION HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT UNDER RULE 24b-2.
CAMBRIDGE BIOTECH CORPORATION
July 15, 1996
BioNebraska, Inc.
3820 NW 46th Street
Lincoln, Nebraska 68524
Attention: Mr. Thomas R. Coolidge
Chairman of the Board and C.E.O.
OT Company
Suite #4
11823 Arbor
Omaha, Nebraska 68144
GRF Corporation
3820 NW 46th Street
Lincoln, Nebraska 68524
Dear Tom:
I would like to confirm our settlement agreement among Cambridge Biotech
Corporation ("CBC"), GRF Corporation ("GRFCO"), OT Company ("OTJV") and
BioNebraska, Inc. ("BN") concerning CBC's interest in GRFCO and related matters.
We have agreed on the following terms that BN will acquire all of CBC's interest
in the Joint Venture Agreement, under date of July 23, 1992 (the "Joint Venture
Agreement") and all of CBC's 38 shares of Class A Stock of GRFCO and that
certain agreements of CBC will be cancelled and terminated. Capitalized terms
used herein, unless otherwise stated, shall have the meanings set forth in the
Joint Venture Agreement.
1. BN shall pay to CBC or its successor or its assign (it is understood and
agreed that CBC's interest in this settlement agreement, including future
royalties and other payments, may be assigned to its successor under its
reorganization plan, Aquila Biopharmaceuticals, Inc.) the sum of
[CONFIDENTIAL TREATMENT REQUESTED] at the closing (the "Closing") under
this settlement agreement which shall occur on or before August 15, 1996.
At the Closing, CBC shall deliver to BN, duly endorsed, certificates for 38
shares of Class A GRFCO Common Stock and a duly executed assignment of all
of CBC's interest in the Joint Venture Agreement, free and clear of all
encumbrances and in such form and with such other
<PAGE>
documentation as may be reasonably required to effectively transfer all
of such interests to BN. OTJV and BN hereby waive any provision of the
Joint Venture Agreement including, without limitation, those contained
in Sections 9.2 and 10.1 thereof which would in any way restrict,
condition or make void the transfer contemplated by this section.
2. CBC (or its successor or assign) will be paid (quarterly) for a period of
twenty years from the date hereof a royalty of [CONFIDENTIAL TREATMENT
REQUESTED] of net sales of commercial growth hormone releasing factor
("GRF") finished product (pursuant to an NDA, PLA or similar application
form approved by the FDA or equivalent regulatory authority approval) made
by GRFCO, OTJV (or its joint venture partners) or BN or by any of their
collaborators or licensees or any other party which is an owner or licensee
of GRF Technology which has been discovered, developed or acquired by
GRFCO, BN or OTJV or any of their successors or affiliates. For the
purposes of this agreement, GRF Technology shall be deemed to include all
GRF Technology whenever developed and shall, without limitation, include
GRF Technology developed during the term of the Joint Venture Agreement. A
GRF finished product may also contain one or more other therapeutically
active products; and in such an event the royalty rate shall be
[CONFIDENTIAL TREATMENT REQUESTED] of such net sales. In the case where
GRF is manufactured in bulk by BN (or its contractors) and the full royalty
of [CONFIDENTIAL TREATMENT REQUESTED] is paid, [CONFIDENTIAL TREATMENT
REQUESTED] of the net sales price of the GRF finished product will be
deducted before the royalty is calculated. All royalty payments due
hereunder shall be made within 60 days after the close of each calendar
quarter when earned and each such payment shall be accompanied by a report,
prepared by BN or GRFCO, setting forth INTER ALIA the applicable total
sales of GRF finished product for the quarter in question, the amount of
any "license fee" payable to CBC or its successor or assign pursuant to
paragraph 3 hereof, the calculation of the royalty or license fee being
paid at the time and any other information, directly pertinent to the
determination of the royalty or license fee, as may be reasonably requested
by the recipient. The recipient at its expense shall have the right, upon
ten day's notice and not more than once annually, to have its independent
auditors review at the premises of BN, GRFCO or OTJV all the books and
records which are directly relevant to and which form the basis for the
royalty or license fee calculations and the quarterly reports made
hereunder. To the extent that GRF final product sales are carried out by
one or more collaborating entities other than BN, GRFCO or OTJV, which are
not under the control of such companies, BN, GRFCO and OTJV shall use their
respective best efforts to obtain access for such auditor to the pertinent
books and records of each such entity. Such independent auditor shall be
responsible for maintaining the confidentiality of the information obtained
from any such review and will execute an appropriate confidentiality
agreement in this connection.
3. CBC (or its successor or assign) will be paid on a quarterly basis
[CONFIDENTIAL TREATMENT REQUESTED] of all license fees received by GRFCO,
OTJV or BN or their successors or affiliates which are paid relative to the
licensing of GRF Technology which has been or shall be discovered,
developed or acquired by GRFCO, BN or OTJV or any of their successors or
affiliates prior to July 15, 2001. The term "license fee" shall include
whether characterized as a license fee or otherwise, without limitation,
any initial lump sum payment made for the acquisition of rights to GRF
Technology and/or the rights to distribute GRF
<PAGE>
finished products and/or any amounts paid for such an acquisition or
retention of rights upon the happening of prescribed subsequent events
or milestones. The term "license fee" shall not include payments
received to the extent that such payments are reimbursements for costs
for research and development activities.
4. GRFCO, BN or OTJV, or any of their respective shareholders, successors or
assigns, shall have the right without limitation to purchase, buy out and
fully terminate all royalty and license fee payments, and all other rights
and obligations of any nature whatever, which are conferred on CBC or its
successors or assigns or which may be owed to or payable to CBC and its
successors and assigns under the provisions of this settlement agreement by
any and all of GRFCO, BN or OTJV (or any of their successors or assigns),
by making a cash payment (in the form of a bank cheque or wire transfer) to
CBC (or its successor or assign owning such rights) of [CONFIDENTIAL
TREATMENT REQUESTED], if made on or before December 31, 2002, or
[CONFIDENTIAL TREATMENT REQUESTED], if made between January 1, 2003 and the
close of business on December 31, 2006. Upon completion of any such cash
payment, CBC or its successors or assigns, as the case may be, shall
deliver such documentation in respect to the termination of all such rights
and obligations under this agreement as well as the termination of this
agreement as the entity making such payment may reasonably require.
5. Effective as of the Closing under this settlement agreement, and except as
otherwise specifically provided in this agreement, BN, CBC (and its
successor or assign, as applicable), OTJV and GRFCO, each for itself and
its successors in interest, hereby release each and every other such entity
from all claims of any nature which were or could have been asserted by any
one such entity against another arising out of or relating to the
negotiation, execution or implementation of the Joint Venture Agreement.
At the Closing, OTJV, BN, GRFCO and CBC (and its successor or assign) shall
deliver such other documentation as may be reasonably required,
respectively, by CBC, OTJV, BN or GRFCO to further evidence such release.
6. Effective as of the Closing under this settlement agreement, GRFCO, BN and
OTJV agree to the termination and release of any and all obligations or
responsibilities of CBC, and its successors and assigns, which had or may
have existed on or prior to this date and at any time in the future,
relative to research on, development, communicating or licensing to GRFCO
of any technology for the non-injection delivery of GRF, whether pursuant
to the Joint Venture Agreement, the CBC License Agreement entered into in
conjunction with the Joint Venture Agreement or otherwise. GRFCO, BN, OTJV
and CBC hereby agree that effective as of the Closing, the CBC License
Agreement and the CBC Option and Contribution Agreement are hereby
terminated and shall be void and without recourse to any party. Without
limiting the generality of the foregoing, GRFCO shall no longer have any
rights to CBC Patents and Know-How, as defined in the CBC License
Agreement. At the Closing, GRFCO, OTJV and BN shall deliver such other
documentation as may be reasonably required by CBC to evidence the
termination of such agreements.
<PAGE>
7. OTJV, BN and GRFCO hereby jointly and severally represent that they have
informed CBC of all material matters pertaining to the Pilot Study and the
development and marketing of GRF Technology and have provided CBC with all
data and test results which would have a material bearing upon CBC's
evaluation of the GRF Technology and the transfer of its joint venture
interest pursuant to the terms hereof, including any discussions by
representatives or agents of OTJV, BN or GRFCO of prospective funding
sources for further development or marketing of GRF Technology.
8. The foregoing provisions of this settlement agreement not withstanding, CBC
on behalf of itself and its successors and assigns shall safeguard and
maintain all proprietary and confidential information relative to GRF
Technology which it has heretofore received under the Joint Venture
Agreement and which it and/or its successors and assigns may hereafter
receive in connection with this agreement in accordance with the provisions
of Article VII of the Joint Venture Agreement, which provisions for this
purpose shall be incorporated in this agreement by reference.
9. Subject to and contingent upon CBC presenting for approval this settlement
agreement by the Bankruptcy Court as part of the CBC Plan of
Reorganization, BN, and OTJV each agrees to withdraw its objections before
or at the hearing on July 15, 1996 relative to the confirmation of such
Plan and to the assumption and assignment by CBC of the Joint Venture
Agreement (as changed by the provisions hereof) and this settlement
agreement.
If these terms and conditions are agreeable, please sign and return one copy of
this settlement agreement, which shall constitute a binding agreement among the
respective parties hereto, subject only to approval of the Bankruptcy Court.
CAMBRIDGE BIOTECH CORPORATION ("CBC")
/s/ Alison Taunton-Rigby
- ---------------------------------------
Alison Taunton-Rigby
President and Chief Executive Officer,
duly authorized
<PAGE>
Agreed and accepted as of the above date by:
BIONEBRASKA, INC. ("BN")
/s/ Thomas R. Coolidge
- ---------------------------------------
Thomas R. Coolidge
Chairman of the Board and CEO,
duly authorized
OT COMPANY ("OTJV")
/s/ Thomas R. Coolidge
- ---------------------------------------
Thomas R. Coolidge
President, duly authorized
GRF CORPORATION ("GRFCO")
/s/ Thomas R. Coolidge
- ---------------------------------------
Thomas R. Coolidge
President, duly authorized
<PAGE>
Exhibit 10.15
INVESTMENT AGREEMENT
THIS AGREEMENT is entered into as of June 16, 1998, by and among
BIONEBRASKA, INC., a Delaware corporation (the "Company"), and MEDTRONIC, INC.,
a Minnesota corporation ("Medtronic").
RECITALS:
A. The Company desires to issue and sell to Medtronic, and Medtronic
desires to purchase from the Company, upon the terms and subject to the
conditions set forth in this Agreement, shares of the Company's Series G
Convertible Preferred Stock, par value $.01 per share ("Series G Preferred"), as
provided for in Section 2.1 hereof.
B. As a condition to Medtronic's investment described above, the Company
is willing to grant to Medtronic certain rights as set forth in this Agreement
and the Registration Rights Agreement (as defined below).
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants, and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 SPECIFIC DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth or as referenced below:
"AFFILIATE" of a specified person (natural or juridical) means a person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified. "Control"
shall mean ownership of more than 50% of the shares of stock entitled to vote
for the election of directors in the case of a corporation, and more than 50% of
the voting power in the case of a business entity other than a corporation.
"AGREEMENT" means this Agreement and all Exhibits and Schedules hereto.
"BOARD" means the Company's Board of Directors.
"CAPITAL STOCK" means any of the authorized shares of the Company.
"cGMP" means current Good Manufacturing Practices.
1
<PAGE>
[***]
"CLOSING" shall have the meaning set forth in Section 2.3.
"COMMON STOCK" means the shares of Common Stock of the Company, par value $.01
per share.
