<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 16, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
BIEX, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3829 84-1183276
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
--------------------------
6693 SIERRA LANE, SUITE F
DUBLIN, CALIFORNIA 94568
(925) 556-0300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JAMES A. EDLUND
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BIEX, INC.
6693 SIERRA LANE, SUITE F
DUBLIN, CALIFORNIA 94568
(925) 556-0300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES TO:
HOWARD G. ERVIN, ESQ. J. CASEY MCGLYNN, ESQ.
MICHAEL J. SULLIVAN, ESQ. CHRISTOPHER D. MITCHELL, ESQ.
ISOBEL A. JONES, ESQ. ISSAC J. VAUGHN, ESQ.
TROY F. CHRISTMAS, ESQ. HAROLD R. DEGRAFF, ESQ.
COOLEY GODWARD LLP WILSON SONSINI GOODRICH & ROSATI P.C.
ONE MARITIME PLAZA, 20TH FLOOR 650 PAGE MILL ROAD
SAN FRANCISCO, CALIFORNIA 94111-3580 PALO ALTO, CA 94304-1050
(415) 693-2000 (650) 493-9300
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
--------------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
AMOUNT OF REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED PROPOSED MAXIMUM AGGREGATE OFFERING PRICE (1) FEE
<S> <C> <C>
Common Stock ($0.001) par value.............. $42,500,000 $12,538
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457 under the Securities Act of
1933. Such amount includes $7,250,000 of Common Stock which the
Underwriters have the option to purchase solely to cover over-allotments,
if any. In accordance with Rule 457 under the Securities Act of 1933, the
number of shares being registered and the proposed maximum offering price
per share have not been included in this table.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 16, 1998
SHARES
[LOGO]
COMMON STOCK
ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY
BIEX, INC. ("BIEX" OR THE "COMPANY"). PRIOR TO THIS OFFERING, THERE HAS BEEN NO
PUBLIC MARKET FOR THE COMMON STOCK OF THE COMPANY. IT IS CURRENTLY ESTIMATED
THAT THE INITIAL PUBLIC OFFERING PRICE FOR THE COMMON STOCK WILL BE BETWEEN
$ AND $ PER SHARE. SEE "UNDERWRITING" FOR A DISCUSSION OF THE
FACTORS TO BE CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING PRICE.
APPLICATION HAS BEEN MADE TO HAVE THE COMMON STOCK APPROVED FOR QUOTATION ON THE
NASDAQ NATIONAL MARKET UNDER THE SYMBOL "BIEX."
THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN PURCHASING THE SHARES OF COMMON
STOCK OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
PER SHARE................................ $ $ $
- --------------------------------------------------------------------------------------------
TOTAL(3)................................. $ $ $
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
</TABLE>
(1) SEE "UNDERWRITING" FOR INFORMATION CONCERNING INDEMNIFICATION OF THE
UNDERWRITERS AND OTHER MATTERS.
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $575,000.
(3) THE COMPANY HAS GRANTED TO THE UNDERWRITERS A 30-DAY OPTION TO PURCHASE UP
TO AN ADDITIONAL SHARES OF COMMON STOCK SOLELY TO COVER
OVER-ALLOTMENTS, IF ANY. IF THE UNDERWRITERS EXERCISE THIS OPTION IN FULL,
THE PRICE TO PUBLIC WILL TOTAL $ , THE UNDERWRITING DISCOUNT WILL TOTAL
$ AND THE PROCEEDS TO COMPANY WILL TOTAL $ . SEE "UNDERWRITING."
THE SHARES OF COMMON STOCK ARE OFFERED BY THE SEVERAL UNDERWRITERS NAMED
HEREIN, SUBJECT TO RECEIPT AND ACCEPTANCE BY THEM AND SUBJECT TO THEIR RIGHT TO
REJECT ANY ORDER IN WHOLE OR IN PART. IT IS EXPECTED THAT DELIVERY OF THE
CERTIFICATES REPRESENTING SUCH SHARES WILL BE MADE AGAINST PAYMENT THEREFOR AT
THE OFFICE OF NATIONSBANC MONTGOMERY SECURITIES LLC ON OR ABOUT ,
1998.
------------------------
NationsBanc Montgomery Securities LLC
Salomon Smith Barney
<PAGE>
Wessels, Arnold & Henderson
, 1998
<PAGE>
[Artwork]
[Caption -- The Problem of Preterm Labor and Delivery]
[Actual size photograph of footprint of newborn baby born at 24 weeks
gestational age, with the following text:
<TABLE>
<CAPTION>
<S> <C>
- Weight 1.25 - 1.5 lbs
- Survival 10%
- Chances of normal development 40% of those that survive
- Typical NICU length-of-stay 90-120 days
- Clinical consequences Immature lungs
Neurological problems
Susceptibility to infection
Intraventricular hemorrhaging
Vision disorders--blindness
Cerebral Palsy
NEWBORN COSTS $155,700 NEWBORN COST/TERM 42.1 TIMES]
</TABLE>
[Actual size photograph of footprint of newborn baby born at 32 weeks
gestational age, with the following text:
<TABLE>
<CAPTION>
<S> <C>
- Weight 3.5 - 4 lbs
- Survival 85%
- Chances of normal development 90% of those that survive
- Typical NICU length-of-stay 15-30 days
- Clinical consequences Mild Respiratory Distress Syndrome
Neurological problems
Some apnea and bradycardia
Cerebral Palsy
NEWBORN COSTS $46,400 NEWBORN COST/TERM 12.5 TIMES]
</TABLE>
[Actual size photograph of footprint of newborn baby born at 40 weeks
gestational age, with the following text:
<TABLE>
<CAPTION>
<S> <C>
- Weight 7 - 8.5 lbs
- Survival 99%
- Chances of normal development 99%
- Typical NICU length-of-stay 0 days
- Clinical consequences Healthy baby
Discharge with mother
NEWBORN COSTS $3,700 NEWBORN COST/TERM 1.0 TIMES]
</TABLE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN ACTIVITIES THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES OFFERED
HEREBY, INCLUDING OVER- ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT
COVERING TRANSACTIONS AND PENALTY BIDS. THESE TRANSACTIONS MAY BE EFFECTED ON
NASDAQ OR OTHERWISE AND, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
Biex-TM- and SalEst-TM- are trademarks of the Company. Certain trademarks of
other companies are used in this Prospectus.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE
IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION CONTAINED IN
THIS PROSPECTUS ASSUMES: (I) THE CONVERSION OF ALL THE OUTSTANDING SHARES OF
PREFERRED STOCK INTO SHARES OF COMMON STOCK UPON THE EFFECTIVENESS OF THE
REGISTRATION STATEMENT FOR THIS OFFERING; (II) THE ISSUANCE OF SHARES OF
COMMON STOCK UPON THE CLOSING OF THIS OFFERING IN PAYMENT OF CERTAIN ACCRUED
DIVIDENDS ON THE PREFERRED STOCK (THE "DIVIDEND SHARES"); (III) THE ISSUANCE OF
465,584 SHARES OF COMMON STOCK UPON THE CLOSING OF THIS OFFERING PURSUANT TO THE
EXERCISE OF OUTSTANDING WARRANTS (THE "WARRANT SHARES"); (IV) THE FILING OF THE
COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION; AND (V) NO EXERCISE
OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. EXCEPT FOR THE HISTORICAL
INFORMATION CONTAINED HEREIN, THE DISCUSSION IN THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT
COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO,
THOSE DISCUSSED IN "RISK FACTORS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS," AS WELL AS THOSE
DISCUSSED ELSEWHERE IN THIS PROSPECTUS.
THE COMPANY
Biex, Inc. ("Biex" or the "Company") is a women's health care company
focused on developing and marketing innovative solutions for maternity
management. The Company's proprietary SalEst system, which measures the level of
the hormone estriol in a pregnant woman's saliva, received United States Food
and Drug Administration ("FDA") approval in 1998 after expedited review as
an aid in identifying women at risk of spontaneous preterm labor and delivery in
singleton pregnancies. The Company believes the SalEst system's ability to aid
in the accurate identification of those women most likely to deliver at term is
a powerful tool in the clinical management of pregnancies inaccurately
categorized as high risk by traditional screening methods. These inaccuracies
often result in unnecessary and costly interventions and treatments. In
addition, clinical results demonstrate that the SalEst system is an improved
method of identifying high risk women inaccurately categorized as low risk by
traditional screening methods. These women account for the majority of preterm
deliveries. Early and accurate identification of risk will allow physicians to
provide appropriate levels of clinical management and intervention, providing
opportunity to prolong pregnancies and decrease the morbidity, mortality and
associated costs for mothers and babies.
Preterm labor and delivery is a major health care problem worldwide.
According to the National Center for Health Statistics, of the estimated four
million births in the United States each year, approximately 11% or more than
400,000 occur preterm. Despite significant improvements in prenatal care, over
40,000 of these babies die each year. Preterm delivery causes 75% of newborn
morbidity and mortality in the United States and is the leading cause of
neonatal intensive care unit admissions. Industry data indicates that costs
associated with the care of preterm infants add over $10 billion annually to
pre-discharge infant health care costs in the United States. Those preterm
babies that survive are often subject to one of many serious diseases that are
more common in preterm babies, such as respiratory distress syndrome, cerebral
palsy, epilepsy, blindness and learning disabilities. Further, maternal care
costs for women inaccurately classified as high risk by traditional screening
methods exceed one billion dollars annually.
Preterm delivery is defined as delivery after 22 weeks but before 37 weeks
of gestation and is caused by many factors, including the spontaneous
commencement of uterine contractions ("spontaneous preterm labor"), infection of
the membranes surrounding the fetus, premature rupture of these membranes and
physician induction of labor. The Company believes the primary cause of
spontaneous preterm labor is a surge of the hormone estriol. Estriol is an
estrogen hormone considered to be critical in the normal biological events
leading to labor and delivery and is easily measured in maternal saliva. This
surge of estriol, which in normal term pregnancies occurs later than 36 weeks,
is a normal physiological event that prepares the uterine muscle for the
organized contractions required in spontaneous labor and is believed to be a
fetal signal for delivery. The Company believes that detection of this estriol
surge is an accurate predictor of labor and delivery.
3
<PAGE>
Traditionally, the only clinical tools available to assess a woman's risk of
spontaneous preterm labor and delivery have been the Creasy method and its
modifications. The Creasy method is a subjective assessment of a woman's risk
profile utilizing a variety of socioeconomic, medical, lifestyle, behavioral and
current pregnancy risk factors that is scored according to a defined protocol.
The most important and predictive of the Creasy risk factors is a prior preterm
delivery. Given that 40% of all deliveries in the United States are from a first
pregnancy, the Creasy method has inherent limitations in identifying many women
at risk. Studies of the Creasy method demonstrate that approximately 80% of the
women identified as high risk, or 480,000 women each year, deliver at term.
Studies also demonstrate that up to 80% of the women who actually experience
preterm delivery, or 320,000 women each year, are not identified as high risk by
the traditional method. The Creasy method is of limited value in directing
intervention once it has categorized a woman as high risk because it does not
identify the maternal or fetal biological causes of preterm labor and delivery
or the time-frame in which these premature deliveries may be expected to occur.
The Company's SalEst system, utilizing a patented marker, provides objective
identification of women at risk of spontaneous preterm labor and delivery by
measuring salivary estriol, a hormone critical in the biological events
preceding labor and delivery. The Company believes the key advantages of the
SalEst system include:
- REDUCTION OF INACCURATE HIGH RISK ASSESSMENTS. Clinical testing of the
SalEst system indicated that patients with persistent low estriol levels
prior to 36 weeks had a 98% chance of not experiencing spontaneous preterm
labor and delivery. It is anticipated that this high negative predictive
value will be used initially as an aid to rule out preterm labor and
delivery in patients who are currently inaccurately classified as high
risk, reducing unnecessary interventions and the cost of maternal
management.
- IMPROVED IDENTIFICATION OF WOMEN AT RISK OF PRETERM LABOR AND
DELIVERY. Clinical results indicated that women who had two consecutive
elevated estriol levels were almost eight times more likely to experience
preterm labor and delivery than those women with low estriol levels,
allowing for more timely and effective interventions to improve maternal
care and newborn outcomes.
- COST EFFECTIVE METHOD OF RISK ASSESSMENT. The Company believes that by
reducing unnecessary interventions and providing opportunities to improve
maternal and neonatal outcomes, the SalEst system will provide significant
cost savings to payors. It is anticipated that these cost savings will
support reimbursement for the SalEst system.
- IDENTIFICATION OF BIOLOGICAL CAUSES. The traditional method is based on
subjective non-cause specific risk factors. By contrast, the SalEst system
identifies a hormonal cause of preterm labor two to three weeks prior to
delivery, creating opportunities for timely cause-specific therapeutic
intervention.
- EASE OF USE. The SalEst system, a saliva-based test, is convenient and
noninvasive. The convenience of the SalEst system enables sample
collection in the physician's office, patient's home or workplace.
The Company is preparing to commercially launch the SalEst system in the
United States. Key elements of the SalEst system sales and marketing strategy
are to: (1) develop a direct sales force to target those obstetricians who
manage a large number of patients, (2) establish third-party reimbursement, (3)
utilize a detailed cost/benefit model for use of the SalEst system incorporating
industry-accepted actuarial databases and the Company's FDA clinical trial
results, (4) create physician and payor demand through a comprehensive sales and
marketing program that will include educational programs, publication of
peer-reviewed scientific articles and symposia, (5) form strategic alliances
with major pharmaceutical, medical device, consumer product and disease
management companies to gain additional market exposure and access to
established distribution channels, and (6) raise patient awareness by working
with major patient support groups and consumer publications.
The Company's executive offices are located at 6693 Sierra Lane, Suite F,
Dublin, California 94568, and its telephone number is (925) 556-0300.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company..................... shares
Common Stock to be outstanding after the offering....... shares(1)
Use of proceeds......................................... Develop sales, marketing and
distribution capabilities, expand
research and development, expand
clinical trials and provide
working capital for general
corporate purposes.
Proposed Nasdaq National Market symbol.................. BIEX
</TABLE>
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1995 1996 1997
---------- ---------- ------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Expenses:
Research and development................................................ $ 1,059 $ 2,156 $ 1,989
General and administrative.............................................. 676 1,465 1,964
---------- ---------- ------------
Operating loss........................................................ 1,735 3,621 3,953
Interest income........................................................... 28 58 110
---------- ---------- ------------
Net loss.................................................................. (1,707) (3,563) (3,843)
---------- ---------- ------------
---------- ---------- ------------
Basic net loss per share (2).............................................. $ (.37) $ (.48) $ (.35)
---------- ---------- ------------
---------- ---------- ------------
Shares used in computing basic net loss per share......................... 4,593 7,365 10,857
---------- ---------- ------------
---------- ---------- ------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------
AS ADJUSTED
HISTORICAL (3)
---------- -------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments.................................... $ 8,268
Working capital...................................................................... 6,905
Total assets......................................................................... 8,497
Stockholders' equity................................................................. 7,028
</TABLE>
- ------------------------------
(1) Based on 13,826,312 shares outstanding as of December 31, 1997,
Dividend Shares and 465,584 Warrant Shares. Excludes as of December 31, 1997
1,719,588 shares of Common Stock issuable upon exercise of outstanding
options under the Company's stock option plans. See "Management--Employee
Benefit Plans," "Description of Capital Stock" and Notes 3 and 4 of Notes to
Financial Statements.
(2) See Note 2 of Notes to Financial Statements for an explanation of the shares
used in computing per share amounts.
(3) Adjusted to reflect (i) the sale by the Company of shares of Common
Stock offered hereby at an assumed initial public offering price of $
per share after deducting estimated underwriting discounts and offering
expenses and the application of the estimated net proceeds therefrom, (ii)
the issuance of the Warrant Shares and (iii) the issuance of the Dividend
Shares. See "Use of Proceeds."
5
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. ACCORDINGLY, PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE
FOLLOWING FACTORS, TOGETHER WITH THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS, IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE PURCHASING THE
SHARES OF COMMON STOCK OFFERED HEREBY. THIS PROSPECTUS CONTAINS FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTY. ACTUAL RESULTS AND THE TIMING OF
CERTAIN EVENTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE
FORWARD-LOOKING STATEMENTS AS A RESULT OF THE RISK FACTORS SET FORTH BELOW AND
OTHER FACTORS DISCUSSED ELSEWHERE IN THIS PROSPECTUS. SEE "SPECIAL NOTE
REGARDING FORWARD-LOOKING STATEMENTS."
DEPENDENCE ON SINGLE PRODUCT
The Company has only one product, the SalEst system, which was approved by
the FDA in 1998 for a single indication: as an aid in identifying the
risk of spontaneous preterm labor and delivery in singleton pregnancies. The
Company does not expect to have any other approved indication for the SalEst
system or any other product for the foreseeable future, if at all. The
successful commercialization of the SalEst system is critical to the future
success of the Company. The Company has not generated any sales of the SalEst
system. Sales of the SalEst system, if any, will account for substantially all
of the Company's revenues, if any, for the foreseeable future. The ability of
the Company to successfully manufacture, market and sell the SalEst system is
subject to a number of risks, many of which are outside the Company's control.
There can be no assurance that the Company will be able to successfully
manufacture the SalEst system in commercial quantities at acceptable costs,
market the SalEst system, obtain adequate third-party reimbursement for the
SalEst system or generate sales of the SalEst system. Failure to achieve any of
the foregoing would have a material adverse effect on the Company's business,
financial condition and results of operations.
UNCERTAINTY OF MARKET ACCEPTANCE
The success and growth of the Company will depend on the level of market
acceptance of the SalEst system by physicians, third-party payors and patients.
The SalEst system is a new method of aiding in the identification of risk of
spontaneous preterm labor and delivery and is the first saliva-based test used
in the area of obstetrics. Most physicians are unfamiliar with the SalEst system
and saliva-based tests in general. Physicians will not use, and payors will not
reimburse for the use of, the SalEst system unless they determine, based on
clinical data and other factors, that the SalEst system is an effective means of
identifying risk of spontaneous preterm labor and delivery and that the cost
savings achieved through use of the SalEst system exceed its cost. These
determinations will depend in part on the effectiveness of current interventions
and the development of improved interventions for women at high risk of
spontaneous preterm labor and delivery. In addition, market acceptance of the
SalEst system may be affected if physicians view the test as of limited utility
in identifying women believed to be at low risk of spontaneous preterm labor and
delivery who actually are at high risk. The Company believes that
recommendations and endorsements by prominent physicians and medical groups, as
well as the publication of favorable peer reviewed medical journal articles, are
significant factors in gaining physician and payor acceptance of any new medical
procedure. There can be no assurance that any such recommendations or
endorsements will be obtained or that any such articles will be published. Other
non-traditional techniques for screening for the risk of spontaneous preterm
labor and delivery, including fetal fibronectin diagnostic tests, ultrasound and
other biological markers, are in various stages of development, and such
techniques may be more attractive to physicians, payors or patients than the
SalEst system. There can be no assurance that the SalEst system will achieve
market acceptance as an aid in identifying the risk of spontaneous preterm labor
and delivery in singleton pregnancies or for any other indications or that
adequate levels of reimbursement from third-party payors will be available, if
at all. Failure of the SalEst system to gain market acceptance would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Sales and Marketing" and "--Third-Party
Reimbursement."
6
<PAGE>
UNCERTAINTY OF REIMBURSEMENT
In the United States, physicians, hospitals and other health care providers
that perform medical services generally rely on third-party payors, such as
private health insurance plans, to reimburse all or part of the costs associated
with the treatment of patients. Although reimbursement for other methods of
screening for the risk of preterm labor and delivery has generally been
available in the United States, there can be no assurance that this will
continue to be the case or that adequate reimbursement will be available for the
SalEst system or any future products developed by the Company. Factors that
payors consider important in making reimbursement decisions for new products
include (i) the cost effectiveness of the product, (ii) the results of clinical
trials evidencing the product's safety and efficacy, (iii) the publication of
favorable studies and peer-reviewed medical journal articles, (iv) technical
reviews and assessments performed by a payor's internal technical review
committees or panels and (v) how the product compares to other competing
products. Failure to obtain sufficient reimbursement from third-party payors for
the SalEst system would have a material adverse effect on the Company's
business, financial condition and results of operations.
A component in the reimbursement decision by most private insurers and the
United States Health Care Financing Administration ("HCFA"), which administers
Medicare and Medicaid, is the assignment of a Current Procedural Terminology
("CPT") code, which is used in the submission of claims to insurers for
reimbursement for medical services. CPT codes are generally required for
Medicare and Medicaid reimbursement and can be important in facilitating
reimbursement by other third-party payors. CPT codes are assigned, maintained
and revised by the CPT Editorial Board which is administered by the American
Medical Association. The Company intends to petition the CPT Editorial Board to
establish a separate CPT code for the SalEst system. CPT codes generally become
effective on January 1 in each year. The Company does not expect that it will
have a CPT code for the SalEst system prior to January 1, 2000. There can be no
assurance that the Company will be successful in obtaining a CPT code for the
SalEst system. Failure to obtain a CPT code could have a material adverse effect
on the Company's business, financial condition and results of operations.
International market acceptance of the SalEst system may be dependent on,
among other factors, the availability of reimbursement within prevailing health
care payment systems. Reimbursement and health care payment systems in
international markets vary significantly by country, and can include both
government sponsored and private health care insurance. Obtaining such approvals
can take 12 to 18 months or longer. There can be no assurance that the SalEst
system will obtain any such approvals in a timely manner, if at all. Failure to
receive international reimbursement approvals could have a material adverse
effect on market acceptance of the SalEst system in the international markets in
which the Company is seeking approvals and could have a material adverse effect
on the Company's business, financial condition and results of operations. See
"Business--Third-Party Reimbursement."
LOSS HISTORY; EXPECTATION OF FUTURE LOSSES
The Company is a developmental stage company and has not generated any
revenues from product sales. Since inception, the Company has been dependent
upon external financing to pursue its intended business activities. The Company
has incurred losses since inception and has an accumulated deficit of
approximately $11.8 million through December 31, 1997. Losses have resulted
principally from costs incurred in research and development activities and
clinical trials and from general and administrative costs. In 1998, the
Company received FDA marketing approval to sell the SalEst system in the United
States as an aid in identifying the risk of spontaneous preterm labor and
delivery in singleton pregnancies. Even though the SalEst system has received
FDA approval, there can be no assurance that the Company will be able to
generate adequate sales to achieve profitability in the future. The Company
expects that its expenses will increase substantially as the Company seeks to
commercialize the SalEst system and expand indications for the SalEst system.
The amount and timing of expenditures will depend on numerous factors that
include, but are not limited to, the nature and timing of sales and marketing
7
<PAGE>
activities, the expansion of the Company's manufacturing capabilities, if any,
and the Company's development efforts. The Company expects to incur additional
operating losses at least through 1999. The Company's ability to achieve
profitability may also be dependent on its ability to successfully obtain patent
protection and regulatory approval for, and commercialize, additional
indications for the SalEst system. There can be no assurance that the Company
will ever achieve profitability or that profitability, if achieved, will be
sustained. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
FLUCTUATIONS IN FUTURE FINANCIAL RESULTS
The Company's future operating results are likely to fluctuate substantially
from period to period and will depend upon numerous factors, many of which are
outside the Company's control. Such factors include, but are not limited to, the
extent to which the SalEst system gains market acceptance as a maternity
management tool, the timing and level of sales through direct sales channels and
strategic partners, increased research and development costs, the introduction
of new products and technologies by the Company or its competitors, the rate and
size of expenditures associated with the implementation of the Company's direct
marketing strategy for the SalEst system in the United States, availability and
cost of component parts from the Company's suppliers and developments with
respect to regulatory matters.
The Company's expenditures for research and development, sales and marketing
and general and administrative functions are based in part on future revenue
projections. The Company may be unable to adjust spending in a timely manner in
response to any unanticipated declines in revenues, which may have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company may be required to reduce prices in response to
competitive pressures or other factors or increase spending to pursue new market
opportunities. Any decline in average selling prices that is not offset by a
reduction in product costs or by sales of other potential products with higher
gross margins would decrease the Company's overall gross profit and adversely
affect the Company's business, financial condition and results of operations. In
the future, it is likely that the Company's operating results will vary from the
expectations of securities analysts and investors in any given quarter and, as a
result, the market price of the Common Stock would be materially and adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
LACK OF SALES AND MARKETING EXPERIENCE
The Company received FDA approval to market the SalEst system in 1998
and consequently has limited experience in marketing, sales and distribution.
The Company is in the process of establishing marketing, direct sales and
distribution capabilities in order to support its SalEst system
commercialization efforts. The Company will be required to continue to recruit
and retain highly trained salespersons, and no assurance can be given that such
personnel will be available on terms acceptable to the Company. There can also
be no assurance that the Company's direct sales force, if established, will be
successful in marketing the SalEst system to physicians and third-party payors.
In addition, due to the limited market awareness of the SalEst system, the
Company believes that the sales process could be lengthy, requiring the Company
to educate patients, physicians and third-party payors regarding the benefits of
the SalEst system. Failure to establish an effective sales and marketing
organization would have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company expects
to utilize strategic partners for future sales and marketing efforts. There can
be no assurance that the Company will be able to identify and engage qualified
strategic partners on a timely basis or on acceptable terms, if at all. In
addition, in the event that the Company does enter into strategic marketing
relationships, the Company will be dependent on the efforts of its strategic
partners for marketing and sales in geographic territories or product or
customer markets that are the responsibility of the strategic partners.
8
<PAGE>
The Company expects to rely on strategic partners for substantially all
sales, marketing, regulatory and reimbursement approvals, if any, for the SalEst
system outside of the United States. The Company will need to establish these
strategic partnerships prior to introducing the SalEst system internationally,
and there can be no assurance that it will be able to identify and engage
qualified strategic partners on a timely basis or on acceptable terms, if at
all. The Company may also rely on certain of these strategic partners to assist
it in obtaining product registration and reimbursement approvals in certain
international markets. There can be no assurance that any potential strategic
partners will perform their obligations as expected or that any revenues will be
derived from such arrangements. The failure to engage such strategic partners or
the failure of the strategic partners to perform their obligations as expected
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Sales and Marketing."
LIMITED MANUFACTURING EXPERIENCE
The Company has limited manufacturing experience and is dependent on third
parties for the manufacturing of clinical and commercial scale quantities of its
proprietary saliva collection kits (the "Collection Kits") and its immuno assay
kits. The Company's failure to maintain existing agreements for manufacturing of
clinical or commercial quantities of these components of the SalEst system or to
enter into additional agreements with these or other third parties to expand
commercial scale manufacturing capabilities as needed would have a material
adverse effect on the Company's business, financial condition and results of
operations. There can be no assurance that the Company's current or future
contract manufacturers will meet the Company's requirements for quality,
quantity or timeliness. If the supply of any of the Company's Collection Kits or
immuno assay kits is interrupted, alternative contract manufacturers will
require prior FDA approval and Collection Kits and immuno assay kits may not be
available in sufficient volumes within required timeframes, if at all, to meet
the Company's production needs, which could have a material adverse effect on
the Company's business, financial condition and results of operations.
In addition, the Company's manufacturing operations and those of its third
party manufacturers are required to comply with applicable Quality System
Regulations ("QSR") of the FDA, which incorporates the FDA's former current Good
Manufacturing Practices ("cGMP") regulations. QSR addresses the design,
controls, methods, facilities and quality assurance controls used in
manufacturing, packing, storing and installing medical devices. In addition,
certain international markets have quality assurance and manufacturing
requirements that may be more or less rigorous than those in the United States.
As part of the approval process, the Company and its contract manufacturers were
inspected by the FDA for compliance with QSR requirements. The Company is also
required to register as a medical device manufacturer with the FDA and the
California Department of Health Services, Food and Drug Branch ("CDHS") and to
list its products with the FDA. Therefore, the Company is subject to biannual
inspections by the FDA and CDHS for compliance with QSR requirements. There can
be no assurance that the Company or its contract manufacturers will continue to
be in compliance with QSR requirements. Failure to comply with applicable QSR or
any applicable international requirements could have a material adverse effect
on the Company's business, financial condition and results of operations. See
"Business--Manufacturing" and "--Government Regulation."
LIMITED LABORATORY OPERATING EXPERIENCE
The Company has limited experience in operating a clinical laboratory and
providing laboratory results to physicians and other users of the SalEst system.
The Company may evaluate the possibility of contracting with commercial
laboratories to perform such laboratory services. However, no commercial
laboratory is currently performing the Company's tests, and there can be no
assurance that any laboratory will be qualified or willing to perform such tests
on commercially reasonable terms, if at all. Failure by the Company to provide
accurate and cost-efficient laboratory services would have a material adverse
effect on
9
<PAGE>
the Company's business, financial condition and results of operations and could
expose the Company to significant liability in the event of errors in
determining or reporting test results.
The Company's proposed laboratory operations will be regulated by HCFA,
under the Clinical Laboratory Improvement Amendments of 1988 ("CLIA"), and
comparable state agencies. CLIA is intended to ensure the quality and
reliability of all medical testing in laboratories in the United States by
requiring such facilities to obtain certification and to demonstrate such
testing meets specified standards in areas such as personnel qualification,
administration, participation in proficiency testing, patient test management,
quality control, quality assurances and inspections. The regulations promulgated
under CLIA have established three levels of regulatory control based on test
complexity, defined as "waived," "moderately" and "highly" complex. The SalEst
system will be categorized as a highly complex test. Failure to meet CLIA
requirements can result in a wide variety of sanctions, including suspension,
limitation or revocation of the CLIA certificate and civil and criminal
penalties. Additionally, failure to maintain the CLIA certification will prevent
the Company from receiving third-party payments for laboratory services
performed. Failure to obtain CLIA certification on a timely basis, and
thereafter maintain such certification, would have a material adverse effect on
the Company's business, financial condition and results of operations.
In addition to the requirements under CLIA, the Company will need to
register with and be certified by CDHS as a clinical laboratory. The Company
must also register with five additional states that require specific
registration prior to allowing the Company to analyze and report results from
samples obtained from the citizens of those states. These states are New York,
Florida, Maryland, Rhode Island and Nevada. Failure to obtain and maintain these
certificates, particularly the State of California certificate, or similar
certificates which may be required by other states in the future could have a
material adverse effect on the Company's business, financial condition and
results of operations.
MANAGEMENT OF GROWTH
In connection with the commercialization of the SalEst system, the Company
has begun and intends to continue to significantly expand the scope of its
operations, particularly in sales and marketing. Such activities have placed,
and may continue to place, a significant strain on the Company's resources and
operations. The Company's ability to effectively manage such growth will depend
upon its ability to attract, hire and retain highly qualified employees and
management personnel. The Company competes for such personnel with other
companies, academic institutions, government entities and other organizations.
There can be no assurance that the Company will be successful in hiring or
retaining qualified personnel. The Company's success will also depend on the
ability of its officers and key employees to continue to implement and improve
the Company's operational, management information and financial control systems,
of which there can be no assurance. The Company's inability to manage growth
effectively would have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Sales and
Marketing" and "--Employees" and "Management."
FUTURE CAPITAL REQUIREMENTS
The Company's future capital requirements will depend upon numerous factors
that include, but are not limited to, the extent and timing of future SalEst
system sales, if any, the nature, timing and success of the Company's clinical
research and product development programs, the receipt of and time required to
obtain regulatory authorizations and the level of resources the Company devotes
to developing its sales, marketing and manufacturing capabilities. The timing
and amount of such capital requirements cannot be predicted accurately. There
can be no assurance that the Company will not require additional financing
through bank facilities, debt or equity offerings or other sources of capital
and that additional funding will be available on terms acceptable to the
Company, if at all. Insufficient capital or a lack of access to additional
capital would impair the Company's ability to pursue its business objectives,
which could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Use
10
<PAGE>
of Proceeds" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
COMPETITION; RAPID TECHNOLOGICAL CHANGE
The Company competes with providers of traditional and other methods for
screening for the risk of spontaneous preterm labor and delivery. Several health
care organizations have developed commercially available risk screening and
management programs for preterm labor and delivery, most of which use the
traditional method of risk identification. Other approaches for screening for
the risk of spontaneous preterm labor and delivery are in various stages of
development and market acceptance. Currently, Adeza Biomedical Corporation
("Adeza") markets the only FDA-approved immunodiagnostic test for the assessment
of likelihood of preterm delivery. Adeza's fetal fibronectin immuno assay was
approved for marketing as a diagnostic aid for symptomatic patients in 1995 and
in January 1997, it was approved for the screening of asymptomatic patients to
detect the risk of preterm delivery at less than 34 completed weeks of
gestation. Recently, vaginally inserted ultrasound probes have been used to
assess cervical length and dilation and as a tool for determining the risk of
spontaneous preterm labor and delivery. Additionally, various biological markers
are being studied as early markers of spontaneous preterm labor and delivery.
The health care industry is characterized by extensive research efforts and
rapid technological progress. Other companies and institutions, including many
major medical device and pharmaceutical companies, are engaged in the research
and development of products that may compete directly with the SalEst system or
the Company's other potential products. The Company believes that important
competitive factors include the relative speed with which companies can develop
products, establish clinical utility, complete clinical testing, obtain
regulatory approval, obtain third-party reimbursement and supply commercial
quantities of the product to the market. Many of the Company's current and
potential competitors have substantially greater financial, technological,
research and development, regulatory and clinical, marketing and sales, and
personnel resources than the Company. These competitors may also have greater
experience in developing products, conducting clinical trials, obtaining
regulatory approvals, and manufacturing and marketing such products. Certain of
these competitors may obtain patent protection, approval or clearance by the FDA
or foreign countries or product commercialization earlier than the Company, any
of which could have a material adverse effect on the Company's business,
financial condition and results of operations. Furthermore, to the extent that
the Company commences significant commercial sales of the SalEst system or any
future products, it will be competing with respect to manufacturing efficiency
and marketing capabilities, areas in which it currently has limited experience.
See "Business--Competition."
DEPENDENCE ON PATENTS AND PROPRIETARY RIGHTS
The Company holds two United States patents relating to the SalEst system.
One of the issued patents covers the use of estriol measurement to screen for
the potential onset of preterm labor, and the other covers the use of estriol
measurement to monitor tocolytic therapy. The Company has recently received
Notice of Allowance from the United States Patent and Trademark Office (the
"USPTO") on the claims on two patent applications that cover the design and use
of the Collection Kit. The Company has patent applications pending in the United
States, Canada, Japan and certain European countries. The Company's ability to
compete effectively will depend substantially on its ability to develop and
maintain proprietary aspects of its technology. In particular, the Company's
success will depend in large part on its ability to obtain United States and
foreign patent protection for its products, preserve its trade secrets and
operate without infringing on the proprietary rights of third parties. There can
be no assurance that the Company's issued patents or any future patents that may
be issued will offer any degree of protection to the Company's products against
competitive products. There can also be no assurance that any additional patents
will be issued from any of the patent applications owned by or licensed to the
Company, or that any patents that currently are or may be issued or licensed to
the Company or any of the Company's patent applications will not be challenged,
invalidated or circumvented in the future, or that any patents issued to
11
<PAGE>
or licensed by the Company will not be infringed upon or circumvented by others.
In addition, there can be no assurance that competitors, many of whom have
substantial resources and have made substantial investments in competing
technologies, will not seek to apply for and obtain patents that will prevent,
limit or interfere with the Company's ability to make, use or sell its products
either in the United States or in international markets. Patent law relating to
certain of the Company's fields of interest, particularly as to the scope of
claims in issued patents, is still developing and it is unclear how this
uncertainty will affect the Company's patent rights.
The medical device and diagnostic industries have been characterized by
extensive litigation regarding patents and other intellectual property rights,
and companies in these industries have employed intellectual property litigation
as a strategy to gain a competitive advantage. There can be no assurance that
the Company will not in the future become subject to patent infringement claims
and litigation or interference proceedings declared by the USPTO to determine
the priority of inventions. The defense and prosecution of intellectual property
suits, USPTO interference proceedings and related legal and administrative
proceedings are both costly and time consuming. Litigation may be necessary to
enforce patents issued to or licensed to the Company, to protect the Company's
trade secrets or know-how or to determine the enforceability, scope and validity
of the proprietary rights of others.
Although there are currently no pending claims or lawsuits against the
Company regarding any possible infringement claims, there can be no assurance
that infringement claims by third parties or claims for indemnification
resulting from infringement claims will not be asserted in the future or that
such assertions, if proven to be true, will not have a material adverse effect
on the Company's business, financial condition and results of operations. Any
litigation or interference proceedings involving the Company will result in
substantial expenses to the Company and significant diversion of resources by
the Company's technical and management personnel. An adverse determination in
litigation or interference proceedings to which the Company may become a party
could subject the Company to significant liabilities to third parties or require
the Company to seek licenses from third parties, which could involve substantial
costs and could include ongoing royalties. Adverse determinations in a judicial
or administrative proceeding or failure to obtain necessary licenses could
prevent the Company from manufacturing and selling the SalEst system, which
would have a material adverse effect on the Company's business, financial
condition and results of operations.
In addition to patents, the Company relies on trade secrets and proprietary
know-how, which it seeks to protect, in part, through appropriate
confidentiality and proprietary information agreements. These agreements
generally provide that all confidential information developed or made known to
the individual by the Company during the course of the individual's relationship
with the Company is to be kept confidential and not disclosed to third parties,
except in specific circumstances. The agreements also generally provide that all
inventions conceived by the individual in the course of rendering services to
the Company shall be the exclusive property of the Company. There can be no
assurance that proprietary information or confidentiality agreements with
employees, consultants and others will not be breached, that the Company will
have adequate remedies for any breach, or that the Company's trade secrets will
not otherwise become known to or independently developed by competitors. See
"Business--Patents and Proprietary Rights."
DEPENDENCE ON KEY PERSONNEL
The Company is highly dependent on the members of its management and
scientific teams. The loss of the services of one or more of these individuals
could impede the achievement of its research and development or strategic
objectives. Because of the specialized scientific nature of the Company's
business, the Company is also highly dependent upon its ability to continue to
attract and retain qualified scientific and technical personnel. The Company
intends to hire a significant number of employees, particularly in sales and
marketing, in 1998. There is intense competition for qualified personnel in the
areas of medical devices and diagnostics, and there can be no assurance that the
Company will be able to continue to recruit
12
<PAGE>
and retain the qualified personnel necessary for the development of its
business. Failure to recruit and retain key personnel would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Management--Executive Officers and Directors."
PRODUCT LIABILITY AND LIMITED INSURANCE COVERAGE
The medical device and diagnostic industries have historically been
litigious, and the Company faces an inherent business risk of financial exposure
to product liability claims. Although the Company has not experienced any claims
to date, there can be no assurance that the Company will not experience losses
due to product liability claims in the future. The Company currently carries
product liability insurance. Such insurance is expensive, difficult to obtain
and may not be available in the future on acceptable terms, if at all. There can
be no assurance that product liability insurance will continue to be available
to the Company at a reasonable cost, if at all, or that such product liability
insurance will be adequate. The Company may require increased product liability
coverage to the extent its products are commercialized and as it provides
increased diagnostic services. Furthermore, there can be no assurance that the
Company will have sufficient resources to satisfy any liability or litigation
expenses that may result from any uninsured or underinsured claims. Any claims
or series of claims against the Company, regardless of their merit or eventual
outcome, could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Manufacturing" and
"--Product Liability Insurance."
UNCERTAINTY RELATED TO GOVERNMENT REGULATION
The manufacture and sale of diagnostic products, including the SalEst
system, are subject to extensive regulation by numerous governmental
authorities, principally the FDA and corresponding state and foreign regulatory
agencies. The process of obtaining and maintaining required regulatory clearance
and approvals is lengthy, expensive and uncertain. Failure to comply with FDA
and other applicable regulatory requirements can result in, among other things,
Warning Letters, fines, injunctions, civil penalties, recall or seizure of
product, total or partial suspensions of production, withdrawal of previously
granted clearances or approvals and criminal prosecution. There are two
principal FDA regulatory review paths for medical devices: the 510(k) premarket
notification ("510(k)") process and the premarket approval ("PMA") process. The
PMA process typically requires the submission of more extensive clinical data
and is generally more costly and time consuming to complete than the 510(k)
process. In addition, certain material changes to medical devices already
cleared or approved by the FDA are also subject to FDA review and clearance or
approval prior to marketing and sale in the United States. Moreover, regulatory
clearances and approvals, if granted, may include significant limitations on the
intended uses for which a product may be marketed. Delays in receipt of or
failure to receive such clearances and approvals, the loss of previously
obtained clearances or approvals, or failure to comply with existing or future
regulatory requirements would have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, no
assurance can be given that any new products or applications developed by the
Company will not require approval under the lengthy and expensive PMA process or
that such approval will be received on a timely basis, if at all.
In 1998 the Company received PMA approval by the FDA to market the
SalEst system in the United States as an aid in identification of risk of
spontaneous preterm labor and delivery in singleton pregnancies. Nonetheless, in
the future, it will be necessary for the Company to file PMA supplements and
receive additional regulatory approvals for other applications or indications of
the SalEst system or for new or modified products.
The FDA and regulatory authorities in other countries impose numerous
additional requirements with which medical device manufacturers must comply. FDA
enforcement policy, subject to only minor exceptions, strictly prohibits the
promotion of approved medical devices for uses other than those specifically
cleared or approved for marketing by the FDA. There can be no assurance that the
Company
13
<PAGE>
will not incur significant costs in complying with applicable laws and
regulations or changes in laws or regulations, or that laws and regulations will
not have a material adverse effect on the Company's products.
The Company's manufacturing operations and those of its contract
manufacturers are required to comply with applicable QSR requirements, which
incorporates the FDA's former cGMP regulations. QSR addresses the design,
controls, methods, facilities and quality assurance controls used in
manufacturing, packing, storing and installing medical devices. In addition,
certain international markets have quality assurance and manufacturing
requirements that may be more or less rigorous than those in the United States.
Failure to comply with QSR or any applicable international requirements could
have a material adverse effect on the Company's business, financial condition
and results of operations. Ongoing compliance with QSR and other applicable
regulatory requirements will be monitored through periodic inspections by
federal and state agencies, including the FDA and the CDHS, and by comparable
agencies in other countries.
Sales of medical devices outside of the United States are subject to
regulatory requirements that vary from country to country. The time required to
obtain clearance or approval for sale internationally may be longer or shorter
than that required for FDA clearance or approval, and the requirements may
differ. The Company has not yet obtained any international regulatory approvals
for the SalEst system. There can be no assurance that the Company will be able
to obtain the required marketing clearance or approval for the SalEst system or
any future products in a timely manner, if at all. In addition, significant
costs and requests by regulators for additional information may be encountered
by the Company in its efforts to obtain regulatory approvals. Any such events
could substantially delay or preclude the Company from marketing its products in
the United States or other countries. See "Business--Government Regulation."
DEPENDENCE ON KEY SUPPLIERS
The Company relies upon sole source suppliers for certain of the key
components of its Collection Kit and immuno assay kit. If the Company were to
experience discontinuation or unavailability of such components, the
qualification, including regulatory certification, of additional sources would
be required or, if no alternative sources were identified, product design
changes may be necessary. Furthermore, any required design changes could require
regulatory submissions and approvals. Any extended delays in product deliveries
resulting from pursuing and qualifying additional sources of supply or obtaining
necessary regulatory approvals would have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business--Manufacturing."
RISK OF INTERNATIONAL SALES AND OPERATIONS
The Company expects that international sales may in the future account for a
portion of the Company's total revenues. International sales and operations are
subject to a number of risks, including the imposition of government controls,
export license requirements, restrictions on the export of critical technology,
political and economic instability or conflicts, trade restrictions, changes in
tariffs and taxes, difficulties in staffing and managing international
operations, problems in establishing or managing distributor relationships and
general economic conditions. In addition, as the Company expands its
international operations, it may be required to invoice its sales in local
currencies. Consequently, fluctuations in the value of foreign currencies
relative to the United States dollar may adversely affect the Company's
business, financial condition and results of operations. See "Business--Sales
and Marketing."
The Company has not obtained any foreign regulatory approvals. There can be
no assurance that the Company will be successful in obtaining foreign regulatory
approvals or certifications. Failure to receive such approvals or certifications
on a timely basis could have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business--Government Regulation."
14
<PAGE>
BROAD MANAGEMENT DISCRETION IN USE OF PROCEEDS
The Company intends to use the net proceeds from this offering for the
following purposes: (i) to develop sales, marketing and distribution
capabilities for the SalEst system; (ii) to expand research and development
activities, including the development of new chemical assays; (iii) to expand
clinical trials to support product development and marketing activities; and
(iv) to provide working capital for general corporate purposes. The Company's
management and Board of Directors will have broad discretion with respect to the
application of such proceeds, and the amounts actually expended by the Company
for working capital purposes may vary significantly depending on a number of
factors, including future revenue growth, if any, and the amount of cash, if
any, generated by the Company's operations. See "Use of Proceeds."
ADVERSE EFFECT OF CONCENTRATION OF OWNERSHIP
Following the completion of this offering, officers and directors of the
Company, together with entities affiliated with them, will beneficially own
approximately % of the Common Stock of the Company ( % if the
over-allotment option is exercised in full). These stockholders, acting as a
group, will continue to be able to control the election of all members of the
Company's Board of Directors and to determine all corporate actions after the
sale of the Shares offered hereby. The voting power of these stockholders could
also have the effect of delaying or preventing a change in control of the
Company. See "Principal Stockholders" and "Description of Capital Stock."
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS AND DELAWARE LAW
The Company's Amended and Restated Certificate of Incorporation (the
"Restated Certificate") authorizes the Board of Directors, without stockholder
approval, to issue additional shares of Common Stock and to fix the rights,
preferences and privileges of and issue up to 5,000,000 shares of Preferred
Stock with voting, conversion, dividends and other rights and preferences that
could adversely affect the voting power or other rights of the holders of the
Common Stock. The issuance of preferred stock, rights to purchase preferred
stock or additional shares of Common Stock could discourage a proxy contest,
make more difficult the acquisition of a substantial block of the Company's
Common Stock or otherwise discourage or prevent certain transactions involving
an actual or potential change in control of the Company. Further, the Restated
Certificate provides that any action required or permitted to be taken by
stockholders of the Company after this offering must be effected at a duly
called annual or special meeting of stockholders and may not be effected by any
consent in writing. Special meetings of stockholders of the Company may be
called only by the Board of Directors, the Chairman of the Board or the Chief
Executive Officer of this company. The Restated Certificate provides for a
classified board of directors and specifies that the authorized number of
directors may be changed only by resolution of the Board of Directors. Amendment
of these provisions requires the vote of stockholders holding at least
two-thirds of the Company's outstanding shares. In addition, the Company is
subject to the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which prohibits the Company from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
These provisions could discourage or prevent certain transactions involving an
actual or potential change in control of the Company.
In addition, the Company's Board of Directors has approved a Stockholder
Rights Plan under which a dividend of one right (a "Right") to purchase one
one-hundredth of a share of the Company's Series F Junior Participating
Preferred Stock for each outstanding share of Common Stock of the Company has
been declared and will be distributed to stockholders of record as of the
effective date of this offering. The Rights may have the effect of rendering it
more difficult or discouraging an acquisition of the Company deemed undesirable
by the Company's Board of Directors. The Rights may cause substantial dilution
to a person or group that attempts to acquire the Company on terms or in a
manner not approved by the Board
15
<PAGE>
of Directors, except pursuant to an offer conditioned upon the cancellation,
purchase or redemption of the Rights, and may therefore discourage or prevent
certain transactions involving an actual or potential change in control of the
Company. See "Description of Capital Stock."
NO PRIOR PUBLIC MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to this offering, there has been no public market for the Common Stock
and there can be no assurance that an active public market for the Common Stock
will develop or be sustained after this offering. The initial public offering
price, which will be determined by negotiations between the Company and the
Underwriters, will not necessarily be indicative of the market price at which
the Common Stock of the Company will trade after this offering. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price. In addition, in recent years the stock market in
general, and the shares of medical device companies in particular, have
experienced extreme market price fluctuations. These broad market and industry
fluctuations may have a material adverse effect on the market price of the
Common Stock of the Company. In the future, it is likely that the Company's
operating results will vary from the expectations of securities analysts and
investors in any given quarter and, as a result, the market price of the Common
Stock would be materially and adversely affected. Announcements of technological
innovations or new commercial products by the Company or its competitors,
disputes or other developments concerning proprietary rights, including patents
and litigation matters, publicity regarding new products or technologies under
development by the Company, its licensors or its competitors, general market
conditions, quarterly fluctuations in the Company's revenues and financial
results, as well as the other factors described in these "Risk Factors" and
elsewhere in this Prospectus could have a material adverse effect on the market
price of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Sales of a substantial number of shares of Common Stock in the public market
following this offering could adversely affect the market price for the Common
Stock. The number of shares of Common Stock available for sale in the public
market is limited by restrictions under the Securities Act of 1933, as amended
(the "Securities Act"), and lockup agreements pursuant to which all directors
and officers and certain stockholders of the Company have agreed not to sell or
otherwise dispose of any of their shares without the prior written consent of
NationsBanc Montgomery Securities LLC. However, NationsBanc Montgomery
Securities LLC may at any time without notice release all or any portion of the
securities subject to lockup agreements. The Company has agreed with NationsBanc
Montgomery Securities LLC not to release any stockholder from any such lockup
agreement between the Company and such stockholder without the consent of
NationsBanc Montgomery Securities LLC. As a result of such restrictions and
based upon the number of shares outstanding as of January 31, 1998, on the date
of this Prospectus, 265,061 shares, other than the shares offered
hereby, will be eligible for sale in the public market. An additional 14,291,896
shares and 919,073 shares issuable upon exercise of outstanding vested options
will be eligible for sale 180 days after the date of this Prospectus upon
expiration of such lockup agreements and subject to compliance with certain
restrictions set forth in the rules promulgated under the Securities Act. After
this offering, the holders of approximately 13,007,408 shares of Common Stock
will be entitled to certain demand and piggyback registration rights with
respect to registration of such shares under the Securities Act. If such
holders, by exercising their demand or piggyback registration rights, cause a
large number of securities to be registered and sold in the public market, such
sales could have an adverse effect on the market price of the Common Stock. If
the Company were to include in a Company-initiated registration shares held by
such holders pursuant to the exercise of their piggyback registration rights,
such sales may have an adverse effect on the Company's ability to raise needed
capital. See "Description of Capital Stock--Registration Rights" and "Shares
Eligible For Future Sale."
16
<PAGE>
IMMEDIATE AND SUBSTANTIAL DILUTION
Purchasers of the shares of Common Stock offered hereby will experience
immediate and substantial dilution of $ in the net tangible book value per
share of their investment from the initial public offering price. Additional
dilution will occur upon exercise of outstanding options. See "Dilution" and
"Shares Eligible For Future Sale."
ABSENCE OF DIVIDENDS
The Company has not paid any cash dividends and does not presently intend to
pay cash dividends. The Company currently intends to retain all available funds
and any future earnings for use in the operations of its business. It is not
likely that any cash dividends will be paid in the foreseeable future. See
"Dividend Policy."
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus including, without
limitation, statements containing the words "believes," "anticipates," "expects"
and words of similar import, constitute "forward-looking statements." Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others: the ability of
the Company to successfully commercialize the SalEst system and any future
products, the ability of the Company to develop additional products, the ability
of the Company to obtain third-party reimbursement for the SalEst system and any
future products and the Company's ability to manage future growth, if any.
Certain of these factors are discussed in more detail elsewhere in this
Prospectus including, without limitation, under the captions "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business." Given these uncertainties,
prospective investors are cautioned not to place undue reliance on such
forward-looking statements. The Company disclaims any obligation to update any
such factors or to publicly announce the result of any revisions to any of the
forward-looking statements contained herein to reflect future events or
developments.
17
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby at an assumed public offering price of $ per share are
estimated to be $ ($ if the Underwriters' over-allotment option is
exercised in full). The Company intends to use the net proceeds from this
offering for the following purposes: (i) to develop sales, marketing and
distribution capabilities; (ii) to expand research and development activities,
including the development of new chemical assays; (iii) to expand clinical
trials to support product development and marketing activities; and (iv) to
provide working capital for general corporate purposes. Pending use of the net
proceeds for the above purposes, the Company plans to invest the net proceeds of
this offering in short-term, investment grade, interest-bearing securities.
DIVIDEND POLICY
The Company has paid no cash dividends on its capital stock and does not
anticipate that it will pay cash dividends on its capital stock in the
foreseeable future. The Company currently intends to retain all available funds
and any future earnings for use in the operations of its business. Any payment
of future dividends and the amounts thereof will be dependent upon the Company's
earnings, financial requirements, and other factors deemed relevant by the
Company's Board of Directors.
18
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1997 (i) on a historical basis which reflects the conversion of all
outstanding shares of Preferred Stock into Common Stock immediately prior to the
effectiveness of the registration statement for this offering and (ii) as
adjusted to give effect to the sale of shares of Common Stock offered by
the Company hereby at an assumed initial public offering price of $ per share
and application of the net proceeds therefrom, the issuance of the Dividend
Shares and the issuance of the Warrant Shares. See "Use of Proceeds." This table
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements and
Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------
HISTORICAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Preferred Stock, par value $.001 per share, 23,009,026 shares authorized, no shares
issued and outstanding historical; 5,000,000 shares authorized, no shares issued and
outstanding as adjusted................................................................ $ -- $
Common Stock, par value $0.001 per share; 26,250,677 shares authorized and 13,826,312
shares issued and outstanding, historical (1); 30,000,000 shares authorized and
shares issued and outstanding as adjusted (2).......................................... 14
Additional paid-in capital............................................................... 19,425
Deferred compensation.................................................................... (729) (729)
Unrealized gain on investments........................................................... 73 73
Deficit accumulated during the development stage......................................... (11,755) (11,755)
---------- -----------
Total capitalization................................................................. $ 7,028 $
---------- -----------
---------- -----------
</TABLE>
- ------------------------
(1) Excludes as of December 31, 1997 (i) 1,719,588 shares of Common Stock
issuable upon exercise of outstanding options under the Company's option
plans, (ii) the Warrant Shares and (iii) the Dividend Shares. See
"Management--Employee Benefit Plans" and Note 4 to Financial Statements.
(2) Excludes 1,719,588 shares of Common Stock issuable upon exercise of
outstanding options under the Company's option plans as of December 31,
1997.
19
<PAGE>
DILUTION
The historical net tangible book value of the Company as of December 31,
1997 (assuming the conversion of all outstanding shares of Preferred Stock into
Common Stock ) was approximately $7.0 million, or $0.51 per share of Common
Stock. The historical net tangible book value per share is determined by
dividing the historical net tangible book value (tangible assets, less total
liabilities, including cumulative dividends to be settled by the Dividend
Shares) of the Company by the number of shares of Common Stock outstanding,
including shares of Common Stock to be issued from the conversion of the
Preferred Stock immediately prior to the effectiveness of the registration
statement for this offering. Without taking into account any other changes in
the net tangible book value after December 31, 1997, other than to give effect
to (i) the receipt by the Company of the estimated net proceeds from the sale of
shares of Common Stock offered by the Company hereby at an assumed initial
public offering price of $ per share and (ii) the effect of the issuance of
the Warrant Shares and the Dividend Shares, the pro forma net tangible book
value of the Company as of December 31, 1997 would have been $ or $ per
share. This represents an immediate increase in the net tangible book value of
$ per share to existing stockholders and an immediate dilution of $ per
share to new investors. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price............................... $
Historical net tangible book value per share before the offering
(1)........................................................... $ 0.51
Increase per share attributable to new investors (2)............
---------
Pro forma net tangible book value after offering....................
---------
Dilution to new investors...........................................
---------
---------
</TABLE>
The following table summarizes, on a pro forma basis as of December 31,
1997, the difference between the existing stockholders and purchasers of new
shares in the offering (at an assumed initial public offering price of $ per
share and before deducting underwriting discounts and estimated offering
expenses payable by the Company) with respect to the number of Shares purchased
from the Company, the total consideration paid and the average price per share
paid:
<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION AVERAGE
---------------------- ---------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Existing stockholders (3)....................................
New investors................................................
Total.................................................... 100.0% 100.0%
</TABLE>
- ------------------------
(1) Excludes the effect of the issuance of the Warrant Shares. If the issuance
of the Warrant Shares is included, then historical net tangible book value
per share before the offering would amount to $0.52.
(2) The foregoing tables assume no exercise of the Underwriters' over-allotment
option and no exercise of outstanding options under the Company's option
plans. As of December 31, 1997, options to purchase 1,719,588 shares of
Common Stock were outstanding under the Company's option plans with a
weighted average exercise price of $0.33 per share. The foregoing tables
also exclude 1,000,000 shares reserved for issuance under the 1998 Stock
Option Plan, 500,000 shares reserved for issuance under the 1998 Employee
Stock Purchase Plan and 300,000 shares reserved for issuance under the 1998
Directors Stock Option Plan. To the extent that options are exercised and
shares of Common Stock are issued, there will be further dilution to new
investors. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources,"
"Management--Employee Benefit Plans" and "Description of Capital Stock."
(3) Includes the effect of the issuance of the Warrant Shares and the Dividend
Shares.
20
<PAGE>
SELECTED FINANCIAL DATA
The selected balance sheet data as of December 31, 1996 and 1997 and the
selected statement of operations data for the years ended December 31, 1995,
1996 and 1997 have been derived from the audited financial statements of the
Company that are included elsewhere in this Prospectus. The statement of
operations data for the years ended December 31, 1993 and 1994 and the balance
sheet data as of December 31, 1993, 1994 and 1995 have been derived from audited
financial statements of the Company not included in this Prospectus. The data
set forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements and Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Expenses:
Research and development......................................... $ 360 $ 767 $ 1,059 $ 2,156 $ 1,989
General and administrative....................................... 225 330 676 1,465 1,964
--------- --------- --------- --------- ---------
Operating loss............................................... (585) (1,097) (1,735) (3,621) (3,953)
Interest income.................................................... 6 11 28 58 110
--------- --------- --------- --------- ---------
Net loss........................................................... (579) (1,086) (1,707) (3,563) (3,843)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Basic net loss per share (1)....................................... $ (.34) $ (.38) $ (.37) $ (.48) $ (.35)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Shares used in computing basic net loss per share.................. 1,703 2,842 4,593 7,365 10,857
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments.............. $ 502 $ 853 $ 1,106 $ 1,440 $ 8,268
Working capital................................................ 432 715 837 489 6,905
Total assets................................................... 508 857 1,174 1,533 8,497
Stockholders' equity........................................... 438 718 900 523 7,028
</TABLE>
- ------------------------
(1) See Note 2 of Notes to Financial Statements for an explanation of the shares
used in computing per share amounts.
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE DISCUSSION BELOW CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT ARE
BASED ON THE BELIEFS OF THE COMPANY'S MANAGEMENT, AS WELL AS ASSUMPTIONS MADE
BY, AND INFORMATION CURRENTLY AVAILABLE TO, THE COMPANY'S MANAGEMENT. THE
COMPANY'S FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS COULD DIFFER MATERIALLY
FROM THOSE EXPRESSED IN, OR IMPLIED BY, ANY SUCH FORWARD-LOOKING STATEMENTS. SEE
"RISK FACTORS" FOR A DISCUSSION OF FACTORS THAT COULD CAUSE OR CONTRIBUTE TO
SUCH MATERIAL DIFFERENCES. THE FOLLOWING DISCUSSION SHOULD BE READ IN
CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE
IN THIS PROSPECTUS.
OVERVIEW
Biex is a women's health care company focused on developing and marketing
innovative solutions for maternity management. The Company's SalEst system is a
screening system that aids in the identification of women at risk of spontaneous
preterm labor and delivery in singleton pregnancies. The SalEst system measures
the level of estriol, an estrogen hormone considered critical in preparing the
uterus for labor and delivery, in a pregnant woman's saliva. From its inception
in 1991 until the end of 1997, the Company's primary focus has been on obtaining
FDA approval for the SalEst system. The Company filed a PMA application with the
FDA during the summer of 1997 to obtain marketing approval of the SalEst system
to be used as an aid in screening for the risk of spontaneous preterm labor and
delivery and received approval from the FDA in , 1998. The Company is
preparing to commercially launch the SalEst system in the United States.
Since its inception, the Company's primary operating activities have
consisted of research and development, patent related activities, clinical
trials, personnel recruitment and raising capital. From inception through
December 31, 1997, the Company had an accumulated deficit of approximately $11.8
million. The Company anticipates that operating losses will continue and will
increase until the Company's SalEst system generates adequate sales to enable
the Company to achieve profitability. The Company is working to structure
reimbursement rates for the SalEst system with major third-party payors in the
United States. The Company does not expect to achieve significant sales unless
and until such reimbursement approvals are obtained for the SalEst system. To
date, the Company's operations have been funded primarily by equity financing.
The Company intends to sell the SalEst system through a direct sales force
that will target physicians and payors. The Company is also seeking strategic
partners in the United States to access these customers. Additionally, the
Company intends to pursue commercial introduction of the SalEst system
internationally through strategic partners which have significant market
presence and experience in the international women's health care market. It is
expected that these international partners would be responsible for all sales,
marketing, regulatory and reimbursement approvals for the SalEst system in their
respective territories.
The Company expects to incur substantial costs related to sales and
marketing activities associated with the United States launch of the SalEst
system, expansion of laboratory capabilities, clinical trials, regulatory
activities and product and process development. It is expected that there will
be a significant delay between the increased levels of spending and any
resulting increase in revenues. Accordingly, the Company expects to remain
unprofitable through at least 1999. There can be no assurance that the Company
will become profitable after that time or, that if it becomes profitable, it
will remain so in future periods. The Company's future operating results are
likely to fluctuate substantially from period to period and will depend upon
numerous factors, many of which are outside the Company's control. Such factors
include, but are not limited to, the extent to which the SalEst system gains
market acceptance as a maternity management tool, the timing and level of sales
through direct sales channels and strategic partners, increased research and
development costs, the introduction of new products and technologies by the
Company or its competitors, the rate and size of expenditures associated with
the implementation of
22
<PAGE>
the Company's direct marketing strategy of the SalEst system in the United
States, availability and cost of component parts from the Company's suppliers
and developments with respect to regulatory matters.
RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996
RESEARCH AND DEVELOPMENT COSTS. Research and development costs generally
comprise salaries, clinical trials, new marker evaluation, travel and laboratory
supplies. Research and development costs decreased to $2.0 million in 1997 from
$2.2 million in 1996. This decrease was primarily attributable to the completion
of the Company's pivotal clinical trial for the SalEst system in December 1996,
partially offset by increases due to new employee hiring and chemical assay
development.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
generally comprise salaries, fees paid to outside professionals, travel and
facilities. General and administrative expenses increased to $2.0 million in
1997 from $1.5 million in 1996. This increase was primarily due to the hiring of
additional marketing and administrative staff.
DEFERRED COMPENSATION. Deferred compensation of $747,000 was recorded in
1997, representing the difference between the exercise prices of certain options
granted and the deemed fair value of the Company's Common Stock on the grant
dates. Deferred compensation expense of $18,000 attributed to such options was
amortized during the year ended December 31, 1997. The remaining deferred
compensation will be amortized over the vesting period of the options (generally
four years).
INTEREST INCOME. Interest income increased to $110,000 in 1997 from $58,000
in 1996 due to higher average cash balances in 1997 resulting from the Company's
sale of equity securities.
NET LOSS. As a result of the factors described above, net loss was $3.8
million in 1997 as compared to $3.6 million in 1996.
YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995
RESEARCH AND DEVELOPMENT COSTS. Research and development costs increased to
$2.2 million in 1996 from $1.1 million in 1995. This increase was primarily due
to clinical trial costs related to the Company's pivotal clinical trial for the
SalEst system.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $1.5 million in 1996 from $676,000 in 1995. This increase was
primarily due to the hiring of marketing and administrative staff, market
research expenses and moving expenses and operating costs associated with the
Company's relocation to California from Colorado.
INTEREST INCOME. Interest income increased to $58,000 in 1996 from $28,000
in 1995 due to higher average cash balances in 1996 resulting from the Company's
sale of equity securities.
NET LOSS. As a result of the factors described above, net loss was $3.6
million in 1996 as compared to $1.7 million in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since its inception through private
placements of its equity securities, supplemented by interest income earned on
investments of cash. Since inception, the Company has raised aggregate gross
proceeds of $18.9 million from the sale of equity securities through private
placements. At December 31, 1997, the Company had cash, cash equivalents and
short-term investments totaling $8.3 million and working capital of $6.9
million.
23
<PAGE>
The Company has a lease line of credit under which it may enter into
operating leases for up to $700,000 of furniture, fixtures and equipment. The
line of credit expires in September 1998. The Company has no indebtedness and no
obligations for capital expenditures.
From inception through December 31, 1997, the Company's cash used for
operating activities and capital expenditures was $10.3 million and $159,000,
respectively. The operating expenditures were used primarily to finance research
and development and clinical trials, marketing research and general
administration. The Company expects that amounts expended historically are not
indicative of future expenditures, which the Company believes will increase
significantly. The Company expects to continue to incur substantial expenses
related to the further development of its products and technologies, acquisition
of rights to additional clinical markers, and sales and marketing. These
expenses will include, but are not limited to, increases in personnel and
personnel related costs, inventory and capital expenditures, and may also
include costs of facilities expansion.
The Company believes that existing capital resources, together with the net
proceeds of this offering and the interest income earned thereon, will satisfy
the Company's working capital and identified capital expenditure requirements
for at least the next 12 months. However, the Company's capital requirements
depend upon numerous factors, including the commercialization of the SalEst
system, progress of the Company's clinical research and product development
programs, the receipt of and time required to obtain regulatory authorizations
and the resources the Company devotes to developing, manufacturing and marketing
its products, as well as other factors. The timing and amount of such capital
requirements cannot accurately be predicted. It is possible that the Company
will require additional funding. There can be no assurance that additional
funding will be available on terms acceptable to the Company, or at all.
Insufficient capital may require the Company to delay, scale back or eliminate
certain of its research and development programs or to attempt to license to
third parties the rights to commercialize products or technologies that the
Company itself would otherwise undertake.
The Company does not anticipate any significant costs, problems or
uncertainties associated with the "Year 2000" issue with regard to the Company's
financial reporting and other data processing systems. The Company uses an
outside provider to process its payroll and the provider has informed the
Company that the provider's systems are Year 2000 compliant.
As a result of the net losses incurred from inception, the Company has not
incurred any income tax obligations. As of December 31, 1997, the Company has
$5.6 million of net operating loss carryforwards for income tax purposes, $4.8
million of capitalized start-up costs, and $101,000 of research and development
tax credits available to offset future federal income tax, subject to
limitations for alternative minimum tax. The net operating loss and credit
carryforwards are subject to examination by the tax authorities and expire in
various years from 2006 through 2012. The Internal Revenue Code contains
provisions that may limit the net operating loss and credit carryforwards
available to be used in any given year upon the occurrence of certain events,
including significant changes in ownership interest. The principal differences
between losses for financial and tax reporting purposes are the result of the
capitalization of start-up costs for tax purposes.
24
<PAGE>
BUSINESS
THE COMPANY
Biex is a women's health care company focused on developing and marketing
innovative solutions for maternity management. The Company's proprietary SalEst
system, which measures the level of the hormone estriol in a pregnant woman's
saliva, received FDA approval in 1998 after expedited review as an aid in
identifying women at risk of spontaneous preterm labor and delivery in singleton
pregnancies. The Company believes the SalEst system's ability to aid in the
accurate identification of those women most likely to deliver at term is a
powerful tool in the clinical management of pregnancies inaccurately categorized
as high risk by traditional screening methods. These inaccuracies often result
in unnecessary and costly interventions and treatments. In addition, clinical
results demonstrate that the SalEst system is an improved method of identifying
high risk women inaccurately categorized as low risk by traditional screening
methods. These women account for the majority of preterm deliveries. Early and
accurate identification of risk will allow physicians to provide appropriate
levels of clinical management and intervention, providing opportunity to prolong
pregnancies and decrease the morbidity, mortality and associated costs for
mothers and babies.
PRETERM LABOR AND DELIVERY OVERVIEW
Preterm labor and delivery is a major health care problem worldwide.
According to the National Center for Health Statistics, of the estimated four
million births in the United States each year, approximately 11% or more than
400,000 occur preterm. Despite significant clinical intervention, over 40,000 of
these babies die each year. The prevalence of preterm births increased from 9.4%
of all births in 1984 to 11.0% of all births in 1994.
Widespread efforts to increase prenatal care in the United States began in
the early 1960's. As a result of these efforts, the percentage of women
receiving prenatal care during the first trimester of pregnancy reached 80% in
1994. However, despite improvements in the level of prenatal care, preterm
delivery causes 75% of newborn morbidity and mortality in the United States and
is the leading cause of neonatal intensive care unit admissions. Industry data
indicates that costs associated with the care of preterm infants, including
neonatal intensive care, add over $10 billion annually to pre-discharge infant
health care costs in the United States. Those preterm babies that survive are
often subject to one of many serious diseases that are more common in preterm
babies, such as respiratory distress syndrome ("RDS"), cerebral palsy, epilepsy,
blindness, and learning disabilities. Nearly one-half of neurological
impairments in children, including 40% of cerebral palsy cases, have been
attributed to preterm delivery.
There is a direct correlation between the degree of prematurity of the baby
and the morbidity, mortality and associated costs for mothers and babies. In
order to enable the physician to manage high risk pregnancies aggressively,
providing opportunity to prolong these pregnancies and improve birth outcomes,
it is imperative that women at risk be accurately identified. Additionally,
because the interventions associated with the management of high-risk
pregnancies are costly and may expose the mother to unnecessary treatments, it
is equally important that women at low risk be accurately identified.
CAUSES OF PRETERM LABOR AND DELIVERY
Full-term delivery occurs between 37 and 42 weeks of gestation. Preterm
delivery is defined as delivery after 22 weeks but before 37 weeks of gestation,
with a majority occurring between 30 and 37 weeks. Preterm delivery is caused by
many factors, including the spontaneous commencement of uterine contractions
("spontaneous preterm labor"), infection of the membranes surrounding the fetus,
premature rupture of these membranes, and physician induction of labor.
Approximately 60% or 240,000 of all preterm deliveries in the United States each
year result from spontaneous preterm labor. The Company believes the primary
cause of spontaneous preterm labor is a surge of the hormone estriol.
25
<PAGE>
Estriol is an estrogen hormone considered to be critical in the normal
biological events preceding labor and delivery. The substrate for estriol, the
hormone dehydroepiandrosterone ("DHEA"), is produced by the fetal adrenal
glands. In a normal pregnancy a surge in DHEA occurs in the four weeks prior to
delivery. This hormone is metabolized by both the fetal liver and the placenta
into estriol which is then released into the maternal circulation as
unconjugated, unbound biologically active estriol. The surge of estriol, which
typically occurs in a term pregnancy after 36 weeks of gestation, is a normal
physiological event that prepares the uterine muscle for the organized
contractions required in spontaneous labor and is believed to be a fetal signal
for delivery. The Company believes that detection of this estriol surge is an
accurate predictor of labor and delivery. The estriol surge occurs prior to 36
weeks in preterm labor caused by the hormonal etiology. The following graph
illustrates the estriol surge in a normal full-term delivery with the surge
occurring in the example at 37 weeks and a spontaneous preterm labor and
delivery with the surge occurring in the example at 34 weeks.
THE ESTRIOL SURGE IN A TERM AND PRETERM DELIVERY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ESTRIOL CONCENTRATION
(NG/ML)
<S> <C> <C>
Preterm Delivery Term Delivery
35.3 weeks 39.6 weeks
24 0.9 0.5
26 0.9 0.5
28 0.9 0.7
30 0.9 0.7
32 1.2 0.7
34 2.4 0.8
36 3.7 1.5
38 3.6
40 4.8
42
Preterm Delivery
Gestational Age (weeks)
</TABLE>
SCREENING FOR RISK OF SPONTANEOUS PRETERM LABOR AND DELIVERY
THE TRADITIONAL METHOD. Traditionally, the only clinical tool available to
assess a woman's risk of spontaneous preterm labor and delivery has been the
Creasy method and its modifications. The Creasy method is a subjective
assessment of a woman's risk profile utilizing a variety of socioeconomic,
medical, lifestyle, behavioral and current pregnancy risk factors that is scored
according to a defined protocol. This initial risk assessment is usually made at
the patient's first prenatal visit and is reviewed periodically throughout the
pregnancy. The most important and predictive of the Creasy risk factors is
considered to be a prior preterm delivery. A woman is considered high risk if
her cumulative score is ten or more. A prior preterm delivery is assigned a
score of ten and automatically places the woman in the high risk category. Once
a woman is identified as high risk, she is more likely to receive intervention,
including increased physician office visits, hospital admissions,
pharmacological treatments, additional specialized home care support and medical
leave from work. If a pregnancy is identified as low risk (cumulative score less
than ten), the mother will only receive clinical interventions in the event of
advanced symptoms of preterm
26
<PAGE>
labor, at which point medical interventions are generally less effective. The
table below describes a version of the Creasy method listing several selected
risk factors and their assigned scores.
SELECTED TRADITIONAL (CREASY) RISK FACTORS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
SCORE
RISK FACTOR (POINTS)
<S> <C>
- ------------------------------------------------------------------
SOCIOECONOMIC
Low socioeconomic status 1
Younger than 20 years or older than 40 years 2
- ------------------------------------------------------------------
MEDICAL AND PREGNANCY HISTORY
Two prior abortions 2
Urinary tract infections 4
Prior preterm delivery 10
- ------------------------------------------------------------------
DAILY HABITS AND LIFESTYLE
Smoking more than 10 cigarettes per day 3
Heavy work or prolonged standing 3
- ------------------------------------------------------------------
CURRENT PREGNANCY
Vaginal bleeding after 12 weeks of pregnancy 4
Uterine irritability 5
Abdominal surgery 10
- ------------------------------------------------------------------
</TABLE>
Given that 40% of all deliveries in the United States are from a first
pregnancy and that the most significant Creasy risk factor is a prior preterm
delivery, the Creasy method has inherent limitations in identifying many women
at risk. Additionally, the Creasy method is of limited value in directing
intervention once it has categorized a woman as high risk because it does not
identify the maternal or fetal biological causes of preterm labor and delivery
or the time-frame in which these potential premature deliveries may be expected
to occur. In addition, backaches and mild cramping, which are among the Creasy
risk factors, are often normal discomforts of pregnancy and are consequently
subject to misinterpretation by the physician or the mother, resulting in
possible over or under treatment.
The traditional method identifies approximately 15% of pregnant women, or
600,000 women each year, as high risk. However, this method has not proved to be
highly accurate in practice. Studies of the traditional method demonstrate that
approximately 80% of the women identified as high risk, or 480,000 women each
year, actually deliver at term. The Company believes that a significant
proportion of these women were inaccurately identified as high risk. Studies
also demonstrate that up to 80% of the women who actually experience preterm
delivery, or 320,000 women each year, are not identified as high risk by the
traditional method. Approximately 192,000 of these preterm deliveries result
from spontaneous preterm labor.
OTHER SCREENING APPROACHES. Other techniques for identifying the risk of
spontaneous preterm labor and delivery are in various stages of development and
market acceptance. The FDA has approved for marketing a diagnostic test to
measure a protein, fetal fibronectin, which is a component of the amniotic fluid
and fetal membranes which surround the fetus. It is believed that when these
membranes are compromised by inflammation, infection or mechanical disruption,
fetal fibronectin is released into the vaginal secretions. The secretions can be
gathered by a physician and the level of fetal fibronectin determined using an
immuno assay. A study by the National Institutes of Health has shown that the
fetal fibronectin test identifies approximately 24% of preterm deliveries.
Recently, vaginally inserted ultrasound probes have been used to assess
cervical length and dilation and as a tool for determining the risk of
spontaneous preterm labor and delivery. Use of these probes is currently limited
to specially trained physicians and their accuracy is dependent on specific user
technique.
27
<PAGE>
The Company believes this method is of limited utility after 32 weeks of
gestation because cervical dilation may occur in a normal pregnancy after that
time, particularly in women who have had prior pregnancies.
INTERVENTIONS FOR WOMEN AT HIGH RISK OF SPONTANEOUS PRETERM LABOR AND DELIVERY
When a woman is identified as high risk for spontaneous preterm labor and
delivery, a number of steps are taken beginning at 22 weeks of gestation to
reduce the likelihood that she delivers preterm. While clinical practice varies
significantly among physicians, the most common first step is to increase the
frequency of physician office visits from monthly to bi-weekly. During the
typical office visit for a high risk pregnancy, the physician will perform a
physical exam and discuss with the mother the signs and symptoms of preterm
pregnancy. This increased surveillance and the related education process has
been shown to be effective in facilitating early detection of the signs or
symptoms of preterm labor.
If a woman exhibits symptoms of preterm labor, she is immediately assessed
regarding the status of the pregnancy and is often referred to the labor and
delivery ward for observation and diagnostic assessment, which may include fetal
heart rate monitoring, ultrasound and amniocentesis for fetal lung maturity. The
woman may then be admitted to the hospital for additional observation and
assessment. If delivery is not imminent, a physician will typically recommend
bed rest, hydration, work leave or specialized home care support. Some
physicians may also choose to prescribe tocolytics, which are drugs that have
been shown to prolong pregnancy by several days to weeks by suppressing uterine
contractions. If the delivery seems imminent, tocolytics are given immediately
to prolong the pregnancy. In addition, corticosteroid therapy, principally in
the form of betamethasone, may be administered to the mother to accelerate fetal
lung development in utero and thereby reduce the chances of RDS, and to reduce
the incidence of cerebral hemorrhage. Preterm infants diagnosed with RDS often
require ventilation in a neonatal intensive care unit and are associated with
increased short and long-term morbidity and mortality. Studies have demonstrated
that corticosteriod therapy can reduce neonatal health care costs by an average
of $3,000 per preterm delivery. However, in order to be most effective,
corticosteroid therapy must be administered 24 to 48 hours prior to delivery,
making early diagnosis of the preterm delivery critical.
The Company believes that certain pharmaceutical companies are developing
drugs that are designed to suppress uterine contractions more effectively than
currently available tocolytics by acting on the biological events specifically
caused by the estriol surge. The Company believes that one such drug is
currently under FDA review.
The success of clinical intervention relies heavily on the physician's
ability to make early identification of the risk of spontaneous preterm labor
and delivery. Administration of currently available tocolytics and bed rest as a
means of prolonging pregnancy are often successful only when labor is diagnosed
before advanced dilation of the cervix has occurred. The Company believes that
the efficacy of new tocolytics being developed also will be dependent on the
early identification of risk. In addition, the early identification of women at
increased risk will allow the patient and physician to make arrangements to
transfer the mother if necessary to a hospital with a neonatal intensive care
facility which can improve clinical outcomes and reduce costs.
THE ECONOMICS OF PRETERM LABOR AND DELIVERY
As a result of the predictive limitations of existing screening and
diagnostic tools, the assessment of many women's risk profiles for preterm labor
and delivery is inaccurate. Women who are inaccurately identified as high risk
undergo unnecessary treatments and interventions for spontaneous preterm labor
and delivery. According to industry sources, if a woman is identified as high
risk by the traditional method but delivers at term, the average medical costs
for the mother are approximately $9,600. If that woman were accurately
identified as low risk, the average cost would be $7,500, saving approximately
$2,100 per mother. Maternal care costs for women inaccurately classified as high
risk by traditional screening methods exceed one billion dollars annually.
28
<PAGE>
Conversely, many other mothers are inaccurately identified as low risk and
are excluded from the potential benefits of existing interventions. This
ultimately leads to emergency medical care at the unexpected onset of preterm
labor, resulting in significant costs due to maternal and newborn
hospitalization, and often leads to major acute and chronic neonatal disorders.
If these women could be identified accurately as high risk, their pregnancies
may be prolonged with appropriate medical treatment, and pregnancy outcomes may
be improved by timely treatment with corticosteroids. These treatments would not
only result in substantial medical benefit to the mother and baby, but also
would result in substantial cost savings. Average neonatal care costs through
initial hospital discharge increase significantly as gestational age decreases.
COSTS OF NEONATAL CARE
<TABLE>
<CAPTION>
- ----------------------------------------------------------
GESTATIONAL AGE NEWBORN COST VERSUS
(WEEKS) COST TERM DELIVERY
<S> <C> <C>
- ----------------------------------------------------------
Term delivery $ 3,700 1.0x
35.5 - 37.0 $ 7,900 2.1x
33.5 - 35.5 $ 13,300 3.6x
30.0 - 33.5 $ 46,400 12.5x
Less than 30.0 $ 155,700 42.1x
- ----------------------------------------------------------
</TABLE>
In addition to the improved medical management of the preterm pregnancy and
the associated cost savings, significant economic benefit can be gained by
managed care and other third-party payors not only through appropriate
identification of those women at risk but also through the referral of those
patients to appropriate provider networks and contract hospital facilities.
Large urban communities typically have several facilities that offer high risk
maternal and neonatal care. However, managed care contracts will generally have
preferred provider arrangements with a limited number of these facilities and
providers. The prospective identification of high risk women allows for referral
of these women to those preferred provider organizations with contracted
reimbursement rates. In addition, improved identification of risk can enable the
transfer of high risk women from a rural community to an urban medical facility
with a sophisticated neonatal intensive care unit, thus improving clinical
outcomes.
THE SALEST SOLUTION
The Company's proprietary SalEst system, which was internally discovered and
developed, provides objective identification of women at risk of spontaneous
preterm labor and delivery by measuring salivary estriol. The Company believes
the key advantages of the SalEst system include:
REDUCTION OF INACCURATE HIGH RISK ASSESSMENTS
It is anticipated that the SalEst system will be used initially as an aid to
rule out preterm labor and delivery in patients who are considered high risk by
traditional screening methods. Clinical testing of the SalEst system indicated
that patients with persistent low estriol levels prior to 36 weeks had a 98%
chance of not experiencing spontaneous preterm labor and delivery. This high
negative predictive value provides an increased level of assurance that the
woman is at reduced risk of preterm labor and delivery, providing opportunities
to reduce the maternal costs associated with high risk care which include
unnecessary physician office visits, specialized home care support costs,
hospital and drug treatment costs, as well as avoiding unnecessary exposure of
low risk women inaccurately classified as high risk to invasive and other
interventions.
29
<PAGE>
IMPROVED IDENTIFICATION OF WOMEN AT RISK OF PRETERM LABOR AND DELIVERY
Results from the Company's clinical trials indicated that women who had
consecutive elevated estriol levels were almost eight times more likely to
experience preterm labor and delivery than those women with low estriol levels.
These results indicated that the SalEst system identified 50% of the women
missed by traditional risk screening methods. The Company believes that use of
the SalEst system in the general population has the potential to reduce the
number of pregnancies managed as high risk each year from 600,000 to less than
400,000. Improved identification of these pregnancies inaccurately classified as
low risk will create opportunities for risk-specific intervention to prolong
pregnancies, improve birth outcomes and enable referrals of the mothers to
appropriate provider networks.
COST EFFECTIVE METHOD OF RISK ASSESSMENT
The Company believes that by reducing unnecessary interventions and
providing opportunity to improve maternal and neonatal outcomes, the SalEst
system will provide significant cost savings to payors. It is anticipated that
these cost savings will support reimbursement for the SalEst system. The Company
has developed a proprietary comprehensive cost-benefit model that demonstrates
the cost-effectiveness of the SalEst system.
IDENTIFICATION OF BIOLOGICAL CAUSES
The traditional method of risk assessment is based on subjective
non-cause-specific risk factors. Subjective risk factors have the disadvantage
of requiring treatment of the entire pregnancy as high risk, without first
identifying a cause upon which to base therapy. By contrast, the SalEst system
identifies a hormonal cause of preterm labor two to three weeks prior to
delivery, creating opportunities for timely cause-specific therapeutic
interventions.
EASE OF USE
The SalEst system, a saliva-based test, is convenient and noninvasive. The
convenience of the SalEst system enables sample collection in the physician's
office, patient's home or workplace. Unlike blood, urine or cervical vaginal
secretions, saliva samples do not require special handling. The Company believes
that the convenient collection format will enhance patient compliance and lower
the cost of sample collection.
BUSINESS STRATEGY
Biex is a women's health care company focused on developing and marketing
innovative solutions for maternity management. The Company is focused on
establishing the SalEst system as a routine method of aiding in the
identification of women who are at risk of spontaneous preterm labor and
delivery. Key elements of the Company's strategy are:
LAUNCH THE SALEST SYSTEM
The SalEst system received FDA approval in 1998 after expedited
review for use as an aid in identifying women at risk of spontaneous preterm
labor and delivery in singleton pregnancies. The Company intends to commercially
launch the SalEst system in the United States through a direct sales force that
will target physicians and payors. In order to create physician and payor
demand, the Company is developing a comprehensive sales and marketing program
that includes medical and payor professional education programs, broad-based
marketing communications, direct sales contact with physicians and payors and
symposia. The Company also is seeking the publication of peer-reviewed medical
journal articles relating to the SalEst system. In addition, the Company plans
to form strategic alliances with major pharmaceutical, medical device, consumer
product and disease management companies to gain additional market exposure and
access to established distribution channels.
30
<PAGE>
ESTABLISH REIMBURSEMENT
The Company is working to structure reimbursement rates for the SalEst
system with major third-party payors in the United States. The Company is
positioning the SalEst system's clinical results and potential to impact the
high cost of maternal and newborn care, a major cost target for managed care
organizations, as the foundation for obtaining reimbursement for the SalEst
system. In order to demonstrate the cost-effectiveness of the SalEst system, the
Company has developed a comprehensive cost/ benefit model using actuarial data
from 10,000 singleton pregnancies. When combined with data from the Company's
pivotal clinical trial, this model will enable health care payors to assess the
potential financial benefits of improving risk assessment and delivering an
appropriate level of prenatal care. The model is designed to enable individual
payors to perform a customized cost/benefit analysis based on their actual
enrollment and historical cost experiences.
BUILD PROPRIETARY CLINICAL DATABASE
The Company is developing a proprietary data collection, management and
reporting system to support the SalEst system. Biex will collect a database of
outcome data including information such as traditional risk identification,
SalEst system results, care paths, interventions initiated and maternal and
newborn outcomes. The Company believes that this outcome and care path database
may increase the predictive value of the SalEst system and will provide proof to
third-party payors of the effectiveness of the SalEst system in improving
outcomes and thereby reducing costs associated with maternal and newborn care.
The Company's database is expected to provide the framework that will allow
payors and physicians to more accurately apply appropriate care paths to their
patients and apply disease management models to maternal and newborn care.
LEVERAGE CORE TECHNOLOGY
The Company plans to expand applications of its estriol-based technology by
testing for other indications such as the likelihood of successful labor
induction, identification of patients most likely to benefit from interventional
drug therapies, monitoring of tocolytic therapy, prediction of labor onset in
term deliveries and identification of women at risk of post-term delivery. The
Company is also investigating additional markers to complement the SalEst system
by exploring tests for other causes of spontaneous preterm labor and delivery,
such as infection. Ultimately, the Company intends to explore the possibility of
using its estrogen-based technology in non-maternity areas of women's health.
ESTABLISH INTERNATIONAL PRESENCE THROUGH STRATEGIC PARTNERS
The Company intends to pursue commercial introduction of the SalEst system
internationally through the use of strategic partners. The Company expects that
these strategic partners would be responsible for all sales, marketing,
regulatory and reimbursement approvals in exchange for a percentage of the
revenues from SalEst system sales.
THE SALEST SYSTEM
THE SALEST TESTING PROCESS
The SalEst system is an aid in identifying women at risk of spontaneous
preterm labor and delivery by measuring the level of salivary estriol. The
Company's clinical research has shown that if an estriol surge occurs prior to
36 weeks of gestation, the woman is at increased risk of spontaneous preterm
labor and delivery.
The patient's saliva is collected using the Company's proprietary Collection
Kit. The Collection Kit contains a collection tube and plunger with an
anti-microbial filter that allows for the filtration and stabilization of the
saliva sample. The sample, which can be collected in the physician's office,
patient's home or workplace, is then sent to the Company's laboratory for
testing via a preaddressed overnight
31
<PAGE>
shipping envelope that is contained in the Collection Kit. Saliva samples are
stable for long periods of time and, unlike blood, urine or cervical vaginal
secretions, do not require temperature-controlled or other specialized handling
during shipment. The Company's laboratory processes saliva samples in batches
which take approximately 90 minutes to analyze. The results are distributed to
the physician through a variety of methods depending on the urgency of the
results, and may include facsimile, telephone, Internet or regular or overnight
mail notification.
The Company recommends the use of the SalEst system starting as early as 22
weeks of gestation. After an initial test, the SalEst system can be used every
one to two weeks until the woman has reached 36 weeks of gestation. If the
woman's SalEst system results indicate that a significant estriol surge has
occurred, a follow-up test would be recommended for the following week. Based on
the Company's clinical trials, an elevated salivary estriol level indicates that
a woman is at increased risk of preterm labor and delivery, and when confirmed
by a follow-up test, the patient is at significantly greater risk of preterm
labor and delivery. A non-elevated salivary estriol level indicates a very high
probability that the patient will not experience spontaneous preterm labor and
delivery during the ensuing two to three weeks.
THE SALEST SERVICE
The Company is implementing a comprehensive service program for the SalEst
system. The service program will consist of several elements designed to assist
the physician, patient and payor to obtain maximum benefit from the SalEst
system. After a physician has been enrolled in the program, they will have
access to the results of individual tests and the cumulative serial results for
each patient's testing sequence. In addition, physicians and payors will receive
regular reports on the results and outcomes for their patients.
A patient will receive her initial Collection Kit directly from her
physician. The Collection Kits required for further sequential testing will be
shipped directly to the patient's home from the Company's laboratory. Each
Collection Kit will have a unique identification number that will enable the
laboratory to track and identify each individual collection tube from the
shipping warehouse to the patient's home and back to the laboratory for
analysis. The Company will track and manage each patient's compliance in order
to determine when her sample should arrive in the laboratory. If a sample does
not arrive as expected, the Company will alert the patient or her physician to
assist with her compliance. Appropriate compliance will ensure that the
physician, patient and payor receive the maximum benefit afforded by the SalEst
system.
The Company believes that physicians and payors will also benefit from the
Company's proprietary outcome database. The Company intends to follow each
enrolled patient through her delivery to obtain primary outcome statistics for
the database. The Company believes that this outcome and care path database may
increase the predictive value of the SalEst system and will provide proof to
third-party payors of the SalEst system's effectiveness in improving outcomes
and thereby reducing costs.
CLINICAL TRIALS
The Company commenced clinical trials of the SalEst system in 1992. In three
clinical studies, over 1,000 patients and 15,000 samples underwent SalEst
testing. Initial feasibility studies, which were conducted from July 1993 until
April 1994, focused primarily on establishing efficacy of the SalEst system as
well as establishing clinically significant salivary estriol levels for use in
the SalEst system. In May 1995, the Company commenced its pivotal United States
clinical trial of the SalEst system, the results of which were submitted to the
FDA in the Company's PMA application. The objective of the PMA study was to
establish whether the presence of salivary estriol at concentrations equal to or
greater than 2.1 nanograms per milliliter (2.1 ng/ml) could be used
prospectively as a risk assessment marker for spontaneous preterm labor and
delivery.
In the PMA study, participants were enrolled between 21 and 25 weeks of
gestation and were studied until delivery. Weekly saliva samples were collected,
alternating between clinic and home collection. A total of 956 patients were
enrolled at eight clinical sites in the United States. A total of 302 of these
32
<PAGE>
patients were categorized as high risk, and 654 were categorized as low risk,
under traditional screening methods. Of the 956 patients, 714 were eligible for
inclusion in the study and the remaining patients were excluded due to the
development of one or more of the exclusion criteria, non-compliance or failure
to complete follow-up. Of the 714 patients included in the study, the primary
endpoint was performed on a total of 601 patients, comparing the incidence of
spontaneous preterm labor and delivery in women with high estriol levels to
women with low estriol levels. The 601 patients consisted of patients with
spontaneous preterm labor and delivery and patients with no preterm labor and
term delivery. This comparison excluded patients who experienced spontaneous
rupture of membranes, patients with medically indicated preterm deliveries and
patients treated with tocolytics or corticosteriods, which may affect levels of
estriol.