"CONFIDENTIAL INFORMATION" means know-how, trade secrets, and unpublished
information disclosed (whether before or during the term of this Agreement) by
one of the parties (the "disclosing party") to the other party (the "receiving
party") or generated under this Agreement, excluding information that:
(a) was already in the possession of the receiving party prior to its
receipt from the disclosing party or has been independently developed by
the receiving party without breach of this Agreement or use of any
Confidential Information of the other party (provided that the receiving
party is able to provide the disclosing party with reasonable documentary
proof thereof);
(b) is or becomes part of the public domain by reason of acts not
attributable to the receiving party;
(c) is or becomes available to the receiving party from a source
other than the disclosing party, which source, to the best of the receiving
party's knowledge, has rightfully obtained such information and has no
obligation of nondisclosure or confidentiality to the disclosing party with
respect thereto;
(d) is made available by the disclosing party to a third party
unaffiliated with the disclosing party on an unrestricted basis; or
(e) has been or must be publicly disclosed by reason of legal,
accounting, or regulatory requirements beyond the reasonable control, and
despite the reasonable efforts, of the receiving party.
All Confidential Information disclosed by one party to the other under this
Agreement shall be in writing and bear a legend stating "Proprietary,"
"Confidential," or words of similar import or, if disclosed in any manner other
than writing, shall be preceded by an oral statement indicating that the
information is Company proprietary or confidential, and shall be followed by
transmittal of a reasonably detailed written summary of the information provided
to the receiving party within 30 days and identified as Confidential Information
bearing the legend described above.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and all
regulations promulgated thereunder.
* Confidential portions of this document indicated by [***] have been omitted
and filed separately with the Commission.
2
<PAGE>
"FDA" means the United States Food and Drug Administration.
"FIELD" [***]
[***]
"INTELLECTUAL PROPERTY" means letters patent and patent applications;
trademarks, service marks and registrations thereof and applications therefor;
copyrights and copyright registrations and applications; all discoveries, ideas,
inventions, technology, know-how, trade secrets, processes, formulas, drawings
and designs, notebooks, computer programs and software, and licenses; and all
amendments, modifications, and improvements to any of the foregoing.
"KNOWLEDGE" means actual knowledge of a fact or the knowledge that such person
could reasonably be expected to have based on reasonable inquiry. The knowledge
of an entity shall include the knowledge of such entity's executive officers.
"LIENS" means liens, mortgages, charges, security interests, claims, voting
trusts, pledges, encumbrances, options, assessments, restrictions, or
third-party or spousal interests of any nature.
"PREFERRED STOCK" means shares of the Company's Series A Preferred Stock, Series
B Convertible Preferred Stock, Series C Convertible Preferred Stock, Series D
Convertible Preferred Stock, Series E Convertible Preferred Stock, Series F
Convertible Preferred Stock, and Series G Convertible Preferred Stock.
"PURCHASED SHARES" means the shares of Series G Preferred purchased by Medtronic
pursuant to Section 2.1.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement of even
date herewith between Medtronic and the Company.
"SEC" shall mean the Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and all
regulations promulgated thereunder.
1.2 DEFINITIONAL PROVISIONS.
(a) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement
as a whole and not to any particular provisions of this Agreement.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
* Confidential portions of this document indicated by [***] have been omitted
and filed separately with the Commission.
3
<PAGE>
(c) References to an "Exhibit" or to a "Schedule" are, unless
otherwise specified, to one of the Exhibits or Schedules attached to or
referenced in this Agreement, and references to an "Article" or a "Section"
are, unless otherwise specified, to one of the Articles or Sections of this
Agreement.
(d) The term "person" includes any individual, partnership, joint
venture, corporation, trust, unincorporated organization or government or
any department or agency thereof.
ARTICLE 2
PURCHASE OF SERIES G PREFERRED STOCK
2.1 PURCHASE AND SALE OF SHARES; PURCHASE PRICE. At or before the
Closing, the Company shall adopt and file with the Secretary of State of
Delaware a Certificate of Designation relating to the Series G Preferred in the
form attached hereto as EXHIBIT A. Subject to the terms and conditions hereof,
the Company shall issue and deliver to Medtronic, and Medtronic shall purchase
from the Company, 50,000 shares of Series G Preferred (the "Purchased Shares"),
which shall have a face value and purchase price of $100 per share and an
aggregate purchase price of $5,000,000. As described in the Certificate of
Designation, the Purchased Shares shall initially be convertible into shares of
Common Stock based on a price per share of Common Stock of $7.75. Certificates
representing the Purchased Shares shall be issued on the Closing Date in form
acceptable to Medtronic and its counsel.
2.2 PAYMENT OF PURCHASE PRICE. Medtronic shall pay the Purchase Price to
the Company on the Closing Date via wire transfer of funds to an account
designated by the Company.
2.3 CLOSING. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place, following the satisfaction or waiver
of all of the conditions to Closing contained in this Agreement, at 10:00 a.m.
on June 16, 1998, or at such other time as shall be agreed upon by Medtronic and
the Company (the "Closing Date"). The Closing shall take place (i) at the
office of Fredrikson & Byron, P.A. in Minneapolis, Minnesota, or (ii) on the
mutual agreement of the parties, by delivery via facsimile transmission (with
originals sent by overnight courier service) of the documents to be delivered at
the Closing, or (iii) at such other place or in such other manner as the parties
mutually agree.
2.4 USE OF PROCEEDS. The Company and Medtronic agree that the proceeds
received by the Company from the sale of the Purchased Shares hereunder shall be
used by the Company for [***]
* Confidential portions of this document indicated by [***] have been omitted
and filed separately with the Commission.
4
<PAGE>
ARTICLE 3
MEDTRONIC RIGHTS OF FIRST OFFER AND FIRST REFUSAL
3.1 RIGHT OF FIRST REFUSAL ON NEW ISSUANCES.
(a) The Company hereby grants to Medtronic a right of first refusal
to purchase all or part of its pro rata share of any New Securities (as
defined below) that the Company may, from time to time, propose to sell and
issue, subject to the terms and conditions set forth below. Medtronic's
pro rata share, for purposes of this Section 3.1, shall equal a fraction,
the numerator of which is the number of issued and outstanding shares of
Common Stock then held by Medtronic or into which the shares of Preferred
Stock then held by Medtronic are convertible and the denominator of which
is the total number of shares of Common Stock then issued and outstanding
and/or into which the shares of all preferred stock of the Company then
issued and outstanding are convertible.
(b) "New Securities" means any Capital Stock, whether or not now
authorized, and rights, options, or warrants to purchase Capital Stock, and
securities of any kind whatsoever that are, or may become, convertible into
Capital Stock; provided, however, that the term "New Securities" does not
include:
(i) Shares of Common Stock issuable upon conversion of
outstanding shares of Preferred Stock;
(ii) Shares of Series F Convertible Preferred Stock currently
being offered to investors by the Company, any warrants to purchase
Common Stock issued to any agents in connection with such offering,
and any shares of Common Stock issued to any agent in lieu of
commissions in connection with such offering;
(iii) Shares of Common Stock issuable to officers, directors, or
employees of or consultants to the Company granted pursuant to the
Company's 1993 Stock Plan, as it has been, and may be, amended from
time to time;
(iv) Shares of Common Stock issued or issuable upon exercise of
warrants to purchase shares of Common Stock outstanding on the date
hereof;
(v) Shares of Common Stock issued upon conversion of the
Company's bridge notes outstanding on the date hereof;
(vi) Shares of Common Stock sold to the public pursuant to a
registration statement filed under the Securities Act; or
5
<PAGE>
(vii) Securities issued as a result of any stock split, stock
dividend, or reclassification of Common Stock, distributable on a pro
rata basis to all holders of Common Stock.
(c) In the event the Company intends to issue New Securities, it
shall give Medtronic written notice of such intention, describing the type
of New Securities to be issued, the price thereof, the proposed offeree(s),
and the general terms upon which the Company proposes to effect such
issuance. Medtronic shall have 15 days from the date of receipt of such
notice to agree to purchase all or part of its pro rata share of such New
Securities for the price and upon the general terms and conditions
specified in the Company's notice by giving written notice to the Company
stating the quantity of New Securities to be so purchased.
(d) In the event that Medtronic fails to exercise the foregoing right
of first refusal with respect to any New Securities within such 15-day
period, the Company may within 120 days thereafter sell any or all of such
New Securities not agreed to be purchased by Medtronic, at a price and upon
general terms no more favorable to the purchaser(s) thereof than specified
in the notice given to Medtronic pursuant to paragraph (c) above. In the
event that the Company does not sell such New Securities within such
120-day period, the Company shall not thereafter issue or sell any New
Securities without first offering such New Securities to Medtronic in the
manner described above.
(e) The rights of Medtronic described in this Section 3.1 shall
terminate upon the closing of the sale of the Company's Common Stock in an
underwritten public offering registered under the Securities Act that
results in aggregate gross proceeds to the Company of not less than
$7,000,000.
3.2 [***]
(a) [***]
(b) [***]
(i) [***]
(ii) [***]
[***]
(c) [***]
(d) [***]
* Confidential portions of this document indicated by [***] have been omitted
and filed separately with the Commission.
6
<PAGE>
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the attached Disclosure Schedule, the Company
represents and warrants to Medtronic as follows:
4.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Company is a
corporation duly incorporated, validly existing, and in good standing under the
laws of the State of Delaware and is duly licensed or qualified to transact
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of the business transacted by it or the character of the
properties owned or leased by it requires such licensing or qualification and
where the failure to be so licensed or qualified could have a material adverse
effect upon the Company or its business. The Company has the corporate power
and authority to own and hold its properties and to carry on its business as now
conducted and as proposed to be conducted, to execute, deliver and perform this
Agreement, and to issue, sell, and deliver the Purchased Shares.
4.2 AUTHORIZATION OF AGREEMENT, ETC.
(a) The execution and delivery by the Company of this Agreement, the
performance by the Company of its obligations hereunder, and the issuance,
sale, and delivery of the Purchased Shares have been duly authorized by all
requisite corporate action and will not violate any provision of law, any
order of any court or other agency of government, the Certificate of
Incorporation or the Bylaws of the Company, as amended, or any provision of
any indenture, agreement or other instrument to which the Company or any of
its Affiliates, properties or assets is bound, or conflict with, result in
a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or result
in the creation or imposition of any lien, charge, restriction, claim or
encumbrance of any nature whatsoever upon any of the properties or assets
of the Company or its Affiliates.
(b) The Purchased Shares have been duly authorized and validly
issued, and are fully paid and nonassessable shares of Series G Preferred
with no personal liability attaching to the ownership thereof and are free
and clear of all Liens imposed by or through the Company. Neither the
issuance nor the sale or delivery of the Purchased Shares is subject to any
preemptive right of stockholders of the Company or to any right of first
refusal or other right in favor of any person that has not been complied
with or duly waived. Assuming, and after taking into account, the sale and
issuance of all of the shares of Capital Stock described in Section
3.1(b)(ii) hereof, the Purchased Shares constitute approximately 6.5
percent of the issued and outstanding shares of Common Stock of the
Company, on an as-converted and fully-diluted basis.
4.3 VALIDITY. This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid, and binding obligations of the
Company, enforceable in accordance with its terms, subject, as to the
enforcement of remedies, to the discretion of the courts in awarding equitable
relief and to applicable bankruptcy, reorganization, insolvency, moratorium, and
similar laws affecting the rights of creditors generally.
7
<PAGE>
4.4 FINANCIAL STATEMENTS. The Company has furnished to Medtronic (i) the
audited balance sheet of the Company as of December 31, 1997 (the "Balance
Sheet"), and the related statements of operations, shareholders' equity, and
cash flows of the Company for the year then ended, and (ii) the unaudited
balance sheet of the Company as of March 31, 1998 (the "March 31 Balance
Sheet"), and the related statements of operations, shareholders' equity, and
cash flows for the month then ended. The Balance Sheet and related financial
statements for the year ended December 31, 1997 have been prepared in accordance
with generally accepted accounting principles consistently applied, and all of
the financial statements described in this Section 4.4 fairly present the
financial position of the Company as of the dates thereof and the results of its
operations for the periods then ended. Since the date of the March 31 Balance
Sheet and except as disclosed on the Disclosure Schedule, (i) there has been no
change in the assets, liabilities or financial condition of the Company from
that reflected in the March 31 Balance Sheet except for changes in the ordinary
course of business that in the aggregate have not been materially adverse, and
(ii) none of the business, prospects, financial condition, operations, property
or affairs of the Company has been materially adversely affected by any
occurrence or development, individually or in the aggregate, whether or not
insured against.