The principal findings and implications of the pivotal PMA study are as
follows:
- Patients with persistent low estriol levels (I.E., below 2.1 ng/ml) prior
to 36 weeks of gestation had a 98% (negative predictive value) chance of
not experiencing spontaneous preterm labor and delivery.
- The incidence of preterm labor and delivery was significantly higher in
patients with a high estriol level as compared to patients with a low
estriol level. Patients with a high estriol level that was confirmed by a
consecutive test prior to 36 weeks of gestation had a 1 in 5 chance
(positive predictive value) of experiencing spontaneous preterm labor and
delivery, as compared to 1 in 50 for patients with low estriol levels.
- Among all patients, the mean time to delivery after an initial high
estriol test was 2.3 weeks. A single positive SalEst test, confirmed by a
consecutive positive test, indicated a 71% likelihood of delivery within
three weeks. Among the eight women who delivered preterm and experienced a
single positive SalEst test, confirmed by a consecutive positive test,
100% delivered within three weeks. This supports the Company's belief that
an estriol surge occurs before the major symptoms of preterm labor
commence, providing physicians with a window of opportunity for
appropriate intervention.
- An initial SalEst test identified 57% (sensitivity) of the women
experiencing spontaneous preterm labor and delivery, including 50% of the
cases in the population identified as low risk by the traditional method.
These traditional low risk patients would otherwise have been unidentified
until being diagnosed as undergoing preterm labor, potentially too late
for successful intervention.
- Among patients identified as high risk under the traditional method, the
SalEst system accurately predicted outcomes (I.E., preterm labor and
delivery or its absence) 87.0% of the time whereas the traditional method
accurately predicted outcomes 7.2% of the time.
The SalEst system demonstrated a high negative predictive value with respect
to spontaneous preterm labor and delivery and specificity for term delivery.
Therefore, use of the SalEst system can be used by physicians as an aid to rule
out preterm labor and delivery in patients who are inaccurately classified as
high risk, reducing unnecessary intervention and the cost of maternal
management. The positive predictive value and sensitivity of the SalEst system
may assist physicians in identifying patients inaccurately classified as low
risk by the traditional method who may actually be at increased risk for preterm
labor and delivery.
33
<PAGE>
Relative risk is defined as the ratio of positive predictive value to one
minus the negative predictive value and is used in the assessment of risk in a
low incidence disease such as preterm delivery. The following table illustrates
the relative risk of spontaneous preterm labor and delivery as identified by the
SalEst system, contrasted with certain traditional risk factors measured in a
2,929 patient study conducted by the maternal-fetal unit of the National
Institutes of Health. The SalEst system had a relative risk of 7.9x compared to
the most predictive of the traditional risk factors, prior preterm delivery,
which has a relative risk of 2.6x.
RELATIVE RISK OF THE SALEST SYSTEM COMPARED TO TRADITIONAL RISK FACTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SALEST SYSTEM PRIOR PRETERM CERVICAL UTERINE SYMPTOMS
PIVOTAL TRIAL DELIVERY CHANGE CONTRACTIONS OF PTL
<S> <C> <C> <C> <C> <C>
7.9x 2.6x 1.8x 1.6x 1.3x
Traditional Risk Factors - NIH Trial
Relative Rist of Spontaneous Preterm
Delivery
</TABLE>
The FDA-approved labeling for the SalEst system states that the device is
indicated for use as an aid in identifying risk of spontaneous preterm labor and
delivery in singleton pregnancies. The test can be used every one to two weeks
from gestational age 22 weeks until 36 weeks. The SalEst system is labeled for
use as a component of the clinician's assessment of risk for preterm labor and
delivery. The SalEst system is not indicated for use in pregnant women with
suspected ruptured membranes, vaginal infections, uterine abnormalities or those
who are already diagnosed with preterm labor or when treatment with tocolytics
or corticosteroids have been administered. Tocolytics and corticosteroids may
affect the levels of estriol and will lead to potentially inaccurate SalEst test
results. The physician must then rely on physical examinations, ultrasound or
other diagnostic methods to determine whether preterm labor is occurring.
Additionally, the SalEst system is not indicated for use in conjunction with
bleeding gums, intrauterine growth retardation or the presence of fetal demise.
The data collected in the Company's studies may also contain information
regarding potential additional indications for the SalEst system, including
testing for the likelihood of successful induction of birth at term,
identification of patients most likely to benefit from interventional drug
therapy, monitoring of tocolytic therapy, prediction of labor onset for term
delivery and identification of women at risk of post-term delivery. Use of the
SalEst system for these indications, each of which would require FDA approval of
either a PMA supplement or a new PMA application, may be supported by data from
existing clinical trials or may be investigated in future clinical trials.
34
<PAGE>
FUTURE CLINICAL TRIALS
In February 1998, the Company commenced new clinical trials with the
National Institutes of Health to explore the efficacy of a potential tocolytic
for treating pregnant women with elevated estriol levels. Additionally, the
Company is planning clinical trials with major managed care organizations to
prospectively demonstrate the costs and benefits associated with the SalEst
system. Finally, the Company is investigating the use of the SalEst system in
possible pilot intervention studies which would be designed to measure the
efficacy of various interventions on women with elevated estriol levels. Other
possible clinical trials relating to the Company's estriol-based diagnostic
technology may include testing for other indications such as the likelihood of
successful labor induction, prediction of labor onset in term deliveries and
identification of women at risk of post-term delivery.
SALES AND MARKETING
UNITED STATES
The SalEst system was approved by the FDA for sale in the United States in
1998 for use as an aid in identifying women at risk of spontaneous preterm
labor and delivery in singleton pregnancies. The Company intends to sell the
SalEst system through a direct sales force that will target physicians and
payors. The field sales team will be headed by regional area directors supported
by obstetrician sales specialists and managed care specialists. As of March 4,
1998, the Company's sales and marketing team consisted of an executive vice
president of sales, marketing and strategic development, a director of
marketing, three regional area directors and six obstetrician sales specialists,
all of whom have significant medical device sales experience, three managed care
specialists and one clinical support specialist. In addition, the Company plans
to form strategic alliances with major pharmaceutical, medical device, consumer
product and disease management companies to gain additional market exposure and
access to established distribution channels.
The Company's sales and marketing plan focuses on reaching those
obstetricians who treat a large number of women. In the United States, there are
approximately 33,000 obstetricians and gynecologists. According to a recent
survey conducted by the American College of Obstetricians and Gynecologists
("ACOG"), approximately 24,000 of these physicians deliver at least one baby per
month, of which approximately 21,000 treat patients identified as high risk
using traditional screening methods. The average practice group of obstetricians
consists of between four and five physicians. Therefore, the Company expects to
target between 4,000 and 5,000 obstetrics practice groups as potential customers
for the SalEst system. The Company estimates that there are approximately 500 to
1,000 physicians specializing in the care of high risk pregnancies
(perinatologists). The Company believes that physicians in this group are likely
to be early adopters of the SalEst system and plans to focus its initial
marketing efforts on this group.
The Company believes that recommendations and endorsements by prominent
physicians and medical groups, as well as the publication of favorable peer
reviewed medical journal articles, are significant factors in gaining physician
and payor acceptance of any new medical procedure. The Company is developing a
comprehensive sales and marketing program to launch the SalEst system that
includes medical and payor professional education programs, broad-based
marketing communications, direct sales contact with physicians and payors and
symposia. In the summer of 1997, the Company was invited to present at an ACOG
symposia on the hormonal pathway to delivery. The Company expects proceedings
from this symposia to be published in a peer-review supplement to THE AMERICAN
JOURNAL OF OBSTETRICS AND GYNECOLOGY. In February 1998, a paper containing the
Company's pivotal clinical trial data was presented to the Society of Perinatal
Obstetricians ("SPO"). The paper was awarded "Best Paper" of the Prematurity
Session and resulted in an invitation by the Society of Gynecological
Investigation to present as part of "The Best of SPO." The Company is also
planning a continuing medical education program in connection with ACOG in May
1998.
35
<PAGE>
The Company has developed a detailed cost/benefit model for use of the
SalEst system which incorporates industry-accepted actuarial databases and the
Company's FDA clinical trial results. The model is designed to enable individual
payors to perform a customized cost/benefit analysis based on their actual
enrollment and historical cost experiences. The Company believes that this
cost/benefit model will accelerate third-party reimbursement and market adoption
of the SalEst system.
The Company intends to increase patient awareness by working with major
patient support groups, including Sidelines, whose 5,000 volunteers provide
patient support and advocacy to women with high risk pregnancies. In addition,
the Company will work with major consumer publications in public relations
efforts to improve public awareness of the benefits of the SalEst system. The
Company believes that, as awareness of the SalEst system develops, patient
demand will help drive third-party reimbursement and market adoption of the
SalEst system.
INTERNATIONAL
The Company intends to pursue commercial introduction of the SalEst system
internationally through the use of strategic partners. The Company expects that
these strategic partners would be responsible for all sales, marketing,
regulatory and reimbursement approvals in exchange for a percentage of the
revenues from SalEst system sales. The Company is in the process of identifying
suitable marketing partners for the Japanese and European markets. To date, the
Company has not entered into any such agreements.
THIRD-PARTY REIMBURSEMENT
In the United States, physicians, hospitals and other health care providers
generally rely on third-party payors, such as private health insurance plans, to
reimburse all or a portion of the costs of medical treatment. The Company is
working to structure reimbursement rates with major third-party payors in
anticipation of the full-scale commercial launch of the SalEst system in the
United States. The Company is planning clinical trials with major managed care
organizations to prospectively demonstrate the costs and benefits associated
with the SalEst system. The data from these trials will be used in the Company's
cost/ benefit model. To support the cost-effectiveness of the SalEst system, the
Company has developed a comprehensive cost/benefit model based on actuarial data
from 10,000 singleton pregnancies and the Company's pivotal clinical trial,
which it anticipates using in connection with these efforts. See "--Sales and
Marketing."
A component in the reimbursement decision by most private insurers and the
United States Health Care Financing Administration, which administers Medicare
and Medicaid, is the assignment of a CPT code, which is used in the submission
of claims to insurers for reimbursement for medical services. CPT codes
generally are required for Medicare and Medicaid reimbursement and can be
important in facilitating reimbursement by other third-party payors. CPT codes
are assigned, maintained and revised by the CPT Editorial Board which is
administered by the American Medical Association. The Company intends to
petition the CPT Editorial Board to establish a separate CPT code for the SalEst
system. CPT codes generally become effective on January 1 of each year. The
Company does not expect that it will have a CPT code for the SalEst system prior
to January 1, 2000. Although the Company believes a CPT code will ultimately be
issued (and that a specific CPT code may not be necessary to obtain third-party
reimbursement from many private payors), there can be no assurance that this
will be the case.
The Company believes that adoption of and reimbursement for the SalEst
system will provide opportunities for managed care organizations to improve
their scores on the Health Plan Employer Data and Information Set ("HEDIS") and
the National Committee for Quality Assurance ("NCQA"), which are quality
standards used by employers and others to measure performance of managed care
organizations. Maternal and newborn programs and birth outcomes are part of
these scores.
The Company believes that the SalEst system will have significant patient
appeal. In particular, the Company believes that the SalEst system will appeal
to women, who often have significant influence on
36
<PAGE>
their families' selection of a managed care plan. The Company believes that, as
awareness of the SalEst system develops, patient demand will help drive
third-party reimbursement of the SalEst system.
Reimbursement for screening for risk of spontaneous preterm labor and
delivery has generally been available in the United States, typically through
reimbursement for traditional screening methods and ultrasound. However, there
can be no assurance that this will continue to be the case or that reimbursement
will be available for the SalEst system at acceptable levels, if at all. Factors
that third-party payors consider important in making reimbursement decisions for
new products include (i) the cost effectiveness of the product, (ii) the results
of clinical trials demonstrating the product's safety and efficacy, (iii)
favorable studies and peer-reviewed medical journal articles and (iv) how the
product compares to other competing products. Failure by the Company,
physicians, hospitals and other health care providers to obtain sufficient
reimbursement from third-party payors for tests in which the SalEst system is
used would have a material adverse effect on the Company's business, financial
condition and results of operations. Market acceptance of the Company's products
in international markets may be dependent in part upon the availability of
reimbursement within prevailing health care payment systems. Reimbursement and
health care payment systems in international markets vary significantly by
country, and can include both government sponsored and private health care
insurance. Obtaining such approvals can take 12 to 18 months or longer. There
can be no assurance that any such approvals will be obtained in a timely manner,
if at all. Failure to receive international reimbursement approvals could have a
material adverse effect on market acceptance of the Company's products in the
international markets in which the Company is seeking approvals and could have a
material adverse effect on the Company's business, financial condition and
results of operations.
RESEARCH AND DEVELOPMENT
The Company's research strategy emphasizes its patented position covering
the use of estriol as a marker for spontaneous preterm labor and therapeutic
drug monitoring and its proprietary saliva Collection Kit which has received a
Notice of Allowance from the USPTO. The Company's research and development
efforts are currently primarily focused on the development of the SalEst system,
including the development of alternative delivery systems that will enable the
Company's tests to be performed at the point of care and in the home as well as
the expansion of the Company's product portfolio through the development of
additional markers in the area of maternity management. The Company has entered
into an agreement with a diagnostic company to carry out feasibility studies to
determine the applicability of developing a point-of-care delivery system for
the SalEst system. The Company's current activities with respect to the SalEst
system include continuing manufacturing support, process optimization and
qualification of alternative reagents and vendors. The Company spent a total of
$2.0 million, $2.2 million and $1.1 million on research and development in 1997,
1996 and 1995, respectively.
The Company intends to investigate the use of its estriol-based diagnostic
technology to include testing for the likelihood of successful induction of
birth at term, identification of patients most likely to benefit from
interventional drug therapies, monitoring of tocolytic therapy, prediction of
labor onset for term delivery and identification of pregnant women at high risk
of post-term delivery. There can be no assurance that the Company will be able
to expand the use of its technology to cover these possible indications.
Moreover, marketing of a test for any of these indications will require FDA
approval, and there can be no assurance that the Company will be successful in
obtaining FDA approval for such indications.
The Company is also investigating additional markers to complement the
SalEst system by identifying other precursors of preterm labor and delivery,
such as infection or compromise of the amniotic membranes. The Company has
entered into a license agreement for a marker that may relate to the breakdown
of the amniotic membranes preceding delivery. There can be no assurance that the
Company will be successful in licensing or developing additional markers. The
Company also intends to explore the possibility of using its estrogen-based
technology in non-maternity areas of women's heath.
37
<PAGE>
COMPETITION
The Company competes with providers of traditional and other methods for
screening for the risk of spontaneous preterm labor and delivery. Several health
care organizations have developed commercially available risk screening and
management programs for preterm labor and delivery, most of which use the
traditional method of risk identification.
Other techniques for identifying the risk of spontaneous preterm labor and
delivery are in various stages of development and market acceptance. The FDA has
approved for marketing a diagnostic test to measure a protein, fetal
fibronectin, which is a component of the amniotic fluid and fetal membranes
which surround the fetus. It is believed that when these membranes are
compromised by inflammation, infection or mechanical disruption, fetal
fibronectin is released into the vaginal secretions. The secretions can be
gathered by a physician and the level of fetal fibronectin determined using an
immuno assay. Studies have shown that the fetal fibronectin test identifies
approximately 24% of preterm deliveries.
Recently, vaginally inserted ultrasound probes have been used to assess
cervical length and dilation and as a tool for determining the risk of
spontaneous preterm labor and delivery. Use of these probes is currently limited
to specially trained physicians and their accuracy is dependent on specific user
technique. The Company believes this method is of limited utility after 32 weeks
of gestation because cervical dilation may occur in a normal pregnancy after
that time, particularly in women who have had prior pregnancies.
The health care industry is characterized by extensive research and
development efforts and rapid technological progress. Other companies and
institutions, including many major medical device and pharmaceutical companies,
are engaged in the research and development of products that may compete
directly with the Company's SalEst system. The Company believes that important
competitive factors include the relative speed with which companies can develop
products, establish clinical utility, complete clinical testing, obtain
regulatory approval, obtain third-party reimbursement and supply commercial
quantities of the product to the market. Many of the Company's current and
potential competitors have substantially greater financial, technological,
research and development, regulatory and clinical, marketing and sales, and
personnel resources than the Company. These competitors may also have greater
experience in developing products, conducting clinical trials, obtaining
regulatory approvals, and manufacturing and marketing such products. Certain of
these competitors may obtain patent protection, approval or clearance by the FDA
or foreign countries or product commercialization earlier than the Company, any
of which could have a material adverse effect on the Company's business,
financial condition and results of operations. Furthermore, to the extent that
the Company commences significant commercial sales of the SalEst system or any
future products, it will be competing with respect to manufacturing efficiency
and marketing capabilities, areas in which it currently has limited experience.
See "Risk Factors-- Competition."
MANUFACTURING
The Company relies on third parties to manufacture the immuno assay kit and
the Collection Kit. The Company believes that its contract vendors have
sufficient capacity to meet projected forecasts for both the Collection Kit and
the immuno assay kit for the first 18 to 24 months of domestic sales. The
Company leases manufacturing equipment that has been placed into the facility of
the contract vendor responsible for immuno assay kit production for the
exclusive production of the Company's test kit components. The Company is
working with its vendors to expand manufacturing capacity to meet sales
forecasts beyond 24 months from commencement of domestic sales. There can be no
assurance that the Company will be able to maintain existing agreements for
manufacturing of commercial quantities of the immuno assay kit and the
Collection Kit, that it will be able to enter into additional agreements for
commercial scale manufacturing or that these parties will be able to develop
additional manufacturing capabilities. These third parties have manufacturing
facilities with current licenses from CDHS, and are registered with the FDA as
device manufacturers.
38
<PAGE>
The Company's in-house operations currently are limited to quality assurance
of raw materials, final product release testing and the manufacture of several
intermediate bulk materials that are transferred to its contract manufacturers
for final kit manufacturing. The Company believes its current facility will be
adequate for its activities through the end of 1999. The Company is required to
register with the FDA and CDHS as a California manufacturing facility. As such,
the Company is subject to biannual inspections by the FDA and CDHS for
compliance with the FDA's QSR requirements. There can be no assurance that the
Company will be successful in obtaining or maintaining these licenses. QSR
addresses the design, controls, methods, facilities and quality assurance
controls used in manufacturing, packing, storing and installing medical devices.
In addition, certain international markets have quality assurance and
manufacturing requirements that may be more or less rigorous than those in the
United States. Failure to comply with QSR or any applicable international
requirements could have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company has limited experience in manufacturing and is dependent on
third parties for the manufacturing of clinical and commercial scale quantities
of its immuno assay test and its Collection Kit. The Company's failure to
maintain existing agreements for manufacturing of clinical or commercial
quantities of Collection Kits or immuno assay kits or to enter into additional
agreements with these or other third parties to expand commercial scale
manufacturing capabilities as needed would have a material adverse effect on the
Company's business, financial condition and results of operations. There can be
no assurance that the Company's current or future contract manufacturers will
meet the Company's requirements for quality, quantity or timeliness. If the
supply of any of the Collection Kits or immuno assay kits is interrupted,
Collection Kits and immuno assay kits from alternative contract manufacturers
will require prior FDA approval and may not be available in sufficient volumes
within required timeframes, if at all, to meet the Company's production needs,
which could have a material adverse effect on the Company's business, financial
condition and results of operations.
PATENTS AND PROPRIETARY RIGHTS
The Company holds two United States patents relating to the SalEst system.
One of the issued patents covers the use of estriol measurement to screen for
the potential onset of preterm labor, and the other covers the use of estriol
measurement to monitor tocolytic therapy. The Company has recently received
Notice of Allowance from the United States Patent and Trademark Office on the
claims on two patent applications that cover the design and use of the
Collection Kit. The Company has patent applications pending in the United
States, Japan, Canada and certain European countries. The Company's ability to
compete effectively will depend substantially on its ability to develop and
maintain proprietary aspects of its technology. In particular, the Company's
success will depend in large part on its ability to obtain United States and
foreign patent protection for its products, preserve its trade secrets and
operate without infringing on the proprietary rights of third parties. There can
be no assurance that the Company's issued patents, any future patents that may
be issued as a result of the Company's United States or international patent
applications, or the patents that the Company has licensed, will offer any
degree of protection for the Company's products against competitive products.
There can also be no assurance that any additional patents will be issued from
any of the patent applications owned by or licensed to the Company, or that any
patents that currently are or may be issued or licensed to the Company or any of
the Company's patent applications will not be challenged, invalidated or
circumvented in the future, or that any patents issued to or licensed by the
Company will not be infringed upon or circumvented by others. In addition, there
can be no assurance that competitors, many of whom have substantial resources
and have made substantial investments in competing technologies, will not seek
to apply for and obtain patents that will prevent, limit or interfere with the
Company's ability to make, use or sell its products either in the United States
or in international markets. Patent law relating to certain of the Company's
fields of interest, particularly as to the scope of claims in issued patents, is
still developing, and it is unclear how this uncertainty will affect the
Company's patent rights.
39
<PAGE>
The medical device and diagnostic industries have been characterized by
extensive litigation regarding patents and other intellectual property rights,
and companies in these industries have employed intellectual property litigation
as a strategy to gain a competitive advantage. There can be no assurance that
the Company will not in the future become subject to patent infringement claims
and litigation or interference proceedings declared by the USPTO to determine
the priority of inventions. The defense and prosecution of intellectual property
suits, USPTO interference proceedings and related legal and administrative
proceedings are both costly and time consuming. Litigation may be necessary to
enforce patents issued to or licensed to the Company, to protect the Company's
trade secrets or know-how or to determine the enforceability, scope and validity
of the proprietary rights of others.
Although there are currently no pending claims or lawsuits against the
Company regarding any possible infringement claims, there can be no assurance
that infringement claims by third parties or claims for indemnification
resulting from infringement claims will not be asserted in the future or that
such assertions, if proven to be true, will not have a material adverse effect
on the Company's business, financial condition and results of operations. Any
litigation or interference proceedings involving the Company will result in
substantial expense to the Company and significant diversion of effort by the
Company's technical and management personnel. An adverse determination in
litigation or interference proceedings to which the Company may become a party
could subject the Company to significant liabilities to third parties or require
the Company to seek licenses from third parties, which could involve substantial
costs and could include ongoing royalties. Adverse determinations in a judicial
or administrative proceeding or failure to obtain necessary licenses could
prevent the Company from manufacturing and selling its products, which would
have a material adverse effect on the Company's business, financial condition
and results of operations.
In addition to patents, the Company relies on trade secrets and proprietary
know-how, which it seeks to protect, in part, through appropriate
confidentiality and proprietary information agreements. These agreements
generally provide that all confidential information developed or made known to
the individual by the Company during the course of the individual's relationship
with the Company is to be kept confidential and not disclosed to third parties,
except in specific circumstances. The agreements also generally provide that all
inventions conceived by the individual in the course of rendering services to
the Company shall be the exclusive property of the Company. There can be no
assurance that proprietary information or confidentiality agreements with
employees, consultants and others will not be breached, that the Company will
have adequate remedies for any breach, or that the Company's trade secrets will
not otherwise become known to or independently developed by competitors.
GOVERNMENT REGULATION
REGULATION OF MEDICAL DEVICES
The Company's products and its research and development activities are
subject to extensive and rigorous regulation by the FDA and, to varying degrees,
by other Federal, state and foreign regulatory agencies. The Company's
diagnostic products are regulated as medical devices by the FDA under the
Federal Food, Drug and Cosmetic Act (the "FDC Act"), and implementing
regulations. Under the FDC Act and the regulations promulgated thereunder, the
FDA regulates, among other things, the preclinical and clinical testing,
manufacturing, safety and efficacy, labeling, distribution, promotion, sale and
use of medical devices in the United States. In addition, various other
countries in which the Company's products may be sold impose local regulatory
requirements. The testing for, preparation of and subsequent FDA and foreign
regulatory review and approval of required applications is expensive, lengthy
and uncertain. Failure to comply with FDA and other applicable regulatory
requirements can result in, among other things, Warning Letters, fines,
injunctions, civil penalties, recall or seizure of product, total or partial
suspension of production, refusal of the government to grant clearances or
approvals, withdrawal of previously granted clearances or approvals and criminal
prosecution.
40
<PAGE>
In the United States, medical devices are classified into three different
categories over which the FDA maintains increasing levels of regulation: Class I
(general controls, e.g., labeling, premarket notification and QSRs), Class II
(general and special controls, e.g., performance standards and postmarket
surveillance) and Class III (premarket approval). The SalEst system has been
classified and approved as a Class III device. Before a new device can be
introduced into the United States market, the manufacturer typically must obtain
FDA clearance or approval through either a 510(k) premarket notification or a
PMA.
A 510(k) premarket notification clearance will typically be granted for a
device that is "substantially equivalent" to a legally marketed Class I or Class
II medical device called a "predicate device" or a Class III medical device for
which the FDA has not yet required submission of PMAs. A 510(k) premarket
notification must contain information supporting the claim of substantial
equivalence, which may include laboratory test results or the results of
clinical studies. Following submission of a 510(k) premarket notification, a
company may not market the device for clinical use until the FDA finds that
product is substantially equivalent. It generally takes four to 12 months from
the date of submission of a 510(k) to obtain the FDA's determination, but it may
take longer. The FDA may determine that the device is not substantially
equivalent and require submission and approval of a PMA or require further
information before it is able to make a determination regarding substantial
equivalence. For any devices cleared through the 510(k) process, modifications
or enhancements that could significantly affect safety or effectiveness, or
constitute a major change in intended use, requires a new 510(k) submission and
a separate FDA determination of substantial equivalence.
If a device does not qualify for the premarket notification procedure, a
company must file a PMA application. A PMA application must be supported by
extensive data, including laboratory and clinical trial data establishing the
safety and effectiveness of the device, as well as extensive manufacturing
information. After a preliminary review, the FDA makes an initial determination
regarding whether a PMA application is sufficiently complete to permit a
substantive review. If the FDA finds the PMA application sufficiently complete,
the FDA accepts the application for filing. Once the PMA application is accepted
for filing, the FDA begins a more in-depth review process, which likely will
include review by a scientific advisory panel. During the PMA review process,
the FDA will conduct an inspection of the manufacturer's facilities to ensure
compliance with the applicable QSR requirements. During the review process, the
FDA may determine that additional clinical data is necessary or request other
information, which may delay the regulatory review process.
The PMA review and approval process can be expensive, uncertain and lengthy,
and there can be no assurance that any approval will be granted on a timely
basis, if at all. A PMA application may be denied if applicable regulatory
criteria are not satisfied, and the FDA may impose certain conditions upon the
applicant, such as postmarket testing and surveillance. Modifications to a
device that is the subject of an approved PMA, its labeling, manufacturing or
clinical use may require approval of the FDA of PMA supplements or new PMAs. PMA
supplements often require submission of the same type of information required
for the initial PMA except that the supplement generally is limited to that data
needed to support the proposed changes. Regulatory approval, if granted, may
entail limitations on the indicated uses for which the product may be marketed,
and product approvals, once granted, may be withdrawn if problems occur after
initial marketing. The Company will be subject to pervasive and continuing
government regulations, including record keeping requirements and reporting of
adverse events associated with product uses.
The President recently signed into law the Food and Drug Administration
Modernization Act of 1997. This legislation makes changes to the device
provisions of the FDC Act and other provisions in the Act affecting the
regulation of devices. Among other things, the changes will affect the 510(k)
and PMA processes, and also will affect device standards and data requirements,
procedures relating to humanitarian and breakthrough devices, tracking and
postmarket surveillance, accredited third party review, and the dissemination of
off label information. The Company cannot predict how or when these changes will
be implemented or what effect the change will have on the regulation of the
Company's products.
41
<PAGE>
Sales of medical devices outside of the United States are subject to
regulatory requirements that vary from country to country. The time required to
obtain approval for sale internationally may be longer or shorter than that
required for FDA approval, and the requirements may differ. There can be no
assurance that the Company will be able to obtain the required marketing
authorizations in a timely manner, if at all. In addition, significant costs and
requests by regulators for additional information may be encountered by the
Company in its efforts to obtain regulatory approvals. Any such events could
substantially delay or preclude the Company from marketing its products in the
United States or other countries.
REGULATION OF MANUFACTURING PRACTICES
The Company's manufacturing operations are required to comply with the FDA's
QSR, which incorporates the agency's former cGMP regulations. QSR addresses the
design, controls, methods, facilities and quality assurance controls used in
manufacturing, packing, storing and installing medical devices. There can be no
assurance that the Company will not incur significant costs to comply with laws
and regulations in the future or that laws and regulations will not have a
material adverse effect upon the Company's business, financial condition and
results of operations. In addition, certain international markets have quality
assurance and manufacturing requirements that may be more or less rigorous than
those in the United States. Failure to comply with QSR or any applicable
international requirements could have a material adverse effect on the Company's
business, financial condition and results of operations.
REGULATION OF CLINICAL LABORATORIES
The Company's proposed laboratory operations will be regulated by HCFA,
under CLIA, and by comparable state agencies. The Company will need to receive
CLIA certification through HCFA prior to the use of its laboratories and
facilities for test analysis on a commercial basis. CLIA is intended to ensure
the quality and reliability of all medical testing in laboratories in the United
States by requiring such facilities to obtain certification and to demonstrate
such testing meets specified standards in areas such as personnel qualification,
administration, participation in proficiency testing, patient test management,
quality control, quality assurances and inspections. The regulations promulgated
under CLIA have established three levels of regulatory control based on test
complexity, defined as "waived," "moderately" and "highly" complex. The SalEst
system will be categorized as highly complex. Failure to meet CLIA requirements
can result in a wide variety of sanctions, including suspension, limitation or
revocation of the CLIA certificate and civil and criminal penalties.
Additionally, failure to maintain the CLIA certification will prevent the
Company from receiving Medicare and Medicaid and private payments for laboratory
services performed. Failure to obtain CLIA certification on a timely basis, and
thereafter maintain such certification, would have a material adverse effect on
the Company's business, financial condition and results of operations.
In addition to the requirements under CLIA, the Company will need to
register and be certified by the CDHS as a clinical laboratory. The Company must
also register with five additional states that require specific registration
prior to allowing the Company to analyze and report results from samples
obtained from the citizens of those states. These states are New York, Florida,
Maryland, Rhode Island and Nevada (effective in late 1998). Other states and
territories generally accept the State of California, State of New York or CLIA
certification. These certifications are currently in process. Any failure to
obtain these certificates, particularly the State of California certificate, or
similar certificates which may be required by other states in the future could
have a material adverse effect on the Company's business, financial condition
and results of operations.
OTHER REGULATIONS
The manufacture, sale or use of the Company's products are also subject to
regulation by other federal entities, such as the OSHA and the Environmental
Protection Agency, and by various state
42
<PAGE>
agencies, including the California Environmental Protection Agency. Federal and
state regulations regarding the manufacture, sale or use of the Company's
products are subject to future change, which could have a material adverse
effect on the Company's business, financial condition and results of operations.
PRODUCT LIABILITY INSURANCE
The Company faces an inherent business risk of financial exposure to product
liability claims. Although the Company has not experienced any claims to date,
there can be no assurance that the Company will not experience losses due to
product liability claims in the future. The Company currently carries product
liability insurance. There can be no assurance that product liability insurance
will continue to be available to the Company at a reasonable cost, if at all, or
that such product liability insurance will be adequate. The Company may require
increased product liability coverage to the extent its products are
commercialized and as it provides increased diagnostic services. The medical
device industry has experienced increasing costs in obtaining and maintaining
reasonable product liability coverage, and substantial increases in insurance
premium costs in many cases have rendered coverage economically impractical.
Furthermore, there can be no assurance that the Company will have sufficient
resources to satisfy any liability or litigation expenses that may result from
any uninsured or underinsured claims. Any claims or series of claims against the
Company, regardless of their merit or eventual outcome, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
EMPLOYEES
As of March 4, 1998, the Company had 28 employees, including seven in
research and development, three in clinical and regulatory affairs, fourteen in
sales and marketing and four in administration. The Company has not experienced
any work stoppage and considers its employee relations to be good.
FACILITIES
The Company maintains its headquarters in Dublin, California in a 11,000
square foot facility that contains a laboratory and houses the Company's
research and development, sales and marketing and administrative personnel. The
lease for this facility expires in April 2003. The Company also maintains a
small office in Boulder, Colorado to support its clinical testing efforts. The
Company believes that its existing facilities are adequate to meet its immediate
needs and that suitable additional space will be available in the future on
commercially reasonable terms as needed.
LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings.
43
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company and their ages as of
January 31, 1998 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ------------------------------------------ -- ---------------------------------------------------------------
<S> <C>
James A. Edlund(1)........................ 50 President, Chief Executive Officer and Director
Vivian K. Dullien, Ph.D................... 44 Founder, Executive Vice President and Director
Edgar A. Luce............................. 46 Chief Financial Officer and Secretary
Dale D. Tyerman........................... 47 Executive Vice President of Sales, Marketing and Strategic
Development
H. Fred Voss, Ph.D........................ 50 Executive Vice President of Technology
Janet G. Effland(1)....................... 49 Director
Fredric J. Feldman, Ph.D.(2).............. 57 Director
Robert M. Friedland, M.D.................. 42 Director
Sherman J. Muller(l)...................... 44 Director
Barbara L. Santry(2)...................... 50 Director
</TABLE>
- ------------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
JAMES A. EDLUND has been Chief Executive Officer, President and a director
of the Company since June 1996. From June 1993 to January 1995, Mr. Edlund
served as Chief Executive Officer of Inhalon Pharmaceuticals, Inc., a
pharmaceutical company. From 1989 to June 1993, Mr. Edlund was a private
investor. From 1986 to 1989, Mr. Edlund served as President and Chief Operating
Officer for Cooper Technicon Instruments, a diagnostics company. Mr. Edlund
holds a B.S. in marketing and business administration from Bradley University.
Prior to 1986, Mr. Edlund spent seven years with the diagnostics division of
Abbott Laboratories in various management positions.
VIVIAN K. DULLIEN, PH.D., the inventor of the SalEst system and the founder
and a director of the Company, has been Executive Vice President of the Company
since October 1995. From 1991 to October 1995, Dr. Dullien was the Chief
Executive Officer of the Company. From 1985 to 1991, Dr. Dullien was a founder,
director and manager of Dullien Associates, a contract research organization,
and prior to that was a manager of regulatory affairs with Abbott Laboratories,
a pharmaceutical company. Dr. Dullien holds a B.S. from the University of New
Hampshire and a Ph.D. in physiology from Tufts University School of Medicine.
EDGAR A. LUCE has been Chief Financial Officer of the Company since May 1997
and Secretary of the Company since March 1998. From 1991 to December 1996, he
was Vice President, Finance and Administration, for Penederm Incorporated, a
dermatology pharmaceutical company. From 1987 to 1991, Mr. Luce served as
Corporate Controller for Applied Immune Sciences, Inc., a medical device
company. Mr. Luce holds a B.A. from Stanford University and an M.B.A. from the
University of California at Los Angeles.
DALE D. TYERMAN has been Executive Vice President of Sales, Marketing and
Strategic Development of the Company since April 1996. From 1985 to April 1996,
Mr. Tyerman served as Vice President of Sales and Marketing and Corporate Vice
President for Tokos Medical Corporation (now Matria Health Care), a women's
health care company. From 1972 to 1984, Mr. Tyerman held various management
positions with American Hospital Supply Corporation. Mr. Tyerman holds a B.A.
and an M.B.A. from the University of California at Los Angeles.
H. FRED VOSS, PH.D., has served as Executive Vice President of Technology of
the Company since July 1997. From October 1995 to July 1997, Dr. Voss was Vice
President of Research & Development of
44
<PAGE>
the Company. From 1990 to February 1994, Dr. Voss served as Director of Research
and Development of Biotrack, Inc., a subsidiary of Ciba Corning Diagnostics, a
diagnostics company. From 1983 to 1990, Dr. Voss served as Vice President,
Research and Development, at Hana Biologics, a cell biology company. Dr. Voss
holds a B.S. from the University of California at Santa Barbara and a Ph.D. in
chemistry from the University of Colorado at Boulder.
JANET G. EFFLAND has been a director of the Company since August 1993. Since
1988, Ms. Effland has been a general partner and vice president of Patricof &
Co. Ventures, Inc., a venture capital firm. Ms. Effland holds B.A. and J.D.
degrees from Arizona State University and completed the program for management
development at Harvard Business School. Ms. Effland serves on the boards of
directors of Focal, Inc. and Urologix, Inc.
FREDRIC J. FELDMAN, PH.D., has been a director of the Company since April
1992. From September 1995 to June 1996, Dr. Feldman acted as interim Chief
Executive Officer of the Company while the Company conducted its search for a
President and Chief Executive Officer. From March 1992 to January 1995, Dr.
Feldman served as Chairman and Chief Executive Officer of Oncogenetics, a
genetic cancer diagnostics company. From March 1988 to January 1992, he served
as President and Chief Executive Officer of Microgenics, a diagnostics company.
Dr. Feldman holds a B.S. from Brooklyn College of City University of New York
and an M.S. and a Ph.D. in chemistry from the University of Maryland. Dr.
Feldman serves on the boards of directors of OrthoLogic Corp., Ostex
International, Inc. and SangStat Medical Corp.
ROBERT M. FRIEDLAND, M.D., has been a director of the Company since October
1997. Since 1981, Dr. Friedland has practiced medicine in the areas of high-risk
obstetrics, gynecology and infertility. In addition, since 1995, Dr. Friedland
has been a principal of Kline Hawkes, a private equity investment firm, based in
Los Angeles, CA. Over the last 6 years, Dr. Friedland has been a consultant to
several venture capital firms including Brentwood Associates, Crosspoint Venture
Partners and United States Venture Partners. Dr. Friedland has expertise in the
areas of medical devices, diagnostics, instruments and medical services. Dr.
Friedland holds a combined M.D. and M.B.A. degree in health care economics from
the University of Pennsylvania School of Medicine and the Wharton Graduate
School of Business and a J.D. degree from the University of California at Los
Angeles.
SHERMAN J. MULLER has been a director of the Company since its inception in
1991. Since 1983, Mr. Muller has been a general partner of The Columbine Venture
Funds, a venture capital firm. Mr. Muller holds a B.A. from Oral Roberts
University and an M.B.A. from Tulane University.
BARBARA L. SANTRY has been a director of the Company since October 1994.
Since 1992, Ms. Santry has been a general partner of Pathfinder Venture Capital
Funds, a venture capital firm. Since 1996, Ms. Santry has been a managing member
of Capstone Ventures, a venture capital firm and a spin-off of Pathfinder
Venture Capital Funds. Ms. Santry holds a B.S.N. from Georgetown University and
an M.B.A. from Stanford University. Ms. Santry also serves on the board of
directors of Welch Allyn, Inc.
BOARD COMPOSITION
The Company currently has authorized seven directors. In accordance with the
terms of the Company's Restated Certificate of Incorporation, which will become
effective upon the closing of this offering (the "Restated Certificate"), the
terms of office of the directors will be divided into three classes: Class I,
whose term will expire at the annual meeting of stockholders to be held in 1999
or special meeting held in lieu thereof; Class II, whose term will expire at the
annual meeting of stockholders to be held in 2000 or special meeting held in
lieu thereof; and Class III, whose term will expire at the annual meeting of
stockholders to be held in 2001 or special meeting held in lieu thereof. The
Class I directors are Janet G. Effland and Robert M. Friedland, the Class II
directors are Fredric J. Feldman and Barbara L. Santry, and the Class III
directors are James A. Edlund, Vivian K. Dullien and Sherman J. Muller. At each
annual meeting of stockholders after the initial classification or special
meeting in lieu thereof, the successors to directors whose terms will then
expire will be elected to serve from the time of election and qualification
45
<PAGE>
until the third annual meeting following election or special meeting held in
lieu thereof. In addition, the Restated Certificate provides that the authorized
number of directors may be changed only by resolution of the Board of Directors.
Any additional directorships resulting from an increase in the number of
directors will be distributed among the three classes so that, as nearly as
possible, each class will consist of one third of the directors. This
classification of the Board of Directors may have the effect of delaying or
preventing changes in control or management of the Company. Notwithstanding the
foregoing, when the Company is subject to Section 2115 of the California General
Corporation Law, all directors shall be designated of the same class, and such
directors shall be elected by cumulative voting if any shareholder requests
cumulative voting. Although directors of the Company may be removed for cause by
the affirmative vote of the holders of a majority of the Common Stock, the
Restated Certificate provides that directors may not be removed without cause.
However, when the Company is subject to Section 2115 of the California General
Corporation Law, unless the entire Board is removed, no single director may be
removed without cause when the votes cast against such director's removal would
be sufficient to elect that director if voted cumulatively.
BOARD COMMITTEES
The Board of Directors has an Audit Committee, which currently consists of
Fredric J. Feldman and Barbara L. Santry. The Audit Committee makes
recommendations to the Board regarding the selection of independent accountants,
reviews the results and scope of the audit and other services provided by the
Company's independent accountants, and reviews and evaluates the Company's
control functions. The Board of Directors has a Compensation Committee, which
currently consists of James A. Edlund, Janet G. Effland and Sherman J. Muller.
The Compensation Committee makes recommendations to the Board concerning
salaries and incentive compensation for employees and consultants of the
Company. The Company has created a subcommittee of the Compensation Committee,
consisting of Janet G. Effland and Sherman J. Muller, which will have the
authority to issue options to Executive Officers and Directors of the Company.
The Company also has a Nominating Committee, which currently consists of James
A. Edlund and Fredric J. Feldman. The Nominating Committee interviews, evaluates
and recommends individuals for membership on the Board of Directors and election
as officers of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Other than Mr. Edlund, none of the members of the Compensation Committee of
the Board of Directors was, at any time since the formation of the Company, an
officer or employee of the Company. No executive officer of the Company serves
as a member of the board of directors or compensation committee of any entity
that has one or more executive officers serving on the Company's Board of
Directors or Compensation Committee.
DIRECTOR COMPENSATION
Other than Dr. Feldman, who receives cash compensation of $12,000 per annum,
directors currently receive no cash compensation from the Company for their
services as members of the Board of Directors. They are reimbursed for certain
expenses in connection with attendance at Board and Committee meetings. From
time to time, certain directors who are not employees of the Company have
received grants of options to purchase shares of the Company's Common Stock.
Directors are eligible to participate in the Company's 1998 Equity Incentive
Plan and, beginning in 1998, employee directors will also be eligible to
participate in the 1998 Employee Stock Purchase Plan and non-employee directors
will also be eligible to participate in the 1998 Non-Employee Directors' Stock
Option Plan. See "--Employee Benefit Plans," "Principal Stockholders" and
"Certain Transactions."
46
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain compensation awarded by the Company
during the fiscal year ended December 31, 1997 to its Chief Executive Officer
and the Company's other four most highly compensated executive officers (the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL -------------
COMPENSATION(1) SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
- ---------------------------------------------------- ---------- --------- ------------- ----------------
<S> <C> <C> <C> <C>
James A. Edlund .................................... $ 205,000 $ 58,932 40,505 $ 158(2)
President and Chief Executive Officer
Vivian K. Dullien, Ph.D. ........................... $ 143,333 $ 35,833 40,379 $ 19,937(3)
Executive Vice President
Edgar A. Luce(4) ................................... $ 91,269 $ 18,083 165,522 $ 59(2)
Chief Financial Officer
Dale D. Tyerman .................................... $ 147,500 $ 33,125 31,455 $ 130(2)
Executive Vice President of Sales, Marketing and
Strategic Development
H. Fred Voss, Ph.D. ................................ $ 132,417 $ 26,483 50,455 $ 130(2)
Executive Vice President of Technology
</TABLE>
- ------------------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other annual compensation in the form of perquisites and other personal
benefits has been omitted where the aggregate amount of such perquisites and
other personal benefits constitutes less than the lesser of $50,000 or 10%
of the total annual salary and bonus for the Named Executive Officer for the
fiscal year.
(2) Represents premiums paid by the Company for term-life insurance.
(3) Represents relocation expenses of $19,485 and term-life insurance premiums
of $452 paid by the Company.
(4) Mr. Luce joined the Company in May 1997.
47
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain information regarding stock options
granted to the Named Executive Officers during the fiscal year ended December
31, 1997:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED
ANNUAL RATES
INDIVIDUAL GRANTS OF STOCK
--------------------------------------------------------- PRICE
NUMBER OF PERCENT OF APPRECIATION
SECURITIES TOTAL OPTIONS FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM(4)
OPTIONS EMPLOYEES IN BASE PRICE PER EXPIRATION -------------
NAME GRANTED(#)(1)(2) FISCAL YEAR(3) SHARE DATE 5%($) 10%($)
- ------------------ ------------- -------------- -------------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
James A. Edlund... 505 8.8 % $ 0.30 03/09/07
40,000 $ 1.00 12/11/07
Vivian K. Dullien, 379 8.8 % $ 0.30 03/09/07
Ph.D............ 40,000 $ 1.00 12/11/07
Edgar A. Luce..... 115,827 36.0 % $ 0.30 05/20/07
41,695 $ 0.30 08/28/07
8,000 $ 1.00 12/11/07
Dale D. Tyerman... 455 6.8 % $ 0.30 03/09/07
31,000 $ 1.00 12/11/07
H. Fred Voss, 455 11.0 % $ 0.30 03/09/07
Ph.D............ 50,000 $ 1.00 12/11/07
</TABLE>
- ------------------------
(1) Options to purchase an aggregate of 118,334 shares were granted to certain
of the Named Executive Officers during fiscal year 1996 subject to the
achievement of certain events which did not occur until March 1997.
(2) Generally, initial option grants vest as to 25% of the total shares one year
from the date of hire, and one forty-eighth of the total shares vest on each
monthly anniversary thereafter. Additional option grants generally vest
monthly over a four year period from the date of grant. Such options expire
10 years from the date of grant or earlier upon termination of employment.
See "Management-- Employment Agreements" and "--Employee Benefit Plans."
(3) Based on an aggregate of 458,037 options granted to employees during the
fiscal year ended December 31, 1997.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the rules of the Securities and Exchange Commission. There
can be no assurance that the actual stock price appreciation over the
ten-year option term will be at the assumed 5% or 10% levels or at any other
defined level. Unless the market price of the Common Stock appreciates over
the option term, no value will be realized from the option grants made to
the Named Executive Officers. The potential realizable value is calculated
by assuming that the initial public offering price of $ per share
appreciates at the indicated rate for the entire term of the option and that
the option is exercised at the exercise price and the stock issued upon
exercise thereof is sold on the last day at the appreciated price.
48
<PAGE>
AGGREGATE OPTION EXERCISES IN FISCAL 1997 AND YEAR-END OPTION HOLDINGS AND
VALUES
The following table sets forth for each of the Named Executive Officers the
shares acquired and the value realized on exercise of stock options during the
fiscal year ended December 31, 1997 and the number and value of securities
underlying unexercised options held by each of the Named Executive Officers as
of December 31, 1997:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS AT
SHARES 1997(#) DECEMBER 31, 1997($)
ACQUIRED ON VALUE -------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE(2) EXERCISABLE/UNEXERCISABLE(1)(2)
- ------------------------------ ----------- ----------------- -------------------------- ----------------------------
<S> <C> <C> <C> <C>
James A. Edlund............... -- -- 619,849/0
Vivian K. Dullien, Ph.D....... -- -- 317,190/0
Edgar A. Luce................. -- -- 165,522/0
Dale D. Tyerman............... 90,000 -- 206,455/0
H. Fred Voss, Ph.D............ -- -- 168,890/0
</TABLE>
- ------------------------
(1) Value realized and value of unexercised in-the-money options are based on a
value of $ per share of the Company's Common Stock, the assumed offering
price. Amounts reflected are based on the assumed value minus the exercise
price multiplied by the number of shares acquired on exercise and do not
indicate that the optionee sold such stock.
(2) Options may be exercised immediately pursuant to early exercise provisions
contained in option agreements. Any unvested shares issued pursuant to such
early exercise provisions are subject to repurchase upon termination of
employment. Such repurchase option terminates at a rate reflecting the
vesting schedule of the underlying option. Accordingly, such repurchase
option generally terminates at a rate of 1/48th per month. However, in
certain circumstances, such repurchase option may terminate earlier. See
"--Employment Agreements" and "Principal Stockholders."
EMPLOYMENT AGREEMENTS
In June 1996, the Company entered into a letter agreement with James A.
Edlund, the Company's president and Chief Executive Officer (the "Edlund
Agreement"). Pursuant to the Edlund Agreement, Mr. Edlund was to receive a base
salary of $205,000 for the 1996 calendar year. In addition, the Edlund Agreement
entitled Mr. Edlund to receive (i) stock options to purchase 442,177 shares of
the Company's Common Stock at a per share price of $0.20, (ii) stock options to
purchase that number of shares of Common Stock equal to 5% of the number of
shares purchased with the first $3,500,000 of investment in the equity of the
Company subsequent to Mr. Edlund's employment (the "Equity Investment"), and
(iii) stock options to purchase that number of shares of Common Stock equal to
5% of the increase in the number of shares in the Company's stock option pool
from the date of Mr. Edlund's employment until the earlier of the Equity
Investment or the Company's initial public offering. All such options have been
granted.
The stock options granted to Mr. Edlund pursuant to the Edlund Agreement
were granted at the fair market value of the Company's Common Stock at the date
of grant and vest 1/4 upon the first anniversary of Mr. Edlund's employment with
the Company and 1/48th monthly thereafter. The Edlund Agreement also provides
that upon a change of control of the Company due to merger or consolidation in
which the Company is not the surviving entity, all stock options granted to Mr.
Edlund pursuant to the Edlund Agreement would become immediately vested.
In July 1993, the Company entered into a Covenant Not To Compete with Vivian
K. Dullien, Ph.D., the Company's founder and Executive Vice President (the
"Dullien Agreement"). Pursuant to the Dullien
49
<PAGE>
Agreement, in the event Dr. Dullien's employment with the Company is terminated
without cause, Dr. Dullien would be entitled to receive severance pay in an
amount equal to six months of her then-current salary. In addition, pursuant to
the terms of the applicable stock option grants, options to purchase up to an
aggregate of 58,955 shares would become immediately vested in the event Dr.
Dullien's employment is terminated without cause within six months after a
"change of control transaction," as defined therein.
EMPLOYEE BENEFIT PLANS
1998 EQUITY INCENTIVE PLAN
The Company's 1998 Equity Incentive Plan (the "Incentive Plan") was adopted
by the Company's Board of Directors in March 1998 as a successor equity plan to
the Company's existing 1996 Stock Option Plan and 1993 Stock Option Plan
(collectively, the "Prior Plan"). The Incentive Plan will become effective upon
the completion of this offering. The Company has outstanding options under the
Prior Plans, which are substantially similar to options which will be granted
under the Incentive Plan.
The Incentive Plan provides for the grant of incentive stock options (as
defined in the Internal Revenue Code of 1986, as amended (the "Code")) to
employees (including officers) and nonstatutory stock options, restricted stock
purchase awards and stock bonuses to employees (including officers), directors
and consultants of the Company. The Incentive Plan is administered by the Board
of Directors (or a committee thereof), and the Board of Directors (or committee)
determines recipients and types of awards to be granted, including the exercise
price, number of shares subject to the award and the exercisability thereof.
The terms of stock options granted under the Incentive Plan may not exceed
10 years. The exercise price of options granted under the Incentive Plan is
determined by the Board (or committee), provided that the exercise price for a
nonstatutory stock option cannot be less than 85% of the fair market value of
the Common Stock on the date of grant, and the exercise price of an incentive
stock option cannot be less than 100% of the fair market value of the Common
Stock on the date of grant. Options granted under the Incentive Plan vest at the
rate specified in the option agreement, which generally is over four (4) years.
No stock option may be transferred by the optionee other than by will or the
laws of descent or distribution or, in certain limited instances, pursuant to a
domestic relations order or for limited estate planning purposes, provided that
an optionee may designate a beneficiary who may exercise the option following
the optionee's death. An optionee whose service relationship with the Company or
any affiliate ceases for any reason (other than by death or disability) may
generally exercise his or her options during the three-month period following
such cessation, unless such options expire sooner by their terms or the Board
provided otherwise in the optionee's option agreement. Options generally may be
exercised for up to twelve (12) months after an optionee's relationship with the
Company and any affiliate ceases due to optionee's disability, and eighteen (18)
months if such termination is due to optionee's death.
No incentive stock option may be granted to any person who, at the time of
the grant, owns (or is deemed to own) stock possessing more than 10% of the
total combined voting power of the Company or any affiliate of the Company,
unless the option exercise price is at least 110% of the fair market value of
the stock subject to the option on the date of grant and the term of the option
does not exceed five years from the date of grant. In addition, the aggregate
fair market value, determined at the time of grant, of the shares of Common
Stock with respect to which incentive stock options are exercisable for the
first time by an optionee during any calendar year (under all such plans of the
Company and its affiliates) may not exceed $100,000.
There are currently 1,000,000 shares of Common Stock authorized for issuance
under the Incentive Plan. Additionally, an amount equal to the difference (if
any) between five percent (5%) of the Company's total outstanding shares as of
each December 31 during the term of the Incentive Plan and the number of shares
then reserved under the Incentive Plan will be added to the share reserve each
such December 31.
50
<PAGE>
Shares subject to stock awards that have expired or otherwise terminated without
having been exercised in full again become available for the grant of awards
under the Incentive Plan.
The Board (or committee) has the authority to reprice outstanding options
and to offer optionees the opportunity to replace outstanding options with new
options for the same or a different number of shares.
Restricted stock purchase awards granted under the Incentive Plan may be
granted pursuant to a repurchase option in favor of the Company in accordance
with a vesting schedule and at a price determined by the Board (or committee).
Restricted stock purchases must be at a price equal to at least 85% of the
stock's fair market value on the award date, but stock bonuses may be awarded in
consideration of past services without a purchase payment. Rights under a stock
bonus or restricted stock bonus agreement may not be transferred other than by
will, the laws of descent and distribution or a domestic relations order during
the time the stock awarded pursuant to such an agreement remains subject to the
agreement.
Upon certain changes in control of the Company, all outstanding awards under
the Incentive Plan shall either be assumed or substituted by the surviving
entity. If the surviving entity determines not to assume or substitute such
awards, and with respect to persons then performing services as employees,
directors or consultants, the time during which such awards may be exercised
shall be accelerated and the awards terminated if not exercised prior to such
change in control.
The Incentive Plan will terminate in March 2008 unless sooner terminated by
the Board (or committee).
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
In March 1998, the Board adopted the 1998 Non-Employee Directors' Stock
Option Plan (the "Directors' Plan") to provide for the automatic grant of
options to purchase shares of Common Stock to non-employee directors of the
Company. The Directors' Plan will become effective upon the completion of this
offering. The Directors' Plan is administered by the Board, unless the Board
delegates administration to a committee.
The maximum number of shares of Common Stock that may be issued pursuant to
options granted under the Directors' Plan is 300,000. Pursuant to the terms of
the Directors' Plan, each person serving as a director of the Company upon the
completion of this offering who is not an employee of the Company (a
"Non-Employee Director") shall automatically be granted an option to purchase
7,500 shares of Common Stock. Any person who first becomes a Non-Employee
Director after the effectiveness of the initial public offering of the Company's
Common Stock shall automatically be granted an option to purchase that number of
shares of Common Stock equal to 7,500 multiplied by the fraction, the numerator
equalling the number of whole months remaining in the calendar year in which the
person first joined the Board and the denominator equalling 12. In addition, on
January 1 of each calendar year, commencing in 1999, each Non-Employee Director
will automatically be granted an option to purchase 7,500 shares of Common
Stock.
Options under the Directors' Plan will vest in twelve (12) equal, monthly
installments commencing on the date of the grant of the option. The exercise
price of the options granted under the Directors' Plan equals the fair market
value of the Common Stock granted on the date of grant. No option granted under
the Directors' Plan may be exercised after the expiration of ten years from the
date it was granted. Options granted under the Directors' Plan are generally
nontransferable except pursuant to a domestic relations order or a beneficiary
designation. The Directors' Plan will terminate at the direction of the Board.
In the event of certain changes of control, options outstanding under the
Directors' Plan will automatically become fully vested and exercisable, and will
terminate if not exercised prior to such change of control.
51
<PAGE>
1998 EMPLOYEE STOCK PURCHASE PLAN
In March, 1998, the Company's Board of Directors approved the 1998 Employee
Stock Purchase Plan (the "Purchase Plan") covering an aggregate of 500,000
shares of Common Stock. The Purchase Plan will become effective upon the
completion of this offering. The Purchase Plan is intended to qualify as an
employee stock purchase plan within the meaning of Section 423 of the Code.
Under the Purchase Plan, the Board may authorize participation by eligible
employees, including officers, in periodic offerings following the adoption of
the Purchase Plan. The offering period for any offering will be no more than 27
months.
In order to participate in the Purchase Plan, employees must be employed for
at least 20 hours per week and for more than five months per year by the Company
or an affiliate of the Company designated by the Board. Employees who
participate in an offering can have up to 15% of their earnings withheld
pursuant to the Purchase Plan and applied, on specified dates determined by the
Board, to the purchase of shares of Common Stock. The price of Common Stock
purchased under the Purchase Plan will be equal to 85% of the lower of the fair
market value of the Common Stock on the commencement date of each offering
period or the relevant purchase date. Employees may end their participation in
the offering at any time during the offering period, and participation ends
automatically on termination of employment with the Company.
In the event of certain changes of control, the Company and the Board has
discretion to provide that each right to purchase Common Stock will be assumed
or an equivalent right substituted by the successor corporation, or the Board
may shorten the offering period and provide for all sums collected by payroll
deductions to be applied to purchase stock immediately prior to the change in
control. The Purchase Plan will terminate at the Board's direction.
401(k) PLAN
Effective January 1998, the Company adopted a tax deferred savings plan
entitled the Biex, Inc. 401(k) Retirement Plan (the "401(k) Plan"), which covers
all employees of the Company beginning on the first day of the calendar quarter
beginning after the date of hire. An employee may contribute up to 15% of his or
her compensation to the 401(k) Plan on a pre-tax basis, not to exceed in any
given year the maximum amount allowable under the Code regulations. The Company
will contribute the total amount of salary elected to be deferred by each
employee and may contribute a discretionary matching contribution equal to a
specified percentage of the participant's obligation. The Company has not made
matching contributions to date. The rates of pre-tax contributions may be
reduced with respect to highly compensated employees, as defined in the Code, so
that the 401(k) Plan will comply with Section 401(k) of the Code. Pre-tax
contributions are allocated to each employee's individual account, which is
invested in selected investment alternatives according to the directions of the
employee. An employee's pre-tax contributions are nonforfeitable at all times.
Withdrawals are permitted from an employee's account while the employee is still
employed by the Company in the event of a financial hardship or when the
employee reaches age 59 1/2. Employees may also borrow from their accounts. All
benefits are generally distributed to employees upon termination of employment.
LIMITATION OF LIABILITY AND INDEMNIFICATION
The Restated Certificate contains certain provisions permitted under
Delaware Law relating to the liability of directors. These provisions eliminate
a director's personal liability for monetary damages resulting from a breach of
fiduciary duty, except in certain circumstances involving certain wrongful acts,
such as (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction from which the
director derives an improper personal benefit. These provisions do not limit or
eliminate the rights of
52
<PAGE>
the Company or any stockholder to seek non-monetary relief, such as an
injunction or rescission, in the event of a breach of director's fiduciary duty.
These provisions will not alter a director's liability under federal securities
laws. The Restated Certificate also contains provisions indemnifying the
directors and officers of the Company to the fullest extent permitted by the
Delaware General Corporation Law. The Company believes that these provisions
will assist the Company in attracting and retaining qualified individuals to
serve as directors.
At present, the Company is not aware of any pending or threatened litigation
or proceeding involving a director, officer, employee or agent of the Company in
which indemnification would be required or permitted. The Company is not aware
of any threatened litigation or proceeding that might result in a claim for such
indemnification. The Company believes that its charter provisions are necessary
to attract and retain qualified persons as directors and officers.
CERTAIN TRANSACTIONS
In August 1997, shares of the Company's Series E Preferred Stock,
convertible into an aggregate of 4,169,567 shares of Common Stock, were sold at
an as-converted price of $2.50 per share, 279,680 shares of which were sold to
Columbine Venture Fund II, L.P., 1,200,000 shares of which were sold to Kline
Hawkes California SBIC, L.P., 160,000 shares of which were sold to entities
affiliated with Patricof & Co. Ventures, Inc., 131,760 shares of which were sold
to Pathfinder Venture Capital Fund III, 28,400 shares of which were sold to
Capstone Ventures and 160,000 shares of which were sold to entities affiliated
with Technology Funding Inc.
In August 1996 and March 1997, shares of the Company's Series D Preferred
Stock, convertible into an aggregate of 2,333,333 shares of Common Stock, were
sold at an as-converted price of $1.50 per share, 466,686 shares of which were
sold to entities affiliated with Patricof & Co. Ventures, Inc., 815,809 shares
of which were sold to Columbine Venture Fund II, L.P., 384,184 shares of which
were sold to Pathfinder Venture Capital Fund III, 82,583 shares of which were
sold to Capstone Ventures and 466,683 shares of which were sold to entities
affiliated with Technology Funding Inc.
In June 1995 through April 1996, shares of the Company's Series C Preferred
Stock, convertible into an aggregate of 3,030,000 shares of Common Stock, were
sold at an as-converted price of $1.00 per share, 750,000 shares of which were
sold to entities affiliated with Patricof & Co. Ventures, Inc., 650,000 shares
of which were sold to Columbine Venture Fund II, L.P., 650,000 shares of which
were sold to Pathfinder Venture Capital Fund III and 750,000 shares of which
were sold to entities affiliated with Technology Funding Inc.
The Company has entered into an employment agreement with Mr. Edlund.
Additionally, the Company has entered into an agreement with Dr. Dullien which,
among other things, provides for certain severance payments in the event Dr.
Dullien's employment with the Company is terminated without cause. See
"Management--Employment Agreements."
The Company believes that all of the transactions set forth above were in
its best interests. As a matter of policy, the transactions were, and all future
transactions between the Company and its officers, directors, principal
stockholders and affiliates will be, approved by a majority of the Board of
Directors, including a majority of the independent and disinterested directors
on the Board of Directors, and will be on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.
53
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of January 31, 1998 and as adjusted
as of such date to reflect the sale of the Common Stock offered by the Company
pursuant to this Prospectus, conversion of all outstanding shares of Preferred
Stock into Common Stock, issuance of the Dividend Shares and issuance of the
Warrant Shares by (i) each person (or group of affiliated persons) known by the
Company to beneficially own more than five percent of the outstanding shares of
Common Stock on an as-converted basis, (ii) each of the Company's directors and
Named Executive Officers, and (iii) all directors and executive officers as a
group. Except as otherwise set forth below, the address of each person listed
below is c/o Biex, Inc., 6693 Sierra Lane, Suite F, Dublin, California.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY OWNED(1)
SHARES --------------------------
BENEFICIALLY PRIOR TO AFTER
BENEFICIAL OWNER OWNED(1) OFFERING OFFERING
- ------------------------------------------------------------------------ ------------ ------------ ------------
<S> <C> <C> <C>
Columbine Venture Fund II, L.P.(2)...................................... 3,537,501
5460 S. Quebec St.
Suite 270
Englewood, Colorado 80111
Entities affiliated with Patricof & Co. Ventures, Inc.(3)............... 2,023,644
c/o Alan Patricof Associates, Inc.
2100 Geng Road
Palo Alto, California 94303
Entities affiliated with Technology Funding Inc.(4)..................... 2,023,639
2000 Alameda de las Pulgas
San Mateo, California 94403
Pathfinder Venture Capital Fund III(5).................................. 1,665,944
3000 Sand Hill Road, Building Three, Suite 255
Menlo Park, California 94025
Kline Hawkes California SBIC, L.P.(6)................................... 1,200,000
11726 San Vicente Blvd., Suite 300
Los Angeles, CA 90049
Hasso Plattner.......................................................... 800,000
c/o Lowenthal Capital
110 Solano Street
Tiburon, CA 94920
James A. Edlund(7)...................................................... 619,849
Vivian K. Dullien, Ph.D.(8)............................................. 767,190
Edgar A. Luce(9)........................................................ 165,522
Dale D. Tyerman(10)..................................................... 296,455
H. Fred Voss, Ph.D.(11)................................................. 168,890
Janet G. Effland(12).................................................... 2,031,144
Fredric J. Feldman, Ph.D.(13)........................................... 205,935
Robert M. Friedland(14)................................................. 1,207,500
Sherman J. Muller(15)................................................... 3,545,001
Barbara L. Santry(16)................................................... 2,032,706
All directors and executive officers as a group (10 persons)(17)........ 11,040,192
</TABLE>
- ------------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as
54
<PAGE>
indicated by footnote, and subject to community property laws where
applicable, the persons named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them. Percentage of beneficial ownership is based on
14,291,896 shares of Common Stock outstanding as of January 31, 1998 (after
giving effect to the conversion of the Preferred Stock and the issuance of
the Warrant Shares and Dividend Shares) and shares of Common Stock
outstanding after completion of this offering.
(2) Sherman J. Muller, a director of the Company, is a general partner of The
Columbine Fund, which is the general partner of Columbine Venture Fund II,
L.P. ("Columbine").
(3) Includes 1,457,023 shares held by APA Excelsior III, L.P. ("APA") and
566,621 shares held by Coutts & Co. (Jersey) Ltd., Custodian for APA
Excelsior III/Offshore, L.P. ("Coutts"). Janet G. Effland, a director of
the Company, is a general partner of APA Excelsior III Partners, the
general partner of APA and Coutts, which are funds managed by Patricof &
Co. Ventures, Inc.
(4) Includes 634,546 shares held by Technology Funding Partners III L.P.
("TFPIII"), 634,546 shares held by Technology Funding Venture Partners IV,
an Aggressive Growth Fund, L.P. ("TFPIV"), 634,547 shares held by
Technology Funding Partners V, an Aggressive Growth Fund, L.P. ("TFPV") and
120,000 shares held by Technology Funding Medical Partners I L.P.
(5) Barbara L. Santry, a director of the Company, is a general partner of
Pathfinder Partners III, the general partner of Pathfinder Venture Capital
Fund III ("PVCF").
(6) Robert M. Friedland, a director of the Company, is a principal of Kline
Hawkes California SBIC, L.P. ("Kline Hawkes").
(7) Includes 619,849 shares of Common Stock subject to immediately exercisable
stock options, 256,184 of which will be vested as of April 1, 1998 and the
remaining 363,665 shares of which would be subject to repurchase if
purchased prior to vesting. Vesting of such unvested shares immediately
accelerates upon a change of control of the Company. See
"Management--Employment Agreements."
(8) Includes 317,190 shares of Common Stock subject to immediately exercisable
stock options, 194,663 of which will be vested as of April 1, 1998 and the
remaining 122,527 shares of which would be subject to repurchase if
purchased prior to vesting. Vesting of 58,955 shares subject to such stock
options accelerates upon a termination of employment within six months
following a change of control transaction or the initiation of sales of the
Company's first FDA-approved product. See "Management--Employment
Agreements."
(9) Includes 165,522 shares of Common Stock subject to immediately exercisable
stock options, 500 of which will be vested as of April 1, 1998 and the
remaining 165,022 shares of which would be subject to repurchase if
purchased prior to vesting.
(10) Includes 206,455 shares of Common Stock subject to immediately exercisable
stock options, 32,155 of which will be vested as of April 1, 1998 and the
remaining 174,300 shares of which would be subject to repurchase if
purchased prior to vesting.
(11) Includes 168,890 shares of Common Stock subject to immediately exercisable
stock options, 62,188 of which will be vested as of April 1, 1998 and the
remaining 106,702 shares of which would be subject to repurchase if
purchased prior to vesting.
(12) Includes 1,457,023 shares held by APA and 566,621 shares held by Coutts.
Ms. Effland, a director of the Company, is a general partner of APA III
Partners, the general partner of APA and Coutts. Ms. Effland disclaims
beneficial ownership in the shares held by APA and Coutts except to the
extent of her pecuniary interest arising from her general partnership
interest in APA III partners. Also, includes 7,500 shares of Common Stock
subject to immediately exercisable stock options, 1,875 of
55
<PAGE>
which will be vested as of April 1, 1998 and the remaining 5,625 shares of
which would be subject to repurchase if purchased prior to vesting.
(13) Includes 24,167 shares of Common Stock subject to immediately exercisable
stock options, 7,709 of which will be vested as of April 1, 1998 and the
remaining 16,458 shares of which would be subject to repurchase if
purchased prior to vesting.
(14) Includes 1,200,000 shares held by Kline Hawkes. Dr. Friedland, a director
of the Company, is a principal of Kline Hawkes. Also, includes 7,500
shares of Common Stock subject to immediately exercisable stock options,
1,875 of which will be vested as of April 1, 1998 and the remaining 5,625
shares of which would be subject to repurchase if purchased prior to
vesting.
(15) Includes 3,537,501 shares held by Columbine. Mr. Muller, a director of the
Company, is a general partner of the Columbine Fund, which is the general
partner of Columbine. Also, includes 7,500 shares of Common Stock subject
to immediately exercisable stock options, 1,875 of which will be vested as
of April 1, 1998 and the remaining 5,625 shares of which would be subject
to repurchase if purchased prior to vesting.
(16) Includes 1,665,944 shares held by Pathfinder Venture Capital Fund III and
359,262 shares held by Capstone Ventures. Ms. Santry, a director of the
Company, is a general partner of Pathfinder Partners III, the general
partner of PVCF, and is a managing member of Capstone Management, L.L.C.,
the general partner of Capstone Ventures. Also, includes 7,500 shares of
Common Stock subject to immediately exercisable stock options, 1,875 of
which will be vested as of April 1, 1998 and the remaining 5,625 shares
would be subject to repurchase if purchased prior to vesting.
(17) Includes 1,532,073 shares of Common Stock subject to immediately
exercisable stock options, of which 501,942 shares will be vested as of
April 1, 1998 and the remaining 1,030,131 shares of which would be subject
to repurchase if purchased prior to vesting. See Notes 7 through 16.
56
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Upon completion of this offering, the authorized capital stock will consist
of 30,000,000 shares of Common Stock, par value $0.001 per share, and 5,000,000
shares of Preferred Stock, par value $0.001 per share.
COMMON STOCK
As of January 31, 1998, assuming the conversion of all outstanding shares of
Preferred Stock into shares of Common Stock, and issuance of the Warrant Shares,
there were 14,291,896 shares of Common Stock outstanding held by 33
stockholders, options to purchase 1,809,588 shares of Common Stock and 799,731
shares reserved for future issuance under the Company's 1996 Stock Option Plan.
In addition, 10,224 shares are authorized for future issuance under the
Company's 1993 Stock Option Plan, but the Company does not intend to grant
additional options under such plan. Effective upon the completion of this
offering, the 1993 Stock Option Plan and the 1996 Stock Option Plan will be
terminated and replaced by the 1998 Equity Incentive Plan, under which 1,000,000
shares will be reserved for issuance. Also effective upon the completion of this
offering, the Board of Directors has reserved 500,000 and 300,000 shares for
issuance under the Purchase Plan and the Director's Plan, respectively.
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Unless Section
2115 of the California General Corporation Law is applicable to the Company,
holders of Common Stock are not entitled to cumulative voting rights with
respect to the election of directors and, as a consequence, minority
stockholders will not be able to elect directors on the basis of their votes
alone. The holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. See "Dividend Policy." In the event of liquidation,
dissolution or winding up of the Company, holders of the Common Stock are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preference of any then outstanding shares of Preferred
Stock. Holders of Common Stock have no preemptive rights and no right to convert
their Common Stock into any other securities. There are no redemption or sinking
fund provisions applicable to the Common Stock. All outstanding shares of Common
Stock are fully paid and nonassessable.
PREFERRED STOCK
Upon the closing of this offering, the Board of Directors will be authorized
to issue up to 5,000,000 shares of Preferred Stock in one or more series and to
fix the rights, preferences, privileges and restrictions thereof, including
dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption, redemption prices, liquidation preferences and the number of shares
constituting any series or the designation of such series, without further vote
or action by the stockholders.
The issuance of Preferred Stock may have the effect of delaying, deferring
or preventing a change in control of the Company without further action by the
stockholders. The issuance of Preferred Stock with voting and conversion rights
may adversely affect the voting power of the holders of Common Stock. In certain
circumstances, such issuance could have the effect of decreasing the market
price of the Common Stock. As of the closing of the offering, no shares of
Preferred Stock will be outstanding and the Company currently has no plans to
issue any shares of Preferred Stock.
REGISTRATION RIGHTS
After this offering and the issuance of the Dividend Shares and the Warrant
Shares, the holders of approximately 13,007,408 shares of Common Stock, or their
transferees, will be entitled to certain rights with respect to the registration
of such shares under the Securities Act. Under the terms of an agreement between
the Company and such holders, if the Company proposes to register any of its
securities under the Securities Act, either for its own account or the account
of other security holders exercising registration
57
<PAGE>
rights, the holders are entitled to notice of such registration and are entitled
to include shares of such Common Stock therein; provided, among other
conditions, that the underwriters of any offering have the right to limit the
number of such shares included in such registration. In addition, the security
holders benefiting from these rights may require the Company, beginning six
months after the date of this Prospectus, on not more than two occasions to file
a registration statement under the Securities Act with respect to such shares,
and the Company is required to use its best efforts to effect such registration,
subject to certain conditions and limitations. Further, certain holders may
require the Company to file a registration statement on Form S-3 when such form
becomes available to the Company, subject to certain conditions and limitations.
Registration of such shares under the Securities Act would result in such shares
becoming freely tradeable and could have an adverse effect on the market price
for the Company's Common Stock.
DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Amended and Restated Certificate (the "Restated Certificate") and
Amended and Restated Bylaws (the "Bylaws") of the Company provide, among other
things, that after the closing of this offering, any action required or
permitted to be taken by the stockholders of the Company after this offering may
be taken only at a duly called annual or special meeting of the stockholders and
may not be effected by a consent in writing. In addition, special meetings of
the stockholders of the Company may be called only by the Board of Directors,
the Chairman of the Board, or the Chief Executive Officer of the Company. The
Restated Certificate also provides for a classified board of directors and
specifies that the authorized number of directors may be changed only by
resolution of the Board of Directors. See "Management-- Board Composition."
These provisions, which require the vote of stockholders holding at least
two-thirds of the outstanding shares to amend, may have the effect of deterring
hostile takeovers or delaying changes in control or management of the Company.
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, the statute prohibits
a publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. For the purposes of
Section 203, a "business combination" includes a merger, asset sale or other
transaction resulting in a financial benefit to the interested stockholder, and
an "interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior did own) 15% or more of the
corporation's voting stock.
STOCKHOLDER RIGHTS PLAN
Pursuant to a Rights Agreement (the "Rights Agreement") between the Company
and Boston Equiserve, L.P. as Rights Agent (the "Rights Agent"), the Company's
Board of Directors declared a dividend of one right (a "Right") to purchase one
one-hundredth of a share of the Company's Series F Junior Participating
Preferred Stock ("Series F Preferred") for each outstanding share of Common
Stock of the Company. The dividend is payable on the effective date of this
offering (the "Record Date") to stockholders of record as of the close of
business on that date. Each Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of Series F Preferred at an
exercise price of $ (the "Purchase Price"), subject to adjustment. The
following summary of the principal terms of the Rights Agreement is a general
description only and is subject to the detailed terms and conditions of the
Rights Agreement.
Initially, the Rights will be evidenced by the stock certificates
representing Common Shares then outstanding, and no separate Right Certificates
will be distributed. Until the earlier to occur of (i) a public announcement
that a person or group of affiliated or associated persons, has become an
"Acquiring Person" (as such term is defined in the Rights Agreement) or (ii) 10
business days (or such later date as the Board may determine) following the
commencement of, or announcement of an intention to make, a
58
<PAGE>
tender offer or exchange offer which would result in the beneficial ownership by
an Acquiring Person of 20% or more of the outstanding Common Shares (the earlier
of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate. In general, an "Acquiring
Person" is a person, the affiliates or associates of such person, or a group,
which has acquired beneficial ownership of 20% or more of the outstanding Common
Shares.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferable with
and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights) the
surrender or transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on , 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below. Until a Right is
exercised, the holder thereof, as such, will have no rights as a stockholder of
the Company, including, without limitation, the right to vote or to receive
dividends.
The Purchase Price payable, and the number of shares of Series F Preferred
("Preferred Shares") or other securities or property issuable or payable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution. The number of outstanding Rights and the number of one one-hundredths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares, or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date. With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional Preferred Shares
will be issued (other than fractions which are integral multiples of one one-
hundredth of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Shares on the last
trading day prior to the date of exercise.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $l per share but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per Common Share. Each Preferred
Share will have 100 votes, voting together with the Common Shares. Finally, in
the event of any merger, consolidation or other transaction in which Common
Shares are exchanged, each Preferred Share will be entitled to receive 100 times
the amount received per Common Share. These rights are protected by customary
anti-dilution provisions. Because of the nature of the Preferred Shares'
dividend, liquidation and voting rights, the value of the one one-hundredth
interest in a Preferred Share purchasable upon exercise of each Right should
approximate the value of one Common Share. The Preferred Shares would rank
junior to any other series of the Company's preferred stock.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the
59
<PAGE>
Acquiring Person or any affiliate or associate thereof (which will thereafter be
void), will thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the exercise price of the
Right. This right will commence on the date of public announcement that a person
has become an Acquiring Person (or the effective date of a registration
statement relating to distribution of the rights, if later) and terminate 60
days later (subject to adjustment in the event exercise of the rights is
enjoined).
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold to an Acquiring Person, its affiliates or associates or certain
other persons in which such persons have an interest, proper provision will be
made so that each such holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the Right.
At any time prior to the earliest of (i) the close of business on the day of
the first public announcement that a person has become an Acquiring Person, or
(ii) the Final Expiration Date, the Board of Directors of the Company may redeem
the Rights in whole, but not in part, at a price of $.001 per Right (the
"Redemption Price"). In general, the redemption of the Rights may be made
effective at such time on such basis with such conditions as the Board of
Directors in its sole discretion may determine. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
At any time after any Person becomes an Acquiring Person and prior to the
acquisition by such person or group of 50% or more of the outstanding Common
Shares, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by such person or group which will have become void), in whole
or in part, at an exchange ratio of one Common Share, or, under circumstances
set forth in the Rights Agreement, cash, property or other securities of the
Company, including fractions of a Preferred Share (or of a share of a class or
series of the Company's preferred stock having equivalent designations and the
powers, preferences and rights, and the qualifications, limitations and
restrictions), per Right (with value equal to such Common Shares).
The terms of the Rights generally may be amended by the Board of Directors
of the Company without the consent of the holders of the Rights, except that
from and after such time as the Rights are distributed no such amendment may
adversely affect the interests of the holders of the Rights (excluding the
interest of any Acquiring Person).
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is BankBoston, N.A.,
289 South San Antonio Road, Suite 100, Los Altos, California, (650) 947-3225.
60
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, the Company will have outstanding
shares of Common Stock, based on the number of shares of Preferred Stock and
Common Stock outstanding as of January 31, 1998 and assuming issuance of the
Dividend Shares and the Warrant Shares and no exercise of the Underwriters'
over-allotment option and no exercise of outstanding options. Of these shares,
all the shares sold in this offering will be freely tradeable without
restrictions or further registration under the Securities Act of 1933, as
amended (the "Securities Act") unless purchased by an "affiliate" of the
Company, as that term is defined in Rule 144 promulgated under the Securities
Act. The remaining 14,291,896 shares of Common Stock held by existing
stockholders are "restricted securities" as the term is defined in Rule 144
under the Securities Act (the "Restricted Shares"). Restricted Shares may be
sold in the public market only if registered or if they qualify for an exemption
from registration under Rules 144, 144(k) or 701 promulgated under the
Securities Act. As a result of contractual restrictions and the provisions of
Rule 144 and 701, additional shares will be available for sale in the public
market as follows: (i) 706,901 Restricted Shares will be eligible for immediate
sale on the date of this Prospectus or within 180 days after the Date of this
Prospectus; and (ii) 13,584,995 of the Restricted Shares, and 919,073 shares
subject to existing options will be eligible for sale 180 days after the date of
this Prospectus upon expiration of lock-up agreements.
Each officer and director of the Company, holders of 12,974,995 of the
outstanding shares of Common Stock and all holders of options to acquire Common
Stock have agreed with the Representatives for a period of 180 days after the
effective date of this Prospectus (the "Lock-Up Period"), subject to certain
exceptions, not to offer to sell, contract to sell, or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to any shares of Common Stock,
any options or warrants to purchase any shares of Common Stock, or any
securities convertible into or exchangeable for shares of Common Stock owned as
of the date of this Prospectus or thereafter acquired directly by such holders
or with respect to which they have or hereafter acquire the power of
disposition, without the prior written consent of NationsBanc Montgomery
Securities LLC. However, NationsBanc Montgomery Securities LLC may, in its sole
discretion and at any time without notice, release all or any portion of the
securities subject to lock-up agreements. In addition, the Company has agreed
that during the Lock-Up Period, the Company will not, without the prior written
consent of NationsBanc Montgomery Securities LLC, subject to certain exceptions,
issue, sell, contract to sell, or otherwise dispose of, any shares of Common
Stock, any options or warrants to purchase any shares of Common Stock or any
securities convertible into, exercisable for or exchangeable for shares of
Common Stock other than the Company's sale of shares in this offering, the
issuance of Common Stock upon the exercise of outstanding options and the
Company's issuance of options and shares under existing employee stock option
and stock purchase plans.
As of January 31, 1998, there were 1,809,588 shares of Common Stock issuable
upon exercise of outstanding options. The Company intends to file registration
statements under the Securities Act to register shares of Common Stock reserved
for issuance under its employee stock option plans, the Purchase Plan and the
Directors' Plan, thus permitting the sale of such shares by non-affiliates in
the public market without restriction under the Securities Act. Such
registration statements will become effective immediately upon filing. Upon
effectiveness of such registration statements and expiration of the lockup
agreements described above, holders of vested options to purchase approximately
919,073 shares will be entitled to exercise such options and immediately sell
such shares.
In general, under Rule 144 as currently in effect, and beginning after
expiration of the lockup agreements described above (180 days after the date of
this Prospectus), a person (or persons whose shares are aggregated) who has
beneficially owned Restricted Shares for at least one year would be entitled to
sell within any three-month period a number of shares that does not exceed the
greater of: (i) 1% of the number of shares of Common Stock then outstanding
(which will equal approximately shares immediately after the offering);
and (ii) the average weekly trading volume of the Common Stock during the four
calendar weeks preceding the date of sale. Sales under Rule 144 are also subject
to certain manner of sale provisions and notice requirements and to the
availability or current public information about the
61
<PAGE>
Company. Under Rule 144(k), a person who is not deemed to have been an affiliate
of the Company at any time during the three months preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years, is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation and notice provisions of Rule 144.
Pursuant to the lockup agreements described above, all Company employees and
consultants holding Common Stock or stock options may not sell shares acquired
upon exercise until 180 days after the date of this Prospectus. Beginning 180
days after the date of this Prospectus, any employee, officer or director of or
consultant to the Company who purchased his or her shares pursuant to a written
compensatory plan or contract may be entitled to rely on the resale provisions
of Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under
rule 144 without complying with the holding period requirements of Rule 144.
Rule 701 further provides that nonaffiliates may sell such shares in reliance on
Rule 144 without having to comply with the holding period, public information,
volume limitation or notice provisions of Rule 144.
Prior to this offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that an active public market for the
Common Stock will develop or will continue after this offering or that the
market price of the Common Stock will not decline below the initial public
offering price. Future sales of substantial amounts of Common Stock in the
public market could adversely affect market prices prevailing from time to time.
As described herein, only a limited number of shares will be available for sale
shortly after this offering because of certain contractual and legal
restrictions on resale. Sales of substantial amounts of Common Stock of the
Company in the public market after the restrictions lapse could adversely affect
the prevailing market price and the ability of the Company to raise equity
capital in the future.
62
<PAGE>
UNDERWRITING
The Underwriters named below, represented by NationsBanc Montgomery
Securities LLC, Smith Barney Inc. and Wessels, Arnold & Henderson, L.L.C. (the
"Representatives"), have severally agreed, subject to the terms and conditions
of the Underwriting Agreement (the "Underwriting Agreement") by and between the
Company and the Underwriters, to purchase from the Company the aggregate number
of shares of Common Stock indicated below opposite their respective names at the
offering price less the underwriting discount set forth on the cover page of
this Prospectus. The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the shares of Common Stock are
subject to certain conditions precedent, and that the Underwriters are committed
to purchase all of such shares if they purchase any.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ------------------------------------------------------------------------------------------- ----------
<S> <C>
NationsBanc Montgomery Securities LLC......................................................
Smith Barney Inc...........................................................................
Wessels, Arnold & Henderson, L.L.C.........................................................
----------
Total..................................................................................
----------
----------
</TABLE>
The Representatives have advised the Company that the Underwriters propose
initially to offer the Common Stock to the public on the terms set forth on the
cover page of this Prospectus. The Underwriters may allow selected dealers a
concession of not more than $ per share, and the Underwriters may allow, and
such dealers may reallow, a concession of not more than $ per share to
certain other dealers. After the offering, the price and other selling terms may
be changed by the Representatives. The Common Stock is offered subject to
receipt and acceptance by the Underwriters, and to certain other conditions,
including the right to reject orders in whole or in part.
The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of additional shares of Common Stock to cover over-allotments, if any,
at the same price per share as the initial shares to be purchased by
the Underwriters. To the extent that the Underwriters exercise such option, each
of the Underwriters will be committed, subject to certain conditions, to
purchase such additional shares in approximately the same proportion as set
forth in the above. The Underwriters may purchase such shares only to cover
over-allotments made in connection with the offering.
The Representatives have advised the Company that the Underwriters do not
expect to confirm sales to any accounts over which they exercise discretionary
authority in excess of 5% of the number of shares of Common Stock offered
hereby.
The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including civil liabilities
under the Securities Act, or will contribute to payments the Underwriters may be
required to make in respect thereof.
For a period of 180 days after the date of this Prospectus, without the
prior written consent of NationsBanc Montgomery Securities LLC, the Company and
holders of 13,584,995 shares of Common
63
<PAGE>
Stock, including the Company's directors and executive officers, have agreed not
to offer, sell or contract to sell, sell or grant any option to purchase, make
any short sale, pledge or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or securities exchangeable or exercisable
for or convertible into shares of, or any other rights to purchase or acquire
Common Stock of the Company other than transfers to the holders' immediate
family or into trusts for the benefit of the holder or members of the holders'
immediate family.
Prior to the offering, there has been no public market for the Common Stock
of the Company. Consequently, the offering price for the Common Stock will be
negotiated between the Company and the Representatives. Among the factors to be
considered in determining the offering price of the Common Stock will be
prevailing market and economic conditions, market valuations of other companies
engaged in activities similar to the Company, estimates of the business
potential and prospects of the Company, the present state of the Company's
business operations, the Company's management and other factors deemed relevant.
The Representatives, on behalf of the Underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Over-allotment involves syndicate
sales in excess of the offering price, which creates a syndicate short position.
Stabilizing transactions permit bids to purchase the underlying security so long
as the stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Common Stock in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the Representatives to reclaim a selling concession from a
syndicate member when the Common Stock originally sold by such syndicate member
is purchased in a syndicate covering transaction to cover syndicate short
positions. Such stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the Common Stock to be higher than it would
otherwise be in the absence of such transactions. These transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Cooley Godward LLP, San Francisco and Palo Alto, California. Certain
legal matters in connection with this offering will be passed upon for the
Underwriters by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California.
Entities affiliated with Cooley Godward LLP beneficially own an aggregate of
120,573 shares of the Company's Common Stock. Howard G. Ervin, a partner in
Cooley Godward LLP, serves as Assistant Secretary of the Company.
EXPERTS
Certain legal matters with respect to information contained in this
Prospectus under the captions "Risk Factors--Dependence on Patents and
Proprietary Rights" and "Business--Patents and Proprietary Rights" will be
passed upon by McDonnell Boehmen Hulbert & Berghoff, patent counsel to the
Company.
The financial statements as of December 31, 1996 and 1997 and for each of
the three years in the period ended December 31, 1997 have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
64
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement (which term includes any amendments thereto) on Form S-1
under the Securities Act with respect to the Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
items of which are contained in exhibits to the Registration Statement as
permitted by the rules and regulations of the Securities and Exchange
Commission. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement, including
the exhibits thereto, and the financial statements and notes filed as a part
thereof. Statements made in this Prospectus concerning the contents of any
document referred to herein are not necessarily complete. With respect to each
such document filed with the Commission as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved. The Registration Statement, including exhibits thereto and
the financial statements and notes filed as a part thereof, as well as such
reports and other information filed with the Securities and Exchange Commission,
may be inspected without charge at the public reference facilities maintained by
the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, DC
20549, and at the regional offices of the Securities and Exchange Commission
located at Seven World Trade Center, 13th Floor, New York, NY 10048, and the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661. Copies of all or any part thereof may be obtained from the Securities and
Exchange Commission upon payment of certain fees prescribed by the Commission.
Such reports and other information may also be inspected without charge at a
World Wide Web site on the Internet maintained by the Securities and Exchange
Commission (www.sec.gov) that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Securities and Exchange Commission through the Electronic Data Gathering,
Analysis and Retrieval System.
65
<PAGE>
BIEX, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Report of Independent Public Accountants................................................................... F-2
Balance Sheets............................................................................................. F-3
Statements of Operations................................................................................... F-4
Statements of Stockholders' Equity (Deficit)............................................................... F-5
Statements of Cash Flows................................................................................... F-7
Notes to Financial Statements.............................................................................. F-8
</TABLE>
F-1
<PAGE>
Upon the effective date of Biex, Inc.'s proposed initial public offering, we
expect to be in a position to render the following audit report:
ARTHUR ANDERSEN LLP
San Jose, California
March 13, 1998
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Biex, Inc.:
We have audited the accompanying balance sheets of Biex, Inc. (a Delaware
corporation in the development stage) as of December 31, 1997 and 1996, and the
related statements of operations, stockholders' equity (deficit) and cash flows
for each of the three years in the period ended December 31, 1997, and for the
period from inception (November 1, 1991) to December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Biex, Inc. as of December
31, 1997 and 1996, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1997, and for the period
from inception (November 1, 1991) to December 31, 1997, in conformity with
generally accepted accounting principles.