4.5 LITIGATION; COMPLIANCE WITH LAW. There is no (i) action, suit, claim,
proceeding or investigation pending or, to the Company's knowledge, threatened
against or affecting the Company, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, (ii) arbitration
proceeding relating to the Company pending under collective bargaining
agreements or otherwise, or (iii) governmental inquiry pending or, to the
Company's knowledge, threatened against or affecting the Company or its
Affiliates (including without limitation any inquiry as to the qualification of
the Company to hold or receive any license or permit), and there is no basis for
any of the foregoing. The Company has complied with all laws, rules,
regulations, and orders applicable to its business, operations, properties,
assets, products, and services. The Company has all necessary permits,
licenses, and other authorizations required to conduct its business as
conducted, and has no reason to believe that the Company will not obtain the
same with respect to its business as proposed to be conducted, which, if not
obtained, would have, either individually or in the aggregate, a material
adverse effect on the Company.
4.6 PROPRIETARY INFORMATION OF THIRD PARTIES. To the Company's knowledge,
no third party has claimed or has reason to claim that any person employed by or
affiliated with the Company or its Affiliates has (a) violated or may be
violating any of the terms or conditions of his or her employment,
noncompetition or nondisclosure agreement with such third party, (b) disclosed
or may be disclosing or utilized or may be utilizing any trade secret or
proprietary information or documentation of such third party, or (c) interfered
or may be interfering in the employment relationship between such third party
and any of its present or former employees.
4.7 TITLE TO PROPERTIES. The Company has good and marketable title to its
properties and assets reflected on the March 31 Balance Sheet or acquired by it
since the date of the March 31 Balance Sheet (other than properties and assets
disposed of in the ordinary course of business since the date of the March 31
Balance Sheet), and all such properties and assets are free and clear of all
Liens, except for liens for current taxes not yet due and payable and minor
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imperfections of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of the
Company.
4.8 LEASEHOLD INTERESTS. Each material lease or agreement to which the
Company is a party under which it is a lessee of any property, real or personal,
is a valid and existing agreement without any default of the Company thereunder
and, to the Company's knowledge, without any default thereunder of any other
party thereto. No event has occurred and is continuing that, with due notice or
lapse of time or both, would constitute a default or event of default by the
Company under any such material lease or agreement or, to the Company's
knowledge, by any other party thereto.
4.9 TAXES. The Company has filed all tax returns, federal, state, county,
and local, required to be filed by it, and the Company has paid all taxes shown
to be due by such returns as well as all other taxes, assessments, and
governmental charges that have become due or payable, including without
limitation all taxes that the Company is obligated to withhold from amounts
owing to employees, creditors, and third parties. All such taxes with respect
to which the Company has become obligated pursuant to elections made by the
Company in accordance with generally accepted practice have been paid and
adequate reserves have been established for all taxes accrued but not yet
payable. The federal income tax returns of the Company have never been audited
by the Internal Revenue Service. No deficiency assessment with respect to or
proposed adjustment of the Company's federal, state, county or local taxes is
pending or, to the Company's knowledge, threatened.
4.10 NO DEFAULTS. The Company and, to the Company's knowledge, each other
party thereto have in all material respects performed all the obligations
required to be performed by them to date, have received no notice of default and
are not in default (with due notice or lapse of time or both) under any lease,
agreement or contract now in effect to which the Company is a party or by which
it or its property may be bound. The Company has no present expectation or
intention of not fully performing all its obligations under each such lease,
contract or other agreement, and the Company has no knowledge of any breach or
anticipated breach by the other party to any contract or commitment to which the
Company is a party. The Company is in full compliance with all of the terms and
provisions of its Certificate of Incorporation and Bylaws, as amended.
4.11 PATENTS, TRADEMARKS, ETC. To the Company's knowledge, the Company
owns or possesses licenses or other rights to use all Intellectual Property
necessary or desirable to the conduct of its business as conducted and as
proposed to be conducted, and no claim is pending or threatened to the effect
that the operations of the Company infringe upon or conflict with the asserted
rights of any other person under any Intellectual Property, and there is no
basis for any such claim. No claim is pending or threatened to the effect that
any such Intellectual Property owned or licensed by the Company, or which the
Company otherwise has the right to use, is invalid or unenforceable by the
Company, and there is no basis for any such claim (whether or not pending or
threatened). To the Company's knowledge, all technical information developed by
and belonging to the Company that has not been patented has been kept
confidential.
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4.12 BROKERS. The Company has no contract, arrangement or understanding
with any broker, finder or similar agent with respect to the transactions
contemplated by this Agreement.
4.13 TRANSACTIONS WITH AFFILIATES. No director, officer, employee or
stockholder of the Company, or member of the family of any such person, or any
corporation, partnership, trust or other entity in which any such person, or any
member of the family of any such person, has a substantial interest or is an
officer, director, trustee, partner or holder of more than 5% of the outstanding
capital stock thereof, is a party to any transaction with the Company, including
any contract, agreement or other arrangement providing for the employment of,
furnishing of services by, rental of real or personal property from or otherwise
requiring payments to any such person or firm.
4.14 DISCLOSURE. Neither this Agreement, nor any other statements,
documents, certificates or other items prepared or supplied by the Company with
respect to the transactions contemplated hereby contains an untrue statement of
a material fact or omits a material fact necessary to make the statements
contained therein not misleading. There is no fact that the Company has not
disclosed to Medtronic and its counsel in writing and of which the Company is
aware that materially and adversely affects or could materially and adversely
affect the business, prospects, financial condition, operations, property or
affairs of the Company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MEDTRONIC
Medtronic represents and warrants to the Company as follows:
5.1 PURCHASE OF SHARES. Medtronic is an "accredited investor" within the
meaning of Rule 501 under the Securities Act and was not organized for the
specific purpose of acquiring the Purchased Shares. Medtronic has sufficient
knowledge and experience in investing in companies similar to the Company in
terms of the Company's stage of development so as to be able to evaluate the
risks and merits of Medtronic's investment in the Company, and Medtronic is able
financially to bear the risks thereof. Medtronic has had an opportunity to
discuss the Company's business, management, and financial affairs with the
Company's management. The Purchased Shares are being acquired for Medtronic's
own account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof. Medtronic understands that (i) the
Purchased Shares have not been registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated
under the Securities Act, (ii) the Purchased Shares must be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration, (iii) the Purchased Shares will bear a
legend to such effect, and (iv) the Company will make a notation on its transfer
books to such effect.
5.2 CORPORATE AUTHORITY. The execution, delivery, and performance by
Medtronic of this Agreement and the transactions contemplated hereby has been
duly and validly authorized and approved by all requisite corporate action on
the part of Medtronic, and the execution and
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the delivery of this Agreement and consummation of the transactions
contemplated hereby and compliance with and fulfillment of the terms and
provisions hereof will not (i) conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under the Articles
of Incorporation or Bylaws of Medtronic, or (ii) require any affirmative
approval, consent, authorization or other order or action of any court,
governmental authority, regulatory body, creditor or any other person.
Medtronic has all requisite power and authority to do and perform all acts
and things required to be done by it under this Agreement and the agreements
contemplated hereby. This Agreement constitutes the valid and binding
obligation of Medtronic enforceable in accordance with its terms except as
may be limited by laws affecting creditors' rights generally or by judicial
limitations on the right to specific performance.
ARTICLE 6
CONDITIONS TO THE OBLIGATIONS OF MEDTRONIC
The obligations of Medtronic to purchase and pay for the Purchased Shares
pursuant to Section 2.1 are, at its option, subject to the satisfaction on or
before the Closing Date of the conditions set forth in Sections 6.1 through 6.8
below, inclusive. References in this Article 6 to the "Closing Date" shall mean
and refer to the date set forth in Section 2.4, unless the parties agree to
consummate the transactions contemplated by this Agreement as of a date other
than the date set forth therein.
6.1 REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. The representations
and warranties of the Company contained in Article 4 shall be true, complete,
and correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, and the
Chairman of the Board and the President of the Company shall have certified to
such effect to Medtronic in writing.
6.2 PERFORMANCE. The Company shall have performed and complied with all
agreements contained herein required to be performed or complied with by it
prior to or at the Closing Date, and the Chairman of the Board and the President
of the Company shall have certified to Medtronic in writing to such effect and
to the further effect that all of the conditions set forth in Section 6.1
through 6.8, inclusive, have been satisfied.
6.3 ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to Medtronic and its counsel, and Medtronic and its counsel
shall have received all such counterpart originals or certified or other copies
of such documents as they reasonably may request.
6.4 SUPPORTING DOCUMENTS. Medtronic and its counsel shall have received
copies of the following documents:
(a) a certificate of the Secretary of State of the State of Delaware
dated as of a date within five days prior to the Closing Date as to the
good standing of the Company and the payment of all excise taxes by the
Company and listing all documents of the
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Company on file with said Secretary of State, and evidence satisfactory
to Medtronic of the filing of the Certificate of Designation described in
Section 2.1;
(b) a certificate of the Secretary of the Company dated as of the
Closing Date certifying: (i) that the Company's Certificate of
Incorporation and Bylaws have not been amended since the date of the copies
thereof previously delivered to Medtronic; (ii) that attached thereto is a
true and complete copy of all resolutions adopted by the Board of Directors
of the Company authorizing the execution, delivery, and performance of this
Agreement and the issuance, sale, and delivery of the Purchased Shares, and
that all such resolutions are in full force and effect and are all the
resolutions adopted in connection with the transactions contemplated by
this Agreement; and (iii) to the incumbency and specimen signature of each
officer of the Company executing this Agreement, the stock certificates
representing the Purchased Shares, and any certificate or instrument
furnished pursuant hereto, and a certification by another officer of the
Company as to the
incumbency and signature of the officer signing the certificate referred to
in this paragraph (b); and
(c) such additional supporting documents and other information with
respect to the operations and affairs of the Company as Medtronic or its
counsel reasonably may request.
6.5 REQUIRED CONSENTS. The Company shall have obtained the written
consent or approval of each person whose consent or approval Medtronic
reasonably believes is required in connection with this Agreement.
6.6 LITIGATION AFFECTING CLOSING. No suit, action or other proceeding
shall be pending or threatened by any third party or by or before any court or
governmental agency seeking to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement, or the consummation of the
transactions contemplated hereby or thereby, and no investigation that might
result in any such suit, action or other proceeding shall be pending or
threatened.
6.7 NO MATERIAL ADVERSE CHANGES. Since the date hereof, no events shall
have occurred or circumstances arisen that are reasonably expected to have or
result in a material adverse effect upon the Company or its business or
prospects. The Company shall fully cooperate to enable Medtronic to determine
that this condition has been satisfied.
6.8 REGISTRATION RIGHTS AGREEMENT. The Company shall have executed and
delivered to Medtronic the Registration Rights Agreement.
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ARTICLE 7
COVENANTS OF THE COMPANY AND THE SHAREHOLDERS
So long as Medtronic is the legal or beneficial owner of at [***] of the
issued and outstanding shares of Common Stock of the Company, on an
as-converted basis:
7.1 FINANCIAL STATEMENTS, REPORTS, ETC. The Company shall furnish to
Medtronic:
(a) within 120 days after the end of each fiscal year of the Company,
a balance sheet of the Company as of the end of such fiscal year and the
related consolidated statements of income, stockholders' equity, and cash
flows for the fiscal year then ended, prepared in accordance with generally
accepted accounting principles and certified by a firm of independent
public accountants selected by the Board of Directors of the Company;
(b) within 30 days after the end of each month, an unaudited balance
sheet of the Company and the related statement of income, prepared on a
basis consistent with the Company's past practice and in accordance with
its books and records;
(c) within 30 days prior to the start of each fiscal year, any
Company-wide forecasts or budgets prepared by the Company in respect of
such fiscal year, and forecasts or budgets [***];
(d) promptly after the commencement thereof, notice of all actions,
suits, claims, proceedings, investigations, and inquiries that could
materially adversely affect the Company;
(e) promptly upon sending, making available or filing the same, all
press releases, reports, and financial statements that the Company sends or
makes available to its stockholders or directors or files with the SEC, the
NASD, or any national securities exchange; and
(f) promptly, from time to time, such other information regarding the
Company's overall financial condition [***]as Medtronic reasonably may
request.
7.2 INSPECTION, CONSULTATION, AND ADVICE. The Company shall permit and
cause any Affiliates of the Company to permit Medtronic and such persons as it
may designate, at Medtronic's expense, to visit and inspect any of the
properties of the Company and its Affiliates, examine their books and take
copies and extracts therefrom, discuss [***] the finances of the Company and its
Affiliates with their officers, employees, and public accountants (and the
Company hereby authorizes said accountants to discuss with Medtronic and such
designees such information), and consult with and advise the management of the
Company and its Affiliates as to the Company's finances and [***], all at
reasonable times and upon reasonable notice. All such information shall be
subject to Section 9.2 hereof.
* Confidential portions of this document indicated by [***] have been omitted
and filed separately with the Commission.
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7.3 TRANSACTIONS WITH AFFILIATES. Except for transactions contemplated by
this Agreement or as otherwise approved by the Board of Directors, neither the
Company nor any of its subsidiaries shall enter into any transaction with any
director, officer, employee or holder of more than 5% of the outstanding capital
stock of any class or series of capital stock of the Company or any of its
subsidiaries, member of the family of any such person, or any corporation,
partnership, trust or other entity in which any such person, or member of the
family of any such person, is a director, officer, trustee, partner or holder of
more than 5% of the outstanding capital stock thereof, except for transactions
on customary terms related to such person's employment.
7.4 BOARD MEETINGS. The Company shall use its best efforts to ensure that
meetings of its Board of Directors are held at least four times each year and at
least once each quarter.
7.5 MEDTRONIC BOARD OBSERVER. Medtronic shall have the right to designate
an observer to the Company's Board. Medtronic's designee shall receive all
notices, documents, and other information in the same time and manner as such
information is supplied to members of the Board. All such information shall be
subject to Section 9.2 hereof. The Company shall make reasonable efforts to
permit Medtronic's designee to participate or observe Board meetings by
telephone if such designee is unable to attend in person. The parties agree
that Medtronic's observer to the Company's Board shall be present solely for the
purpose of observation and shall have no power to exert "control" on behalf of
Medtronic as that term is defined in Rule 405 under the Securities Act.
7.6 PROPRIETARY INFORMATION AND EMPLOYEE INVENTIONS AGREEMENTS. The
Company shall use its best efforts to obtain confidentiality and assignment of
inventions agreements from all officers, key employees, and other employees,
consultants or independent contractors who will have access to confidential
information of the Company.
7.7 COMPLIANCE WITH LAWS. The Company shall comply, and cause each
Affiliate to comply, with all applicable laws, rules, regulations, and orders,
noncompliance with which could materially adversely affect the Company's
business or condition, financial or otherwise.
7.8 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall keep, and
cause each Affiliate to keep, adequate records and books of account, in which
complete entries will be made in accordance with generally accepted accounting
principles consistently applied, reflecting all financial transactions of the
Company and such subsidiary, and in which, for each fiscal year, all proper
reserves for depreciation, depletion, obsolescence, amortization, taxes, bad
debts, and other purposes in connection with its business shall be made.
7.9 USE OF MEDTRONIC NAME. Except for any joint public announcement
described in Section 9.8 and the information contained therein, the Company
shall not, except with the written consent of Medtronic, publicly use
Medtronic's name or disclose Medtronic's relationship with the Company.
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ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION OF MEDTRONIC. The Company shall indemnify, defend,
and hold harmless Medtronic and each of its subsidiaries, officers, directors,
shareholders, employees, agents, and affiliates (Medtronic and such other
indemnities are referred to in this Article 8 as "Medtronic") from and against
and in respect of any and all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, interest and penalties, costs, and
expenses (including, without limitation, reasonable legal fees and disbursements
incurred in connection therewith and in seeking indemnification therefor, and
any amounts or expenses required to be paid or incurred in connection with any
action, suit, proceeding, claim, appeal, demand, assessment or judgment)
("Indemnifiable Losses") resulting from, arising out of, or imposed upon or
incurred by any person to be indemnified hereunder by reason of any breach of
any representation, warranty, covenant or agreement of the Company contained in
this Agreement or any agreement, certificate or document executed and delivered
by the Company pursuant hereto or in connection with any of the transactions
contemplated by this Agreement.
8.2 INDEMNIFICATION OF THE COMPANY. Medtronic shall indemnify, defend,
and hold harmless the Company and each of its subsidiaries, officers, directors,
shareholders, employees, agents, and affiliates (the Company and such other
indemnities referred to in this Article 8 as "the Company") from and against and
in respect of any and all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, interest and penalties, costs, and
expenses (including, without limitation, reasonable legal fees and disbursements
incurred in connection therewith and in seeking indemnification therefor, and
any amounts or expenses required to be paid or incurred in connection with any
action, suit, proceeding, claim, appeal, demand, assessment or judgment)
resulting from, arising out of, or imposed upon or incurred by any person to be
indemnified hereunder by reason of any breach of any representation, warranty,
covenant or agreement of Medtronic contained in this Agreement or any agreement,
certificate or document executed and delivered by Medtronic pursuant hereto or
in connection with the transactions contemplated by this Agreement.
8.3 THIRD-PARTY CLAIMS. If a claim by a third party is made against an
indemnified party and if the indemnified party intends to seek indemnity with
respect thereto under this Article 8, such indemnified party shall promptly
notify the indemnifying party of such claim; provided, however, that failure to
give timely notice shall not affect the rights of the indemnified party so long
as the failure to give timely notice does not adversely affect the indemnifying
party's ability to defend such claim against a third party. The indemnifying
party or parties shall be entitled to settle or assume the defense of such
claim, including the employment of counsel reasonably satisfactory to the
indemnified party. If the indemnifying party or parties elect(s) to settle or
defend such claim, the indemnifying party or parties shall notify the
indemnified party within 30 days (but in no event less than 20 days before any
pleading, filing or response on behalf of the indemnified party is due) of the
indemnifying party's or parties' intent to do so. If the indemnifying party or
parties elect(s) not to settle or defend such claim or fail(s) to notify the
indemnified party of the election within 30 days (or such shorter period
provided above) after receipt of the indemnified party's notice of a claim of
indemnity hereunder, the indemnified party shall have the right to contest,
settle or compromise the claim without prejudice to any
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rights to indemnification hereunder. Regardless of which party is
controlling the settlement of defense of any claim, (a) both the indemnified
party and indemnifying party or parties shall act in good faith, (b) the
indemnifying party or parties shall not thereby permit to exist any lien,
encumbrance or other adverse charge upon any asset of any indemnified party
or of its subsidiaries, (c) the indemnifying party or parties shall permit
the indemnified party to participate in such settlement or defense through
counsel chosen by the indemnified party, with all fees, costs, and expenses
of such counsel borne by the indemnifying party or parties, (d) no entry of
judgment or settlement of a claim may be agreed to without the written
consent of the indemnified party, and (e) the indemnifying party or parties
shall promptly reimburse the indemnified party for the full amount of such
claim and the related expenses as incurred by the indemnified party pursuant
to this Article 8. So long as the indemnifying party or parties is (are)
reasonably contesting any such third party claim in good faith and the
foregoing clause (b) is being complied with, the indemnified party shall not
pay or settle any such claim. The controlling party shall upon request
deliver, or cause to be delivered, to the other party copies of all
correspondence, pleadings, motions, briefs, appeals or other written
statements relating to or submitted in connection with the settlement or
defense of any such claim, and timely notices of any hearing or other court
proceeding relating to such claim.
8.4 COOPERATION AS TO INDEMNIFIED LIABILITY. Each party hereto shall
cooperate fully with the other parties with respect to access to books, records,
or other documentation within such party's control, if deemed reasonably
necessary or appropriate by any party in the defense of any claim that may give
rise to indemnification hereunder.
ARTICLE 9
OTHER PROVISIONS
9.1 PURCHASE OF PURCHASED SHARES BY MEDTRONIC AFFILIATE. Notwithstanding
any other provisions of this Agreement, Medtronic shall have the right at its
option to designate and permit an affiliate of Medtronic to acquire and hold the
Purchased Shares pursuant to this Agreement. In the event that Medtronic elects
to do so, references in this Agreement to "Medtronic" shall, in the context of
the acquisition and ownership of the Purchased Shares, mean and refer to such
affiliate.
9.2 NONDISCLOSURE. Each party agrees not to disclose or use (except as
permitted or required for performance by the party receiving such Confidential
Information of its rights or duties hereunder) any Confidential Information of
the other party obtained during the during the term of this Agreement until, as
to any such Confidential Information, the date as of which such Confidential
Information has been in the possession of the receiving party, as a result of
disclosure under this Agreement, for a period of seven years. Each party
further agrees to take appropriate measures to prevent any such prohibited
disclosure by its present and future employees, officers, agents, subsidiaries,
or consultants during such period.
9.3 FURTHER ASSURANCES. At such time and from time to time on and after
the date hereof upon request by Medtronic, the Company will execute,
acknowledge, and deliver, or will cause to be done, executed, acknowledged, and
delivered, all such further acts, certificates, and
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assurances that may be required for the better conveying, transferring,
assigning, delivering, assuring, and confirming to Medtronic, or to its
respective successors and assigns, all of the Purchased Shares or to
otherwise carry out the purposes of this Agreement.
9.4 ENTIRE AGREEMENT. The Schedules and Exhibits to this Agreement shall
be construed as an integral part of this Agreement to the same extent as if they
had been set forth verbatim herein. This Agreement and the Registration Rights
Agreement, and the Schedules and Exhibits hereto and thereto, constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements whether written or oral relating
hereto, except for that certain Agreement for Mutual Exchange of Confidential
Information dated December 11, 1997, between the Company and Medtronic, which
shall remain in effect.
9.5 SURVIVAL. The representations, warranties, covenants, and agreements
contained herein shall survive the purchase of the Purchased Shares and remain
in full force and effect, except that the representations and warranties
contained in Articles 4 and 5 hereof shall expire on the date that is two years
after the date hereof. No independent investigation of the Company by
Medtronic, its counsel, or any of its agents or employees shall in any way limit
or restrict the scope of the representations and warranties made by the Company
in this Agreement.
9.6 WAIVER, DISCHARGE, AMENDMENT, ETC. The failure of either party to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part of it or the right of either party after
any such failure to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to be a waiver of any other or subsequent
breach. This Agreement may be amended only by the Company and Medtronic, by
mutual action approved by their respective Boards of Directors or their
respective officers authorized by such Board of Directors. Any amendment to
this Agreement shall be in writing and signed by the Company and Medtronic.
9.7 NOTICES. All notices or other communications to a party required or
permitted hereunder shall be in writing and shall be delivered personally or by
telecopy (receipt confirmed) to such party (or, in the case of an entity, to an
executive officer of such party) or shall be sent by a reputable express
delivery service or by certified mail, postage prepaid with return receipt
requested, addressed as follows:
if to Medtronic to:
Medtronic, Inc.
Corporate Center
7000 Central Avenue N.E.
Minneapolis, Minnesota 55432
FAX (612) 572-5404
with separate copies thereof addressed to:
Attention: General Counsel
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and
Attention: Vice President, Corporate Development
and Associate General Counsel
if to the Company to:
BioNebraska, Inc.
3820 NW 46th Street
Lincoln, Nebraska 68524
FAX (402) 470-2345
Attention: Thomas R. Coolidge
Chairman of the Board and CEO
Any party may change the above-specified recipient and/or mailing address
by notice to all other parties given in the manner herein prescribed. All
notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the day shown on the return
receipt (if delivered by mail or delivery service).
9.8 PUBLIC ANNOUNCEMENT. In the event any party proposes to issue any
press release or public announcement concerning any provisions of this Agreement
or the transactions contemplated hereby, such party shall so advise the other
parties hereto, and the parties shall thereafter use their best efforts to cause
a mutually agreeable release or announcement to be issued. Neither party will
publicly disclose or divulge any provisions of this Agreement or the
transactions contemplated hereby without the other parties' written consent,
except as may be required by applicable law or stock exchange regulation, and
except for communications to employees.