San Jose, California
___________, 1998
F-2
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1997
----------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................................................ $ 446,285 $ 194,282
Short-term investments........................................................................... 993,769 8,073,513
Interest receivable.............................................................................. 12,337 48,589
Prepaids and other current assets................................................................ 45,885 57,000
----------- ------------
Total current assets......................................................................... 1,498,276 8,373,384
Property and Equipment, net of accumulated depreciation of $12,298 in 1996 and $20,588 in 1997..... 26,151 114,852
Deposits........................................................................................... 8,269 8,269
----------- ------------
Total assets................................................................................. $ 1,532,696 $ 8,496,505
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities......................................................... $ 573,557 $ 733,088
Cumulative dividends payable..................................................................... 436,147 735,356
----------- ------------
Total current liabilities.................................................................... 1,009,704 1,468,444
----------- ------------
Commitments (Note 6)
Stockholders' Equity:
Preferred stock, $.001 par value; 23,009,026 shares authorized, none outstanding................. -- --
Common stock, $.001 par value; 26,250,677 shares authorized; 8,738,311 and 13,826,312 shares
issued and outstanding at December 31, 1996 and 1997; respectively............................. 8,738 13,827
Additional paid-in capital....................................................................... 8,127,542 19,425,008
Deferred compensation............................................................................ -- (729,000)
Unrealized gain on investments................................................................... -- 73,513
Deficit accumulated during the development stage................................................. (7,613,288) (11,755,287)
----------- ------------
Total stockholders' equity................................................................... 522,992 7,028,061
----------- ------------
Total liabilities and stockholders' equity................................................... $ 1,532,696 $ 8,496,505
----------- ------------
----------- ------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-3
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM INCEPTION
FOR THE YEARS ENDED DECEMBER 31, (NOVEMBER 1, 1991)
------------------------------------------- TO DECEMBER 31,
1995 1996 1997 1997
------------- ------------- ------------- ------------------
<S> <C> <C> <C> <C>
Expenses:
Research and development....................... $ 1,058,898 $ 2,155,935 $ 1,988,848 $ 6,433,521
General and administrative..................... 676,119 1,465,047 1,963,770 4,801,554
------------- ------------- ------------- ------------------
Operating loss............................... (1,735,017) (3,620,982) (3,952,618) (11,235,075)
------------- ------------- ------------- ------------------
Interest Income.................................. 27,987 57,717 109,828 215,144
------------- ------------- ------------- ------------------
Net Loss......................................... $ (1,707,030) $ (3,563,265) $ (3,842,790) $ (11,019,931)
------------- ------------- ------------- ------------------
------------- ------------- ------------- ------------------
Basic Net Loss Per Share......................... $ (0.37) $ (0.48) $ (0.35) $ (2.38)
------------- ------------- ------------- ------------------
------------- ------------- ------------- ------------------
Shares Used in Computing Basic Net Loss Per
Share.......................................... 4,592,638 7,365,161 10,856,936 4,621,978
------------- ------------- ------------- ------------------
------------- ------------- ------------- ------------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-4
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL UNREALIZED DURING THE
---------------------- PAID-IN DEFERRED GAIN ON DEVELOPMENT
SHARES AMOUNT CAPITAL COMPENSATION INVESTMENTS STAGE
--------- ----------- ---------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balances, inception (November 1,
1991)............................. -- $ -- $ -- $ -- $ -- $ --
Issuance of common stock for cash
at $.001 per share in November
1991............................ 900,000 900 -- -- -- --
Issuance of common stock for cash
at $.00125 per share in December
1991............................ 30,000 30 8 -- -- --
Net loss.......................... -- -- -- -- -- (16,401)
--------- ----------- ---------- ------------- ----------- ------------
Balances, December 31, 1991......... 930,000 930 8 -- -- (16,401)
Issuance of common stock for cash
at $.001 per share in March
1992............................ 70,000 70 -- -- -- --
Net loss.......................... -- -- -- -- -- (226,116)
--------- ----------- ---------- ------------- ----------- ------------
Balances, December 31, 1992......... 1,000,000 1000 8 -- -- (242,517)
Issuance of common stock for cash
and conversion of notes due to a
stockholder in the amount of
$249,963 in July 1993........... 1,592,307 1,592 1,283,370 -- -- --
Stock offering costs.............. -- -- (27,853) -- -- --
Issuance of common stock for
services valued at $.065 per
share in December 1993.......... 12,500 12 801 -- -- --
Net loss.......................... -- -- -- -- -- (578,557)
--------- ----------- ---------- ------------- ----------- ------------
Balances, December 31, 1993......... 2,604,807 2,604 1,256,326 -- -- (821,074)
Issuance of common stock for cash
and conversion of notes due to a
stockholder in the amount of
$478,955 in October 1994........ 1,416,617 1,417 1,415,200 -- -- --
Stock offering costs.............. -- -- (36,705) -- -- --
Dividends......................... -- -- -- -- -- (14,166)
Net loss.......................... -- -- -- -- -- (1,085,772)
--------- ----------- ---------- ------------- ----------- ------------
Balances, December 31, 1994......... 4,021,424 4,021 2,634,821 -- -- (1,921,012)
Issuance of common stock for cash
at $1.00 per share in June
1995............................ 1,010,004 1,010 1,008,994 -- -- --
Issuance of common stock for cash
at $1.00 per share at December
1995............................ 1,010,000 1,010 1,008,990 -- -- --
Stock offering costs.............. -- -- (12,678) -- -- --
Issuance of common stock for cash
from stock option exercises..... 20,220 20 1,294 -- -- --
Dividends......................... -- -- -- -- -- (119,337)
Net loss.......................... -- -- -- -- -- (1,707,030)
--------- ----------- ---------- ------------- ----------- ------------
Balances, December 31, 1995......... 6,061,648 $ 6,061 $4,641,421 $ -- $ -- $(3,747,379)
</TABLE>
F-5
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL UNREALIZED DURING THE
---------------------- PAID-IN DEFERRED GAIN ON DEVELOPMENT
SHARES AMOUNT CAPITAL COMPENSATION INVESTMENTS STAGE
--------- ----------- ---------- ------------- ----------- ------------
Balances, December 31, 1995......... 6,061,648 $ 6,061 $4,641,421 $ -- $ -- $(3,747,379)
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock for cash
at $1.00 per share in April
1996............................ 1,009,996 1,010 1,008,986 -- -- --
Issuance of common stock for cash
at $1.50 per share in August
1996............................ 1,666,667 1,667 2,498,333 -- -- --
Stock offering costs.............. -- -- (21,198) -- -- --
Dividends......................... -- -- -- -- -- (302,644)
Net loss.......................... -- -- -- -- -- (3,563,265)
--------- ----------- ---------- ------------- ----------- ------------
Balances, December 31, 1996......... 8,738,311 8,738 8,127,542 -- -- (7,613,288)
Issuance of common stock for
services valued at $.20 per
share in January 1997........... 5,000 5 995 -- -- --
Issuance of common stock for cash
at $1.50 per share in March
1997............................ 666,666 667 999,333 -- -- --
Issuance of common stock for cash
at $2.50 per share in August
1997............................ 4,169,567 4,170 10,337,648 -- -- --
Stock offering costs.............. -- -- (832,789) -- -- --
Issuance of common stock for cash
from stock option exercises..... 246,768 247 45,279 -- -- --
Deferred compensation............. -- -- 747,000 (747,000) -- --
Amortization of deferred
compensation.................... -- -- -- 18,000 -- --
Unrealized gain on investments.... -- -- -- -- 73,513 --
Dividends......................... -- -- -- -- -- (299,209)
Net loss.......................... -- -- -- -- -- (3,842,790)
--------- ----------- ---------- ------------- ----------- ------------
Balances, December 31, 1997......... 13,826,312 $ 13,827 $19,425,008 $(729,000) $ 73,513 ($11,755,287)
--------- ----------- ---------- ------------- ----------- ------------
--------- ----------- ---------- ------------- ----------- ------------
</TABLE>
The accompanying notes to financial statement are an integral part of these
statements.
F-6
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM INCEPTION
FOR THE YEARS ENDED DECEMBER 31, (NOVEMBER 1, 1991)
-------------------------------------- TO DECEMBER 31,
1995 1996 1997 1997
----------- ----------- ------------ ------------------
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss...................................................... $(1,707,030) $(3,563,265) $ (3,842,790) $ (11,019,931)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................... 2,713 7,772 8,290 24,836
Common stock issued for services............................ -- -- 1,000 1,813
Amortization of deferred compensation....................... -- -- 18,000 18,000
Accrued interest on promissory notes converted into Series B
preferred stock........................................... -- -- -- 16,620
Changes in operating assets and liabilities:
Interest receivable....................................... -- -- (36,252) (36,252)
Prepaids and other current assets......................... (5,000) (52,772) (11,115) (69,337)
Deposits.................................................. (5,318) (2,951) -- (8,269)
Accounts payable and accrued liabilities.................. 15,520 433,281 159,531 733,088
----------- ----------- ------------ ------------------
Net cash used in operating activities................... (1,699,115) (3,177,935) (3,703,336) (10,339,432)
----------- ----------- ------------ ------------------
Cash Flows From Investing Activities:
Purchases of property and equipment........................... (57,441) -- (96,991) (159,055)
Proceeds from sale of property and equipment.................. -- 23,615 -- 23,615
Purchases of short-term investments........................... (1,403,466) (1,493,769) (8,000,000) (12,906,240)
Proceeds from sale of short-term investments.................. 1,592,617 1,090,117 993,769 4,906,240
Cash paid for organization costs.............................. -- -- -- (4,248)
----------- ----------- ------------ ------------------
Net cash provided by (used in) investing activities....... 131,710 (380,037) (7,103,222) (8,139,688)
----------- ----------- ------------ ------------------
Cash Flows From Financing Activities:
Proceeds from issuance of equity securities................... 2,021,318 3,509,996 11,387,344 18,892,593
Equity securities offering costs.............................. (12,678) (21,198) (832,789) (931,489)
Proceeds from issuance of notes payable to a related party and
others, canceled on July 23, 1993........................... -- -- -- 399,963
Repayment of note payable to a related party.................. -- -- -- (150,000)
Proceeds from issuance of notes payable to a related party and
others...................................................... -- -- -- 462,335
----------- ----------- ------------ ------------------
Net cash flows provided by financing activities........... 2,008,640 3,488,798 10,554,555 18,673,402
----------- ----------- ------------ ------------------
Net Increase (Decrease) in Cash and Cash Equivalents............ 441,235 (69,174) (252,003) 194,282
Cash and Cash Equivalents, beginning of period.................. 74,224 515,459 446,285 --
----------- ----------- ------------ ------------------
Cash and Cash Equivalents, end of period........................ $ 515,459 $ 446,285 $ 194,282 $ 194,282
----------- ----------- ------------ ------------------
----------- ----------- ------------ ------------------
Supplemental Cash Flow Information:
Cash paid for interest........................................ $ -- $ -- $ -- $ 26,500
----------- ----------- ------------ ------------------
----------- ----------- ------------ ------------------
Cancellation of convertible promissory notes due to related
party....................................................... $ -- $ -- $ -- $ 712,298
----------- ----------- ------------ ------------------
----------- ----------- ------------ ------------------
Issuance of common stock for services......................... $ -- $ -- $ 1,000 $ 1,813
----------- ----------- ------------ ------------------
----------- ----------- ------------ ------------------
Accrued non-cash dividends.................................... $ 119,337 $ 302,644 $ 299,209 $ 735,356
----------- ----------- ------------ ------------------
----------- ----------- ------------ ------------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-7
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. ORGANIZATION:
Biex, Inc. (a Delaware corporation in the development stage, the "Company")
is a women's health care company focused on developing and marketing solutions
for maternity management, including the development of a proprietary
saliva-based screening system for the women's prenatal healthcare market. The
Company's product is in the early stages of development; no product revenues
have been generated thus far. Prior to selling this product and generating
product revenues, the Company must complete the development of its product and
receive regulatory approvals. No assurance can be given that the Company's
product will be successfully developed, regulatory approvals will be granted, or
patient and physician acceptance of this product will be achieved.
Since inception, the Company has incurred substantial losses, principally
from expenses associated with seeking regulatory approval of its product,
development efforts related to its product and the establishment of its sales
and administrative organization. The Company has funded its operations primarily
through the private placement of equity securities aggregating approximately
$18.9 million as of December 31, 1997. The Company continues to be subject to
certain risks common to companies in similar stages of development, including
the need for additional financing, dependence on a single product, uncertainty
of regulatory approval, uncertainty of market acceptance, limited manufacturing,
marketing and sales experience and uncertainty of successful future operations.
There can be no assurance that additional financing will be available to the
Company. If other financing is not available, management believes the Company
could continue its operations at least through December 31, 1998 by delaying,
scaling back or eliminating certain of its planned expenditures, including, but
not limited to, research and development, clinical, marketing and manufacturing
programs.
2. SIGNIFICANT ACCOUNTING POLICIES:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments with an original maturity of three months or less
to be cash equivalents. Cash equivalents consist of government obligations or
investments collateralized by government obligations.
SHORT-TERM INVESTMENTS
Short-term investments consist of commercial paper and are classified as
available-for-sale and carried at fair market value. Unrealized gains and losses
on such securities, when material, are reported as a separate component of
stockholders' equity. Realized gains and losses on sales of all such securities
are reported in earnings and computed using the specific identification cost
method. At December 31, 1997, the cost basis of the short-term investments was
$8,000,000 with a fair market value of $8,073,513.
F-8
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment consists of equipment and leasehold improvements and
are stated at cost. Depreciation of equipment and leasehold improvements is
provided on the straight-line method over approximately five years.
RESEARCH AND DEVELOPMENT
Costs incurred in connection with research and development activities are
expensed as incurred. These costs consist of direct and indirect costs
associated with specific projects as well as fees paid to various entities that
perform research for the Company.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" (SFAS No. 130). SFAS No. 130 is effective
for financial statements for fiscal years beginning after December 15, 1997.
This standard defines comprehensive income as the changes in equity of an
enterprise except those resulting from stockholder transactions. All components
of comprehensive income will be required to be reported in financial statements
issued for periods beginning after the effective date of SFAS No. 130.
Management believes the adoption of SFAS No. 130 will not have a material effect
on the Company's financial statements.
In June 1997, the Financial Accounting Standards Board also issued Statement
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
(SFAS No. 131). SFAS No. 131 is effective for financial statements for periods
beginning after December 15, 1997. SFAS No. 131 establishes standards for
disclosures about operating segments, products and services geographic areas and
major customers. Management believes the adoption of SFAS No. 131 will not have
a material effect on the Company's financial statements.
BASIC NET LOSS PER COMMON SHARE
Basic net loss per share is computed using the weighted average number of
shares of common stock outstanding. No diluted loss per share information has
been presented in the accompanying statements of operations since potential
common shares from conversion of stock options and warrants are antidilutive.
3. REDEEMABLE PREFERRED STOCK:
Prior to the effectiveness of the registration statement for the Company's
initial public offering, the Company was authorized to issue 23,009,026 shares
of preferred stock, of which 12,541,824 shares were issued and were carried at
their aggregate redemption value of $19,377,530, which was equal to their
aggregate liquidation preference. The shares of preferred stock had various
rights and privileges including redemption rights and rights to cumulative
dividends. Such dividends amounted to $735,356 at December 31, 1997, and are
payable in either stock or cash at the option of the Company. All shares of
preferred stock outstanding were converted to shares of common stock immediately
prior to the effectiveness of the registration statement filed with respect to
the Company's initial public offering (see Note 7). Accordingly, all share and
per share amounts in the accompanying financial statements have been
retroactively restated
F-9
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
3. REDEEMABLE PREFERRED STOCK: (CONTINUED)
to reflect this conversion. Additionally, the board of directors authorized the
payment of the accrued dividend payable simultaneous with the closing of the
initial public offering by the issuance of shares of common stock.
In connection with the issuance of certain of the previously outstanding
series of preferred stock, a warrant to purchase 465,584 shares of stock at
$1.00 per share was issued to the purchasers. This warrant originally expired on
the earlier of the Company's initial public offering or October 1997; the
expiration date was extended during 1997 to October 31, 1999.
4. STOCK COMPENSATION PLANS:
1993 STOCK OPTION PLAN AND 1996 STOCK OPTION PLAN
As of December 31, 1997, the Company had two stock option plans, the 1993
Stock Option Plan (the "1993 Plan") and the 1996 Stock Option Plan (the "1996
Plan") (collectively, the "Plans"). The stock options granted under the Plans
may be either incentive stock options ("ISO's") or nonstatutory stock options.
The Board of Directors sets the rate at which the options become exercisable and
determines when the options expire. No options shall be exercisable after the
tenth anniversary of the date of grant.
ISO's may not be granted at an exercise price of less than the fair market
value of the common stock at the date of grant. If an ISO is granted to an
employee who owns more than 10% of the Company's total voting stock, such
exercise price shall be at least 110% of the fair market value of the common
stock, and the ISO shall not be exercisable after five years from the date of
grant.
F-10
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
4. STOCK COMPENSATION PLANS: (CONTINUED)
Activity under the Plans is as follows:
<TABLE>
<CAPTION>
EXERCISE
OPTIONS PRICE PER WEIGHTED AVERAGE
OUTSTANDING SHARE EXERCISE PRICE
----------- ------------- -----------------
<S> <C> <C> <C>
Outstanding at December 31, 1993............................ 58,432 $.065 $ .065
Granted................................................... 132,474 .065 - .15 .12
-----------
Outstanding at December 31, 1994............................ 190,906 .065 - .15 .08
Granted................................................... 341,212 .15 .15
Exercised................................................. (20,220) .065 .065
Canceled.................................................. (85,745) .065 - .15 .07
-----------
Outstanding at December 31, 1995............................ 426,153 .065 - .15 .14
Granted................................................... 967,312 .20 .20
-----------
Outstanding at December 31, 1996............................ 1,393,465 .065 - .20 .18
Granted................................................... 610,371 .30 - 1.00 .61
Exercised................................................. (246,768) .15 - .20 .18
Canceled.................................................. (37,480) .20 .20
-----------
Outstanding at December 31, 1997............................ 1,719,588 .065 - 1.00 .33
-----------
-----------
Exercisable at December 31, 1997............................ 538,655 .18
-----------
-----------
Weighted Average Fair Value of Options...................... $ .10
-----------
-----------
</TABLE>
There are 249,955 and 322,846 options available for grant at December 31,
1997 and 1996, respectively.
The following table summarizes information about stock options outstanding
at December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-------------------------------------------- OPTIONS EXERCISABLE
WEIGHTED- -------------------------
NUMBER AVERAGE WEIGHTED- NUMBER WEIGHTED-
RANGE OF OUTSTANDING AT REMAINING AVERAGE EXERCISABLE AVERAGE
EXERCISE DECEMBER 31, CONTRACTUAL EXERCISE DECEMBER 31, EXERCISE
PRICES 1997 LIFE PRICE 1997 PRICE
- --------- -------------- --------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
$.065 46,716 6 years $ .065 46,716 $ .065
.15 - .20 1,063,207 8 years .19 479,441 .18
.30 314,165 9 years .30 12,498 .30
.60 48,000 10 years .60 -- --
1.00 247,500 10 years 1.00 -- --
-------------- ------------
1,719,588 538,655
-------------- ------------
-------------- ------------
</TABLE>
Of the 1,719,588 options outstanding at December 31, 1997, 117,913 are
subject to accelerated vesting based on certain milestones set by the Board of
Directors. In addition, 663,923 options will become vested in the event the
Company is sold or has certain other significant changes in its ownership. In
March 1997, the Company amended the terms of outstanding options to provide the
option holders the right to early
F-11
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
4. STOCK COMPENSATION PLANS: (CONTINUED)
exercise their options, subject to the right of the Company to repurchase
unvested shares at the original purchase price.
The Company applies APB Opinion No. 25 and related interpretations in
accounting for the Plans. Had compensation cost for the Plans been determined
based on the fair value of the stock options on the date of grant, consistent
with the method specified in SFAS No. 123, the Company's net loss and basic net
loss per share would have increased to the following pro forma amounts for
fiscal 1995, 1996 and 1997, as follows:
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
------------- -------------
<S> <C> <C>
1995
Net loss...................................................... $ (1,707,030) $ (1,715,704)
Basic net loss per share...................................... (0.37) (0.37)
1996
Net loss...................................................... (3,563,265) (3,596,052)
Basic net loss per share...................................... (0.48) (0.49)
1997
Net loss...................................................... (3,842,790) (3,901,126)
Basic net loss per share...................................... (0.35) (0.36)
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1996 and 1997, respectively: risk-free interest
rate of 6.2 percent and 5.7 percent, respectively, expected dividend yields of
zero percent; expected lives of 3 years; expected volatility of zero percent.
DEFERRED COMPENSATION
In connection with the issuance of stock options to employees, the Company
has recorded deferred compensation in the aggregate amount of $747,000
representing the difference between the fair market value of the Company's
common stock and the exercise price of the stock options at the date of grant.
The Company is amortizing the deferred compensation expense over the shorter of
the period in which the employee provides services or the applicable vesting
period, which is typically over 48 months. For the period ended December 31,
1997, amortization expense was $18,000.
1998 EQUITY INCENTIVE PLAN
The Company's 1998 Equity Incentive Plan (the "Incentive Plan") was adopted
by the Company's board of directors in March 1998, as a successor plan to the
Plans. The Incentive Plan will become effective upon completion of the Company's
initial public offering. In addition to the shares to be initially reserved for
the Incentive Plan, an amount equal to the difference, if any, between five
percent of the Company's total outstanding shares as of each December 31 during
the term of the Incentive Plan and the number of shares then reserved under the
Incentive Plan will be added to the share reserve each such December 31. Under
the Incentive Plan, the Board of Directors may grant options to purchase the
Company's common
F-12
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
4. STOCK COMPENSATION PLANS: (CONTINUED)
stock to employees, directors or consultants at an exercise price of not less
than 100% of the fair value of the Company's common stock on the date of grant,
in the case of incentive stock options, and not less than 85% of the fair value
of the Company's common stock on the date of grant, in the case of nonqualified
stock options. The term of the stock options issued under the Incentive Plan may
not exceed 10 years from the date of grant and such options shall generally vest
over four years. Shares subject to stock awards that have expired or otherwise
terminated without having been exercised in full again become available for the
grant of awards under the Incentive Plan. The board of directors has the
authority to reprice outstanding options and to offer optionees the opportunity
to replace outstanding options with new options.
Under the Incentive Plan, restricted stock purchase awards may be granted
pursuant to a repurchase option in favor of the Company in accordance with a
vesting schedule and at a price determined by the board of directors. Restricted
stock purchases must be at a price equal to at least 85% of the stock's fair
market value on the award date, but stock bonuses may be awarded in
consideration of past services without a purchase payment.
Upon certain changes in control of the Company, all outstanding awards under
the Incentive Plan shall either be assumed or substituted by the surviving
entity. If the surviving entity determines not to assume or substitute such
awards, and with respect to persons then performing services as employees,
directors or consultants, the time during which such awards may vest shall be
accelerated and the awards terminated if not exercised prior to such change in
control.
The Incentive Plan will terminate in March 2008 unless sooner terminated by
the board of directors.
1998 EMPLOYEE STOCK PURCHASE PLAN
The Company's 1998 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Company's board of directors in March 1998. The Purchase Plan
permits eligible employees to purchase common stock at 85% of the lower of the
fair market value of the Company's common stock on the commencement date of each
offering period or the relevant purchase date.
In the event of certain changes of control, the Company and the board of
directors has discretion to provide that each right to purchase common stock
will be assumed or an equivalent right substituted by the successor corporation,
or the board of directors may shorten the offering period and provide for all
sums collected by payroll deductions to be applied to purchase stock immediately
prior to the change in control. The Purchase Plan will terminate at the board of
directors' direction.
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
The Company's 1998 Directors' Stock Option Plan (the "Directors' Plan") was
adopted by the Company's board of directors in March 1998. Pursuant to the terms
of the Directors' Plan, each person serving as a director of the Company who is
not an employee of the Company (a "Non-Employee Director") shall upon the date
such person first becomes a Non-Employee Director after the effectiveness of the
initial public offering of the Company's common stock automatically be granted
an option to purchase that number of shares of common stock equal to 7,500
divided by the whole number of months remaining in the calendar year in which
the person first joined the board of directors. In addition, on
F-13
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
4. STOCK COMPENSATION PLANS: (CONTINUED)
January 1 of each calendar year, commencing in 1999, each Non-Employee Director
will automatically be granted an option to purchase 7,500 shares of common
stock.
Options under the Directors' Plan will vest in twelve monthly installments
commencing on the date of the grant of the option. The exercise price of the
options granted under the Directors' Plan equals the fair market value of the
Common Stock granted on the date of grant. No option granted under the
Directors' Plan may be exercised after the expiration of ten years from the date
it was granted.
In the event of certain changes of control, options outstanding under the
Directors' Plan will automatically become fully vested and exercisable, and will
terminate if not exercised prior to such change of control.
5. INCOME TAXES:
As of December 31, 1997, the Company has approximately $5,576,000 of net
operating loss carryforwards for income tax purposes, approximately $4,809,000
of capitalized start-up costs, and approximately $101,000 of research and
development tax credits available to offset future federal income tax, subject
to limitations for alternative minimum tax. The net operating loss and credit
carryforwards are subject to examination by the tax authorities and expire in
various years from 2006 through 2012.
The Internal Revenue Code contains provisions that may limit the net
operating loss and credit carryforwards available to be used in any given year
upon the occurrence of certain events, including significant changes in
ownership interest.
The components of the net deferred income tax asset were as follows as of
December 31, 1996 and 1997:
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Cumulative net operating loss carryforwards..................... $ 1,545,000 $ 2,174,000
Capitalized start-up costs...................................... 1,101,000 1,875,000
Research and development tax credits............................ 79,000 101,000
Less: Valuation allowance....................................... (2,725,000) (4,150,000)
------------- -------------
$ -- $ --
------------- -------------
------------- -------------
</TABLE>
The Company has not achieved profitable operations. Accordingly, the Company
has recorded a valuation allowance for the entire net deferred tax asset.
F-14
<PAGE>
BIEX, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
6. COMMITMENTS:
The Company leases its facilities and certain equipment under noncancelable
operating lease agreements. As of December 31, 1997, the minimum future lease
payments under these leases are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
- ---------------------------------------------------------------------------------- ----------
<S> <C>
1998.............................................................................. $ 156,077
1999.............................................................................. 145,731
2000.............................................................................. 84,754
2001.............................................................................. 72,818
</TABLE>
Total rent expense was approximately $157,326 for 1997, $67,211 for 1996,
$35,120 for 1995, $16,310 for 1994, and $286,292 for the period from inception
to December 31, 1997.
The Company has entered into employment agreements with certain of its
executive officers; such agreements generally provide for compensation, stock
option arrangements, and severance provisions, including provisions in the event
of change in control of the Company.
In November 1997, the Company entered into a three-year manufacturing
agreement with a third party manufacturer, under which certain portions of the
Company's product will be produced by the manufacturer. During the term of the
agreement, the Company will supply the manufacturer with a rolling 12 month
forecast of product requirements. The forecast for each period will be
considered a firm commitment for the next immediate quarter. Changes from
forecast for subsequent quarters may be made, subject to certain limitations, as
set forth in the agreement.
The Company has a lease line of credit under which it may enter into
operating leases for up to $700,000 of furniture, fixtures and equipment. The
line of credit expires in September 1998. The Company has no indebtedness and no
obligations for capital expenditures.
7. SUBSEQUENT EVENTS:
In March 1998, the Board of Directors authorized the filing of a
registration statement with the Securities and Exchange Commission permitting
the Company to sell shares of its common stock in connection with the proposed
initial public offering.
Effective January 1998, the Company adopted a tax deferred savings plan
entitled the Biex, Inc. 401(k) Retirement Plan (the "401(k) Plan"), which covers
all employees of the Company beginning on the first day of the calendar quarter
beginning after the date of hire. An employee may contribute up to 15% of his or
her compensation to the 401(k) Plan on a pre-tax basis, not to exceed in any
given year the maximum amount allowable under the Internal Revenue Code
regulations. The Company will contribute the total amount of salary elected to
be deferred by each employee and may contribute a discretionary matching
contribution equal to a specified percentage of the participant's obligation.
F-15
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SHARES OF COMMON STOCK TO WHICH IT RELATES, OR AN OFFER TO, OR A
SOLICITATION OF, ANY PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUMMARY............................. 3
RISK FACTORS................................... 6
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS................................... 17
USE OF PROCEEDS................................ 18
DIVIDEND POLICY................................ 18
CAPITALIZATION................................. 19
DILUTION....................................... 20
SELECTED FINANCIAL DATA........................ 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS................................... 22
BUSINESS....................................... 25
MANAGEMENT..................................... 44
CERTAIN TRANSACTIONS........................... 53
PRINCIPAL STOCKHOLDERS......................... 54
DESCRIPTION OF CAPITAL STOCK................... 57
SHARES ELIGIBLE FOR FUTURE SALE................ 61
UNDERWRITING................................... 63
LEGAL MATTERS.................................. 64
EXPERTS........................................ 64
ADDITIONAL INFORMATION......................... 65
INDEX TO FINANCIAL STATEMENTS.................. F-1
</TABLE>
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
SHARES
[LOGO]
COMMON STOCK
---------------
PROSPECTUS
---------------
NationsBanc Montgomery
Securities LLC
Salomon Smith Barney
Wessels, Arnold & Henderson
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates except
for the SEC registration fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC Registration fee..................................................... $ 12,538
NASD filing fee.......................................................... 4,750
Nasdaq application fee................................................... 5,000
Blue sky qualification fee and expenses.................................. 5,000
Printing and engraving expenses.......................................... 100,000
Legal fees and expenses.................................................. 325,000
Accounting fees and expenses............................................. 100,000
Transfer agent and registrar fees........................................ 5,000
Miscellaneous............................................................ 17,712
---------
Total................................................................ $ 575,000
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act"). The Registrant's Amended and
Restated Bylaws also provide that the Registrant will indemnify its directors
and executive officers and may indemnify its other officers, employees and other
agents to the fullest extent not prohibited by Delaware law.
The Registrant's Amended and Restated Certificate of Incorporation provides
for the elimination of liability for monetary damages for breach of the
directors' fiduciary duty of care to the Registrant and its stockholders. These
provisions do not eliminate the directors' duty of care and, in appropriate
circumstances, equitable remedies such an injunctive or other forms of
non-monetary relief will remain available under Delaware law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to the Registrant, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for any
transaction from which the director derived an improper personal benefit, and
for payment of dividends or approval of stock repurchases or redemptions that
are unlawful under Delaware law. The provision does not affect a director's
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.
The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Registrant and
its officers and directors for certain liabilities arising under the Securities
Act or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since January 1, 1995, the Registrant has sold and issued the following
unregistered securities:
(a) Since January 1, 1995, the Registrant has granted stock options under
its stock option plans covering an aggregate of 2,045,495 shares of the
Registrant Common Stock, at exercise prices ranging from $0.15 to $2.00
per share.
(b) From June 1995 through April 1996, the Registrant issued and sold an
aggregate of 3,030,000 shares of Series C Preferred Stock (convertible
into 3,030,000 shares of Common Stock) at $1.00 per share to nine
investors, 2,050,000 shares of which were sold to affiliates of the
Company.
II-1
<PAGE>
(c) In August 1996 and March 1997, the Registrant issued and sold an
aggregate of 2,333,333 shares of Series D Preferred Stock (convertible
into 2,333,333 shares of Common Stock) at $1.50 per share to nine
investors, 1,749,532 of which were sold to affiliates of the Company.
(d) In August 1997, the Registrant issued and sold an aggregate of 4,169,567
shares of Series E Preferred Stock (convertible into 4,169,567 shares of
Common Stock) at $2.50 per share to 20 investors, 599,840 of which were
sold to affiliates of the Company and 1,200,000 shares of which were sold
to an entity that became an affiliate of the Company in connection with
such sale.
The sales and issuances of securities in the transactions described in
paragraph (a) above were deemed to be exempt from registration under the
Securities Act by virtue of Rule 701 promulgated thereunder in that they were
offered and sold either pursuant to written compensatory benefit plans or
pursuant to a written contract relating to compensation, as provided by Rule
701.
The sales and issuances of securities in the transactions described in
paragraphs (b), (c) and (d) above were deemed to be exempt from registration
under the Securities Act by virtue of Section 4(2) and/or Regulation D
promulgated under the Securities Act. The purchasers in each case represented
their intention to acquire the securities for investment only and not with a
view to the distribution thereof. Appropriate legends are affixed to the stock
certificates issued in such transactions. Similar legends were imposed in
connection with any subsequent sales of any such securities. All recipients
either received adequate information about the Registrant or had access, through
employment or other relationships, to such information.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Bylaws.
3.2* Bylaws, to be effective upon closing of this offering.
3.3 Amended and Restated Certificate of Incorporation.
3.4* Amended and Restated Certificate of Incorporation to be filed upon the closing of this offering.
4.1 Reference is made to Exhibits 3.1 through 3.4.
4.2 Amended Investors' Rights Agreement among the Registrant and certain other persons named therein, dated
as of August 28, 1997.
4.3* Rights Agreement, dated as of 1998, between the Company and Boston Equiserve, L.P., as rights
agent.
4.4* Specimen stock certificate.
5.1* Opinion of Cooley Godward LLP.
10.1 1998 Equity Incentive Plan, together with form of stock option agreement thereunder to be effective upon
the closing of this offering.
10.2 1998 Non-Employee Directors' Stock Option Plan, together with form of stock option agreement thereunder,
to be effective upon the closing of this offering.
10.3 1998 Employee Stock Purchase Plan to be effective upon the closing of this offering.
10.4 Letter agreement, dated as of June 4, 1996, between the Registrant and James A. Edlund.
10.5 Covenant Not To Compete, dated as of July 23, 1993, between the Registrant and Vivian K. Dullien, Ph.D.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.6 Lease Agreement dated January 30, 1995 for facilities located at 885 Arapahoe Ave., Boulder, Colorado,
as extended by letter agreement dated March 26, 1997.
10.7 Lease Agreement dated November 13, 1995 for facilities located at 6693 Sierra Lane, Suite F, Dublin,
California amended as of November 28, 1995 and March 6, 1998.
10.8 Master Equipment Lease dated December 31, 1995 between the Registrant and Phoenix Leasing Incorporated
amended as of September 25, 1997.
10.9+ Product Purchase Agreement between the Registrant and Horizon Medical, Inc. dated as of November 17,
1997.
10.10 401(k) Retirement Plan.
23.1 Consent of Arthur Andersen LLP.
23.2* Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
23.3 Consent of McDonnell Boehmen Hulbert & Berghoff.
24.1 Power of Attorney. Reference is made to page II-4.
27.1 Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by amendment.
+ Registrant has sought confidential treatment pursuant to Rule 406 for a
portion of the referenced exhibit and has separately filed such exhibit with
the Commission.
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefor, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant undertakes that: (1) for purposes of determining
any liability under the Securities Act of 1933, the information omitted from the
form of prospectus as filed as part of the registration statement in reliance
upon Rule 430A and contained in the form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of the registration statement as of the time it was declared
effective, and (2) for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dublin, County of
Alameda, State of California, on the 16th day of March, 1998.
BIEX, INC.
By /s/ JAMES A. EDLUND
------------------------------------------
James A. Edlund
PRESIDENT AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints James A.
Edlund and Edgar A. Luce his or her true and lawful attorneys-in-fact and
agents, each acting alone, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to the Registration Statement on Form S-1, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
President, Chief Executive
/s/ JAMES A. EDLUND Officer and Director
- ------------------------------ (PRINCIPAL EXECUTIVE March 16, 1998
James A. Edlund OFFICER)
/s/ EDGAR A. LUCE Chief Financial Officer
- ------------------------------ (PRINCIPAL FINANCIAL AND March 16, 1998
Edgar A. Luce ACCOUNTING OFFICER)
/s/ VIVIAN K. DULLIEN
- ------------------------------ Executive Vice President March 16, 1998
Vivian K. Dullien, Ph.D. and Director
/s/ FREDRIC J. FELDMAN
- ------------------------------ Director March 16, 1998
Fredric J. Feldman, Ph.D.
/s/ JANET EFFLAND
- ------------------------------ Director March 16, 1998
Janet Effland
/s/ SHERMAN MULLER
- ------------------------------ Director March 16, 1998
Sherman Muller
/s/ BARBARA SANTRY
- ------------------------------ Director March 16, 1998
Barbara Santry
/s/ ROBERT M. FRIEDLAND
- ------------------------------ Director March 16, 1998
Robert M. Friedland, M.D.
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Bylaws.
3.2* Bylaws, to be effective upon closing of this offering.
3.3 Amended and Restated Certificate of Incorporation.
3.4* Amended and Restated Certificate of Incorporation to be filed upon the closing of this offering.
4.1 Reference is made to Exhibits 3.1 through 3.4.
4.2 Amended Investors' Rights Agreement among the Registrant and certain other persons named therein, dated
as of August 28, 1997.
4.3* Rights Agreement, dated as of 1998, between the Company and Boston Equiserve, L.P., as rights
agent.
4.4* Specimen stock certificate.
5.1* Opinion of Cooley Godward LLP.
10.1 1998 Equity Incentive Plan, together with form of stock option agreement thereunder to be effective upon
the closing of this offering.
10.2 1998 Non-Employee Directors' Stock Option Plan, together with form of stock option agreement thereunder,
to be effective upon the closing of this offering.
10.3 1998 Employee Stock Purchase Plan to be effective upon the closing of this offering.
10.4 Letter agreement, dated as of June 4, 1996, between the Registrant and James A. Edlund.
10.5 Covenant Not To Compete, dated as of July 23, 1993, between the Registrant and Vivian K. Dullien, Ph.D.
10.6 Lease Agreement dated January 30, 1995 for facilities located at 885 Arapahoe Ave., Boulder, Colorado,
as extended by letter agreement dated March 26, 1997.
10.7 Lease Agreement dated November 13, 1995 for facilities located at 6693 Sierra Lane, Suite F, Dublin,
California amended as of November 28, 1995 and March 6, 1998.
10.8 Master Equipment Lease dated December 31, 1995 between the Registrant and Phoenix Leasing Incorporated
amended as of September 25, 1997.
10.9+ Product Purchase Agreement between the Registrant and Horizon Medical, Inc. dated as of November 17,
1997.
10.10 401(k) Retirement Plan.
23.1 Consent of Arthur Andersen LLP.
23.2* Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
23.3 Consent of McDonnell Boehmen Hulbert & Berghoff.
24.1 Power of Attorney. Reference is made to page II-4.
27.1 Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by amendment.
+ Registrant has sought confidential treatment pursuant to Rule 406 for a
portion of the referenced exhibit and has separately filed such exhibit with
the Commission.
<PAGE>
BYLAWS
OF
BIEX, INC.
AS AMENDED OCTOBER 31, 1994
AND DECEMBER 11, 1996
ARTICLE I
STOCKHOLDERS
SECTION 1.1 ANNUAL MEETINGS. The annual meeting of the stockholders of
the corporation, for the purpose of election of directors and for such other
business as may lawfully come before it, shall be held on such date and at
such time as may be designated from time to time by the Board of Directors.
SECTION 1.2 SPECIAL MEETINGS. A special meeting of stockholders may be
called at any time by the President, any two directors or the holders of not
less than 20% of all the shares entitled to vote at the meeting by either
giving appropriate notice to the stockholders or notifying the Secretary in
writing specifying the matter or matters appropriate for action at such a
meeting, proposed to be presented at the meeting. Upon receipt of such
notice, the Secretary shall cause appropriate notice of a stockholders
meeting to be given. Any such meeting shall be held at such time as shall be
determined by the body or person calling such meeting at the place where the
last annual meeting was held, unless another place (within or without the
State of Delaware) is designated by the President or the Board of Directors.
SECTION 1.3 NOTICE OF MEETING. For each meeting of stockholders,
written notice shall be given stating the place, date and hour and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called and, if the list of stockholders required by Section 1.9 is not to be
at such place at least 10 days prior to the meeting, the place where such
list will be. Except as otherwise provided by Delaware law, the written
notice of any meeting shall be given not less than 10 nor more than 60 days
before the date of the meeting to each stockholder entitled to vote at such
meeting. If mailed, notice shall be deemed to be given when deposited in the
United States Mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation.
SECTION 1.4 QUORUM. Except as otherwise required by Delaware law or
the Certificate of Incorporation, the holders of record of a majority of the
shares of stock entitled to be voted, present in person or represented by
proxy, at a meeting shall constitute a quorum for the transaction of business
at the meeting, but in the absence of a quorum, the holders of record present
or represented by proxy at such meeting may vote to adjourn the meeting from
time to
1.
<PAGE>
time, without notice other than announcement at the meeting, until a quorum
is obtained. At any such adjourned session of the meeting at which there
shall be present or represented the holders of record of the requisite number
of shares, any business may be transacted that might have been transacted at
the meeting as originally called.
SECTION 1.5 CHAIRMAN AND SECRETARY AT A MEETING. At each meeting of
stockholders, the President or, in his absence, the person designated in
writing by the president, or if no person is so designated, then a person
designated by the Board of Directors, shall preside as chairman of the
meeting; if no person is so designated, then the meeting shall choose a
chairman by plurality vote. The Secretary or, in his absence, a person
designated by the chairman of the meeting shall act as secretary of the
meeting.
SECTION 1.6 VOTING; PROXIES. Except as otherwise provided by Delaware
law or the Certificate of Incorporation, and further subject to the
provisions of section 1.10:
(a) Each stockholder shall, at every meeting of the stockholders,
be entitled to one vote for each share of capital stock held by him.
(b) Each stockholder entitled to vote at a meeting of stockholders
or to express consent or dissent to corporate action in writing without a
meeting may authorize another person or persons to act for him by proxy, but
no such proxy shall be voted or acted upon after three years from its date,
unless the proxy provides for a longer period.
(c) Directors shall be elected by a plurality vote.
(d) Each matter, other than election of directors, presented to
any meeting, shall be decided by majority of the votes cast on the matter.
(e) Election of directors and the vote on any other matter
presented to a meeting shall be by written ballot only if so ordered by the
chairman of the meeting or if so requested by any stockholder present or
represented by proxy at the meeting entitled to vote in such election or on
such matter, as the case may be.
SECTION 1.7 ADJOURNED MEETINGS. A meeting of stockholders may be
adjourned to another time or place as provided in Section 1.4. Notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. Unless the Board
of Directors fixes a new record date, stockholders of record for an adjourned
meeting shall be as originally determined for the meeting from which the
adjournment was taken. If the adjournment is for more than 30 days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote. At the adjourned meeting, any business may be transacted
that might have been transacted at the meeting as originally called.
SECTION 1.8 CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Any action
that may be taken at any annual or special meeting of stockholders may be
taken without a meeting, without
2.
<PAGE>
prior notice and without a vote if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Notice of the taking of such action shall be given
promptly to each stockholder that would have been entitled to vote thereon at
a meeting of stockholders and that did not consent thereto in writing.
SECTION 1.9 LIST OF STOCKHOLDERS ENTITLED TO VOTE. At least 10 days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order and showing
the address of each stockholder and the number of shares registered in the
name of each stockholder, shall be prepared and shall be open to the
examination of any stockholder for any purpose germane to the meeting, during
ordinary business hours, for a period of at least 10 days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. Such list shall be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
SECTION 1.10 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 any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix
in advance a record date, which shall not be more than 60 nor less than 10
days before the date of such meeting, no more than sixty days prior to any
other action. If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be the close of business on the day next preceding the date on which
notice is given, or, if notice is waived, at the close of the business on the
day next preceding the day on which the meeting is held. The record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is expressed,
and the record date for any other purpose shall be at the close of the
business on the day on which the Board of Directors adopts the resolution
relating thereto.
ARTICLE II
DIRECTORS
SECTION 2.1 NUMBER; TERM OF OFFICE; QUALIFICATIONS; VACANCIES. The
Board of Directors shall consist of between five (5) and seven (7) members,
inclusive, who need not be stockholders nor residents of the State of
Delaware. The number of directors shall initially be five (5), and shall
thereafter be determined from time to time within such range by resolution of
the Board of Directors, but no decrease in the number of directors shall have
the effect of shortening the term of any incumbent director. Directors shall
be elected at the annual meeting
3.
<PAGE>
of stockholders to hold office, subject to Sections 2.2 and 2.3, until the
next annual meeting of stockholders and until their respective successors are
elected and qualified. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, although less than a quorum, or by
the sole remaining director; and the directors so chosen shall hold office,
subject to Sections 2.2 and 2.3, until the next annual meeting of
stockholders and until their respective successors are elected and qualified.
SECTION 2.2 RESIGNATION. Any director of the Corporation may resign at
any time by giving written notice of such resignation to the Board of
Directors, to the president or to the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein or, if no time be
specified, upon receipt thereof by the Board of Directors or one of the
above-named officers; and, unless specified therein, the acceptance of such
resignation shall not be necessary to make it effective. When one or more
directors shall resign from the Board of Directors effective at a future
date, a majority of the directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in these
Bylaws in the filling of other vacancies.
SECTION 2.3 REMOVAL. Any one or more directors may be removed, with or
without cause, by the vote to written consent of the holders of a majority of
the shares entitled to vote at an election of directors.
SECTION 2.4 REGULAR AND ANNUAL MEETINGS; NOTICE. Regular meetings of
the Board of Directors shall be held at such time and at such place, within
or without the State of Delaware, as the Board of Directors may from time to
time prescribe. No notice need be given of any regular meeting, and a
notice, if given, need not specify the purposes thereof. A meeting of the
Board of Directors may be held without notice immediately after an annual
meeting of stockholders at the same place as that at which such meeting was
held.
SECTION 2.5 SPECIAL MEETINGS; NOTICE. A special meeting of the Board
of Directors may be called at any time by the Board of Directors, its
Chairman, any one director, the President, any person acting in the place of
the President, the holders of not less than 25% of the shares of the Series A
Preferred Stock of the Corporation outstanding from time to time, or the
holders of not less than 25% of the Series B Preferred Stock of the
Corporation outstanding from time to time, by either giving appropriate
notice to the directors or by notifying the Secretary in writing, specifying
the matter or matters appropriate for action at such a meeting, proposed to
be presented at the meeting. Upon receipt of such notice, the Secretary
shall cause appropriate notice to be given. Any such meeting shall be held
at such time as shall be determined by the body or person calling such
meeting and at the place where the last annual meeting was held, unless
another place (within or without the State of Delaware) is designated by the
President or the Board of Directors. Notice of such meeting stating the time
and place thereof shall be given (a) by deposit of the notice in the United
States Mail, first class, postage prepaid, at least seven days before the day
fixed for the meeting, addressed to each director at his or her address as it
appears on the Corporation's records or at such other address as the
4.
<PAGE>
director may have furnished the Corporation for that purpose, (b) by delivery
of the notice by cable, radio, fax, telecopy, telex, overnight or other
express delivery service, in each case at least four (4) days before the time
fixed for the meeting, or (c) by personal delivery, telephone or telegraph,
in each case at least forty-eight (48) hours before the time fixed for the
meeting.
SECTION 2.6 CHAIRMAN OF THE BOARD; PRESIDING OFFICER AND SECRETARY AT
MEETINGS. The Board of Directors may elect one of its members to serve at
its pleasure as Chairman of the Board. Each meeting of the Board of
Directors shall be presided over by the Chairman of the Board or in his
absence by the president, if a director, or if neither is present, by such
member of the Board of Directors as shall be chosen by the meeting. The
Secretary or, in his absence, an Assistant Secretary shall act as secretary
of the meeting, or if no such officer is present, a secretary of the meeting
shall be designated by the person presiding over the meeting.