9.9 EXPENSES. The Company and Medtronic shall each pay their own expenses
incident to this Agreement and the preparation for, and consummation of, the
transactions provided for herein.
9.10 GOVERNING LAW. This Agreement shall be governed by, and interpreted
and construed in accordance with, the laws of the State of Minnesota, without
giving effect to principles of conflict or choice of laws.
9.11 TITLES AND HEADINGS; CONSTRUCTION. The titles and headings to the
Articles and Sections herein are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement. This Agreement shall be construed without regard to any
presumption or other rule requiring construction hereof against the party
causing this Agreement to be drafted.
9.12 BENEFIT. Nothing in this Agreement, expressed or implied, is intended
to confer on any person other than the parties to this Agreement, or their
respective successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
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9.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument, and may be delivered in person or by
facsimile transmission.
9.14 SEVERABILITY. If any provision of this Agreement is held invalid by a
court of competent jurisdiction, the remaining provisions shall nonetheless be
enforceable according to their terms. Further, if any provision is held to be
overbroad as written, such provision shall be deemed amended to narrow its
application to the extent necessary to make the provision enforceable according
to applicable law and shall be enforced as amended.
9.15 PARTIES IN INTEREST. All representations, covenants, and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto, whether so expressed or not. Without limiting the generality of
the foregoing, all representations, covenants, and agreements benefiting
Medtronic shall inure to the benefit of any and all subsequent holders from time
to time of the Purchased Shares.
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IN WITNESS WHEREOF, each of the parties has caused this Investment
Agreement to be executed in the manner appropriate for each, and to be dated as
of the date first above written.
BIONEBRASKA, INC.
By: /s/ Thomas R. Coolidge
-------------------------------------------
Name: Thomas R. Coolidge
Title: Chairman of the Board and Chief
Executive Officer
MEDTRONIC, INC.
By: /s/ Michael D. Ellwein
-------------------------------------------
Its: Vice President
-------------------------------------
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Exhibit 10.16
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is entered into as of June 16, 1998, by and between
BIONEBRASKA, INC., a Delaware corporation (the "Company"), and MEDTRONIC, INC.,
a Minnesota corporation ("Medtronic").
RECITALS:
WHEREAS, the parties hereto have executed an Investment Agreement (the
"Investment Agreement") of even date herewith pursuant to which Medtronic is
purchasing shares of the Company's Series G Convertible Preferred Stock; and
WHEREAS, in connection with the Investment Agreement the parties desire
to provide certain registration rights and benefits with respect to the Common
Stock (defined below) issuable upon conversion of the Series G Convertible
Preferred Stock,
NOW, THEREFORE, in consideration of the respective covenants and
agreements contained herein, and for other valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 SPECIFIC DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
"COMMON STOCK" means the Company's Common Stock, par value $.01 per
share.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"FORM S-3" means such form under the Securities Act in effect on the date
hereof or any successor registration form under the Securities Act subsequently
adopted by the SEC that permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
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"HOLDER" means Medtronic or any person owning of record Registrable
Securities that have not been sold to the public or any assignee of record of
such Registrable Securities in accordance with Article 2.
"PREFERRED SHARES" means the shares of Series G Convertible Preferred
Stock purchased pursuant to the Investment Agreement.
"REGISTER," "REGISTERED," and 'REGISTRATION" mean a registration effected
by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering by the SEC of effectiveness of
such registration statement.
"REGISTRABLE SECURITIES" means (i) the Common Stock issuable or issued
upon conversion of the Preferred Shares, and (ii) any Common Stock issued as (or
issuable upon the conversion or exercise of any warrant, right, or other
security issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, the Common Stock referenced in the preceding
clause (i). Notwithstanding the foregoing, Registrable Securities shall not
include any securities sold by a person to the public either pursuant to a
registration statement or Rule 144 under the Securities Act or sold in a private
transaction in which the transferor's rights under Article 2 of this Agreement
are not assigned.
"REGISTRATION EXPENSES" means all expenses incurred by the Company in
complying with Article 2 hereof, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel and
accountants for the Company, reasonable fees and disbursements of a single
special counsel for the Holders of Registrable Securities, and blue sky fees and
expenses (but excluding the compensation of regular employees of the Company,
which shall be paid in any event by the Company).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING EXPENSES" means all underwriting discounts and commissions
applicable to a sale of Registrable Securities.
1.2 DEFINITIONAL PROVISIONS.
(a) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provisions of this
Agreement.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
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(c) References to an "Article" or a "Section" are, unless
otherwise specified, to one of the Articles or Sections of this
Agreement.
(d) The term "person" includes any individual, partnership,
joint venture, corporation, trust, unincorporated organization or
government or any department or agency thereof.
ARTICLE 2
REGISTRATION RIGHTS
2.1 DEMAND REGISTRATIONS.
(a) Subject to the conditions of this Section 2.1, if the
Company shall receive at any time after the date hereof a written request
from Medtronic or other Holder(s) of at least 50 percent of the
Registrable Securities then outstanding that the Company file a
registration statement under the Securities Act covering the registration
of Registrable Securities having a proposed aggregate offering price to
the public of at least $1,000,000, then the Company shall, within 30 days
after the receipt thereof, give written notice of such request to all
Holders and, subject to the limitations of Section 2. 1 (b), effect, as
soon as practicable, the registration under the Securities Act of all
Registrable Securities that the Holders request to be registered.
(b) If the Holder requesting such registration intends to
distribute the Registrable Securities covered by its request by means of
an underwriting, the Holder shall so advise the Company as a part of its
request made pursuant to this Section 2.1 and the Company shall include
such information in the written notice referred to in Section 2.1(a). In
such event, the right of any Holder to include such Holder's Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Holders) to the extent provided
herein. All Holders proposing to distribute their securities through
such underwriting shall enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting
by the Holder that initially requested the registration (which
underwriter or underwriters shall be reasonably acceptable to the
Company).
(c) The Company shall not be obligated to effect more than two
registrations pursuant to this Section 2.1. Further, the Company shall
not be obligated to take any action to effect any registration pursuant
to this Section 2.1 until the earliest to occur of, (i) the date that is
three years after the date hereof, (ii) the first date as of which any
other shareholder of the Company exercises a demand registration, or
(iii) 180 days after the effective date of the registration statement
pertaining to the first underwritten public
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offering of securities of the Company for its own account.
Further, the Company shall not be obligated to effect a demand
registration pursuant to this Section 2.1 if the Company furnishes
to the Holders a certificate signed by the Chief Executive Officer
stating that, in the good faith judgment of the Board, it would be
seriously detrimental to the Company and its shareholders for such
registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the
registration statement for a period of not more than 120 days after
receipt of the request of the Holder or Holders under this
Section 2.1. The Company shall give written notice to the Holders of
any demand made by other holders of securities of the Company for
registration of such securities.
2.2 PIGGYBACK REGISTRATIONS.
(a) The Company shall notify all Holders of Registrable
Securities in writing at least 30 days prior to the filing of any
registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of
the Company, but excluding registration statements relating to employee
benefit plans and corporate reorganizations) and will afford each such
Holder an opportunity to include in such registration statement all or
part of such Registrable Securities of such Holder. Each Holder desiring
to include in any such registration statement all or any part of such
Holder's Registrable Securities shall, within 20 days after receipt of
the above-described notice from the Company, so notify the Company in
writing. Such notice shall state the intended method of disposition of
the Registrable Securities by such Holder. If a Holder of Registrable
Securities decides not to include any or all of such Holder's Registrable
Securities in any registration statement thereafter filed by the Company,
such Holder shall nevertheless continue to have the right to include any
Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to
offerings of its securities, all upon the terms and conditions set forth
herein.
(b) If the registration statement under which the Company gives
notice under this Section 2.2 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such
event, the right of any such Holder to be included in a registration
pursuant to this Section 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 to the extent provided herein.
All Holders proposing to distribute their Registrable Securities through
such underwriting shall enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting.
Notwithstanding any other provisions of this Agreement, if the
underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated,
first, to the Company and, second, to the Holders and any
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other selling shareholders on a pro rata basis based on the total
number of securities held by such Holders and other selling
shareholders and requested to be included in such registration.
2.3 FORM S-3 REGISTRATIONS. If the Company receives from any Holder
or Holders of Registrable Securities a written request or requests that the
Company effect the registration under the Securities Act of all or a part of the
Registrable Securities owned by such Holder or Holders by the filing with the
SEC of a registration statement on Form S-3 covering such Registrable
Securities, the Company will:
(a) promptly give written notice of the proposed registration
to all other Holders of Registrable Securities; and
(b) as soon as practicable, effect such registration and,
in connection therewith, make all such related qualifications and
compliances as would permit or facilitate the sale and distribution
of all or such portion of such Holder's or Holders' Registrable
Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written
request given within 15 days after receipt of such written notice
from the Company; provided, however, that the Company shall not be
obligated to effect any such registration, qualification, or
compliance pursuant to this Section 2.3: (i) if Form S-3 under the
Securities Act is not available for such offering by the Holders,
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public of less
than $500,000, (iii) if the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer stating that, in
the good faith judgment of the Board, it would be seriously
detrimental to the Company and its shareholders for such
registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than 120 days after
receipt of the request of the Holder or Holders under this Section
2.3, (iv) in a given six-month period, the Company has effected one
such registration during such period, (v) the registration request
occurs within six months following the effective date of a
registration initiated by the Company, or (vi) if one of the
following has not occurred at the time of such request: (a) three
years have elapsed since the effective date of this Agreement, (b)
no other investor has exercised its right to demand registration,
or (c) 180 days have not elapsed since the closing of the Company's
initial public offering.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after
receipt of the request or requests of the Holders.
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2.4 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification, or compliance pursuant to
Section 2.1 or any registration under Section 2.2 or 2.3 shall be borne by the
Company. All Selling Expenses incurred in connection with any such registration
shall be borne by the Holders of the securities so registered pro rata on the
basis of the number of shares so registered. The Company shall not, however, be
required to pay for expenses of any registration proceeding begun pursuant to
Section 2.1 or 2.3, the request of which has been subsequently withdrawn by the
Holders, unless (a) the withdrawal is based upon material adverse information
concerning the Company of which the Company was aware but the Holders were not
aware at the time of such request or (b) the Holders of a majority of
Registrable Securities agree to forfeit their right to one requested
registration pursuant to Section 2.1 (in which event such right shall be
forfeited by all Holders). If the Holders are required to pay the Registration
Expenses, such expenses shall be borne by the Holders of securities (including
Registrable Securities) requesting such registration in proportion to the number
of shares for which registration was requested. If the Company is required to
pay the Registration Expenses of a withdrawn offering pursuant to this Section
2.4, then the Holders shall not forfeit their rights pursuant to Section 2.1 to
a demand registration.
2.5 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement, on
such form as is then available to the Company in connection with such
registration, with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective
and, upon the request of the Holders of a majority of the Registrable
Securities registered thereunder, keep such registration statement
effective for up to nine months.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register or qualify the securities
covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by
the Holders within 20 days following the original filing of such
registration statement, 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.
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(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing
underwriter(s) of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations
under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the
occurrence 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 contained
therein not misleading in the light of the circumstances then existing.
(g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable
Securities are delivered to the underwriters for sale, 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
as of 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 and reasonably
satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities, and (ii) a letter
dated as of 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 and reasonably satisfactory to a majority in
interest of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities.
2.6 TERMINATION OF REGISTRATION RIGHTS. All registration rights
granted under this Article 2 shall terminate and be of no further force and
effect on the date that Medtronic would be able to sell all of its remaining
Registrable Securities, without limitation, under Rule 144(k) of the Securities
Act.
2.7 DELAY OF REGISTRATION. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Article 2.
2.8 INDEMNIFICATION. If any Registrable Securities are included in a
registration statement under Section 2.1, 2.2, or 2.3:
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(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, officers, and directors of
each Holder, and each person, if any, who controls such Holder within the
meaning of the Securities Act or the Exchange Act, and each underwriter,
if any, and each person, if any, who controls any underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act, or other
federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions, or violations
(collectively a "Violation") by the Company: (i) any untrue statement or
alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by
the Company of the Securities Act, the Exchange Act, any state securities
law or any rule or regulation promulgated under the Securities Act, the
Exchange Act, or any state securities law in connection with the offering
covered by such registration statement; and the Company will reimburse
each such Holder, partner, officer, director, underwriter, and
controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 2.8(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or
action to the extent that it arises out of or is based upon a Violation
that occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by such
Holder, partner, officer, director, or controlling person of such Holder.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its officers and
directors, each person, if any, who controls the Company within the
meaning of the Securities Act, and each underwriter, if any, and each
person, if any, who controls any underwriter within the meaning of the
Securities Act or the Exchange Act, and any other Holder selling
securities under such registration statement or any of such other
Holder's partners, directors, or officers or any person who controls such
Holder, against any losses, claims, damages, or liabilities (joint or
several) to which the Company or any such director, officer, underwriter,
controlling person, or other such Holder, or partner, director, officer,
or controlling person of such other Holder may become subject under the
Securities Act, the Exchange Act, or other federal or state law, insofar
as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity
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with written information furnished by such Holder and stated to be
specifically for use in connection with such registration; and each
such Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, underwriter,
controlling person, or other Holder, or partner, officer, director,
or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability,
or action if it is judicially determined that there was such a
Violation; provided, however, that the indemnity agreement
contained in this Section 2.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if
such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld; provided,
further, that in no event shall any indemnity under this
Section 2.8(b) exceed the proceeds from the offering received by such
Holder unless the Violation is the result of fraud on the part of
such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section
2.8, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to
retain its own counsel, with the fees and expenses to be paid by the
indemnifying party (or, if there is more than one indemnified party, the
indemnifying party shall pay the fees and expenses of one counsel for any
and all indemnified parties, to be mutually agreed upon by such
indemnified parties), if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 2.8, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have
to any indemnified party otherwise than under this Section 2.8.
(d) If the indemnification provided for in this Section 2.8 is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages, or
liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent
permitted by applicable law contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage, or
liability in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in
such loss, claim,
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damage, or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such
statement or omission.
(e) The foregoing indemnity agreements of the Company and
Holders are subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or remedied in
the amended prospectus on file with the SEC at the time the registration
statement in question becomes effective or the final prospectus is filed
with the SEC pursuant to SEC Rule 424(b), such indemnity agreement shall
not inure to the benefit of any person if a copy of such final prospectus
was furnished to the indemnified party and was not furnished to the
person asserting the loss, liability, claim, or damage at or prior to the
time such action is required by the Securities Act.
(f) The obligations of the Company and Holders under this
Section 2.8 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
2.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Article 2 may be
assigned by a Holder to a transferee or assignee of Registrable Securities;
provided, however, that no such transferee or assignee shall be entitled to
registration rights under this Article 2 hereof unless it acquires Registrable
Securities that represent at least 25 percent of the then-outstanding
Registrable Securities (as adjusted for stock splits and combinations) and the
Company shall, within 20 days after such transfer, be furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned; provided,
however, that a Holder's failure to provide such notice to the Company shall not
in any way impair a Holder's right to make an assignment under this Section 2.9,
but until such notice is provided, the Company may continue to treat the
original Holder (and not the Holder's assignee) as the Holder of the
registration rights. Notwithstanding the foregoing, rights to cause the Company
to register securities may be assigned to any person or entity who is a
subsidiary, parent, general partner, or limited partner of a Holder regardless
of the number of securities transferred to such person or entity.
2.10 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Article 2
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Holders of Registrable Securities
representing at least 75% of the total of the then Registrable Securities. Any
amendment or waiver effected in accordance with this Section 2.0 shall be
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binding upon each Holder and the Company. By acceptance of any benefits under
this Article 2, Holders of Registrable Securities hereby agree to be bound by
the provisions hereunder.
2.11 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. If the Company
grants to any other person or persons registration rights that are more
favorable in any respect than the rights granted to the Holders hereunder, the
Holders shall immediately be granted the same rights, and this Agreement shall
be amended or deemed amended to include such more favorable rights.
2.12 REGISTRATION RIGHTS SEPARATE FROM OTHER REGISTRATION RIGHTS. The
registration rights granted to any Holder hereunder shall be deemed to be
separate and distinct from any other registration rights (the "Other
Registration Rights") granted by the Company to any such Holders or any other
holder of the Company's securities. In addition, any registration of
Registrable Securities pursuant to the rights granted hereunder shall not affect
the rights of any Holder or any other person under the Other Registration
Rights, and any registration of the Company's securities under the Other
Registration Rights shall not affect the rights of any Holder of Registrable
Securities hereunder.
ARTICLE 3
OTHER PROVISIONS
3.1 COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
3.2 WAIVER, DISCHARGE, AMENDMENT, ETC. The failure of any party
hereto to enforce at any time any of the provisions of this Agreement shall not,
absent an express written waiver signed by the party making such waiver
specifying the provision being waived, be construed to be a waiver of any such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of the party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach.
3.3 NOTICES. All notices or other communications to a party required
or permitted hereunder shall be in writing and shall be delivered personally or
by telecopy (receipt confirmed) to such party (or, in the case of an entity, to
an executive officer of such party) or shall be sent by a reputable express
delivery service or by certified mail, postage prepaid with return receipt
requested, addressed as follows:
if to Medtronic to:
Medtronic, Inc.
Corporate Center
7000 Central Avenue N.E.
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Minneapolis, Minnesota 55432
with separate copies thereof addressed to:
Attention: General Counsel
Fax: (612) 572-5459
Attention: Vice President, Corporate Development
and Associate General Counsel
Fax: (612) 572-5404
if to another Holder, at such Holder's address as such Holder shall have
specified to the Company in writing;
if to the Company to:
BioNebraska, Inc.
3820 NW 46th Street
Lincoln, Nebraska 68524
Attention: Thomas R. Coolidge,
Chairman of the Board and CEO
Any party may change the above-specified recipient and/or mailing address by
notice to all other parties given in the manner herein prescribed. All notices
shall be deemed given on the day when actually delivered as provided above (if
delivered personally or by telecopy) or on the day shown on the return receipt
(if delivered by mail or delivery service).
3.4 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Minnesota, including all
matters of construction, validity, performance, and enforcement, without giving
effect to principles of conflict of laws.
3.5 TITLES AND HEADINGS; CONSTRUCTION. The titles and headings to the
Articles and Sections herein are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement. This Agreement shall be construed without regard to any
presumption or other rule requiring construction hereof against the party
causing this Agreement to be drafted.
3.6 BENEFIT. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors or assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
12
<PAGE>
3.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument, and may be delivered in person or by
facsimile transmission.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed as of the date first written above.
BIONEBRASKA, INC.
By: /s/ Thomas R. Coolidge
---------------------------------
Name: Thomas R. Coolidge
Title: Chairman of the Board and Chief
Executive Officer
MEDTRONIC, INC.
By: /s/ Michael D. Ellwein
-------------------------------
Name: Michael D. Ellwein
-------------------------------
Title: Vice President
-------------------------------
13
<PAGE>
Exhibit 10.17
Warrant No. 1
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (1) REGISTRATION IN COMPLIANCE WITH
SUCH ACT AND SUCH STATE LAWS OR (2) AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED.
COMMON STOCK WARRANT
To Purchase 1,500
Shares of Common Stock of
BIONEBRASKA, INC.
September 2, 1993
THIS CERTIFIES THAT, for good and valuable consideration, the receipt of
which is hereby acknowledged, _________________________ and
_________________________, JTWROS are entitled to subscribe for and purchase
from BioNebraska, Inc., a Delaware corporation (herein called the "Company"), at
any time after the date hereof to and including March 1, 1995, 1,500 fully paid
and nonassessable shares of the Company's common stock at an exercise price of
$6.50 per share, subject to adjustment as provided below.
This Warrant is subject to the following provisions, terms and
conditions:
1. EXERCISE. The rights represented by this Warrant may be exercised
by the holder hereof, in whole or in part (but not as to a fractional share of
common stock), by written notice of exercise delivered to the Company twenty
(20) days prior to the intended date of exercise and by the surrender of this
Warrant (properly endorsed if required) at the principal office of the Company
and upon payment to it by certified or cashier's check of the purchase price for
such shares.
2. ISSUANCE OF SHARES. The Company agrees that the shares purchased
hereby shall be and are deemed to be issued to the record holder hereof as of
the close of business on the date on which this Warrant shall have been
surrendered and the payment made for such shares as aforesaid. Subject to the
provisions of the next succeeding paragraph, certificates for the shares of
stock so
<PAGE>
purchased shall be delivered to the holder hereof within a reasonable
time, not exceeding ten (10) days after the rights represented by this Warrant
shall have been so exercised, and, unless this Warrant has expired, a new
Warrant representing the number of shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be delivered to the holder
hereof within such time.
Notwithstanding the foregoing, however, the Company shall not be required
to deliver any certificate for shares of stock upon exercise of this Warrant,
except in accordance with the provisions, and subject to the limitations, set
forth in the paragraphs below.
3. COVENANTS OF COMPANY. The Company covenants and agrees that all
shares which may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance, be duly authorized and issued, fully paid,
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and without limiting the generality of the foregoing, the Company
covenants and agrees that it will from time to time take all such action as may
be required to assure that the par value per share of the common stock is at all
times equal to or less than the then effective purchase price per share of the
common stock issuable pursuant to this Warrant. The Company further covenants
and agrees that during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Warrant, a sufficient number of shares of its common
stock to provide for the exercise of the rights represented by this Warrant.
4. ANTI-DILUTION ADJUSTMENTS. The above provisions are, however,
subject to the following:
(a) In case the Company shall at any time hereafter subdivide or
combine the outstanding shares of common stock or declare a dividend payable in
common stock, the exercise price of this Warrant in effect immediately prior to
the subdivision, combination or record date for such dividend payable in common
stock shall forthwith be proportionately increased, in the case of combination,
or decreased, in the case of subdivision or dividend payable in common stock,
and each share of common stock purchasable upon exercise of the Warrant shall be
changed to the number determined by dividing the then current exercise price by
the exercise price as adjusted after the subdivision, combination, or dividend
payable in common stock.
(b) No fractional shares of common stock are to be issued upon the
exercise of the Warrant, but the Company shall pay a cash adjustment in respect
of any fraction of a share which would otherwise be issuable in an amount equal
to the same fraction of the market price per share of common stock on the day of
exercise as determined in good faith by the Company.
(c) If any merger, capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of
2
<PAGE>
common stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for common stock then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holder hereof shall hereafter
have the right to purchase and receive upon the basis and upon the terms and
conditions specified in this Warrant and in lieu of the shares of the common
stock of the Company immediately theretofore purchasable and receivable upon
the exercise of the rights represented hereby, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such common stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had such
reorganization, reclassification, consolidation, merger or sale not taken
place, and in any such case appropriate provisions shall be made with respect
to the rights and interests of the holder of this Warrant to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Warrant purchase price and of the number of shares purchasable upon the
exercise of this Warrant) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger, or the corporation purchasing such assets, shall
assume by written instrument executed and mailed to the registered holder
hereof at the last address of such holder appearing on the books of the
Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase.
(d) The Company shall mail to the registered holder of the Warrant, at
his or her last known post office address appearing on the books of the Company,
not less than fifteen (15) days prior to the date on which (i) a record will be
taken for the purpose of determining the holders of Common Stock entitled to
dividends (other than cash dividends) or subscription rights, or (ii) a record
will be taken (or in lieu thereof, the transfer books will be closed) for the
purpose of determining the holders of Common Stock entitled to notice of and to
vote at a meeting of shareholders at which any capital reorganization,
reclassification of shares of Common Stock, consolidation, merger, dissolution,
liquidation, winding upon or sale of substantially all of the Company's assets
shall be considered and acted upon.