SECTION 2.7 QUORUM. A majority of the whole Board of Directors shall
constitute a quorum for the transaction of business, but in the absence of a
quorum, a majority of those present (or if only one be present, then that
one) may adjourn the meeting, without notice other than announcement at the
meeting, until such time as a quorum is present. Except as otherwise
required by the Certificate of Incorporation or the Bylaws, the vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 2.8 MEETING BY TELEPHONE. Members of the Board of Directors or
of any committee thereof may participate in meetings of the Board of
Directors or of such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall constitute presence
in person at such meeting.
SECTION 2.9 ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting if all members of the Board of Directors or of such
committee, as the case may be, consent thereto in writing and the writing or
writings are filed with the minutes of proceedings of the Board of Directors
or of such committee.
SECTION 2.10 EXECUTIVE AND OTHER COMMITTEES. The Board of Directors
may, by resolution approved by a majority of the whole Board of Directors,
designate an Executive Committee and one or more other committees, each such
committee to consist of one or more directors as the Board of Directors may
from time to time determine. Any such committee, to the extent provided in
such resolution or resolutions, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, including the power to authorize the seal of the
Corporation to be affixed to all papers that may require it, but no such
committee shall have such power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a
5.
<PAGE>
dissolution of the Corporation or a revocation of a dissolution, or amending
the Bylaws; and unless the resolution shall expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. In the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.
Each such committee, other than the Executive Committee, shall have such name
as may be determined from time to time by the Board of Directors.
SECTION 2.11 COMPENSATION. A director shall receive such compensation,
if any, for his service as a director as may from time to time be fixed by
the Board of Directors, which compensation may be based, in whole or in part,
upon his attendance at meetings of the Board of Directors or of its
committees. The Board of Directors may also authorize the reimbursement of
its members for expenses incurred in attending any meeting.
SECTION 2.12 POWERS. Subject to limitations of the Certificate of
Incorporation, these Bylaws, and the laws of the State of Delaware as to
action which shall be authorized or approved by the stockholders, all
corporate powers shall be exercised by or under the authority of, and the
business and affairs of the Corporation shall be controlled by, the Board of
Directors. Without prejudice to such general powers, but subject to the same
limitation, it is hereby expressly declared that the Board of Directors shall
have the following powers, to-wit:
(a) To select and remove (with or without cause) all the officers,
agents and employees of the Corporation, prescribe such powers and duties for
them as may not be inconsistent with law, with the Certificate of
Incorporation, or the Bylaws, and fix their compensation.
(b) To conduct, manage and control the affairs and business of the
Corporation, and to make such rules and regulations therefor not inconsistent
with law, or with the Certificate of Incorporation, or the Bylaws, as it may
deem best.
(c) To change the principal office for the transaction of the
business of the Corporation and to fix and locate, from time to time, one or
more subsidiary offices of the corporation within or without the State of
Delaware.
(d) To adopt, make and use a corporate seal, and to prescribe the
form of certificates of shares, and to alter the form of such seal and of
such certificates, from time to time, provided such seal and such certificate
shall at all times comply with the provisions of the law.
(e) To authorize the issuance of shares of stock of the
Corporation, from time to time, upon such terms and for such lawful
consideration as it may determine.
6.
<PAGE>
(f) To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor in the
corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations or other evidences of debt and securities
therefor.
(g) To declare dividends pursuant to the provisions of the laws of
the State of Delaware.
ARTICLE III
OFFICERS
SECTION 3.1 ELECTION; QUALIFICATION. The officers of the Corporation
shall be a Chief Executive Officer, President, a Secretary and a Treasurer,
each of whom shall be elected by the Board of Directors. The Board of
Directors may elect a Chairman of the Board, one or more Vice Presidents, a
Controller, one or more Assistant Secretaries, one or more Assistant
Treasurers, one or more Assistant Controllers, and such other officers as it
may from time to time determine. Two or more offices may be held by the same
person.
SECTION 3.2 TERM OF OFFICE. Each officer shall hold office from the
time of his election and qualification to the time at which his successor is
elected and qualified, unless sooner he shall die or resign or shall be
removed pursuant to Section 3.4.
SECTION 3.3 RESIGNATION. Any officer of the Corporation may resign at
any time by giving written notice of such resignation to the Board of
Directors, to the President or to the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein, or if no time be
specified, upon receipt thereof by the Board of Directors or one of the
above-named officers; and, unless specified therein, the acceptance of such
resignation shall not be necessary to make it effective. Nothing contained
herein shall prejudice or affect the Corporation's rights under any contract
with such officer that may be breached by his resignation.
SECTION 3.4 REMOVAL. Any officer may be removed at any time, with or
without cause, by the vote of a majority of the whole Board of Directors.
SECTION 3.5 VACANCIES. Any vacancy, however caused, in any office of
the Corporation may be filled by vote of a majority of the whole Board of
Directors.
SECTION 3.6 COMPENSATION. The compensation of each officer shall be
such as the Board of Directors may from time to time determine.
SECTION 3.7 CHIEF EXECUTIVE OFFICER. Subject to such supervisory
powers, if any, as may be given by the Board of Directors to the Chairman of
the Board, if there be such an officer, the Chief Executive Officer of the
Corporation shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of
the
7.
<PAGE>
Corporation. He shall have the general powers and duties of overall
management usually vested in the office of a chief executive officer of the
Corporation, and shall have such other powers and duties as may be prescribed
by the Board of Directors or these Bylaws.
SECTION 3.8 PRESIDENT. The President, subject to the control of the
Chief Executive Officer, shall have general supervision, direction and
control of the day-to-day operation of the business of the Corporation and
shall have such other powers and duties as may be prescribed by the Chief
Executive Officer, the Board of Directors or these Bylaws.
SECTION 3.9 VICE PRESIDENTS. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as fixed by
the Board of Directors (or if not ranked, the Vice President designated by
the Board of Directors), shall perform all the duties of the President, and
when so acting shall have all the powers of and be subject to all the
restrictions upon the President. The Vice Presidents shall have such other
powers and perform such other duties as, from time to time, may be prescribed
for them respectively by the Board of Directors or these Bylaws.
SECTION 3.10 SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all votes
and the minutes of all proceedings in a book to be kept for that purpose, and
shall perform like duties for the standing committees when required. He
shall keep, or cause to be kept, a stock register showing the names of the
stockholders, number and date of certificates issued, and the number and date
of cancellation of every certificate surrendered for cancellation. He shall
give, or cause to be given, notice of all meetings of the stockholders and
meetings of the Board of Directors as required. He shall perform such other
duties as may be prescribed by the Board of Directors. He shall keep in safe
custody the seal of the Corporation, and when authorized by the Board of
Directors, shall affix the same to any instrument requiring it; and when so
affixed the seal shall be attested by his signature or by the signature of
the Assistant Secretary, the Treasurer or a Vice President.
SECTION 3.11 TREASURER. The Treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct accounting records
affecting the Corporation. The books of account shall at all reasonable
times be open to inspection by any director.
The Treasurer shall deposit all monies and other valuables in the name
and to the credit of the Corporation with such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, shall render to the
President and directors, whenever they request it, an account of all of his
transactions as Treasurer and of the financial condition of the Corporation.
He shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or these Bylaws.
If required by the Board of Directors, the Treasurer shall obtain a bond at
the Corporation's expense in such sum and with such surety or sureties as shall
be satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the
8.
<PAGE>
restoration to the Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money, and other property
of whatsoever kind in his possession or under his control belonging to the
Corporation.
SECTION 3.12 ASSISTANTS. The assistant officers shall, in the order of
their seniority (unless otherwise designated by the Board of Directors), and
in the absence or disability of the officer to whom they are an assistant,
perform the duties of such officer; and when so acting they shall have all
the powers of, and be subject to all the restrictions upon, such officer.
They shall have such other powers and perform such other duties as, from time
to time, may be prescribed for them respectively by the Board of Directors,
the officers of the Corporation, or these Bylaws.
ARTICLE IV
CAPITAL STOCK
SECTION 4.1 STOCK CERTIFICATES. The interest of each holder of stock
of the Corporation shall be evidenced by a certificate or certificates in
such form as the Board of Directors may from time to time prescribe. Each
certificate shall be signed by or in the name of the Corporation by the
Chairman of the Board or the President or a Vice President and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary. Any of or all the signatures appearing on such certificate or
certificates may be a facsimile. If 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 4.2 TRANSFER OF STOCK. Shares of stock shall be transferable
on the books of the Corporation pursuant to applicable law and such rules and
regulations as the Board of Directors shall from time to time prescribe,
subject to any restrictions on transfer that may be noted on the stock
certificates or of which the Corporation has received written notice.
SECTION 4.3 HOLDERS OF RECORD. Prior to due presentment for
registration of transfer, the Corporation may treat the holder of record of a
share of its stock as the complete owner thereof exclusively, entitled to
vote, to receive notifications, and otherwise entitled to all the rights and
powers of a complete owner thereof, notwithstanding notice to the contrary.
SECTION 4.4 LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. The
Corporation shall issue a new certificate of stock to replace a certificate
theretofore issued by it which is alleged to have been lost, destroyed or
wrongfully taken, if the owner or his legal representative (i) requests
replacement before the Corporation has notice that the stock certificate has
been acquired by a bona fide purchaser, (ii) agrees to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss or destruction of any such stock certificate or the issuance of
any such new stock certificate, and provides such security for such
9.
<PAGE>
indemnity as the Corporation deems necessary or desirable; and (iii)
satisfies such other terms and conditions as the Board of Directors may from
time to time prescribe.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 INDEMNITY. The Corporation shall indemnify its directors,
to the full extent permitted by the General Corporation Law of Delaware and
may, upon approval in each case by the Board of Directors, indemnify its
officers, employees and agents to such extent. In order to implement such
indemnification, the Corporation may purchase insurance, establish a trust
fund, grant a security interest, obtain a letter of credit, or employ any
other mechanism which is approved by the Board of Directors. No director
shall be liable to the Corporation for any loss or damage suffered by it on
account of any action taken by him a director of the Corporation if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Corporation or, with respect to a criminal
matter, had no reasonable cause to believe that his conduct was unlawful.
SECTION 5.2 WAIVER OF NOTICE. Whenever notice is required by the
Certificate of Incorporation, the Bylaws, or any provision of the General
Corporation Law of the State of Delaware, a written waiver thereof, signed by
the person entitled to notice, whether before or after the time required for
such notice, shall be deemed equivalent to notice. Attendance of a person at
a meeting shall constitute a waiver of notice of such meeting, except when
the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at nor the purpose of any regular or special meeting of the
stockholders, directors or members of a committee of directors need be
specified in any written waiver of notice.
SECTION 5.3 FISCAL YEAR. The fiscal year of the Corporation shall be
the calendar year unless another fiscal year is selected by the Board of
Directors.
SECTION 5.4 CORPORATE SEAL. The corporate seal shall be in such form
as the Board of Directors may from time to time prescribe, and the same may
be used by causing it or a facsimile thereof to be impressed or affixed or in
any other manner reproduced.
ARTICLE VI
AMENDMENT OF BYLAWS
SECTION 6.1 AMENDMENT. The Bylaws may be adopted, amended or repealed
by the Board of Directors or by the stockholders, except that any Bylaw
adopted by the stockholders may be amended or repealed only by the
stockholders if such Bylaw specifically so provides.
10.
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BIEX, INC.
Biex, Inc., a corporation organized under the General Corporation Law of
the State of Delaware (the "Company"), does hereby certify that the Company was
originally incorporated on November 1, 1991 pursuant to the General Corporation
Law of the State of Delaware (the "General Corporation Law"); that the
amendments to the Company's Restated Certificate of Incorporation contained in
the following resolutions were adopted and approved by the Company's Board of
Directors and stockholders in accordance with the provisions of Sections 141,
228, 242 and 245 of the General Corporation Law; and that notice was provided in
accordance with said Section 228:
"NOW, THEREFORE, BE IT RESOLVED, that the Restated Certificate of
Incorporation be amended and restated in its entirety as follows:
FIRST: The name of the Company is Biex, Inc.
SECOND: The registered office of the Company in the State of Delaware is
located at Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name and address of its registered agent
is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware.
THIRD: The nature of the business and purposes to be conducted or promoted
by the Company is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of stock which the Company shall have
authority to issue is 37,250,677 of which 14,004,513 shares shall be designated
Preferred Stock, each having a par value of $.001, and of which 23,246,164
shares shall be designated Common Stock (the "Common"), each having a par value
of $.00001.
1.
<PAGE>
The Preferred Stock shall be divided into series. The first series shall
consist of 1,592,307 shares and is designated "Series A Preferred Stock." The
second series shall consist of 1,882,206 shares and is designated "Series B
Preferred Stock." The third series shall consist of 3,030,000 shares and is
designated "Series C Preferred Stock." The fourth series shall consist of
2,500,000 shares and is designated "Series D Preferred Stock." The fifth series
shall consist of 5,000,000 shares and is designated "Series E Preferred Stock."
The rights, preferences, privileges, restrictions and other matters
relating to the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock are as
follows:
SECTION 1. GENERAL DEFINITIONS. For purposes of this Article IV the
following definitions shall apply:
(a) "JUNIOR STOCK" shall mean all Common and any other capital
stock of this Company other than the Series A Preferred, the Series B Preferred,
the Series C Preferred, the Series D Preferred or the Series E Preferred.
(b) "PREFERRED STOCK" shall mean the Series A Preferred, the
Series B Preferred, the Series C Preferred, the Series D Preferred and the
Series E Preferred.
(c) "SUBSIDIARY" shall mean any corporation at least 50% of
whose outstanding voting shares shall at the time be owned by this Company or
by one or more of such subsidiaries.
SECTION 2. DIVIDENDS.
(a) DIVIDENDS. The Series A Preferred shall receive
dividends if and when declared by the Board of Directors. The Series B
Preferred and Series C Preferred shall receive dividends, on a cumulative
basis, when and as declared by the Board of Directors, at the rate of $0.06
per annum commencing on the date of issuance and cumulating until the
Original Issue Date of the Series E Preferred (as defined in Section 5(c)
hereof), and the Series D Preferred shall receive dividends, on a cumulative
basis, when and as declared by the Directors at the rate of $0.09 per annum
commencing on the date of issuance and cumulating until the Original Issue
Date of the Series E Preferred (collectively, the "Cumulative Dividends").
After the Original Issue Date of the Series E Preferred, except for the
Cumulative Dividends, the Series B Preferred, the Series C Preferred, the
Series D Preferred and the Series E Preferred shall receive dividends if and
when declared by the Board of Directors. The Cumulative Dividends as of the
last day of each calendar quarter prior to the Original Issue Date of the
Series E Preferred will be declared by the Board of Directors on a quarterly
basis and any cumulated and undeclared dividends as of the Original Issue
Date of the Series E Preferred will be declared as of such date, and the
Cumulative Dividends will be declared upon any payment of the liquidation
preference pursuant to Section 3(a) hereof, any redemption pursuant to
Section 4(c) hereof or any conversion of shares of Preferred Stock pursuant
to Section 2(c) hereof. However, except in the case of a payment pursuant to
Section 2(c), 3(a) or 4(c), the Cumulative Dividends will not be paid as to
the Series B Preferred during the three year period commencing on October 31,
1994, as to the Series C Preferred during the four-year period commencing on
June 26, 1995
2.
<PAGE>
or as to the Series D Preferred during the four-year period commencing on
August 15, 1996 (the "Tolling Period"). After such Tolling Period, all
declared but unpaid Cumulative Dividends shall be paid as to the Series B
Preferred, no later than the later of December 31, 1997 or when permitted
pursuant to Section 2(b), as to the Series C Preferred, no later than August
26, 1999, or as to the Series D Preferred no later than October 15, 2000.
Payment of Cumulative Dividends will be subject to compliance with any
applicable statutory distribution restrictions, but Cumulative Dividends will
be payable as soon as legally permissible in the event any such restrictions
would not allow payment pursuant to this Section 2. Cumulative Dividends may
be paid on the Series D Preferred in cash, Common Stock, Series D Preferred
Stock or any combination thereof as chosen by the Board of Directors at the
time of declaring and paying such Cumulative Dividends. Cumulative Dividends
may be paid on the Series C Preferred in cash, Common Stock, Series C
Preferred Stock or any combination thereof as chosen by the Board of
Directors at the time of declaring and paying such Cumulative Dividends.
Cumulative Dividends may be paid on the Series B Preferred in cash, Common
Stock, Series B Preferred Stock, or any combination thereof as chosen by the
Board of Directors at the time of declaring and paying such Cumulative
Dividends. If dividends are declared and paid in Common Stock then the
Common Stock shall be valued at the fair market value as determined by the
Board of Directors at the time the dividend is paid. If dividends are
declared and paid in Series D Preferred Stock, then the Series D Preferred
Stock shall be valued at the fair market value as determined by the Board of
Directors at the time the dividend is paid. If dividends are declared and
paid in Series C Preferred Stock then the Series C Preferred Stock shall be
valued at the fair market value as determined by the Board of Directors at
the time the dividend is paid. If dividends are declared and paid in Series
B Preferred Stock then the Series B Preferred Stock shall be valued at the
fair market value as determined by the Board of Directors at the time the
dividend is paid.
(b) DIVIDEND PRIORITY. The Company shall make no
distribution to the holders of Preferred Stock or the Junior Stock except as
permitted by this Section 2. "Distribution" in this Section means the
transfer of cash or property without consideration, whether by payment of a
dividend or otherwise (except a dividend in shares of the Company), or the
purchase or redemption of shares of the Company for cash or property, but
does not include repurchase of shares from a terminated employee or
consultant of the Company within the terms of an agreement applicable to such
an employee or consultant providing for such repurchase. The Company shall
make no distributions to the holders of the Series B Preferred in any fiscal
quarter unless and until Cumulative Dividends have been declared and paid on
Series C Preferred and Series D Preferred. The Company shall make no
distributions to the holders of the Series A Preferred, the Junior Stock or
Series E Preferred in any fiscal quarter unless and until the Cumulative
Dividends have been declared and paid on the Series B Preferred, Series C
Preferred and Series D Preferred. Except for the Cumulative Dividends, the
Company shall make no distributions to the holders of Series D Preferred,
Series C Preferred, Series B Preferred, Series A Preferred or Junior Stock
unless and until dividends have been declared and paid on the Series E
Preferred. The Company shall make no distributions to the holders of the
Junior Stock in any fiscal quarter unless and until dividends have been
declared and paid on the Series A Preferred at the rate of $.039 per share,
per annum in such fiscal quarter. If the Company has paid the holders of the
Series A Preferred the full amounts as described in the preceding sentence
and shall elect to declare additional dividends in any fiscal quarter out of
funds legally available therefor, such additional dividends shall be declared
on each share of
3.
<PAGE>
Common to the extent of an amount determined by dividing the dividend
preference paid on each share of Series A Preferred for the quarter by the
number of shares of Common (including fractions of the share) into which each
share of Series A Preferred is convertible on the record date for the
declaration of such dividend. After such amount has been paid or set aside
for payment on each share of Common, any remaining dividends shall be
declared and paid on the Preferred Stock and Common, with each share of
Preferred Stock receiving the same dividend as that paid on the number of
shares of Common Stock (including fractions of a share) into which such share
of Preferred Stock is then convertible.
(c) DIVIDENDS ON CONVERSION. Upon conversion of a share of
Preferred Stock into Common (i) pursuant to Section 5(n) hereof, or (ii)
pursuant to Section 5(o) immediately prior to a firmly underwritten public
offering of Common Stock for the account of the Company meeting all the
requirements of Section 5(n) other than the price per share, all declared but
unpaid dividends on each share of Preferred Stock so converted, shall be
payable by the Company to the holder of such share.
SECTION 3. LIQUIDATION.
(a) LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution or winding up of the Company, either voluntary or involuntary, then
the holders of the Series C Preferred, Series D Preferred and Series E Preferred
shall be entitled to receive, prior and in preference to any distribution of any
assets of the Company to the holders of Series A Preferred, Series B Preferred
or Junior Stock by reason of their ownership thereof, on a pooled, pari passu
basis, at the amount of $1.00 for each share of Series C Preferred, plus an
amount equal to the total of all cumulated and unpaid dividends (including
Cumulative Dividends), the amount of $1.50 for each share of Series D Preferred,
plus an amount equal to the total of all cumulated and unpaid dividends
(including Cumulative Dividends) and the amount of $2.50 for each share of
Series E Preferred, plus an amount equal to the total of all declared and unpaid
dividends. If the assets thus distributed among the holders of the Series C
Preferred, Series D Preferred and Series E Preferred shall be insufficient to
permit the payment to such holders of the full preferential amount, then the
entire assets of the Company legally available for distribution shall be
distributed pro rata among such holders of the Series C Preferred, Series D
Preferred and Series E Preferred at the ratio of 100:150:250, respectively.
Then the holders of the Series A Preferred and Series B Preferred shall be
entitled to receive, prior and in preference to any distribution of any assets
of the Company to the holders of Junior Stock by reason of their ownership
thereof, on a pooled, pari passu basis, the amount of $0.65 for each share of
Series A Preferred, plus an amount equal to the total of all declared but unpaid
dividends of the Series A Preferred and an amount equal to $1.00 for each share
of Series B Preferred, plus an amount equal to the total of all cumulated and
unpaid dividends (including Cumulative Dividends). If the assets thus
distributed among the holders of the Series A Preferred and Series B Preferred
shall be insufficient to permit the payment to such holders of the full
preferential amount, then the remaining assets of the Company legally available
for distribution shall be distributed at the ratio of 65:100 among the holders
of the Series A Preferred and Series B Preferred. After payment has been made
to the holders of the Preferred Stock of the full preferential amount to which
they shall be entitled as aforesaid, the holders of Common shall be entitled to
receive all remaining assets of the Company available for distribution.
Notwithstanding the foregoing, if the Preferred Stock would receive a greater
liquidation preference per share by converting into
4.
<PAGE>
Common immediately prior to the record date for a liquidating distribution,
for purposes of the distribution, the Preferred Stock will be treated as
having converted into Common immediately prior to such record date.
(b) LIQUIDATION EVENTS. For purposes of this Section 3, a
liquidation, dissolution or winding up of the Company shall be deemed to
include the Company's sale of all or substantially all its assets or the
merger or consolidation of the Company into or with any other corporation if
the holders of the outstanding shares of the Company prior to such merger or
consolidation do not retain a majority of the voting power of the surviving
corporation. For such purposes, the exchange of securities of the surviving
corporation for securities of the Company shall be deemed to constitute the
distribution of assets of the Company upon liquidation, dissolution or
winding up. Nothing contained in this subsection (b) shall limit the right
of a holder of Preferred Stock to convert such shares into Common prior to
the effective date of any such transaction.
(c) DETERMINATION OF VALUE. The fair value of the assets to be
distributed or exchanged in such event shall be determined by the Board of
Directors of the Company in good faith, provided that any securities to be
delivered to the holders of the Preferred Stock or Common under Section 3(a)
above shall be valued as follows:
(i) Securities that do not constitute "restricted
stock," as such term is defined in Rule 144 promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended:
(1) If traded on a securities exchange, the value
shall be deemed to be the average of the closing prices of the securities on
such exchange over the 30-day period ending three (3) days prior to the
closing;
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid prices over the 30-day
period ending three (3) days prior to the closing;
(3) If there is no active public market, the value
shall be the fair market value thereof, as determined by the Company's Board
of Directors.
(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability shall be to
make an appropriate discount from the market value determined as set forth
above in clauses (1) or (2) to reflect the appropriate fair market value
thereof, as determined by the Company's Board of Directors, or if applicable,
shall be in accordance with clause (3), giving appropriate weight to such
restriction.
SECTION 4. REDEMPTION.
(a) REDEMPTION RIGHTS. At any time after the day that is five
(5) years and one (1) day after the Original Issue Date of the Series E
Preferred, the Company will (i) redeem outstanding shares of Series A
Preferred requested to be redeemed pursuant to the schedule set forth below,
if and when requested to do so by the holders of at least 65% of the then
5.
<PAGE>
outstanding shares of Series A Preferred, (ii) redeem outstanding shares of
Series B Preferred requested to be redeemed, if and when requested to do so
by the holders of at least 65% of the then outstanding shares of Series B
Preferred, (iii) redeem outstanding shares of Series C Preferred requested to
be redeemed, if and when requested to do so by the holders of at least 65% of
the then outstanding shares of Series C Preferred, (iv) redeem outstanding
shares of Series D Preferred requested to be redeemed, if and when requested
to do so by the holders of at least 65% of the then outstanding shares of
Series D Preferred and (v) redeem outstanding shares of Series E Preferred
requested to be redeemed, if and when requested to do so by the holders of at
least 65% of the then outstanding shares of Series E Preferred. If the
Series A Preferred, Series B Preferred, Series C Preferred, Series D
Preferred or Series E Preferred calls for redemption by the relevant
percentage request, (i) the Company will give immediate notice thereof to all
holders of Preferred Stock pursuant to subparagraph 4(d) below, and (ii) all
holders of Preferred Stock may elect to include their shares of Preferred
Stock in the request for redemption by giving notice of such election to the
Company within five (5) days after the date of such notice from the Company
of the request for redemption. In the event such notice of redemption is
given, then on the first business day of each calendar quarter commencing
with the first calendar quarter that begins after such request is made, the
Company shall redeem 12.5%, adjusted as necessary as to the last such quarter
to result in 100% redemption at the end of such last quarter, of the shares
of Preferred Stock with respect to which redemption was requested that were
outstanding on the first day of the first calendar quarter in which the
redemptions of such series of Preferred Stock are required, provided that all
of the Series D Preferred and Series E Preferred with respect to which
redemption was requested shall be redeemed prior to any Series C Preferred,
and all of the Series C Preferred with respect to which redemption was
requested shall be redeemed prior to any Series A Preferred or Series B
Preferred being redeemed, as provided in subparagraph (c) below. After the
holders give the notice requiring redemption, they shall continue to be
entitled to all rights as holders of Preferred Stock until such shares are
redeemed in accordance with the procedures specified below.
(b) AVAILABILITY OF FUNDS. Notwithstanding the provisions of
subparagraph (a), the Company will not be required to redeem shares in any
quarter to the extent funds are not legally available. If funds are not
legally available to consummate a redemption under subparagraph (a), the
Company shall redeem the maximum number of shares for which funds are legally
available and will continue to do so each calendar quarter thereafter until
the total number of shares of Preferred Stock that it has redeemed is equal
to the total number of shares that it would have redeemed at such time as if
it had redeemed such series of Preferred Stock in accordance with the
provisions of subparagraph (a).
(c) REDEMPTION PRICE AND ALLOCATION. The redemption price per
share for the Series A Preferred shall be $0.65, plus an amount equal to all
declared but unpaid dividends on the shares being redeemed. The redemption
price per share for the Series B Preferred shall be $1.00, plus an amount
equal to all cumulated but unpaid dividends in the shares being redeemed.
The redemption price per share for the Series C Preferred shall be $1.00,
plus an amount equal to all cumulated but unpaid dividends in the shares
being redeemed. The redemption price per share for the Series D Preferred
shall be $1.50, plus an amount equal to all cumulated but unpaid dividends in
the shares being redeemed. The redemption price per share for the Series E
Preferred shall be $2.50, plus an amount equal to all declared but unpaid
6.
<PAGE>
dividends in the shares being redeemed. All of the Series D Preferred and
Series E Preferred with respect to which redemption was requested shall be
redeemed prior to any Series C Preferred being redeemed. Redemption of less
than all of the then outstanding shares of the Series D Preferred and Series
E Preferred shall be pro rata among the holders of the Series D Preferred and
Series E Preferred (as to the number of shares held on the date of
redemption) so that each holder has redeemed the same percentage of the total
shares of Series D Preferred and Series E Preferred held by it. Following
the redemption of all of the Series D Preferred and Series E Preferred with
respect to which redemption was requested, all of the Series C Preferred with
respect to which redemption was requested shall be redeemed prior to any
Series A Preferred or Series B Preferred being redeemed. Redemption of less
than all of the then outstanding shares of the Series C Preferred shall be
pro rata among the holders of the Series C Preferred (as to the number of
shares held on the date of redemption) so that each holder has redeemed the
same percentage of the total shares of Series C Preferred held by it.
Following the redemption of all of the Series C Preferred with respect to
which redemption was requested, any Series A Preferred and Series B Preferred
as to which redemption was requested shall be redeemed. Redemption of less
than all of the outstanding shares of Series A Preferred and Series B
Preferred shall be pro rata among the holders of such Series A Preferred and
Series B Preferred (as to the number of shares held on the date of
redemption) so that each holder has redeemed the same percentage of the total
number of shares of Series A Preferred and Series B Preferred held by it.
(d) REDEMPTION PROCEDURES. The Company shall give notice by
certified mail, postage prepaid, return receipt requested, to the holders of
record of the Preferred Stock of any redemption, such notice to be addressed
to each holder at the address shown in the Company's records, which notice
shall specify the date of redemption, the number of shares of Preferred Stock
of the holder to be redeemed and the date on which conversion rights
terminate. Such notice shall be given no more than sixty (60) but no less
than thirty (30) days prior the date fixed for redemption. On or after the
date of redemption as specified in such notice, each holder shall surrender
his certificate (or comply with applicable lost certificate provisions) for
the number of shares to be redeemed as stated in the notice (except that such
number of shares shall be reduced by the number of shares that have been
converted pursuant to Section 5 hereof between the date of notice and the
date on which conversion rights terminate) to this Company at the place
specified in such notice. If less than all of the shares represented by such
certificate are redeemed, a new certificate shall forthwith be issued for the
unredeemed shares. Provided such notice is duly given, and provided that on
the redemption date specified therein shall be a source of funds legally
available for such redemption and funds necessary for the redemption shall
have been deposited in a bank or trust company ten business days prior to the
redemption date as hereinafter provided, then all rights with respect to such
shares shall, after the specified redemption date, terminate, whether or not
said certificates have been surrendered, excepting only in the latter
instance the right of the holder to receive the redemption price thereof,
without interest, upon such surrender (or compliance with lost certificate
provisions).
(e) BANK DEPOSIT. On or prior to the close of business on the
tenth business day preceding the date of redemption, the Company shall
deposit the redemption price of all shares of Preferred Stock designated for
redemption in said notice and not yet converted with a bank or trust company
having aggregate capital and surplus in excess of $50,000,000 as a trust fund
for the benefit of the respective holders of the shares designated for
redemption and not yet
7.
<PAGE>
converted with irrevocable instructions and authority to the bank or trust
company to pay, on or promptly after the redemption date, the redemption
price to the respective holders upon surrender of their stock certificates.
Contemporaneously, the Company shall furnish such holders evidence of such
deposit and instructions. Any monies deposited by the Company pursuant
hereto for the redemption of shares thereafter converted into shares of
Common pursuant to Section 5 hereof no later than the last business day
preceding the date of redemption, shall be returned to the Company forthwith
upon such conversion. The balance of any monies deposited by the Company
pursuant hereto remaining unclaimed at the expiration of one (1) year
following the date of redemption shall thereafter be returned to the Company
upon its request expressed in a resolution of its Board of Directors. The
holders of the Preferred Stock shall have the right to specifically enforce
the Company's obligations under this Section 4.
SECTION 5. CONVERSION. The holders of Preferred Stock shall have
conversion rights as follows ("Conversion Rights"):
(a) RIGHT TO CONVERT.
(i) Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date
of issuance of such share, at the office of the Company or any transfer agent
for the Preferred Stock, into such number of fully paid and nonassessable
shares of Common, as is determined with respect to the Series A Preferred by
dividing $0.65 by the Conversion Price for the Series A Preferred Stock
determined as hereinafter provided in effect at the time of conversion, with
respect to the Series B Preferred, by dividing $1.00 by the Conversion Price
for the Series B Preferred determined as hereinafter provided in effect at
the time of conversion, with respect to the Series C Preferred, by dividing
$1.00 by the Conversion Price for the Series C Preferred determined as
hereinafter provided in effect at the time of conversion, with respect to the
Series D Preferred, by dividing $1.50 by the Conversion Price for the Series
D Preferred determined as hereinafter provided in effect at the time of
conversion and with respect to the Series E Preferred, by dividing $2.50 by
the Conversion Price for the Series E Preferred determined as hereinafter
provided in effect at the time of conversion.
(ii) The initial Conversion Price for the Series A
Preferred shall be $0.65 per share (the "Series A Conversion Price"). The
initial Conversion Price for the Series B Preferred shall be $1.00 per share
(the "Series B Conversion Price"). The initial Conversion Price for the
Series C Preferred shall be $1.00 per share (the "Series C Conversion
Price"). The initial Conversion Price for the Series D Preferred shall be
$1.50 per share (the "Series D Conversion Price"). The initial Conversion
Price for the Series E Preferred shall be $2.50 per share (the "Series E
Conversion Price"). In the event of a notice of redemption of any shares of
Preferred Stock pursuant to Paragraph 4 hereof, the Conversion Rights shall
terminate as to the shares designated for redemption at the close of business
on the last business day preceding the date of redemption, unless the Company
defaults under Paragraph 4, in which case the notice of redemption shall be
deemed to have been revoked and the Company shall be required to give a new
notice of redemption.
(iii) The initial Series E Conversion Price shall be
retroactively adjusted to the Original Issuance Date of the Series E
Preferred to Two Dollars and Ten Cents
8.
<PAGE>
($2.10) upon the occurrence of an Adjustment Event (as defined below). In
the event of any such retroactive adjustment to the Series E Conversion
Price, all intervening adjustments to the Series E Conversion Price made in
accordance with this Section 5 shall be recalculated and based upon the
initial Series E Conversion Price as so retroactively adjusted. For purposes
of adjustment of the Series E Conversion Price, an "Adjustment Event" shall
mean any of the following: (a) failure of the Company to receive notice from
the U.S. Food and Drug Administration dated on or before September 30, 1998
of the approval of the Company's pre-market approval application for the
SalEst system ("PMA Approval"); (b) a Sale of the Company (as defined below)
prior to PMA Approval; or (c) an underwritten public offering of the
Company's Common Stock at a price per share to the public of less than $4.75
(subject to proportionate adjustment in the case of recapitalizations, stock
splits, stock dividends or combinations of shares) prior to PMA Approval.
"Sale of the Company" shall mean (i) a merger or consolidation or any other
corporate reorganization or business combination in each case in which fifty
percent (50%) or more of the Company's outstanding voting stock (or the stock
of the surviving entity in the event of a transaction in which the Company
does not survive) is transferred from the then present holders to different
holders (not including an issuance by the Company of stock to raise
investment funds) in a single transaction or series of related transactions;
or (ii) the sale, transfer or other disposition of all or substantially all
of the assets of the Company.
(b) MECHANICS OF CONVERSION. Before any holder of Preferred Stock
shall be entitled to convert the same into shares of Common, he shall surrender
the certificate or certificates therefor (or comply with applicable lost
certificate provisions) at the office of the Company or of any transfer agent
for the Preferred Stock, and shall give written notice to the Company at such
office that he elects to convert the same. The Company shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Preferred Stock a certificate or certificates for the number of shares of Common
to which he shall be entitled as aforesaid and, if less than all the shares of
the Preferred Stock represented by such certificate are converted, a certificate
representing the shares of Preferred Stock not converted. In the event of any
conversion at the election of a holder of Preferred Stock, such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common on such date.
(c) ADJUSTMENTS TO THE SERIES A CONVERSION PRICE, SERIES B CONVERSION
PRICE, SERIES C CONVERSION PRICE, SERIES D CONVERSION PRICE AND SERIES E
CONVERSION PRICE FOR DILUTING ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of this subparagraph
5(c), the following definitions apply:
(1) "OPTIONS" shall mean rights, options, or warrants
to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities (as hereinafter defined).
9.
<PAGE>
(2) "ORIGINAL ISSUE DATE" shall mean the date on
which a share of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock or Series E Preferred Stock was
first issued (but in no event as to the Series E Preferred Stock any date
earlier than the date of filing of this Amended and Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware).
(3) "CONVERTIBLE SECURITIES" shall mean any evidences
of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(4) "ADDITIONAL SHARES OF COMMON STOCK" shall mean
any capital stock (including the Common Stock and the Preferred Stock) of the
Company whether now authorized or not, and rights, options or warrants to
purchase capital stock, and securities of any type whatsoever that are, or
may become, convertible into capital stock; PROVIDED, that the term
"Additional Shares of Common Stock" does not include (A) securities issuable
upon conversion of or with respect to the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series
E Preferred Stock (including warrants to purchase Series B Preferred Stock);
(B) in an aggregate amount of up to 2,113,622 shares of Common Stock to
officers, directors, employees and consultants of the Company; PROVIDED,
HOWEVER, that such number may be increased with the approval of the Board of
Directors and any additional shares of Common issued to employees, directors
and consultants pursuant to such approval shall not be considered "New
Securities" for purposes of this Section 5(c); PROVIDED FURTHER, that any
Option issued under this Section 5(c)(i)(4), to the extent that it expires
without being exercised, will be treated as never having been issued for
purposes of this Section 5(c)(i)(4); PROVIDED FURTHER, that the number set
forth in this Section 5(c)(i)(4) be subject to proportionate adjustment in
the case of recapitalizations, stock splits, stock dividends or combinations
of shares; (C) pursuant to warrants or other rights to purchase Common (and
the issuance of shares of Common on the exercise thereof) issued to the
Company's suppliers, customers or lessors or to lenders providing financing
to the Company solely for the purchase of equipment with the approval of the
Board of the Directors; or (D) as a dividend or distribution on the Preferred
Stock.
(ii) NO ADJUSTMENT OF CONVERSION PRICE. No adjustment in
the number of Shares of Common Stock into which the Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred Stock or Series E
Preferred Stock is convertible shall be made, by adjustment of the Series A
Conversion Price, Series B Conversion Price, Series C Conversion Price,
Series D Conversion Price or Series E Conversion Price in respect of the
issuance of Additional Shares of Common Stock or otherwise, unless the
consideration per share for an Additional Share of Common Stock issued or
deemed to be issued by the Company is less than the respective Series A
Conversion Price, Series B Conversion Price, Series C Conversion Price,
Series D Conversion Price or Series E Conversion Price in effect on the date
of, and immediately prior to, the issue of such Additional Shares of Common
Stock.
(iii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK.
In the event the Company at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of
10.
<PAGE>
any class of securities then entitled to receive any such Options or
Convertible Securities, then the maximum number of shares (as set forth in
the instrument relating thereto without regard to any provisions contained
therein for a subsequent adjustment of such number) of Common Stock issuable
upon the exercise of such Options or, in the case of Convertible Securities
and Options therefor, issuable upon the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common
Stock issued as of the time of such issue or, in case such a record date
shall have been fixed, as of the close of business on such record date,
provided that Additional Shares of Common Stock shall not be deemed to have
been issued unless the consideration per share (determined pursuant to
subparagraph 5(c)(vi) hereof) of such Additional Shares of Common Stock would
be less than the respective Series A Conversion Price, Series B Conversion
Price, Series C Conversion Price, Series D Conversion Price or Series E
Conversion Price in effect on the date of and immediately prior to such
issue, or such record date, as the case may be, and provided further that in
any such case in which Additional Shares of Common Stock are deemed to be
issued:
(1) no further adjustments in the respective
Conversion Prices shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase
or decrease in the consideration payable to the Company, or increase or
decrease in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the respective Conversion Prices computed
upon the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon
any such increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities (PROVIDED, HOWEVER,
that no such adjustment of the respective Conversion Prices shall affect
Common Stock previously issued upon conversion of the Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred or Series E
Preferred);
(3) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which
shall not have been exercised, the respective Conversion Prices computed upon
the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon
such expiration, be recomputed as if:
(A) in the case of Convertible Securities or
Options for Common Stock the only Additional Shares of Common Stock issued
were the shares of Common Stock, if any, actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible Securities and
the consideration received therefor was the consideration actually received
by the Company for the issue of all such Options, whether or not exercised,
plus the consideration actually received by the Company upon such exercise,
or for the issue of all such Convertible Securities which were actually
converted or exchanged, plus the additional consideration, if any, actually
received by the Company upon such conversion or exchange, and
11.
<PAGE>
(B) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options and the
consideration received by the Company for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received
by the corporation for the issue of all such Options, whether or not
exercised, plus the consideration deemed to have been received by the Company
(determined pursuant to subparagraph 5(c)(vi)) upon the issue of the
Convertible Securities with respect to which such Options were actually
exercised;
(4) no readjustment pursuant to clause (2) or (3)
above shall have the effect of increasing the respective Conversion Prices to
an amount which exceeds the lower of (1) such Series A, Series B, Series C,
Series D or Series E Conversion Price on the original adjustment date, or (2)
such Series A, Series B, Series C, Series D or Series E Conversion Price that
would have resulted from any issuance of Additional Shares of Common Stock
between the original adjustment date and such readjustment date;
(5) in the case of any Options which expire by
their terms not more than thirty (30) days after the date of issue thereof,
no adjustment of the Series A, Series B, Series C, Series D or Series E
Conversion Price shall be made (except as to shares of Series A, Series B,
Series C, Series D or Series E Preferred Stock converted in such period),
until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the same manner provided in clause (3) above; and
(6) if any such record date shall have been fixed
and such Options or Convertible Securities are not issued on the date fixed
thereof, the adjustment previously made in the Series A, Series B, Series C,
Series D or Series E Conversion Price which became effective on such record
date shall be canceled as of the close of business on such record date, and
shall instead be made on the actual date of issuance, if any.
(iv) ADJUSTMENT OF SERIES A CONVERSION PRICE, SERIES B
CONVERSION PRICE, SERIES C CONVERSION PRICE, SERIES D CONVERSION PRICE AND
SERIES E CONVERSION PRICE UPON ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.
In the event the Company shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
Section 5(c)(iii) hereof) without consideration or for a consideration per
share less than the Series A Conversion Price, Series B Conversion Price,
Series C Conversion Price, Series D Conversion Price or Series E Conversion
Price in effect on the date of and immediately prior to such issue, then and
in such event, such Series A Conversion Price, or Series B Conversion Price,
Series C Conversion Price, Series D Conversion Price or Series E Conversion
Price shall be reduced, concurrently with such issue (calculated to the
nearest cent) determined by multiplying such Conversion Price by a fraction
(x) the numerator of which shall be the number of shares of Common
outstanding immediately prior to such issue (including all shares of Common
issuable upon conversion of the outstanding Preferred Stock) plus the number
of shares of Common that the aggregate consideration received by the Company
for the total number of Additional Shares of Common Stock so issued would
purchase at such Conversion Price, and (y) the denominator of which shall be
the number of shares of Common outstanding immediately prior to such issue
(including all shares of Common issuable upon conversion of the outstanding
Preferred Stock) plus the number of such Additional Shares of Common so
12.
<PAGE>
issued; PROVIDED, HOWEVER, that, for the purposes of this Section 5(c)(iv)
all shares of Common issuable upon conversion of outstanding shares of
Preferred Stock and shares of Common issuable upon conversion of outstanding
Convertible Securities without payment of any additional consideration shall
be deemed to be outstanding.
Notwithstanding the foregoing, the respective Conversion Prices shall not be so
reduced at such time if the amount of such reduction would be an amount less
than one cent ($0.01), but any such amount shall be carried forward and any
deduction with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other amount or
amounts so carried forward, shall aggregate one cent ($0.01) or more.
(v) ADJUSTMENT OF CONVERSION PRICE FOR STOCK
DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. In the event the Company at any
time or from time to time after the Original Issue Date shall declare or pay
any dividend on the Common payable in Common, or effect a subdivision or
combination of the outstanding shares of Common (by reclassification or
otherwise than by payment of a dividend in Common), then and in any such
event, the Conversion Price shall be proportionally decreased in the case of
a stock dividend or subdivision and proportionately increased in the case of
a combination of shares, effective in the case of such dividend, immediately
after the close of business on the record date for the determination of
holders of Common entitled to receive such dividend, or in the case of a
subdivision or combination, at the close of business immediately prior to the
date upon which such corporate action becomes effective.
(vi) DETERMINATION OF CONSIDERATION. For purposes
of this Section 5(c), the consideration received by the Company for the
issuance of any Additional Shares of Common shall be computed as follows:
(1) CASH AND PROPERTY. Such consideration shall:
(A) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the Company excluding
amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property
other than cash, be computed at the fair value thereof at the time of such
issue, as determined in good faith by the Board of Directors of the Company;
and
(C) in the event Additional Shares of
Common are issued together with other shares of securities or other assets of
the Company for consideration that covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above,
as determined in good faith by the Board of Directors of the Company.
(2) OTHER OPTIONS AND CONVERTIBLE SECURITIES.
For the purpose of computing the initial adjustment of the Conversion Price
pursuant to Section 5(c)(iii) (but not for the readjustment pursuant to
subsection 3(B) of that Section), the consideration per
13.
<PAGE>
share received by the Company for Additional Shares of Common deemed to have
been issued pursuant to Section 5(c)(iii) shall be determined by dividing:
(A) the total amount, if any, received or
receivable by the Company as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
(B) the maximum number of shares of Common
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(vii) ADJUSTMENTS FOR OTHER DIVIDENDS AND
DISTRIBUTIONS. In the event the Company at any time or from time to time
makes, or fixes a record date for the determination of holders of Common
entitled to receive a dividend or other distribution payable in capital stock
of the Company other than shares of Common, then and in each such event
provision shall be made so that the holders of Preferred Stock shall receive
upon conversion thereof, in addition to the number of shares of Common
receivable thereupon, the amount of securities of the Company that they would
have received had their Preferred Stock been converted into Common on the
record date of such event and had they thereafter, during the period from the
record date of such event to and including the date of conversion, retained
such securities receivable by them as aforesaid during such period, subject
to all other adjustments called for during such period under this Section 5
with respect to the rights of the holders of the Preferred Stock.
(d) NO IMPAIRMENT. The Company will not, by amendment of its
Amended and Restated Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed
hereunder by the Company but will at all times in good faith assist in the
carrying out of all the provisions of this Section 5 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Preferred Stock against impairment.
(e) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of any Conversion Price pursuant to this
Section 5, the Company at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish to each
holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request at any
time of any holder of Preferred Stock, furnish or cause to be furnished to
such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common and the amount, if any, of other property which,
at the time, would be received upon the conversion of the Preferred Stock.