(e) Upon any adjustment of the warrant purchase price, then and in
each such case, the Company shall give written notice thereof, by first class
mail, postage prepaid, addressed to the registered holder of this Warrant at the
address of such holder as shown on the books of the Company, which notice shall
state the warrant purchase price resulting from such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
5. COMMON STOCK. As used herein, the term "common stock" shall mean
and include the Company's presently authorized shares of common stock and shall
also include any capital stock of any class of the Company hereafter authorized
which shall not be limited to a fixed sum or
3
<PAGE>
percentage in respect of the rights of the holders thereof to participate in
dividends or in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company.
6. NO VOTING RIGHTS. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of the Company.
7. TRANSFER OF WARRANT OR RESALE OF SHARES. The holder acknowledges
that it has obtained this Warrant for investment and not with the intention of
making any resale or distribution. The holder further acknowledges (a) that
neither this Warrant nor any of the shares of common stock obtainable under it
have been registered under the Securities Act of 1933 or any state securities
statutes, and (b) that neither this Warrant nor any shares of common stock
obtained under it may be transferred without such registration or an opinion of
legal counsel acceptable to the Company that such transfer may be made without
registration. The holder of this Warrant, by acceptance hereof, agrees to give
written notice to the Company before transferring this Warrant, or transferring
any common stock issued upon the exercise hereof, of such holder's intention to
do so, describing briefly the manner of any proposed transfer and accompanied by
an opinion of legal counsel, in form and substance satisfactory to the Company,
that the transfer may lawfully be made. Promptly upon receiving such written
notice and opinion, the Company shall present copies thereof to the Company's
legal counsel and to counsel to the original purchaser of this Warrant. If in
the opinion of each such counsel the proposed transfer may be effected without
registration or qualification under any Federal or State law, the Company, as
promptly as practicable, shall notify such holder of such opinion, whereupon
such holder shall be entitled to transfer this Warrant or to dispose of shares
of common stock received upon the previous exercise of this Warrant, provided
that an appropriate legend may be endorsed on this Warrant or the certificates
for such shares respecting restrictions upon transfer thereof necessary or
advisable in the opinion of the Company's legal counsel to prevent further
transfers which would be in violation of the Securities Act of 1933.
If in the opinion of either of the counsel referred to in this paragraph
7 hereof, the proposed transfer or disposition of shares described in the
written notice given pursuant to this paragraph 7 may not be effected without
registration or qualification of this Warrant or the shares of common stock
issued on the exercise hereof, the Company shall promptly give written notice
thereof to the holder hereof, and such holder will limit its activities in
respect to such as, in the opinion of both such counsel, are permitted by law.
4
<PAGE>
IN WITNESS WHEREOF, BioNebraska, Inc. has caused this Warrant to be
signed by its duly authorized officers and dated September 2, 1993.
BIONEBRASKA, INC.
By: /s/ Fred W. Wagner
--------------------------
Fred W. Wagner, President
ATTEST:
/s/ Thomas R. Coolidge
- ------------------------------
Thomas R. Coolidge, Secretary
5
<PAGE>
Exhibit 10.18
APPENDIX B
WARRANT NO. ______
WARRANT FOR PURCHASE OF SHARES OF
COMMON STOCK
OF BIONEBRASKA, INC.
______________, 1997
FOR VALUE RECEIVED, ______________________, or registered assigns (the
"Holder"), is entitled to purchase from BioNebraska, Inc., a Delaware
corporation (the "Company"), commencing on the maturity date, including any
extensions (the "Maturity Date") of the Subordinated Promissory Note issued by
the Company to the Holder pursuant to the Agreement referred to below (the
"Note"), and continuing until the fifth anniversary of the date of the original
issuance of this Warrant, __________ fully paid and nonassessable shares of the
Company's Common Stock, par value $.01 per share, (such class of stock being
hereinafter referred to as the "Common Stock" and such Common Stock as may be
acquired upon exercise hereof being hereinafter referred to as the "Warrant
Stock"), at an exercise price (the " Warrant Exercise Price") equal to (a)
eighty percent (80%) of the price to public of initial public offering of the
Company's Common Stock which is effective on or before the Maturity Date, or (b)
$7.00 per share, in the event such public offering is not completed or is
completed after the Maturity Date.
The Warrant has been issued to the Holder by the Company pursuant to the
Bridge Loan Agreement dated of __________, 1997, by and between the Company and
the Holder (the "Agreement"), and is subject to the terms and provisions
thereof.
This Warrant is subject to the following provisions, terms, and
conditions:
1. The rights represented by this Warrant may be exercised by the
Holder, in whole or in part (but not to a fractional share of Common Stock),
by written notice of exercise substantially in the form attached hereto as
Schedule I, which notice shall be delivered to the Company accompanied by the
surrender of this Warrant (properly endorsed if required) at the principal
office of the Company and upon payment to the Company, by cash, certified
check or bank draft, of the Warrant Exercise Price for such shares. The
Company agrees that the Warrant Stock so purchased shall be and is deemed to
be issued as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such Warrant Stock as aforesaid.
Certificates for the shares of Warrant Stock so purchased shall be delivered
to the Holder within thirty (30) days after the rights represented by this
Warrant shall have been so exercised, and, unless this Warrant has expired, a
new Warrant representing the number of shares of Warrant Stock, if any, with
respect to which this Warrant has not been exercised shall also be delivered
to the Holder within such time. Notwithstanding the foregoing, however, the
Company shall not be required to deliver any certificates for shares of
Warrant Stock, except in accordance
<PAGE>
with the provisions and subject to the limitations of Paragraph 5 below.
2. The Company covenants and agrees that all shares of Warrant Stock
that may be issued upon the exercise of this Warrant will, upon issuance, be
duly authorized and issued, fully paid and nonassessable and free from all
taxes, liens, and charges with respect to the issuance thereof. The Company
further covenants and agrees that until expiration of this Warrant, the
Company will at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of
Common Stock to provide for the exercise of this Warrant.
3. The provisions in this Warrant relating to the Warrant Exercise
Price and the number of shares of Warrant Stock to be issued upon exercise of
this Warrant shall be subject to adjustment from time to time as hereinafter
provided.
(a) Upon each adjustment of the Warrant Exercise Price, the
Holder of this Warrant shall thereafter be entitled to purchase, at the
Warrant Exercise Price resulting from such adjustment, the number of
shares of Common Stock obtained by multiplying the Warrant Exercise Price
in effect immediately prior to such adjustment by the number of shares of
Common Stock purchasable hereto immediately prior to such adjustment and
dividing the product thereof by the Warrant Exercise Price resulting from
such adjustment.
(b) In case the Company shall at any time subdivide its
outstanding Common Stock into a greater number of shares or declare a
dividend payable in Common Stock, the Warrant Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced
and the number of shares of Common Stock purchasable pursuant to this
Warrant shall be proportionately increased, and conversely, in case the
Company's outstanding Common Stock shall be combined into a smaller
number of shares, the Warrant Exercise Price in effect immediately prior
to such combination shall be proportionately increased and the number of
shares of Common Stock purchasable upon the exercise of this Warrant
shall be proportionately reduced.
(c) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of its
assets to another corporation shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities or
assets ("Substituted Property") with respect to or in exchange for such
Common Stock, then, a condition of such reorganization, reclassification,
consolidation, merger or sale, the Holder shall have the right to
purchase and receive upon the basis and upon the terms and conditions
specified in this Warrant, and in lieu of the Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby, such Substituted Property as would have
been issued or delivered to the Holder if it had exercised this Warrant
and had received upon exercise of this Warrant
<PAGE>
the Common Stock prior to such reorganization, reclassification,
consolidation, merger, or sale. The Company shall not effect any such
consolidation, merger, or sale, unless prior to the consummation
thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument executed
and mailed to the Holder at the last address of the Holder appearing
on the books of the Company, the obligation to deliver to the Holder
such Substituted Property, in accordance with the foregoing
provisions, the Holder may be entitled to purchase.
(d) If the Company takes any other action, or if any other
event occurs which does not come within the scope of the provisions of
Paragraphs 3 (b) or 3 (c), but which should result in an adjustment in
the Warrant Exercise Price and/or the number of shares subject to the
Warrant in order to fairly protect the purchase rights of the Holder, an
appropriate adjustment in such purchase rights shall be made by the
Company.
(e) Upon any adjustment of the Warrant Exercise Price or the
number of shares issuable upon exercise of this Warrant, the Company
shall have written notice thereof, by first-class mail, postage prepaid,
addressed to the Holder at the address of the Holder and shown on the
books of the Company, which notice shall state the Warrant Exercise Price
resulting from such adjustment and the increase or decrease, if any, in
the number of shares purchasable at such price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
4. This Warrant shall not entitle the Holder to any voting rights
or other rights as a shareholder of the Company.
5. The Holder, by acceptance hereof, represents and warrants that
(a) it is acquiring this Warrant for its own account for investment purposes
only and not with a view to its resale or distribution and (b) it has no
present intention to resell or otherwise dispose of all or any part of this
Warrant. Other than pursuant to registration under federal and applicable
state securities laws or exemption from such registration, the availability
of which the Company shall determine in its sole discretion, neither this
Warrant nor any shares of Warrant Stock may be sold, pledged, assigned, or
otherwise disposed of (whether voluntarily or involuntarily). Company may
condition such sale, pledge, assignment, or other disposition on the receipt
from the party to whom this Warrant is to be so transferred or to whom
Warrant Stock is to be issued or so transferred of any representations and
agreements requested by the Company in order to permit such issuance or
transfer to be made pursuant to exemptions from registration under federal
and applicable state securities laws. Each certificate representing the
Warrant (or any part thereof) and any shares of Warrant Stock shall bear
appropriate legends setting forth these restrictions on transferability. The
Holder, by acceptance hereof, agrees to give written notice to the Company
before transferring this Warrant or any shares of Warrant Stock of the
Holder's intention to do so, describing briefly the manner of any proposed
transfer. Within thirty (30) days after receiving
<PAGE>
such written notice, the Company shall notify the Holder to whether such
transfer may be effected and of the conditions to any such transfer.
6. This Warrant shall be transferable only on the books of the
Company by the Holder in person, or by duly authorized attorney, on surrender
of the Warrant, properly assigned.
7. Neither this Warrant nor any terms hereof may be changed, waived,
discharged, or terminated orally but only by an instrument in writing signed
by the party against which enforcement of the change, waiver, discharge, or
termination is sought.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on
its behalf by its duly authorized officer on the day and year first above
written.
BIONEBRASKA, INC.
By __________________________________
Its __________________________
<PAGE>
Exhibit 10.19
BIONEBRASKA, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS OPTION AGREEMENT is made as of the _____ day of _______________,
199_, between BioNebraska, Inc., a Delaware corporation (the "Company"), and
________________________________________, an employee of the Company (the
"Optionee").
The Company desires, by affording the Optionee an opportunity to purchase
shares of its Common Stock, of the par value of One Cent ($.01) per share (the
"Common Stock"), as hereinafter provided, to carry out the purpose of the 1993
Stock Plan of the Company, as amended in 1996 and approved by its shareholders
(the "Plan").
THEREFORE, the parties hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee the
right and option (hereinafter called the "Option") to purchase from the Company
all or any part of an aggregate amount of _______________ shares of the Common
Stock of the Company on the terms and conditions herein set forth.
2. PURCHASE PRICE. The purchase price of the shares of the Common
Stock covered by this Option shall be $__________ per share.
3. TERM OF OPTION. The term of the Option shall be for a period of
five (5) years from the date hereof (the "Option Date"), subject to earlier
termination as hereinafter provided.
4. EXERCISE OF OPTION. During the first year the Option is
outstanding, it may not be exercised with respect to any of the Shares covered
hereby. Thereafter, subject to the terms and conditions hereof, the Option may
be exercised as follows:
(a) From and after 12 months from the Option Date, the Option
may be exercised as to _____ shares.
(b) From and after 24 months from the Option Date, the Option
may be exercised as to an additional _____ shares.
(c) From and after 36 months from the Option Date, the Option
may be exercised as to an additional _____ shares.