14.
<PAGE>
(f) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Company shall at all times reserve and keep available out of its authorized
but unissued shares of Common, solely for the purpose of effecting the
conversion of the Preferred Stock, such number of its shares of Common as
shall from time to time be sufficient to effect the conversion of all then
outstanding shares of the Preferred Stock and of the shares of Preferred
Stock issuable upon exercise of outstanding Options, the Company shall
promptly use its best efforts to take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common to such number of shares as shall be sufficient for such
purpose. In determining the number of shares of Common issuable upon
conversion of the Preferred Stock as a result of the possibility that
declared dividends will be paid in shares of Common, the Company may use a
fair market value for the Common as determined from time to time in good
faith by its Board of Directors.
(g) PAYMENT OF TAXES. The Company shall pay all issue taxes
and other governmental charges (other than income or other taxes imposed upon
profits realized by the recipient) that may be imposed in respect of the
issue or delivery of shares of Common or other securities or property upon
conversion of shares of Preferred Stock; PROVIDED, HOWEVER, that the Company
shall not be obligated to pay any tax or other charge imposed in connection
with any transfer involved in the issue and delivery of shares of Common or
other securities in any name other than that in which the shares of Preferred
Stock were registered.
(h) NO REISSUE. Any shares of Preferred Stock that are
converted by the holder shall not be reissued and the certificates
representing such shares shall be appropriately canceled on the books of the
Company.
(i) RECLASSIFICATION; RECAPITALIZATION. In the event of any
reclassification of the Common or recapitalization involving Common (other
than a change in par value or as a result of a stock dividend, subdivision,
or combination of shares or any event described in Section 3(b)), each holder
of the Preferred Stock shall thereafter be entitled to receive and provisions
shall be made therefor, in an agreement relating to the reclassification or
recapitalization, upon conversion of the Preferred Stock, the kind and number
of shares of Common or other securities or property (including cash) of the
Company, to which such holder of Preferred Stock would have been entitled if
he had held the number of shares of Common of the Company into which the
Preferred Stock was convertible immediately prior to such reclassification or
recapitalization; and in any such case, appropriate adjustment shall be made
in the application of the provisions herein set forth with respect to the
rights and interests thereafter of the holders of the Preferred Stock, to the
end that the provisions set forth herein (including the specific changes and
other adjustments to the Conversion Price), shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares, other securities
or property thereafter receivable upon conversion of the Preferred Stock.
(j) NOTICES OF RECORD DATE. In the event that this Company
shall propose at any time:
(i) to declare any dividend or distribution upon its
Common, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus;
15.
<PAGE>
(ii) to offer for subscription pro rata to the
holders of any class or series of its stock any additional shares of stock of
any class or series or other rights;
(iii) to effect any reclassification or
recapitalization of its Common outstanding involving a change in the Common;
or
(iv) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property
or business, or to liquidate, dissolve or wind up;
then, in connection with each event, this Company shall send to the holders of
the Preferred Stock:
(1) at least twenty (20) days prior written
notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common shall be entitled thereto) or for determining rights to
vote in respect of the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in
(iii) and (iv) above, at least twenty (20) days prior written notice of the
date when the same shall take place (and specifying the date on which the
holders of Common shall be entitled to exchange their Common for securities
or other property deliverable upon the occurrence of such event or such
earlier date, if any, on which a record shall be taken of the holders of
Common who shall be entitled to exchange their Common).
(k) MANNER OF NOTICE. Any notice required by this Section 5
shall be deemed given if given by certified mail, postage prepaid, return
receipt requested, addressed to the holders of Preferred Stock at the address
for each such holder as shown on the books of this Company.
(l) FRACTIONAL SHARES. No fractional share shall be issued upon
the conversion of any share or shares of Preferred Stock. All shares of
Common (including fractions thereof) issuable upon conversion of more than
one share of Preferred Stock by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result in the issuance
of any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of Common,
the Company shall, in lieu of issuing any fractional share, if funds are
legally available therefor, pay the holder otherwise entitled to such
fraction a sum in cash equal to the fair market value of such fraction on the
date of conversion (as determined in good faith by the Board of Directors of
the Company).
(m) AUTOMATIC CONVERSION. Each share of Preferred Stock shall
automatically be converted into shares of Common at the then applicable
Conversion Price immediately prior to the effectiveness of the registration
statement filed with respect to a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offer and sale of Common for the account of this
Company to the public at a price per share (prior to the deduction of
underwriting commissions
16.
<PAGE>
and expenses) of not less than $5.00 (subject to proportionate adjustment in
the case of recapitalizations, stock splits, stock dividends or combinations
of shares) and resulting in the receipt by the Company of aggregate gross
sales proceeds of more than $7,500,000. In the event of such offering, the
person(s) entitled to receive the Common issuable upon such conversion of
Preferred Stock shall not be deemed to have converted such Preferred Stock
until immediately prior to the effectiveness of such registration statement,
except that any such person may specify an earlier time for conversion in
accordance with Sections 5(a) and 5(b).
(n) ELECTION TO REQUIRE CONVERSION. The holders of at least
65% of the number of votes of the outstanding shares of Preferred Stock
voting together as a single class may, by written notice to the Company,
elect to have all outstanding shares of Preferred Stock converted into Common
as of the date specified in the notice or as of the date of the notice if no
date is specified. Upon the delivery of such notice signed by the requisite
number of holders, all outstanding shares of Preferred Stock shall
automatically be converted into shares of Common at the Conversion Price in
effect on the effective date of such conversion.
SECTION 6. VOTING RIGHTS. Except as otherwise set forth in this
Certificate or as otherwise required by law, the holders of Preferred Stock
and the holders of Common shall be entitled to notice of any stockholders'
meeting and to vote together as one class upon any matter submitted to the
stockholders for a vote on the following basis:
(a) COMMON VOTE. Each share of Common issued and outstanding
shall have one vote.
(b) PREFERRED STOCK VOTE. Each holder of Preferred Stock shall
have a number of votes equal to the number of shares of Common into which the
Preferred Stock held by such holder is then convertible, as adjusted from
time to time under Section 5 hereof.
(c) QUORUM. For matters to be voted on by the Preferred Stock
and Common together as one class, a quorum shall consist of a majority of the
votes attributable to the Common and Preferred Stock as set forth in Sections
6(a) and (b) hereof.
(d) SERIES C PREFERRED STOCK VOTE. In addition to any other
vote or consent required herein or by law, the vote or written consent of the
holders of a majority of the outstanding shares of Series C Preferred, voting
as a single class, shall be necessary for effecting or validating the
authorization or issuance of any other equity security of the Company
(including any security convertible into or exercisable for any equity
security) with rights, preferences or privileges senior to the Series C
Preferred.
(e) SERIES D PREFERRED STOCK VOTE. In addition to any other
vote or consent required herein or by law, the vote or written consent of the
holders of a majority of the outstanding shares of Series D Preferred, voting
as a single class, shall be necessary for effecting or validating the
authorization or issuance of any other equity security of the Company
(including any security convertible into or exercisable for any equity
security) with rights, preferences or privileges senior to the Series D
Preferred.
17.
<PAGE>
(f) SERIES E PREFERRED STOCK VOTE. In addition to any other
vote or consent required herein or by law, the vote or written consent of the
holders of a majority of the outstanding shares of Series E Preferred, voting
as a single class, shall be necessary for effecting or validating the
authorization or issuance of any other equity security of the Company
(including any security convertible into or exercisable for any equity
security) with rights, preferences or privileges senior to the Series E
Preferred.
(g) SERIES C, SERIES D AND SERIES E PREFERRED STOCK VOTE. In
addition to any other vote or consent required herein or by law, the vote or
written consent of the holders of a majority of the number of votes of the
outstanding shares of Series C, Series D and Series E Preferred, voting as a
single class, shall be necessary for effecting or validating any agreement to
sell, lease or otherwise dispose of all or substantially all of the assets,
property or business of the Company, or to merge or consolidate the Company
with any person, or permit any other person to merge into it, or any other
reorganization except for mergers, consolidations or reorganizations in which
the Company is the surviving corporation and, after giving effect to the
merger, consolidation, or reorganization, the holders of the Company's
outstanding capital stock immediately preceding such merger own at least
fifty percent (50%) of the outstanding capital stock of the surviving
corporation.
SECTION 7. COVENANTS. In addition to any other rights provided by
law or agreement, so long as any Preferred Stock shall be outstanding, the
Company shall not, without first obtaining the affirmative vote or written
consent of the holders of at least 65% of the number of votes of the
outstanding shares of Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred voting together as a
single class:
(a) amend or repeal any provision of, or add any provision to,
the Company's Amended and Restated Certificate of Incorporation or Bylaws if
such action would adversely change the powers, preferences, and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions of the Preferred Stock, or increase the number of
shares of Preferred Stock authorized hereby;
(b) authorize or issue shares of any class of stock not
authorized herein having any preference or priority as to dividends or assets
superior to or on a parity with any such preference or priority of the
Preferred Stock, issue any shares of Preferred Stock or authorize or issue
shares of stock of any class or any bonds, debentures, notes or other
obligations convertible into or exchangeable for, or having option rights to
purchase, any shares of Preferred Stock or other stock of this Company having
any preference or priority as to dividends or assets superior to or on a
parity with any such preference or priority of the Preferred Stock;
(c) reclassify any class or series of stock into, or exchange
any class or series of stock for, shares having any preference or priority as
to dividends or assets superior to or on a parity with any such preference or
priority of any series of Preferred Stock;
(d) reclassify or cancel shares of the Preferred Stock;
(e) merge into, or consolidate with, any corporation or other
entity or sell or lease (as lessor) more than five percent of the Company's
total consolidated assets in any
18.
<PAGE>
twelve-month period (other than mortgages, deeds of trust, pledges or other
hypothecations of real or personal property approved by the Company's board
of directors and other than sales or other dispositions of inventory in the
normal course of business), or liquidate, dissolve or recapitalize or
reorganize in any form of transaction;
(f) amend or repeal any provision of this Section 7.
Notwithstanding the provision of this Section 7, any performance required by the
Company under the Company's Amended and Restated Certificate of Incorporation
may be waived with the affirmative vote or written consent of the holders of at
least 65% of the number of votes of the outstanding shares of Preferred Stock.
SECTION 8. RESIDUAL RIGHTS. All rights accruing to the outstanding
shares of the Company not expressly provided for to the contrary herein shall
be vested in the Common.
FIFTH: Elections of directors need not be by written ballot unless the
Bylaws of the Company shall so provide. The Board of Directors is expressly
authorized to adopt, amend or repeal the Bylaws of the Company.
SIXTH: A director of the Company shall not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law hereafter is
amended to authorize the further elimination or limitation of the liability of
directors, then the liability of a director of the Company, in addition to the
limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Delaware General Corporation Law. Any
repeal or modification of this paragraph by the stockholders of the Company
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Company existing at the time of such
repeal or modification.
RESOLVED FURTHER, that the foregoing Amended and Restated Certificate of
Incorporation is hereby approved and adopted."
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
19.
<PAGE>
IN WITNESS WHEREOF, Biex, Inc. has caused this Amended and Restated
Certificate of Incorporation to be executed by its undersigned duly authorized
officer this 27th day of August, 1997.
BIEX, INC.
By: /s/ James Edlund
-------------------------
James Edlund, President
[AMENDED AND RESTATED CERTIFICATE OF INCORPORATION]
<PAGE>
BIEX, INC.
AMENDED INVESTORS' RIGHTS
AGREEMENT
AUGUST 28, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
ARTICLE 1 INFORMATION; OBSERVER; AND OTHER RIGHTS AND COVENANTS OF THE
COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Financial And Other Information. . . . . . . . . . . . . . . . . . . . . 1
1.2 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Confidentiality Of Information . . . . . . . . . . . . . . . . . . . . . 3
1.4 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Meetings Of Board Of Directors . . . . . . . . . . . . . . . . . . . . . 3
1.6 Board Of Directors' Visitation Rights. . . . . . . . . . . . . . . . . . 3
1.7 No Purchases Of Stock, Etc . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Insider Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Annual Presentation. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13 Termination Of Covenants . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2 RIGHT OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Exercise Of Right. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Issuance To Others . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Oversubscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Purchase Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3 REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Demand Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Piggyback Registration . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Form S-3 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 State Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Expenses Of Registration . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Legal Opinion; Accountant's Letter . . . . . . . . . . . . . . . . . . . 10
3.7 Sale Of Preferred To Underwriter . . . . . . . . . . . . . . . . . . . . 10
3.8 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.9 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.10 Transfer Of Registration Rights. . . . . . . . . . . . . . . . . . . . . 12
3.11 Information by Holder. . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.12 Rule 144 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.13 Other Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . 13
3.14 "Market Stand-Off" Agreement . . . . . . . . . . . . . . . . . . . . . . 14
3.15 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 4 VOTING AGREEMENT WITH RESPECT TO ELECTION OF DIRECTORS;
REPURCHASE OPTION; RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT . . . . 15
4.1 Voting Agreement With Respect To Election Of Directors . . . . . . . . . 15
i
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
4.2 Right Of First Refusal And Co-Sale Agreement . . . . . . . . . . . . . . 16
4.3 Restrictions On Transfer . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 No Adverse Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.5 Term Of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6 Legend On Stock Certificates . . . . . . . . . . . . . . . . . . . . . . 19
4.7 Company Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 5 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.1 Termination Of Prior Agreement . . . . . . . . . . . . . . . . . . . . . 20
5.2 Assignment; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . 20
5.3 Costs Of Enforcement; Remedies . . . . . . . . . . . . . . . . . . . . . 20
5.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.5 Amendments And Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 6 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
ii
<PAGE>
AMENDED INVESTORS' RIGHTS AGREEMENT
THIS AMENDED INVESTORS' RIGHTS AGREEMENT (this "Agreement") is made as
of the 28th day of August, 1997, by and among Biex, Inc., a Delaware
corporation (the "Company"), the holders of the Series A Preferred Stock of
the Company (the "Series A Holders"), the holders of the Series B Preferred
Stock (the "Series B Holders"), the holders of the Series C Preferred Stock
of the Company (the "Series C Holders"), the holders of the Series D
Preferred Stock of the Company (the "Series D Holders") and the purchasers of
the Series E Preferred Stock (the "Series E Purchasers") (the Series A
Holders, the Series B Holders, the Series C Holders and the Series D Holders,
the Series E Purchasers as set forth on Exhibit A hereto are referred to
collectively herein as the "Stockholders" and individually as a
"Stockholder"), Fredric J. Feldman ("Feldman"), Vivian Dullien ("Dullien"),
James A. Edlund ("Edlund") and the Colorado Incubator Fund, L.P. ("CIF").
Capitalized terms used in this Agreement not otherwise defined herein shall
have the meanings set forth in Article 6.
RECITALS
WHEREAS, the Company, the Series A Holders, the Series B Holders, the
Series C Holders, the Series D Holders, Feldman, Dullien and CIF are parties
to the Amended Investors' Rights Agreement dated as of August 15, 1996 (the
"Investors' Rights Agreement");
WHEREAS, the Company is issuing shares of its Series E Preferred Stock
to the Series E Purchasers pursuant to a certain Series E Preferred Stock
Purchase Agreement of even date herewith;
WHEREAS, it is anticipated that future sales of securities of a similar
nature may occur; and
WHEREAS, the Company, the Stockholders, Feldman, Dullien, Edlund and CIF
desire to set forth in a single agreement the rights granted to, and the
obligations of, the Stockholders, Feldman, Dullien and CIF which were
previously set forth in the Investors' Rights Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties mutually agree as follows:
ARTICLE 1
INFORMATION; OBSERVER; AND OTHER RIGHTS AND COVENANTS OF THE COMPANY
1.1 FINANCIAL AND OTHER INFORMATION. The Company will furnish the
reports and information specified in this Section 1.1 to 5% Holders or to
each Holder that is a "Small Business Investment Company" as defined in the
Small Business Investment Act of 1958, as amended, and that requests such
information from the Company in writing.
1
<PAGE>
(a) ANNUAL REPORTS. As soon as practicable after the end of each
fiscal year, and in any event within 120 days thereafter, a consolidated
balance sheet of the Company and its Subsidiaries (as defined below)(if any)
as of the end of such fiscal year, and a consolidated statement of
operations, and a consolidated statement of cash flows for such year,
prepared in accordance with generally accepted accounting principles in
reasonable detail including all supporting schedules and notes and
accompanied by the opinion of independent public accountants of national
standing selected by the Company. A "Subsidiary" shall mean a corporation or
partnership with respect to which the Company owns, directly or indirectly,
shares or partnership interests entitling the Company, in the absence of
events of default, to elect a majority of the board of directors.
(b) QUARTERLY REPORTS. As soon as practicable after the end of the
first, second and third quarterly accounting periods and in any event within 60
days thereafter, a consolidated balance sheet of the Company and its
Subsidiaries (if any) as of the end of such quarter, a consolidated statement of
operations, and a consolidated statement of cash flows for such quarter and for
the current fiscal year to date, prepared in accordance with generally accepted
accounting principles (except that all footnotes need not be included in
quarterly statements and quarterly statements shall be subject to changes
resulting from year-end audit adjustments), setting forth, in each case,
comparisons with the corresponding periods of the previous fiscal year, together
with a comparison of such statements to the Company's operating plan, all in
reasonable detail and signed by the principal financial officer of the Company.
(c) MONTHLY REPORTS. As soon as practicable after the end of each
month and in any event within 30 days thereafter, (i) a consolidated balance
sheet of the Company and its Subsidiaries (if any) as of the end of such
month, and a consolidated statement of operations, and a consolidated
statement of cash flows for such month and for the current fiscal year to
date, prepared in accordance with generally accepted accounting principles
(except that all footnotes need not be included in monthly statements and
monthly statements shall be subject to changes resulting from year end audit
adjustments), and (ii) a pro forma cash flow statement of anticipated cash
flow for the next succeeding 90 day period of the Company and its
Subsidiaries (if any), all in reasonable detail and signed, by the principal
financial officer of the Company.
(d) ANNUAL BUDGET AND PLAN. As soon as available after submission
and approval by the Board of Directors and in any event within 30 days before
the commencement of each fiscal year of the Company, a copy of the operating
budget and plan for such fiscal year prepared and approved by the Board. Any
modifications in such operating plan shall be delivered to the 5% Holders as
promptly as practicable after such changes have been approved by the Board.
The budget and plan shall include monthly capital and operating expense
budgets, cash flow statements and profit and loss and quarterly balance sheet
projections.
(e) OTHER DIRECTORS' INFORMATION. Promptly after it is available,
any additional financial information and all materials distributed to members
of the Board of Directors.
(f) OTHER INFORMATION. Such other information relating to the
financial condition, business, prospects or corporate affairs of the Company
as any 5% Holder may, from time to time, reasonably request.
2
<PAGE>
1.2 INSPECTION. Any 5% Holder shall have the right, at its
expense, to visit any of the properties of the Company or any of its
Subsidiaries, inspect any of its books and records and discuss its affairs,
finances and accounts with its officers, all at such reasonable times and as
often as may be reasonably requested.
1.3 CONFIDENTIALITY OF INFORMATION. Each Holder agrees that any
information obtained by such Holder pursuant to Section 1.1 or 1.2, which is
proprietary to the Company or otherwise confidential, will be held in
confidence and will not be used or disclosed without the prior written
consent of the Company; provided, however, that a Holder may disclose such
information without the prior written consent of the Company to its partners,
employees or agents for purposes of evaluating, or otherwise taking action,
in respect of its investment if in connection with such disclosure to such
partners, employees or agents the Holder protects the confidentiality of such
information to the same extent as it protects the confidentiality of its own
confidential information.
1.4 INSURANCE. The Company will use its best efforts to maintain
a key man level term life insurance policy on the life of Vivian Dullien in
the face amount of at least $1,000,000, naming the Company as beneficiary.
The Company will pay or cause to be paid all premiums on such life insurance
as the same from time to time become payable. The Company will request the
insurer on such policy on life insurance to provide that it may not be
canceled unless the insurance carrier gives the Holders (or if the insurer
requires, a designated representative of the Holders) at least 20 days' prior
written notice thereof. If requested by the holders of at least 65% of the
Purchaser Common (assuming conversion of the Preferred Stock into Common
Stock at the conversion rate then in effect, but excluding Public Shares),
the Company will use its best efforts to obtain and maintain, level term life
insurance on the lives of such other officers and employees and in such face
amounts as may be requested by such Holders, naming the Company as
beneficiary. Within 30 days after the Closing Date, the Company will obtain
and will thereafter maintain such casualty and liability insurance as is
customarily maintained by companies engaged in the same or similar businesses.
1.5 MEETINGS OF BOARD OF DIRECTORS. The Company shall hold
regular meetings of the Board of Directors at least once per quarter. The
Company will pay all reasonable out-of-pocket expenses incurred by each
representative of a Stockholder who is on the Board of Directors in
connection with his or her attendance at such meetings and in connection with
his or her performing any service or conducting any business of the Company
at the request of the Company.
1.6 BOARD OF DIRECTORS' VISITATION RIGHTS. The Company will give
to each Holder who together with its general partners and affiliates holds at
least 20% (such Holders to be referred to as "20% Holders") of the number of
shares of Purchaser Common (assuming conversion of the Preferred Stock into
Common Stock at the conversion rate then in effect, but excluding Public
Shares) whose representative is not a director at least five business days'
prior written notice of each meeting (including any held by conference
telephone) of the Board of Directors of the Company, specifying the time and
place of such meeting and, to the extent then known, the matters to be
discussed thereat. So long as it remains a Holder, Hickory Capital
Corporation shall be invited to have a representative attend meetings of the
Board of Directors. Each 20% Holder's representative shall be invited to
attend all such meetings (and to participate
3
<PAGE>
in any meeting held by conference telephone). The Company will not be
required to pay any expenses incurred or paid by such 20% Holders' or Hickory
Capital Corporation's representatives in connection with their attendance of
board meetings other than representatives who are members of the Board of
Directors. In the case of an emergency, the persons having visitation rights
under this Section 1.6 will be given the same notice of the meeting that is
given to the directors.
1.7 NO PURCHASES OF STOCK, ETC. The Company will not directly or
indirectly, purchase, or redeem any share of its outstanding capital stock or
any securities or options exercisable for, or convertible into, its capital
stock except (i) redemption of the Preferred in accordance with the Amended
and Restated Certificate of Incorporation of the Company and (ii) the
repurchase of stock at cost upon termination of engagement of an officer,
director, employee or consultant.
1.8 INVESTMENTS. Without the approval of the Board of Directors,
the Company will not acquire any corporation or other entity, nor purchase
nor lease (as lessee) all or a substantial portion of the assets, property,
business, stock or other securities or interest of another corporation or
entity. Without Board approval, the Company will not invest (as a
shareholder, partner, lender or otherwise) in any corporation, partnership,
joint venture or any other entity, provided, however, the foregoing
prohibition shall not prevent the Company from purchasing short-term money
market instruments.
1.9 SUBSIDIARIES. The Company will not create, own or otherwise
acquire or hold any Subsidiary.
1.10 INSIDER TRANSACTIONS. The Company will not engage in any
transaction with any of the Company's directors, officers, employees or
stockholders except (i) as provided in this Agreement; (ii) reimbursement of
reasonable expenses incurred in the ordinary course of business including
attendance at board meetings; (iii) the issuance of options and Common Stock
reserved for such issuance on the date hereof to employees and consultants
pursuant to a stock option or purchase plan approved by the directors (and
stockholders if required by the Internal Revenue Code) of the Company and
administered by the Board of Directors or a Compensation Committee approved
by it, provided that each grant of such options or Common Stock will be
issued subject to such exercise or vesting schedule (if any) as may be
determined by the Board of Directors and provided further that the number of
shares available for such plan may be increased with Board approval; and (iv)
as provided in employment contracts which are approved by the Board of
Directors.
1.11 ANNUAL PRESENTATION. The Company shall, at the request of any
20% Holder, make a presentation to such 20% Holder and its partners or
employees at such 20% Holder's annual meeting, describing the Company and its
past, present and future objectives and strategies; provided that the Company
shall not be required to make such presentation to any one 20% Holder on more
than one occasion during any calendar year period.
1.12 COMPLIANCE WITH LAWS. The Company shall comply with all
applicable laws, rules and regulations of all governmental authorities the
violation of which might have a material adverse affect upon its business or
financial condition.
4
<PAGE>
1.13 TERMINATION OF COVENANTS. The covenants contained in this
Article 1 shall terminate upon sale of securities by the Company pursuant to
a Public Offering.
ARTICLE 2
RIGHT OF FIRST REFUSAL
2.1 EXERCISE OF RIGHT. If prior to a Public Offering the Company
should desire to issue any equity securities or debt securities or any other
evidence of indebtedness ("Offered Securities") for cash in a transaction not
registered under the Securities Act, it shall give each Holder the first
right to purchase all or any portion of such Offered Securities as provided
below. Such purchase shall be made on the same terms as the Company is
willing to sell such Offered Securities to any other person. Prior to any
sale or issuance by the Company of Offered Securities, the Company shall
notify each Holder, in writing, of its intention to sell and issue such
Offered Securities, setting forth the amount of Offered Securities it desires
to sell and the terms under which it proposes to make such sale. Each Holder
shall have 20 days after the Company gives its aforesaid notice to notify the
Company of the maximum number of the Offered Securities that it desires to
purchase upon the terms set forth in the Company's notice. Each Holder
exercising the option shall also specify in its notice whether its purchase
is contingent upon the Company consummating the sale of all of the Offered
Securities (or any portion thereof) which it has proposed to sell as set
forth in the Company's notice. A Holder may assign its rights to purchase
(in whole or in part) to an Affiliate.
2.2 ISSUANCE TO OTHERS. Following the end of the 20-day period
that the Holders have to exercise their option, the Company may sell any
Offered Securities with respect to which the Holders did not indicate a
desire to purchase, provided that all such sales described in this sentence
shall be made within 90 days following the Company's notice and shall be upon
terms and conditions no more favorable to the purchaser than those set forth
in the Company's notice. Any Offered Securities described in the Company's
Notice which are not sold within such 90-day period may not be sold
thereafter unless the Company again follows the provisions of this Article 2.
2.3 OVERSUBSCRIPTION. If the Holders oversubscribe for the
Offered Securities, each Holder who notifies the Company that it desires to
purchase Offered Securities shall have a right to purchase a pro rata portion
of such Offered Securities based on the percentage that the Purchaser Common
held by it bears to the shares of Purchaser Common held by all Holders who
notify the Company of their desire to purchase any of the Offered Securities,
assuming, for purpose of such allocation that all Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock has been converted into Common Stock at the then
current conversion price but excluding all Public Shares; provided, however,
that no Holder shall be allocated more of the Offered Securities than the
maximum number it indicated it was willing to purchase in its notice and any
of the Offered Securities which would otherwise be allocated to it will be
allocated among the other Holders in accordance with this sentence. The
Company shall promptly advise each Holder of the amount of Offered Securities
it is entitled to purchase as a result of the allocation.
5
<PAGE>
2.4 PURCHASE PROCEDURES. Each Holder who gives the Company notice
that it desires to purchase any of the Offered Securities shall pay for the
Offered Securities which it has notified the Company that it will purchase by
check against delivery of the Offered Securities at the executive office of
the Company within ten days after the expiration of the 20-day period
referred to above unless such Holder made its purchase contingent upon the
sale of all Offered Securities (or any portion thereof) specified in the
Company's notice in which event such purchase and sale will take place upon
satisfaction of such contingency with at least ten days prior written notice
to such Holder.
2.5 EXCLUSIONS. The provisions of this Article 2 shall not apply
to (i) the issuance from and after the Closing Date of the shares of Common
Stock reserved for issuance (a) upon conversion of the Preferred Stock, (b)
options to purchase up to 2,290,610 shares of Common Stock reserved for
issuance under the Company's Stock Option Plan, or any additional shares
subsequently reserved for issuance to employees, directors and consultants
with approval by the Board of Directors, or (c) rights to acquire capital
stock of the Company existing on the date hereof and set forth on the
Schedule of Exceptions delivered at the closing under the Purchase Agreement,
(ii) warrants or other rights to purchase Common Stock (and the issuance of
shares of Common Stock on the exercise thereof) issued to the Company's
suppliers, customers or equipment lessors or to lenders providing financing
used solely to purchase equipment, provided that any transaction under this
clause (ii) has received approval by the Board of Directors, (iii) the
issuance of securities pursuant to a Public Offering, (iv) the issuance of
securities in connection with a bona fide acquisition of or by the Company of
any business or property, whether by merger, consolidation, sale of assets,
sale or exchange of stock or otherwise, or (v) the issuance of shares of
Preferred Stock reserved for issuance upon exercise of warrants initially to
purchase an aggregate of 465,584 shares of Series B Preferred Stock.
ARTICLE 3
REGISTRATION RIGHTS
3.1 DEMAND REGISTRATION.
(a) EXERCISE OF RIGHT. If at any time after the earlier of
the Company's Public Offering or June 26, 1999 and prior to June 26, 2005
(but not within three months after the effective date of a Registration
Statement pursuant to which securities of the Company were sold to the
public) the Company receives a request from Initiating Holders for the
registration of least 30% of the Underlying Common Stock held by the
Initiating Holders (if any lesser percentage of the anticipated aggregate
offering price, net of underwriting discounts and commissions, is more than
$2,000,000), the Company will prepare and file with the Securities and
Exchange Commission a Registration Statement with respect to a public
offering of the Underlying Common Stock which the Holders making such request
desire to include in a public offering. In the event that a request for
registration is made by less than all of the Holders, the Company will notify
all other Holders of such request and any other Holder must notify the
Company within 30 days after such notice from the Company if it wishes to
join in the request. The Company shall cause a Registration Statement to be
filed as soon as practicable but in no event later than 90 days after receipt
of the initial request for registration, provided that the Company
6
<PAGE>
may defer the filing of a Registration Statement for up to 120 days after the
request for registration is made if the Board of Directors of the Company
determines in good faith that it would be seriously detrimental to the
Company to file the Registration Statement without such deferral. The Company
shall use its best efforts to cause such Registration Statement to become
effective as promptly as practicable and to ensure the availability of a
prospectus meeting the requirements of the Securities Act for a period of 180
days following the effective date of such Registration Statement.
(b) UNDERWRITING. If the Initiating Holders intend to
distribute the Underlying Common Stock covered by their request by means of
an underwriting, they shall so advise the Company as a part of their request
made pursuant to subsection (a) and the Company shall include such
information in its written notice to the other Holders. The right of any
Holder to registration pursuant to this Section 3.1 shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Underlying Common Stock in the underwriting (unless otherwise
mutually agreed by 65% in interest of the Initiating Holders, the managing
underwriter and such Holder) to the extent provided herein. The Company
shall (together with all Holders proposing to distribute their Underlying
Common Stock) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by 65% in interest of the
Initiating Holders.
(c) MARKETING LIMITATIONS. Notwithstanding any other
provision of this Section 3.1, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of
the number of shares to be underwritten, then the Initiating Holders shall so
advise all Holders of Underlying Common Stock and the number of shares of
Underlying Common Stock that may be included in the registration and
underwriting shall be allocated among all Holders desiring to participate in
such registration in proportion, as nearly as practicable, to the respective
shares of Underlying Common Stock held by such Holders at the time of filing
the Registration Statement and no securities held by any person other than a
Holder shall be included therein. No Underlying Common Stock or other
securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. Except with the
consent of the Holders who own at least the 65% of the Underlying Common
Stock to be included in the registration, the Company shall not include
securities for its own account or for the account of any person (other than
the shares of Common Stock held by the Holders that are included in the
registration in accordance with the provision of this Section 3.1) in any
registration undertaken pursuant to this subsection and neither the Company
nor any person or Holder whose shares were not included in the registration
shall sell any such securities in a public offering until at least 90 days
following completion of the offering of the securities included in the
registration or, upon the request of the managing underwriter, up to an
additional 180 days.
(d) WITHDRAWAL. Any Holder may, at any time, prior to the
effectiveness of a Registration Statement withdraw its Underlying Common
Stock therefrom. The Company shall be obligated to register Underlying Common
Stock pursuant to this Section 3.1 on only two occasions; provided that if
prior to the effectiveness of a Registration Statement, the number of Holders
participating or the number of shares of Underlying Common Stock included
would not be sufficient to initiate a registration pursuant to this Section
3.1, the Company may withdraw its Registration Statement and, unless such
insufficiency resulted from shares of Underlying
7
<PAGE>
Common Stock being withdrawn as a result of a materially adverse event or
circumstance relating to the Company which was not known to the Initiating
Holders at the time of their request for registration, the Company will be
deemed to have satisfied one of its obligations to register Underlying Common
Stock under this Section 3.1.
3.2 PIGGYBACK REGISTRATION.
(a) RIGHT TO JOIN IN REGISTRATION. If at any time prior to
August 15, 2006, the Company proposes to file a Registration Statement under
the Securities Act seeking registration of any securities of the Company for
sale for cash to the public either for its own account or for the account of
any holder of securities of the Company, the Company shall notify, in
writing, each Holder of its intention to file such Registration Statement and
in addition to, and independent of, the rights afforded by Section 3.1, will
afford each Holder the opportunity to request inclusion in such Registration
Statement of all or any part of its Underlying Common Stock. If any Holder
desires to join in such Registration Statement, it shall, within 30 days
after the date of mailing such notice by the Company, notify the Company, in
writing, of the number of shares of Underlying Common Stock it desires to
include in any such Registration Statement. If a Holder requests inclusion of
any Underlying Common Stock in such Registration Statement and if such public
offering is to be underwritten, the Company will request the underwriters of
the offering to purchase and sell such Underlying Common Stock. The right of
any Holder to registration pursuant to this Section 3.2 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of
such Holder's Underlying Common Stock in the underwriting unless otherwise
agreed to by the Company.
(b) MARKETING LIMITATION. If the managing underwriter
determines that marketing factors require a limitation of the number of
shares to be underwritten, the Company shall so advise the Holders and the
other persons distributing their securities through such underwriting and (i)
Common Stock held (or issuable upon conversion or exercise of securities
held) by any person who does not have contractual rights of registration
shall first be excluded and (ii) if such exclusion is not sufficient, Common
Stock held (or issuable upon conversion or exercise of securities held) by
any person other than a Holder and shares of Underlying Common Stock held by
the Holders shall be excluded to the extent required to permit the number of
shares of Underlying Common Stock and Common Stock held by such other persons
that may be included in the registration and underwriting to be allocated
among all such Holders and other persons in proportion, as nearly as
practicable, to the number of shares of Underlying Common Stock held by all
such Holders and shares of Common Stock held (or issuable upon conversion or
exercise of securities held) by such other persons at the time of filing the
Registration Statement, provided that (i) no such inclusion of Underlying
Common Stock or Common Stock by the underwriter may reduce the securities
being offered by the Company for its own account in the first such
underwriting and may not reduce such securities being offered by the Company
for its own account by more than 20% in any subsequent underwriting, and (ii)
no securities held by an employee (or former employee) of the Company may be
included in the registration without the prior written consent of Holders of
at least 65% of the Underlying Common Stock to be included in the
registration. No Common Stock, Underlying Common Stock or other securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration. Holders who hold
securities of the Company which were
8
<PAGE>
not included in the registration shall not sell such securities in a public
offering until at least 180 days following the completion of the offering of
the securities included in the registration.
(c) WITHDRAWAL. The Company may decline to file a Registration
Statement after notice to each Holder, or withdraw a Registration Statement
after filing and after such notice, but prior to the effectiveness thereof,
provided that it shall promptly notify each Holder, in writing of any such
action. Any Holder may, at any time prior to the effectiveness of a
Registration Statement filed pursuant to this Section 3.2, withdraw its
Underlying Common Stock therefrom. The fact that any Underlying Common Stock
has been the subject of a request for registration pursuant to this Section
3.2 shall not prevent such Common Stock from being the subject of future
requests for registration pursuant to this Section 3.2 or Section 3.1 or 3.3
if such Underlying Common Stock was not sold in a public offering pursuant to
the Registration Statement with respect to which the prior request was made.
3.3 FORM S-3 REGISTRATION. The Company will use its best efforts
to qualify for registration on Form S-3 (references to Form S-3 to include
any equivalent successor form) and to that end, the Company shall register
(whether or not required by law to do so) its Common Stock under the Exchange
Act within 12 months following the effective date of the first registration
of any securities of the Company on Form S-1 or SB-2 (including any successor
forms), provided that securities have been sold to the public pursuant to
such registration. After the Company has qualified for the use of Form S-3,
the Holders of Underlying Common Stock shall have the right to request an
unlimited number of registrations on Form S-3 under this Section 3.3 (each
such request shall be in writing and shall state the number of the shares of
Underlying Common Stock to be disposed of and the intended method of
disposition of such share by such Holder or Holders), provided that the
Company shall not be required to effect more than two registrations pursuant
to this Section 3.3 in any 12-month period, and shall not be required to
effect a registration unless the Holders requesting registration propose to
dispose of shares of Underlying Common Stock that they reasonably anticipate
will have an aggregate disposition price (before deduction of underwriting
discounts and expenses of sale) of at least $500,000. The Company shall give
notice to all Holders of the receipt of a request for registration pursuant
to this Section 3.3 and shall provide a reasonable opportunity for other
Holders to participate in the registration. Subject to the foregoing the
Company shall use its best efforts to effect promptly the registration of ALL
shares of Underlying Common Stock on Form S-3, to the extent requested by the
Holders.
3.4 STATE QUALIFICATION. In connection with any registration of
Underlying Common Stock pursuant to Section 3.1, 3.2 or 3.3 or the sale of
Underlying Common Stock pursuant to Rule 144 under the Securities Act, the
Company will use its best efforts to qualify the offering under such state
securities laws as the Holders requesting registration shall reasonably
request or to otherwise satisfy the requirements of such state securities
laws.
3.5 EXPENSES OF REGISTRATION. In connection with any Registration
Statements prepared and filed in accordance with Section 3.1, 3.2 or 3.3, the
Company will bear the entire expense of the (i) preparation and filing of
such Registration Statement, (ii) furnishing of such number of copies of the
prospectus included therein as may be reasonably required in connection with
the offering, (iii) qualification of such offering under such state
securities laws as the Holders requesting registration shall request, (iv)
the fees and expenses of counsel for the
9
<PAGE>
Company and the fees and expenses of one counsel for the Holders. The Holders
shall pay all selling expenses attributable to their Underlying Common Stock
that is included in the Registration Statement, including underwriting
commissions and discounts.
3.6 LEGAL OPINION; ACCOUNTANT'S LETTER. In an underwritten
offering, the Company shall furnish to each Holder of Underlying Common Stock
included in a Registration Statement a signed counterpart, addressed to each
such Holder and their underwriters, if any, of:
(a) an opinion of counsel for the Company, dated the
effective date of the Registration Statement; and
(b) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial statements included in
the Registration Statement; covering substantially the same matters with
respect to the Registration Statement (and the prospectus included therein)
and (in the case of the accountants' letter) with respect to the events
subsequent to the date of the financial statements, as are customarily
covered (at the time of such registration) in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in connection with
underwritten public offering of securities.
3.7 SALE OF PREFERRED TO UNDERWRITER. Notwithstanding any
provision in this Agreement to the contrary, in lieu of converting any share
of Preferred Stock prior to the filing of any Registration Statement filed
pursuant to this Agreement, the holder of such shares may sell them to the
underwriters of the offering being registered upon the undertaking of such
underwriters to convert the Preferred Stock on or prior to the closing date
of the offering. The Company agrees to cause the Common Stock issuable on the
conversion of the Preferred Stock to be issued within such time as will
permit the underwriters to make and complete the distribution contemplated by
the underwriting.
3.8 INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. In the event of any
registration of any of its securities under the Securities Act pursuant to
this Agreement, the Company shall indemnify and hold harmless each Holder
requesting or joining in a registration of such securities, each of its
officers, directors and partners and such Holder's legal counsel and
accountants, each underwriter (as defined in the Securities Act) and each
controlling person of each of the foregoing, if any, (within the meaning of
the Securities Act) against any losses, claims, damages or liabilities, joint
or several (or actions in respect thereof), including any of the foregoing
incurred in the settlement of any litigation, commenced or threatened, to
which any of them may be subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(A) any untrue statement (or alleged untrue statement) of any material fact
contained in any offering circular or Registration Statement under which such
securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any summary prospectus
issued in connection with any securities being registered, or any amendment
or supplement thereto, or any other document, or (B) any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (C) any violation
by the Company of the Securities Act or any Blue Sky law
10
<PAGE>
or any other statute or common law, or any rule or regulation promulgated
under the Securities Act or any Blue Sky law or any other law, applicable to
the Company in connection with any such registration, qualification or
compliance, and shall reimburse each such person entitled to indemnification
under this subsection (a) for any legal or other expenses reasonably incurred
by such person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company shall
not be liable to any such person in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission made in such offering circular, Registration Statement,
preliminary prospectus, summary prospectus, prospectus, or amendment or
supplement thereto, or any other document, in reliance upon and in conformity
with written information furnished to the Company by such person,
specifically for use therein. The indemnity provided for herein shall remain
in full force and effect regardless of any investigation made by or on behalf
of the person seeking indemnification and shall survive transfer of such
securities by such Holder.
(b) INDEMNIFICATION BY HOLDERS. The Company may require as a
condition to having the Underlying Common Stock included among the securities
as to which such registration is being effected that each Holder requesting
or joining in a registration agree (severally and not jointly) to indemnify
the Company, its directors and officers and its legal counsel and
accountants, each underwriter (as defined in the Securities Act), each
controlling person of each of the foregoing and each other such Holder, each
of its officers, directors and partners and each controlling person of such
Holder, against any losses, claims, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in the settlement
of any litigation, commenced or threatened, joint or several, to which any of
them may become subject under the Securities Act or under any other statute
or at common law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement (or alleged untrue statement) of any material fact contained in any
offering circular or Registration Statement under which such securities were
registered under the Securities Act at the request of such Holder pursuant to
this Agreement, any preliminary prospectus or final prospectus contained
therein, or any summary prospectus issued in connection with any securities
being registered, or any amendment or supplement thereto, 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 each
case to the extent that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) was made in such Registration Statement,
preliminary prospectus, summary prospectus, prospectus or amendment or
supplement thereto, solely in reliance upon and in conformity with written
information furnished to the Company by such Holder specifically for use
therein, and to reimburse such persons for any legal or other expenses
reasonably incurred in connection with investigating or defending any such
loss, claim, damage, liability or action, provided that a Holder's total
liability under any indemnity given pursuant to this subsection (b) shall not
exceed the net proceeds received by such Holder from the sale of stock
pursuant to the registration.
(c) NOTICE OF CLAIM. Each party entitled to indemnification
under this Agreement (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has written notification 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
11
<PAGE>
or litigation, shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at the Indemnified Party's expense, and provided
further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
subsection (c). Notwithstanding the foregoing, an Indemnified Party shall
have the right to retain its own counsel, with the fees and expenses to be
paid by the Indemnifying Party, if representation of such Indemnified Party
by the counsel retained by the Indemnifying Party would be inappropriate due
to actual or potential differing interests between such Indemnified Party and
any other party represented by such counsel in such proceeding. 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 of such claim or
litigation.
3.9 CONTRIBUTION. If the indemnification provided for in Section
3.8 is for any reason held to be unavailable, or insufficient to hold
harmless an indemnified party with respect to any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claim, damage or liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the
one hand, and of the Indemnified Party on the other, in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations; provided,
however that each Holder's liability under this Section 3.9 shall not exceed
such Holder's gross proceeds from the offering of securities made in
connection with a registered offering pursuant to this Agreement. The
relative fault of this Indemnifying Party and of the Indemnified Party shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
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. For purposes of this Section 3.9 each
person, if any, who controls, within the meaning of the Securities Act, any
Indemnified Party shall have the same rights to contribution as such
Indemnified Party, and each person, if any, who controls the Company within
the meaning of the Securities Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action,
suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section
3.9, will notify such party or parties from whom contribution may be sought,
but the omission so to notify such party or parties from whom contribution
may be sought shall not relieve the party or parties from whom contribution
may be sought from any other obligation it or they may have hereunder or
otherwise than under this Section 3.9. Notwithstanding the foregoing, to the
extent that the provisions on indemnification and contribution contained in
the underwriting agreement entered into in connection with the underwritten
public offering are in conflict with the foregoing provisions, the provisions
in the underwriting agreement shall be controlling.
3.10 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register Underlying Common Stock granted to the Holders may only
be assigned to a transferee in
12
<PAGE>
connection with the transfer or assignment by a Purchaser or Holder of Series
A Preferred Stock, Series B Preferred Stock, warrants initially to purchase
up to an aggregate of 465,584 shares of Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock or
Underlying Common Stock.
3.11 INFORMATION BY HOLDER. The Holder or Holders of Underlying
Common Stock 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 referred to in this Agreement.
3.12 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Securities and Exchange
Commission which may at any time permit the sale of the Underlying Common
Stock 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) PUBLIC INFORMATION. Make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act, at all times 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 and to use its best efforts to cause its
Common Stock to be quoted in the National Association of Securities Dealers,
Inc.'s electronic interdealer quotation system known as Nasdaq.
(b) FILINGS. File with the Securities and Exchange
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and Exchange Act (at any time after it has
become subject to such reporting requirements).
(c) EVIDENCE OF COMPLIANCE. So long as a Holder owns any
Underlying Common Stock to furnish to the Holder forthwith upon request (i) a
written statement by the Company as to its compliance with the reporting
requirements of said Rule 144 (at any time after 90 days after the effective
date of the first registration statement filed by the Company for an offering
of its securities to the general public) and of the Exchange Act (at any time
after it has become subject to such reporting requirements), (ii) a copy of
the most recent annual or quarterly report of the Company, and (iii) such
other reports and documents of the Company as a Holder may reasonably request
in availing itself of any rule or regulation of the Commission allowing a
Holder to sell any such securities without registration.
(d) OTHER ACTION. The Company, at its expense, will also
take such other action necessary or desirable to permit the Holders to sell
the Underlying Common Stock pursuant to the requirements of Rule 144 and all
applicable securities laws of such states as the Holders desiring to sell the
Underlying Common Stock shall request.