5. ADJUSTMENTS. Notwithstanding any installment exercise provisions
of Section 4 above, this Option shall be exercisable in full, without regard to
any installment exercise
<PAGE>
provisions, for a period specified by the Company, but not to exceed sixty
(60) days, prior to the occurrence of any of the following events: (i)
dissolution or liquidation of the Company other than in conjunction with a
bankruptcy of the Company or any similar occurrence, (ii) any merger,
consolidation, acquisition, separation, reorganization, or similar
occurrence, where the Company will not be the surviving entity or (iii) the
transfer of substantially all of the assets of the Company or 75% or more of
the outstanding Stock of the Company.
6. NON-TRANSFERABILITY. The Option shall not be transferable
otherwise than by will or the laws of descent and distribution, and the Option
may be exercised, during the lifetime of the Optionee, only by the Optionee.
7. DEATH, DISABILITY OR RETIREMENT OF OPTIONEE. If the Optionee's
employment with the Company shall terminate by reason of death, Disability or
Retirement (as those terms are defined in the Plan), the Option may be exercised
(to the extent that the Optionee shall have been entitled to do so at the date
of his termination of employment by reason of death, Disability or Retirement)
by the Optionee, his legal representative, or, in the case of death, by the
person to whom the Option is transferred by will or the applicable laws of
descent and distribution at any time within ninety (90) days after the
Optionee's termination of employment, but in no event later than the expiration
of the term specified in Section 3 hereof.
8. OTHER TERMINATION. In the event the employment of the Optionee
shall be terminated for any reason other than death, Disability or Retirement,
any unexercised Option may be exercised by the Optionee to the extent it was
exercisable at such termination, but may not be exercised after ninety (90) days
of such termination or the expiration of the stated term of the option,
whichever period is the shorter; provided, however, that in the event of
termination for Cause (as that term is defined in the Plan), such Option shall
terminate immediately upon such termination of employment. So long as the
Optionee shall continue to be an employee of the Company or one or more of its
subsidiaries, the Option shall not be affected by any change of duties or
position. Nothing in this Option Agreement shall confer upon the Optionee any
right to continue in the employ of the Company or of any of its subsidiaries or
interfere in any way with the right of the Company or any such subsidiary to
terminate the employment of the Optionee at any time.
9. METHOD OF EXERCISING OPTION. Subject to the terms and conditions
of this Option Agreement, the Option may be exercised by written notice to the
Secretary of the Company at the principal office of the Company. Such notice
shall state the election to exercise the Option and the number of shares in
respect of which it is being exercised, and shall be signed by the person so
exercising the Option. Such notice shall be accompanied by payment of the full
purchase price of such shares, which payment shall be made in cash or by check
or bank draft payable to the Company, or, provided such form of payment does not
result in a charge to earnings of the Company for financial accounting purposes,
by delivery of shares of Common Stock of the Company with a fair market value
equal to the purchase price or by a combination of cash and such shares, whose
fair market value shall equal the purchase price. For purposes of
2
<PAGE>
this paragraph, the "fair market value" of the Common Stock of the Company
shall be established in the manner set forth in the Plan. In the event the
Option shall be exercised by any person other than the Optionee, such notice
shall be accompanied by appropriate proof of such right of such person to
exercise the Option.
10. OPTION PLAN. This Option is subject to certain additional terms
and conditions set forth in the Plan pursuant to which this Option has been
issued. A copy of the Plan is on file with the Treasurer of the Company and by
acceptance hereof, Optionee agrees to and accepts this Option subject to the
terms of the Plan. Except as otherwise defined herein, defined terms used in
this Agreement shall have the meaning ascribed thereto in the Plan.
11. DISPUTES. As a condition of the granting of the Option herein
granted, the Optionee agrees, for the Optionee and the Optionee's personal
representatives, that any dispute or disagreement which may arise under or as a
result of or pursuant to this Agreement shall be determined by the Compensation
Committee of the Board of Directors of the Company, or the Board if there is no
such committee, in its sole discretion, and that any interpretation by said
Committee of the terms of this Agreement shall be final, binding and conclusive.
12. BINDING EFFECT. This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereto.
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement as of the date and year first above written.
BIONEBRASKA, INC.
By_________________________________
Chairman of the Board and CEO
____________________________________
Optionee
3
<PAGE>
Exhibit 10.20
BIONEBRASKA, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS OPTION AGREEMENT is made as of the _____ day of _______________,
1993, between BioNebraska, Inc., a Delaware corporation (the "Company"), and
________________________________________, a consultant to the Company (the
"Optionee").
The Company desires, by affording the Optionee an opportunity to purchase
shares of its Common Stock, of the par value of One Cent ($.01) per share (the
"Common Stock"), as hereinafter provided, to carry out the purpose of the 1993
Stock Plan of the Company, as amended (the "Plan").
THEREFORE, the parties hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee the
right and option (hereinafter called the "Option") to purchase from the Company
all or any part of an aggregate amount of _______________ shares of the Common
Stock of the Company on the terms and conditions herein set forth.
2. PURCHASE PRICE. The purchase price of the shares of the Common
Stock covered by this Option shall be $__________ per share.
3. TERM OF OPTION. The term of the Option shall be for a period of
[FIVE (5)] years from the date hereof (the "Option Date"), subject to earlier
termination as hereinafter provided.
4. EXERCISE OF OPTION. During the first year the Option is
outstanding, it may not be exercised with respect to any of the Shares covered
hereby. Thereafter, subject to the terms and conditions hereby, the Option may
be exercised as follows:
(a) From and after 12 months from the Option Date, the Option
may be exercised as to _____ shares.
(b) From and after 24 months from the Option Date, the Option
may be exercised as to an additional _____ shares.
(c) From and after 36 months from the Option Date, the Option
may be exercised as to an additional _____ shares.
5. CHANGE OF CONTROL. Upon a Change of Control, each
outstanding Stock Option shall become exercisable in full as to all of the
shares covered thereby without regard to
<PAGE>
any installment exercise or vesting provisions. For purposes of this
Section 5, the term "Change of Control" means any of the following:
(a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934) becomes a "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities; or
(b) a business combination, following which shareholders of the
Company do not continue to beneficially own at least 50% of the voting
power of the resulting entity or the members of the Company's Board of
Directors prior to the transaction do not constitute a majority of the
resulting entity's Board of Directors; or
(c) A liquidation, dissolution or sale of all or substantially
all of the assets of the Company, and immediately thereafter, there is no
substantial continuity of ownership with respect to the Company and the
entity to which such assets have been transferred.
The grant of an option pursuant to the Plan shall not limit in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
exchange or consolidate or to dissolve, liquidate, sell or transfer all or any
part of its business or assets.
6. NON-TRANSFERABILITY. The Option shall not be transferable
otherwise than by will or the laws of descent and distribution, and the Option
may be exercised, during the lifetime of the Optionee, only by the Optionee.
7. TERMINATION OF CONSULTING RELATIONSHIP. If the Optionee's service
as a consultant to the Company shall terminate by reason of death, the Option
may be exercised, to the extent that the Optionee shall have been entitled to do
so at the date of such termination by reason of death, by his or her legal
representative or by the person to whom the Option is transferred by will or the
applicable laws of descent and distribution at any time within one hundred
eighty (180) days after the termination of Optionee's consulting relationship
with the Company, but in no event later than the expiration of the term
specified in Section 3 hereof.
8. OTHER TERMINATION. In the event the Optionee's service as a
consultant to the Company shall terminate for any reason other than death, any
unexercised Option may be exercised by the Optionee at any time within one
hundred twenty (120) days of such termination but only to the extent the Option
was exercisable by the Optionee on the date of termination. In no event shall
any Option be exercisable after the expiration of the term specified in
Section 3 hereof.
2
<PAGE>
9. METHOD OF EXERCISING OPTION. Subject to the terms and conditions
of this Option Agreement, the Option may be exercised by written notice to the
Company at the principal office of the Company. Such notice shall state the
election to exercise the Option and the number of shares in respect of which it
is being exercised, and shall be signed by the person so exercising the Option.
Such notice shall be accompanied by payment of the full purchase price of such
shares, which payment shall be made by check or bank draft payable to the
Company, or, in the discretion of the Company, by delivery of shares of Common
Stock of the Company with a fair market value equal to the purchase price or by
a combination of cash and such shares, whose fair market value shall equal the
purchase price. For purposes of this paragraph, the "fair market value" of the
Common Stock of the Company shall be established in the manner set forth in the
Plan. In the event the Option shall be exercised by any person other than the
Optionee, such notice shall be accompanied by appropriate proof of such right of
such person to exercise the Option.
10. OPTION PLAN. This Option is subject to certain additional terms
and conditions set forth in the Plan pursuant to which this Option has been
issued. A copy of the Plan is on file with the Treasurer of the Company, and by
acceptance hereof, Optionee agrees to and accepts this Option subject to the
terms of the Plan. Except as otherwise defined herein, defined terms used in
this Agreement shall have the meaning ascribed thereto in the Plan.
11. DISPUTES. As a condition of the granting of the Option herein
granted, the Optionee agrees, for the Optionee and the Optionee's personal
representatives, that any dispute or disagreement which may arise under or as a
result of or pursuant to this Agreement shall be determined by the Compensation
Committee of the Board of Directors of the Company, or the Board if there is no
such committee, in its sole discretion, and that any interpretation by said
Committee of the terms of this Agreement shall be final, binding and conclusive.
12. BINDING EFFECT. This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereto.
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement as of the date and year first above written.
BIONEBRASKA, INC.
By_________________________________
Chairman of the Board and CEO
____________________________________
Optionee
3
<PAGE>
Exhibit 11.1
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
Net loss per common share is computed by dividing net loss
applicable to common stock by the weighted average number of common shares
outstanding. Basic and diluted earnings per common share are the same,
because options for shares of common stock are excluded as all common
equivalent shares would be antidilutive due to the losses. The following
tables reflect the calculation of basic and diluted earnings per share:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
----------------------------
INCOME (LOSS) SHARES PER SHARE
------------- ------ AMOUNT
------
<S> <C> <C> <C>
Net Loss $ (12,133,980)
Preferred stock dividends (2,772,222)
---------------
Basic EPS
Loss applicable to common
stockholders (14,906,202) 5,058,928 $ (2.95)
===========
Effect of dilutive securities
Options 0 0
--------------- -------------
Diluted EPS
Loss applicable to common
stockholders $ (14,906,202) 5,058,928 $ (2.95)
===========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
----------------------------
INCOME (LOSS) SHARES PER SHARE
------------- ------ AMOUNT
------
<S> <C> <C> <C>
Net Loss $ (8,118,329)
Preferred stock dividends (1,991,646)
----------------
Basic EPS
Loss applicable to common
stockholders (10,109,975) 4,264,559 $ (2.37)
===========
Effect of dilutive securities
Options 0 0
---------------- -------------
Diluted EPS
Loss applicable to common
stockholders $ (10,109,975) 4,264,559 $ (2.37)
===========
</TABLE>
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF REGISTRANT
The subsidiaries of BioNebraska, Inc., a Delaware corporation, include:
1. GRF Corporation, a Delaware corporation.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
As an independent public accountant, I hereby consent to the use of my
reports and to all references to my firm included in or made a part of this
Form 10 filing.
Loren D. Swanson, Independent Accountant
Lincoln, Nebraska
April 26, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BIONEBRASKA,
INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 18,393,567
<SECURITIES> 0
<RECEIVABLES> 13,896
<ALLOWANCES> 0
<INVENTORY> 35,172
<CURRENT-ASSETS> 18,442,635
<PP&E> 4,454,803
<DEPRECIATION> 2,063,090
<TOTAL-ASSETS> 23,504,603
<CURRENT-LIABILITIES> 2,202,939
<BONDS> 1,414,369
1,755,156
2,752
<COMMON> 67,192
<OTHER-SE> 18,062,195
<TOTAL-LIABILITY-AND-EQUITY> 23,504,603
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,199,130
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 231,550
<INCOME-PRETAX> (12,133,980)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,133,980)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,133,980)
<EPS-BASIC> (2.95)
<EPS-DILUTED> (2.95)
</TABLE>