3.13 OTHER REGISTRATION RIGHTS. The Company will not grant to any
existing or future purchaser of its securities any rights to require the
Company to register such securities under the Securities Act that are more
favorable than those provided for herein and will not grant any registration
rights that diminish or adversely affect the registration rights of Holders
hereunder or that could result in a reduction in the amount of any securities
of the Holders that are
13
<PAGE>
included in any registration if the managing underwriter in any offering
determined that marketing factors required the limitation of the number of
shares of Common Stock or other securities to be included in the offering,
provided that the foregoing shall not prohibit the Company from granting
future purchasers of securities the right to participate with the Holders on
a pro rata basis in the exercise of "piggyback" registration rights.
3.14 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that
such Holder shall not sell or otherwise transfer or dispose of any Common
Stock (or other securities) of the Company held by such Holder (other than
those included in the registration) for a period specified by the
representative of the underwriters of Common Stock (or other securities) of
the Company not to exceed one hundred eighty (180) days following the
effective date of a registration statement of the Company filed under the
Securities Act, provided that:
(i) such agreement shall apply only to the Company's
Public Offering; and
(ii) all officers and directors of the Company and enter
into similar agreements.
Each Holder agrees to execute and deliver such other agreements as may
be reasonably requested by the Company or the underwriter which are
consistent with the foregoing or which are necessary to give further effect
thereto. The obligations described in this Section 3.14 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form
S-8 or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares of Common Stock (or
other securities) subject to the foregoing restriction until the end of said
one hundred eighty (180) day period.
3.15 RESTRICTIONS ON TRANSFER.
(a) Each Holder agrees not to make any disposition of all or
any portion of the Preferred Stock or Underlying Common Stock unless and
until:
(i) There is then in effect a registration statement
under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or
(ii) (A) The transferee has agreed in writing to be bound
by the terms of this Agreement, (B) such Holder shall have notified the
Company of its intention to effect such transfer, indicating the
circumstances of the proposed transfer and, if reasonably requested by the
Company, furnishes the Company with an opinion of such Holder's counsel, in
form and substance reasonably satisfactory to counsel for the Company, to the
effect that the proposed transfer may be made without registration under the
Securities Act or qualification under any applicable state securities laws.
The Company will promptly notify the Holder if the opinion of counsel
furnished to the Company is reasonably satisfactory to counsel for the
Company. Unless the Company notifies the Holder within ten (10) days after
the Holder furnishes it with
14
<PAGE>
such opinion that such opinion is not reasonably satisfactory to counsel for
the Company, the Holder may proceed to effect the transfer. Notwithstanding
the foregoing provisions, no such registration statement or opinion of
counsel will be necessary for a distribution without consideration by a
Holder that is a partnership, to a partner of such partnership or a retired
partner of such partnership who retires after the date hereof, or to the
estate of any such partner or retired partner or the transfer by gift, will
or intestate succession of any partner to his spouse or to the siblings,
lineal descendants or ancestors of such partner or his or her spouse, if the
transferee agrees in writing to be subject to the terms hereof to the same
extent as if he or she were the Holder hereunder and, in particular, agrees
to be bound by this Article 3.
ARTICLE 4
VOTING AGREEMENT WITH RESPECT TO ELECTION
OF DIRECTORS; REPURCHASE OPTION; RIGHT OF FIRST
REFUSAL AND CO-SALE AGREEMENT
4.1 VOTING AGREEMENT WITH RESPECT TO ELECTION OF DIRECTORS. Each
Purchaser agrees to vote all shares of Preferred Stock and Purchaser Common
then held by it, Dullien agrees to vote all shares of Shareholder Stock,
Feldman agrees to vote all shares of Feldman Stock and Edlund agrees to vote
all shares of Edlund Stock, as follows:
(a) NUMBER OF DIRECTORS. Against any proposal presented to
the stockholders for amendment of either the Amended and Restated Certificate
of Incorporation or the Bylaws of the Company to change the number of
authorized directors of the Company from seven unless a vacancy on the Board
of Directors has not been filled within a reasonable period of time, in which
event the number of authorized directors shall be reduced to equal the number
of persons actively serving as directors, subject to future increase upon the
filling of such vacancy.
(b) DESIGNATION OF MEMBERS. At any stockholder vote for the
election of directors for:
(i) one member (the "Series A Nominee") nominated by the
holders of a majority of the outstanding Series A Preferred Stock (calculated
without counting the shares of Series A Preferred Stock held by Columbine
Venture Fund II, L.P. and its affiliates) ("CVF") (initially to be Janet
Effland);
(ii) one member (the "Series B Nominee") nominated by the
holders of a majority of the outstanding Series B Preferred (calculated
without counting the shares of Series B Preferred held by CVF and its
affiliates) (initially to be Barbara Santry);
(iii) one member nominated by CVF (initially to be Sherman
Muller); and
(iv) one member (the "Series E Nominee") nominated by the
holders of a majority of the outstanding Series E Preferred (calculated
without counting the shares of Series E Preferred held by Existing Holders)
(initially to be Robert M. Friedland); and
15
<PAGE>
(v) two members (if a six person board is constituted), three
members (if a seven person board is constituted) or four members (if a eight
person board is constituted) nominated by a majority of the Company's
outstanding Preferred Stock (on an as-converted basis) and Common Stock, all
voting together as a single class, one of which nominees shall be the Chief
Executive Officer (initially to be James Edlund, Vivian Dullien and Fredric J.
Feldman).
(c) REMOVAL OF DIRECTORS. At any stockholder vote with respect to
the removal of directors, to vote as directed by the person(s) which designated
the director proposed to be removed.
(d) VACANCY. In the event that a vacancy on the Board of Directors
occurs, at the written request of the person(s) entitled by this Agreement to
designate a director to fill the vacancy, the Stockholders, CIF, Dullien,
Feldman and Edlund agree to join in calling a special meeting of stockholders
for the purpose of filling the vacancy, and to vote at such meeting (either in
person or by proxy) as directed in writing by the person(s) entitled by this
Agreement to designate the director to fill such vacancy.
(e) INSTRUCTIONS TO BE IN WRITING. At least one day prior to any
vote for:
(i) the election of directors, the party or parties entitled to
designate each director's position shall notify the other parties to this
Agreement in writing of the name of the person designated by it or them to fill
each such position. If any party fails to designate directors as set forth in
this Section, the parties to this Agreement shall vote for the person last
designated by such party, unless such director declines to serve for an
additional term, has resigned or has been removed from office.
(ii) the removal of a director, the party or parties which
designated the director who is proposed to be removed shall give the other
parties written voting instructions.
(f) AFFIRMATIVE OBLIGATION TO VOTE. Each party to this Agreement
shall have an affirmative obligation to vote, either in person or by proxy, in
accordance with the terms of this Agreement at any vote taken of the
stockholders for the election or removal of directors, and to participate in any
written consent for the election of directors.
(g) EXPENSES OF REPRESENTATIVE DIRECTORS. The Company will reimburse
the non-employee directors for their reasonable expenses incurred in connection
with their attendance at board meetings.
(h) MEETINGS. The Board of Directors will meet regularly at least
every other month.
4.2 RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT.
(a) OFFER TO PURCHASE. During such times as a transfer of the
Shareholder Stock is not restricted under the provisions of Section 4.3, Dullien
may sell or transfer for cash consideration the Shareholder Stock or such
portion thereof that is allocated to her under the
16.
<PAGE>
provisions of subsection 4.2(c), provided that Dullien first complies with the
provisions of this Section 4.2. The provisions of this Section 4.2 shall
supersede any right of first refusal that may be contained in the Bylaws of the
Company after the date hereof. Dullien shall first obtain an unconditional, bona
fide written offer ("Offer") from the contemplated purchaser, setting forth in
reasonably precise details the terms and conditions of purchase or transfer,
including the number of shares of Shareholder Stock, purchase price per share
and terms of payment, and transmit a copy of the Offer to each of the Existing
Holders. Upon request of any of the Existing Holders, Dullien shall promptly
furnish such information as may be reasonably requested in order to establish
that the Offer is bona fide.
(b) RIGHT OF FIRST REFUSAL. The receipt of the Offer by the Existing
Holders shall give the Existing Holders an option to purchase all of the stock
covered by the Offer ("Offered Stock") at the same price and upon the equivalent
terms and conditions as set forth in the Offer. Within 30 days after the receipt
of the Offer, each Existing Holder shall notify Dullien and the Company whether
it exercises its right to purchase the Offered Stock and the maximum number of
shares it agrees to purchase. Unless the Existing Holders oversubscribe for the
Offered Stock, each Existing Holder shall purchase the maximum number of shares
specified in its notice. In the event the Existing Holders oversubscribe for the
Offered Stock, each Existing Holder shall be entitled to purchase a fraction of
the Offered Stock, the numerator of which is the number of shares of Purchaser
Common then held by such Holder and the denominator of which is the number of
shares of Purchaser Common then held by all Existing Holders exercising the
right of purchase assuming all Preferred Stock has been converted into Common
Stock at the then current conversion ratio, but excluding Public Shares;
provided that no Holder shall be allocated more of the Offered Stock than the
maximum amount it indicated it was willing to purchase in its notice, and any
Offered Stock which would otherwise be allocated to it, will be allocated among
the other Existing Holders in accordance with this sentence. Upon expiration of
the aforesaid 30-day period, the Company shall promptly advise each Existing
Holder which exercises the right of purchase of the Offered Stock allocated to
it in accordance with the aforesaid procedure. Nothing contained herein shall
prevent any two or more Existing Holders from agreeing on an alternative
allotment among themselves at any time prior to purchase and so advising Dullien
and the Company, provided that such agreeing Existing Holders as a group
purchase all of the stock that was allocated to all of the agreeing Existing
Holders under this Section. If upon the expiration of the 30-day period after
receipt of the Offer by the Existing Holders, the Existing Holders have not
notified Dullien and the Company that they desire to purchase all of the Offered
Stock upon the terms and conditions set forth in the Offer, then all of the
Offered Stock may thereafter be sold by Dullien upon the terms and conditions
set forth in the Offer, provided that the Existing Holders who elect to
participate in the sale may do so under the provisions of subsection (c) and
provided further that if Dullien and any Existing Holders participating under
subsection (c) do not consummate the sale of the Offered Stock within 120 days
after expiration of the 30-day period described above, such stock may not be
sold unless the provisions of this Section are complied with again in connection
with such sale. Payment for the shares of Offered Stock purchased pursuant to
this subsection (b) shall be made to Dullien at the principal office of the
Company against delivery of duly endorsed certificates representing the Offered
Stock. Payment shall be made by check in an amount based on the per share price
stipulated in the Offer. Payment shall be made by a Holder within ten days after
delivery of the Company's allocation notice, unless the Offer provided for
extended payment terms in which event payment shall be made as comparable as
17.
<PAGE>
possible to the terms set forth in the Offer. The foregoing provisions shall not
prevent a Holder and Dullien from agreeing on alternative terms of payment.
(c) CO-SALE AGREEMENT. Within 30 days after receipt of the Offer
delivered under subsection (a) each Existing Holder shall also notify Dullien
and the Company (which notice may be included in the notice under subsection
(b)) whether it exercises its right of co-sale under the provisions of this
subsection (c) in the event all of the Offered Stock is not purchased by the
Existing Holders pursuant to the right of first refusal under subsection (b). If
all of the Offered Stock is not purchased by the Existing Holders pursuant to
the right of first refusal under the provisions of subsection (b), then Dullien
and the Existing Holders who have so exercised their right of co-sale shall be
entitled to participate in the proposed sale or transfer pro rata based on the
number of shares of Shareholder Stock and Purchaser Common (assuming all
Preferred Stock has been converted into Common Stock at the then current
conversion ratio, but excluding Public Shares) held by Dullien and each Existing
Holder who exercised the right of co-sale but only to the extent a Holder owns,
or can obtain upon conversion, the stock which is the subject of the Offer. Any
Holder who notified the Company during such 30-day period that it elected to
exercise its right of co-sale, shall in the event all of the Offered Stock is
not sold to the Existing Holders pursuant to subsection (b) be obligated to sell
his portion of the Offered Stock in accordance with the terms of the Offer and
Dullien may only sell his portion of the Offered Stock. In the event all of the
Offered Stock is not purchased by the Existing Holders pursuant to subsection
(b) and none of the Existing Holders exercise their right of co-sale pursuant to
this subsection (c), Dullien may consummate the sale in accordance with the
terms of the Offer and upon no more favorable terms, provided that if Dullien
does not consummate the sale of the Offered Stock in accordance with the terms
of the Offer within 120 days after the expiration of the last 30-day period
referred to in subsection (b), such stock may not be sold unless the provisions
of this Section 4.2 are complied with again in connection with such sale.
4.3 RESTRICTIONS ON TRANSFER.
(a) Each holder of Founder Stock agrees that until termination of
this Agreement or such earlier date upon which all Purchaser Common has been
sold to the public, if the Company or the managing underwriter of any public
offering of securities of the Company requests, the Founder Stock will not be
offered or sold to the public in accordance with Rule 144 (promulgated under the
Securities Act) or otherwise during the time that any of the Purchasers (or
other Holders) may be offering securities to the public pursuant to registration
rights granted to them under the Amended Investors' Rights Agreement, or the
Company may be offering securities to the public pursuant to a Registration
Statement, and in each case for a period of at least 180 days following the
closing of the offering.
(b) Whenever the restrictions contained in subsection (a) do not
apply, Dullien may sell or transfer for cash consideration the Shareholder Stock
free from the provisions of this Agreement in accordance with Section 4.2;
provided that the shares she is permitted to sell may be reduced under the
provisions of Section 4.2.
(c) The Company shall not (i) transfer on its books any shares of the
Founder Stock which shall have been sold or transferred in violation of any of
the provisions set forth
18.
<PAGE>
in this Agreement, or (ii) treat as owner of such shares or accord the right to
vote as such owner or pay dividends to any purchaser, transferee or pledgee to
whom any such shares have been so sold, transferred, pledged or encumbered.
4.4 NO ADVERSE AMENDMENTS. Until the termination of this Agreement or
unless specifically contemplated by this Agreement, the Purchasers and the
Founders agree to vote all shares of Preferred Stock, Purchaser Common and
Founder Stock held by each of them, respectively, against any proposed amendment
of the Amended and Restated Certificate of Incorporation or the Bylaws of the
Company which would adversely affect the rights of the Stockholders under this
Agreement including, but not limited to, amendments affecting (a) quorum and
voting requirements at meetings of stockholders, (b) the identity of persons who
may call a special meeting of stockholders, (c) the method by which stockholders
may take action without a meeting, (d) election and removal of directors, (e)
the number of directors, and (f) notices to stockholders and to the
Stockholders. The Stockholders shall be entitled to a temporary restraining
order, injunctive relief, damages and attorneys' fees incurred by them in any
litigation relating to any amendment or proposed amendment violating the
provisions of this paragraph, it being agreed that the Stockholders would have
no adequate remedy at law in such event.
4.5 TERM OF AGREEMENT. Article IV of this Agreement shall terminate and
be of no further force and effect upon the occurrence of any of the following
events:
(a) the determination to terminate this Agreement or any provision of
this Agreement by the Holders of at least 65% of the total number of shares of
Purchaser Common (assuming conversion of the Preferred Stock into Common Stock
at the conversion rate then in effect, but excluding Public Shares), evidenced
by written notice given collectively by such persons to the other parties
hereto; or
(b) August 15, 2006.
In addition, Sections 4.1, 4.2 and 4.4 shall terminate upon a Public
Offering or a Sale of the Company and Section 4.1 will terminate if all Holders
as a group do not hold an aggregate of at least 679,987 shares of Purchaser
Common (assuming conversion of the Preferred Stock at the then current
conversion rate, but excluding Public Shares), as adjusted for stock dividends,
stock splits, combinations of shares and recapitalizations.
Termination of this Agreement shall not affect any rights or obligations
accruing prior thereto.
4.6 LEGEND ON STOCK CERTIFICATES.
(a) The certificates representing shares of Founder Stock and Edlund
Stock issued to or otherwise held by any Founder or Edlund or their transferees
(including certificates issued prior to the date hereof) shall have a legend in
substantially the following form marked thereon:
19.
<PAGE>
"THE VOTING AND TRANSFER OF THE SHARES REPRESENTED HEREBY ARE SUBJECT
TO THE TERMS OF AN INVESTORS' RIGHTS AGREEMENT DATED AUGUST 28, 1997,
AS SUCH AGREEMENT MAY BE AMENDED OR RESTATED FROM TIME TO TIME, A COPY
OF WHICH MAY BE EXAMINED AT THE PRINCIPAL OFFICE OF THE CORPORATION."
(b) The certificates representing shares of Preferred Stock and
Purchaser Common (except Public Shares) issued to or otherwise held by the
Stockholders or their respective transferees except transferees who purchase
such shares in a public offering shall have a legend in substantially the
following form marked thereon:
"THE VOTING OF THESE SHARES IS SUBJECT TO THE TERMS OF AN INVESTORS'
RIGHTS AGREEMENT DATED AUGUST 28, 1997, AS SUCH AGREEMENT MAY BE
AMENDED OR RESTATED FROM TIME TO TIME, A COPY OF WHICH MAY BE EXAMINED
AT THE PRINCIPAL OFFICE OF THE CORPORATION."
4.7 COMPANY OBLIGATIONS. The Company shall assure compliance with the
provisions of Section 4.7. The parties agree that no person shall acquire any
shares of stock from any Stockholder, Founder or any subsequent holder of
Founder Stock, Preferred Stock or Purchaser Common (except Public Shares and
except acquisitions pursuant to a public offering registered under the
Securities Act of 1933) unless such party becomes a party to this Agreement by
executing an agreement to be bound by its terms. The Company shall forthwith
notify the other parties hereto of the name and address of any additional party.
ARTICLE 5
MISCELLANEOUS
5.1 TERMINATION OF PRIOR AGREEMENT. This Agreement amends and supersedes
the Amended Investors' Rights Agreement dated August 16, 1996.
5.2 ASSIGNMENT; BINDING EFFECT. This Agreement shall inure to the benefit
of and be binding upon the parties and their respective transferees, heirs,
executors, legal representatives and successors.
5.3 COSTS OF ENFORCEMENT; REMEDIES. If any action or proceeding is
instituted by any party to enforce or construe any provision of this Agreement,
the prevailing party in such action or proceeding shall be entitled to recover
from such other party (or parties) all of its reasonable attorneys' fees and
disbursements. The rights of the parties under this Agreement are unique and,
accordingly, the parties intend that in addition to all other legal or equitable
remedies available, injunctive relief and the remedy of specific performance may
be utilized in the event of the breach or threatened breach of this Agreement.
20.
<PAGE>
5.4 ENTIRE AGREEMENT. This Agreement contains the sole and entire
understanding of the parties with respect to its subject matter, and all prior
negotiations, discussions, commitments and understandings heretofore had between
them with respect thereto are merged herein.
5.5 AMENDMENTS AND WAIVERS. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated orally or in writing, except
that any term of this Agreement may be amended and the observance of any such
term may be waived (either generally or in a particular instance either
retroactively or prospectively) with (but only with) the written consent of the
Company and the Holders of at least 65% of the Underlying Common Stock. No such
waiver shall extend to or affect any obligation not expressly waived.
5.6 COUNTERPARTS. This Agreement may be executed in more than one
counterpart, each of which shall be deemed to be an original and which,
together, shall constitute one and the same instrument.
5.7 GOVERNING LAW. The validity, legality, enforceability and
interpretation of this Agreement shall be governed by the laws of the State of
Delaware, without giving effect to principles of conflicts of laws.
5.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient, if not, then on the next business day; (c) two
(2) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to (i) to any initial
Holder at its address as set forth in Exhibit B hereto (ii) to any subsequent
Holder at its address which it gives in the manner herein specified to the other
parties to this Agreement and (iii) to the Company, at its address set forth
below:
BIEX INC.
6693 SIERRA LANE, SUITE I
DUBLIN, CA 94568
ATTENTION: JAMES A. EDLUND, PRESIDENT
FACSIMILE: (510) 556-0800
WITH A COPY TO:
COOLEY GODWARD LLP
ONE MARITIME PLAZA, 20TH FLOOR
SAN FRANCISCO, CA 94111-3580
ATTENTION: HOWARD G. ERVIN
FACSIMILE: (415) 951-3699
or such other address as any party may designate to the other parties hereto in
accordance with the aforesaid procedure.
21.
<PAGE>
ARTICLE 6
DEFINITIONS
6.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following respective meanings:
(a) "Edlund Stock" shall mean all shares of Common Stock and other
equity securities now held or hereafter acquired by James Edlund.
(b) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Securities and Exchange Commission thereunder.
(c) "Existing Holder" shall mean the record owner of (i) shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock, (ii) the shares of Common Stock issuable upon
conversion of such Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock or (iii) shares of Common Stock
held by a Series A Holder, Series B Holder, Series C Holder, Series D Holder or
CIF on the date of this Agreement, other than Public Shares.
(d) "Five Percent Holder" or "5% Holder" shall mean each Stockholder
and CIF, and each Holder of at least 5% of the number of shares of Purchaser
Common (assuming conversion of the Preferred Stock into Common Stock at the
conversion rate then in effect, but excluding Public Shares, subject to
proportional adjustment for stock splits, stock dividends, and combinations of
shares). In determining 5% Holders, shares of Purchaser Common held by any
affiliate or general partners of a Holder shall be considered to be held by such
Holder.
(e) "Feldman Stock" shall mean all shares of Common Stock and other
equity securities now held or hereafter acquired by Fredric J. Feldman or a
trust for the benefit of Fredric J. Feldman.
(f) "Founder Stock" shall mean all shares of Feldman Stock and
Shareholder Stock.
(g) "Holder" shall mean (i) the record owner of shares of Preferred
Stock, the Common Stock issuable upon conversion of such Preferred Stock, or
shares of Purchaser Common, other than Public Shares, or (ii) for purposes of
Article 3 only, shall mean any record owner of Underlying Common Stock but only
if such record owner is a Purchaser or a transferee of registration rights as
permitted under Section 3.10, and shall include a registered owner of all or any
portion of the Preferred Stock to the extent of the shares of Common Stock
remaining issuable upon conversion thereof.
(h) "Initiating Holders" shall mean Holders of at least sixty-five
percent (65%) of the Underlying Common Stock.
22.
<PAGE>
(i) "Preferred Stock" shall mean the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stock and the Series E Preferred Stock.
(j) "Public Offering" shall mean the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act.
(k) "Public Shares" shall mean shares of Common Stock sold by a
Holder in an offering registered under the Securities Act or eligible for sale
by a Holder under Rule 144 thereunder.
(l) "Purchaser" shall mean each of the Series A Holders, the Series B
Holders, the Series C Holders, the Series D Holders the Series E Purchasers and
CIF.
(m) "Purchaser Common" shall mean Preferred Stock, Common Stock
issuable upon conversion of Preferred Stock or Common Stock held by a
Stockholder or CIF on the date of this Agreement as set forth on Exhibit B
hereto.
(n) "Purchasers" shall mean the Series A Holders, the Series B
Holders, the Series C Holders, the Series D Holders, the Series E Purchasers and
CIF, collectively.
(o) "Sale of the Company" shall mean (i) a merger or consolidation or
any other corporate reorganization or business combination in each case in which
fifty percent (50%) or more of the Company's outstanding voting stock (or the
stock of the surviving entity in the event of a transaction in which the Company
does not survive) is transferred from the then present holders to different
holders (not including an issuance by the Company of stock to raise investment
funds) in a single transaction or series of related transactions; or (ii) the
sale, transfer or other disposition of all or substantially all of the assets of
the Company.
(p) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Securities and Exchange Commission thereunder.
(q) "Shareholder Stock" shall mean all shares of Common Stock and
other equity securities now held or hereafter acquired by Vivian Dullien.
(r) "Underlying Common Stock" shall mean (i) the shares of Common
Stock held by a Purchaser on the date of this Agreement; (ii) shares of Common
Stock issued upon conversion of the Preferred Stock; and (iii) the shares of
Common Stock remaining issuable upon conversion of the outstanding Preferred
Stock, (iv) together with all shares of Common Stock and other securities issued
or issuable in respect of the Common Stock referred to in clauses (i), (ii) and
(iii) by reason of stock splits, stock dividends, combinations, mergers,
exchanges or other reclassifications or recapitalizations provided that the term
"Underlying Common Stock" shall exclude Public Shares.
23.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By: /s/ James Edlund
---------------------------------------
James Edlund, President
PURCHASERS:
-------------------------------------------
[Print Name of Entity]
By:
---------------------------------------
[Signature]
-------------------------------------------
[Name of Signatory]
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Columbine Venture Fund II, L.P.
-------------------------------------------
[Print Name of Entity]
By: /s/ Sherman J. Muller
---------------------------------------
[Signature]
Columbine Venture Fund II, L.P. by
Columbine Venture Mgt II, its general
partner, by Sherman J. Muller, its
general partner
-------------------------------------------
[Name of Signatory]
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Technology Funding Partners III, L.P.
By Technology Funding Inc.,
Managing General Partner
/s/ Peter F. Bernardoni
-------------------------------------------
(Signature)
Peter F. Bernardoni
-------------------------------------------
(Print Name)
General Partner
-------------------------------------------
(Title, if applicable)
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Technology Funding Venture Partners IV,
an Aggressive Growth Fund, L.P.
By Technology Funding Inc., Managing
General Partner
/s/ Peter F. Bernardoni
-------------------------------------------
(Signature)
Peter F. Bernardoni
-------------------------------------------
(Print Name)
General Partner
-------------------------------------------
(Title, if applicable)
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Technology Funding Venture Partners V,
an Aggressive Growth Fund, L.P.
By Technology Funding Inc.,
Managing General Partner
/s/ Peter F. Bernardoni
-------------------------------------------
(Signature)
Peter F. Bernardoni
-------------------------------------------
(Print Name)
General Partner
-------------------------------------------
(Title, if applicable)
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Technology Funding Medical Partners I, L.P.
By Technology Funding Inc.,
Managing General Partner
/s/ Peter F. Bernardoni
-------------------------------------------
(Signature)
/s/ Peter F. Bernardoni
-------------------------------------------
(Print Name)
General Partner
-------------------------------------------
(Title, if applicable)
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
APA Excelsior III L.P.
By: APA Excelsior III Partners,
General Partner
-------------------------------------------
[Print Name of Entity]
By: /s/ Janet Effland
---------------------------------------
[Signature]
Janet Effland
-------------------------------------------
[Name of Signatory]
General Partner
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Coutts & Co. (Jersey) Ltd.,
Custodian for APA Excelsior III/
Offshore, L.P.
-------------------------------------------
[Print Name of Entity]
By: APA Excelsior III Partners,
General Partner
By: /s/ Janet Effland
----------------------------------------
[Signature]
Janet Effland
-------------------------------------------
[Name of Signatory]
General Partner
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Pathfinder Venture Capital Fund III,
A Limited Partnership
-------------------------------------------
[Print Name of Entity]
By: Pathfinder Partners III, A Limited
Partnership
Its General Partner
By: /s/ Gene Fischer
---------------------------------------
[Signature]
Gene Fischer
-------------------------------------------
[Name of Signatory]
a General Partner
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Capstone Ventures, A Delaware
Limited Partnership
-------------------------------------------
[Print Name of Entity]
By: Capstone Management LLC, Its General
Partner
By: /s/ Gene Fischer
---------------------------------------
[Signature]
Gene Fischer
-------------------------------------------
[Name of Signatory]
Managing Member
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Hickory Capital Corporation
-------------------------------------------
[Print Name of Entity]
By: /s/ Monro B. Lanier, III
---------------------------------------
[Signature]
Monro B. Lanier, III
-------------------------------------------
[Name of Signatory]
Vice President
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Kline Hawkes California SBIC, L.P.
A Delaware limited partnership
By: Kline Hawkes California SBIC General
Partner, L.P.
Its general partner
By: Kline Hawkes Management SBIC, Inc.
Its general partner
By: /s/ Jerome S. Engel
------------------------------------
Name: Jerome S. Engel
Title: Treasurer
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Bayview Investors, Ltd.
-------------------------------------------
[Print Name of Entity]
By: /s/ [Illegible]
---------------------------------------
[Signature]
-------------------------------------------
[Name of Signatory]
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Clariden Bank
-------------------------------------------
[Print Name of Entity]
By: /s/ W. Frick, /s/ R. Phillipp
---------------------------------------
[Signature]
-------------------------------------------
[Name of Signatory]
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Clarion Capital Corp.
-------------------------------------------
[Print Name of Entity]
By: /s/ Morton A. Cohen
---------------------------------------
[Signature]
Morton A. Cohen
-------------------------------------------
[Name of Signatory]
Chairman, CEO
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Curran Partners L.P.
-------------------------------------------
[Print Name of Entity]
By: /s/ John P. Curran
---------------------------------------
[Signature]
John P. Curran
-------------------------------------------
[Name of Signatory]
General Partner
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
J.F. Shea Co., Inc. as Nominee 1997-42
-------------------------------------------
[Print Name of Entity]
By: /s/ James G. Shontere
---------------------------------------
[Signature]
James G. Shontere
-------------------------------------------
[Name of Signatory]
Secretary
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
-------------------------------------------
[Print Name of Entity]
By: /s/
---------------------------------------
[Signature]
-------------------------------------------
[Name of Signatory]
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
McKay Investment Group
-------------------------------------------
[Print Name of Entity]
By: /s/ Robert McKay
---------------------------------------
[Signature]
Robert McKay
-------------------------------------------
[Name of Signatory]
General Manager
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
Closefire Ltd
-------------------------------------------
[Print Name of Entity]
By: /s/ Mai N. Pogue
---------------------------------------
[Signature]
Mai N. Pogue for Closefire Ltd
-------------------------------------------
[Name of Signatory]
President
-------------------------------------------
[Title of Signatory]
Pogue Capital Management
60 Patterson Avenue
Greenwich, CT 06830
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
hereinabove set forth.
BIEX, INC.
By:
---------------------------------------
James Edlund, President
PURCHASERS:
ROBERTSON, STEPHENS & CO.
By: /s/ George M. Vetter, III
---------------------------------------
[Signature]
George M. Vetter, III
-------------------------------------------
[Name of Signatory]
Managing Director
-------------------------------------------
[Title of Signatory]
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
/s/ Vivian Dullien
-------------------------------------------
VIVIAN DULLIEN
/s/ Fredric J. Feldman
-------------------------------------------
FREDRIC J. FELDMAN
/s/ James A. Edlund
-------------------------------------------
JAMES A. EDLUND
AMENDED INVESTORS' RIGHTS AGREEMENT
<PAGE>
EXHIBIT A
STOCKHOLDERS
Columbine Venture Fund II, L.P.
5460 South Quebec Street
Suite 270
Englewood, Colorado 80111
Technology Funding Partners III, L.P.
2000 Alameda de las Pulgas
San Mateo, California 94403
Technology Funding Venture Partners IV,
An Aggressive Growth Fund, L.P.
2000 Alameda de las Pulgas
San Mateo, California 94403
Technology Funding Venture Partners V,
An Aggressive Growth Fund, L.P.
2000 Alameda de los Pulgas
San Mateo, California 94403
APA Excelsior III L.P.
c/o Alan Patricof Associates, Inc.
2100 Geng Road
Palo Alto, California 94303
Courts & Co. (Jersey) Ltd.,
Custodian for APA Excelsior III/Offshore, L.P.
c/o Alan Patricof Associates, Inc.
2100 Geng Road
Palo Alto, California 94303
Capstone Ventures, A Delaware
Limited Partnership
Capstone Management, L.L.C.
3000 Sand Hill Road
Building Three, Suite 255
Pathfinder Venture Capital Fund III,
A Limited Partnership
3000 Sand Hill Road
Building 3, Suite 255
Menlo Park, California 94025
Technology Funding Medical Partners I
2000 Alameda de las Pulgas
San Mateo, CA 94403
Hickory Capital Corporation
200 West Court Square
Suite 100
Huntsville, Alabama 35801
GC&H Partners
One Maritime Plaza, 20th Floor
San Francisco, CA 94111
GC&H Investments
One Maritime Plaza, 20th Floor
San Francisco, CA 94111
Bayview Investors
c/o Robertson Stephens & Company
555 California Street, Suite 2600
San Francisco, CA 94104
Fax: (415) 676-2650
Kline Hawkes California SBIC, L.P.
11726 San Vicente Blvd., Suite 300
Los Angeles, CA 90049
Fax: (310) 442-4707
Dr. Hasso Plattner
c/o Loewenthal Capital
110 Solano Street
Tiburon, CA 94920
Fax: (415) 435-6861
Clariden Bank
Av. Paulista n. 37, 12.o Andar
Sao Paulo, Brazil CEP 01311902
Fax: 55-11-289-6559
J.F. Shea & Company
655 Brea Canyon Road
Walnut, CA 91789
Fax: (909) 869-0840
1.
<PAGE>
McKay Investment Group-BX
303 Sacramento Street, 4th Floor
San Francisco, CA 94111
Fax: (415) 288-1320
Clarion Capital Corp.
Ohio Savings Plaza, Suite 510
1801 East 9th Street
Cleveland, OH 44114
Fax: (216) 694-3545
Curran Partners LP
237 Park Avenue, Suite 900
New York, NY 10017
Fax: (212) 808-2402
Closefire Ltd.
c/o Pogne Capital Management
60 Patterson Avenue
Greenwich, CT 06830
Fax: (203) 629-9861
Robertson, Stephens & Co.
555 California Street, Suite 2600
San Francisco, CA 94104
Fax: (415) 693-3393
2.
<PAGE>
EXHIBIT B
PURCHASER COMMON
<TABLE>
<CAPTION>
STOCKHOLDER NAME NUMBER OF
SHARES OF COMMON
<S> <C>
Columbine Venture Fund II, L.P. 450,000
Colorado Incubator Fund 30,000
</TABLE>
<PAGE>
BIEX INC.
1998 EQUITY INCENTIVE PLAN
ADOPTED MARCH 9, 1998
APPROVED BY STOCKHOLDERS ______________, 1998
INTRODUCTION.
This Plan is a successor plan to the Company's existing 1996 Stock Option
Plan and 1993 Stock Option Plan (the "Prior Plans"), and shall become effective
on the date of the initial public offering (the "IPO") of the Company's common
stock (the "Effective Date"). No options shall be granted under the Prior Plans
from and after the Effective Date.
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company and its Affiliates may
be given an opportunity to benefit from increases in value of the common stock
of the Company ("Common Stock") through the granting of (i) Incentive Stock
Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights to
purchase restricted stock, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees, Directors or Consultants, to secure and retain
the services of new Employees, Directors and Consultants, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.
(c) The Company intends that the Stock Awards issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof. All Options
shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and a separate certificate or certificates will be
issued for shares purchased on exercise of each type of Option.
1. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
1.
<PAGE>
(e) "COMPANY" means Biex Inc., a Delaware corporation.
(f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
(g) "CONTINUOUS SERVICE" means the employment or relationship as a
Director or Consultant is not interrupted or terminated. The Board, in its sole
discretion, may determine whether Continuous Service shall be considered
interrupted in the case of: (i) any leave of absence approved by the Board,
including sick leave, military leave, or any other personal leave; or
(ii) transfers between locations of the Company or between the Company,
Affiliates or their successors.
(h) "DIRECTOR" means a member of the Board.
(i) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(j) "EXCHANGE Act" means the Securities Exchange Act of 1934, as amended.
(k) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock of the Company determined as follows:
(1) If the Common Stock is listed on any established stock exchange,
or traded on the Nasdaq National Market or The Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in Common Stock) on the last market trading day prior to determination,
as reported in THE WALL STREET JOURNAL or such other source as the Board deems
reliable;
(2) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(l) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(m) "LISTING DATE" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange, or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in
accordance with the provisions of Section 25100(o) of the California Corporate
Securities Law of 1968.
2.
<PAGE>
(n) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
of 1933 ("Regulation S-K"), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(p) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(q) "OPTION" means a stock option granted pursuant to the Plan.
(r) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.
(s) "OPTIONEE" means a person to whom an Option is granted pursuant to the
Plan.
(t) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(u) "PLAN" means this 1998 Equity Incentive Plan.
(v) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.
(w) "STOCK AWARD" means any right granted under the Plan, including any
Option, any stock bonus, and any right to purchase restricted stock.
(x) "STOCK AWARD AGREEMENT" means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to
the terms and conditions of the Plan.
3.
<PAGE>
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; whether a Stock Award will be an Incentive Stock Option, a
Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock,
or a combination of the foregoing; the provisions of each Stock Award granted
(which need not be identical), including the time or times when a person shall
be permitted to receive stock pursuant to a Stock Award; and the number of
shares with respect to which a Stock Award shall be granted to each such person.
(2) To construe and interpret the Plan and Stock Awards granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section 12.
(4) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee or
committees ("Committee") of one or more members of the Board. In the discretion
of the Board, a Committee may consist solely of two (2) or more Outside
Directors, in accordance with Code Section 162(m), or solely of two (2) or more
Non-Employee Directors, in accordance with Rule 16b-3. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate some or all of the administration to one or more
subcommittees (and references in this Plan to the Board shall thereafter be to
the Committee or such subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 11 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed the aggregate of (i) Five Hundred Thousand (500,000) shares of Common
Stock (such number reflecting the reverse stock split effected by the Company in
connection with the IPO) plus (ii) an additional number of shares added each
December 31 equal to the difference between five percent (5%) of the Company's
total outstanding shares as of December 31 of each such year and the number of
4.
<PAGE>
shares then reserved under the Plan. If any Stock Award shall for any reason
expire or otherwise terminate, in whole or in part, without having been
exercised in full, the stock not acquired under such Stock Award shall revert to
and again become available for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees. Stock
Awards other than Incentive Stock Options may be granted only to Employees,
Directors or Consultants.
(b) No person shall be eligible for the grant of an Incentive Stock Option
if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any of
its Affiliates unless the exercise price of such Option is at least one hundred
ten percent (110%) of the Fair Market Value of such stock at the date of grant
and the Option is not exercisable after the expiration of five (5) years from
the date of grant.
(c) Subject to the provisions of Section 11 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Stock Awards
covering more than three hundred thousand (300,000) shares of Common Stock in
any calendar year.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option Agreement or
otherwise) the substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted, and the exercise price
of each Nonstatutory Stock Option shall be not less than eighty-five percent
(85%) of the Fair Market Value of the stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, an Option may be granted
with an exercise price lower than that set forth in the preceding sentence if
such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of the Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other Common Stock of the Company,
(B) according to a deferred payment or other arrangement (which may include,
without limiting the generality of the foregoing, the use of other Common Stock
of the Company) with the person
5.
<PAGE>
to whom the Option is granted or to whom the Option is transferred pursuant to
subsection 6(d), or (C) in any other form of legal consideration that may be
acceptable to the Board. In the case of any deferred payment arrangement,
interest shall be payable at least annually and shall be charged at the minimum
rate of interest necessary to avoid the treatment as interest, under any
applicable provisions of the Code, of any amounts other than amounts stated to
be interest under the deferred payment arrangement. In addition, the "par
value" of stock acquired under an Option may not be paid pursuant to a deferred
compensation arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Incentive Stock Option
is granted only by such person. A Nonstatutory Stock Option may be transferred
to the extent provided in the Option Agreement; provided that if the Option
Agreement does not expressly permit transfer, then such Nonstatutory Stock
Option shall not be transferable except by will, by the laws of descent and
distribution or pursuant to a domestic relations order, and shall be exercisable
during the lifetime of the person to whom the Option is granted only by such
person or any transferee pursuant to such domestic relations order.
Notwithstanding the foregoing, the person to whom the Option is granted may, by
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionee, shall
thereafter be entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the Option may become exercisable ("vest")
with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
(f) TERMINATION OF CONTINUED SERVICE. In the event an Optionee's
Continuous Service terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option within such period of
time designated by the Board, which shall in no event be later than the
expiration of the term of the Option as set forth in the Option Agreement (the
"Post-Termination Exercise Period") and only to the extent that the Optionee was
entitled to exercise the Option on the date Optionee's Continuous Service
terminates. In the case of an Incentive Stock Option, the Board shall determine
the Post-Termination Exercise Period at the time the Option is granted, and the
term of such Post-Termination Exercise Period shall in no event exceed three (3)
months from the date of termination. In addition, the Board may at any time,
with the consent of the Optionee, extend the Post-Termination Exercise Period
and provide for continued vesting; provided however, that any extension of such
period by the Board in excess of three (3) months from the date of termination
shall cause an Incentive Stock Option so extended to become a Nonstatutory Stock
Option, effective as of the date of Board action. If, at the date of
termination, the Optionee is not entitled to exercise his or her entire Option,
the shares covered by the unexercisable portion of the Option shall revert to
the Plan. If, after
6.
<PAGE>
termination, the Optionee does not exercise his or her Option within the time
specified in the Option Agreement or as otherwise determined above, the Option
shall terminate, and the shares covered by such Option shall revert to the Plan.
Notwithstanding the foregoing, the Board shall have the power to permit an
Option to continue to vest during the Post-Termination Exercise Period.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Service
terminates as a result of the Optionee's disability, the Optionee may exercise
his or her Option (to the extent that the Optionee was entitled to exercise it
at the date of termination), but only within such period of time ending on the
earlier of (i) the date twelve (12) months following such termination (or such
longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
at the date of termination, the Optionee is not entitled to exercise his or her
entire Option, the shares covered by the unexercisable portion of the Option
shall revert to and again become available for issuance under the Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become available for issuance under the
Plan.
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a three (3)-month period after the termination of, the Optionee's
Continuous Service, the Option may be exercised to the extent vested by the
Optionee's estate, by a person who acquired the right to exercise the Option by
bequest or inheritance or by a person designated to exercise the option upon the
Optionee's death pursuant to subsection 6(d), but only within the period ending
on the earlier of (i) the date eighteen (18) months following the date of death
(or such longer or shorter period specified in the Option Agreement), or (ii)
the expiration of the term of such Option as set forth in the Option Agreement.
If, at the time of death, the Optionee was not entitled to exercise his or her
entire Option, the shares covered by the unexercisable portion of the Option
shall revert to and again become available for issuance under the Plan. If,
after death, the Option is not exercised within the time specified herein, the
Option shall terminate, and the shares covered by such Option shall revert to
and again become available for issuance under the Plan.
(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to any
other restriction the Board determines to be appropriate.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or Committee shall
deem appropriate. The terms and conditions of stock bonus or restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate agreements need not be identical, but each stock bonus or restricted
stock purchase agreement shall include (through incorporation of provisions
hereof by reference in the agreement or otherwise) the substance of each of the
following provisions as appropriate:
7.
<PAGE>
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such agreement, but in no event shall the purchase
price be less than eighty-five percent (85%) of the stock's Fair Market Value on
the date such award is made. Notwithstanding the foregoing, the Board or
Committee may determine that eligible participants in the Plan may be awarded
stock pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company for its benefit.
(b) TRANSFERABILITY. No rights under a stock bonus or restricted stock
purchase agreement shall be transferable except by will or the laws of descent
and distribution or, if the agreement so provides, pursuant to a domestic
relations order satisfying the requirements of Rule 16b-3, so long as stock
awarded under such agreement remains subject to any restrictions pursuant to the
agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or Committee, according to a
deferred payment or other arrangement with the person to whom the stock is sold;
or (iii) in any other form of legal consideration that may be acceptable to the
Board or Committee in its discretion. Notwithstanding the foregoing, the Board
or Committee to which administration of the Plan has been delegated may award
stock pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company or for its benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but need
not, be subject to a repurchase option in favor of the Company in accordance
with a vesting schedule to be determined by the Board or Committee.
(e) TERMINATION OF CONTINUOUS SERVICE. In the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise reacquire
any or all of the shares of stock held by that person which have not vested as
of the date of termination under the terms of the stock bonus or restricted
stock purchase agreement between the Company and such person.
8. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep available
at all times the number of shares of stock required to satisfy such Stock
Awards.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares under Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
of 1933, as amended (the "Securities Act") either the Plan, any Stock Award or
any stock issued or issuable pursuant to any such Stock Award. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to
8.
<PAGE>
issue and sell stock upon exercise of such Stock Awards unless and until such
authority is obtained.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall constitute
general funds of the Company.
10. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which a Stock
Award may first be exercised or the time during which a Stock Award or any part
thereof will vest, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.
(b) Neither an Employee, Director nor a Consultant nor any person to whom
a Stock Award is transferred in accordance with the Plan shall be deemed to be
the holder of, or to have any of the rights of a holder with respect to, any
shares subject to such Stock Award unless and until such person has satisfied
all requirements for exercise of the Stock Award pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Employee, Consultant or other holder of
Stock Awards any right to continue in the employ of the Company or any
Affiliate, or to continue serving as a Consultant and Director, or shall affect
the right of the Company or any Affiliate to terminate the employment of any
Employee with or without notice and with or without cause, the right to
terminate the relationship of any Consultant pursuant to the terms of such
Consultant's agreement with the Company or Affiliate or service as a Director
pursuant to the Company's Bylaws.
(d) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.
(e) The Company may require any person to whom a Stock Award is granted,
or any person to whom a Stock Award is transferred in accordance with the Plan,
as a condition of exercising or acquiring stock under any Stock Award, (1) to
give written assurances satisfactory to the Company as to such person's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (2) to
give written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the Stock Award for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if
9.
<PAGE>
(i) the issuance of the shares upon the exercise or acquisition of stock under
the Stock Award has been registered under a then currently effective
registration statement under the Securities Act, or (ii) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.
(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (1) tendering a cash payment; (2) authorizing the Company to withhold
shares from the shares of the Common Stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the Stock Award; or
(3) delivering to the Company owned and unencumbered shares of the Common Stock
of the Company.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any Stock Award, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan and the maximum number of shares subject to
award to any person during any calendar year, and the outstanding Stock Awards
will be appropriately adjusted in the class(es) and number of shares and price
per share of stock subject to such outstanding Stock Awards. Such adjustments
shall be made by the Board or Committee, the determination of which shall be
final, binding and conclusive. (The conversion of any convertible securities of
the Company shall not be treated as a "transaction not involving the receipt of
consideration by the Company.")
(b) In the event of a Change in Control, (i) any surviving or acquiring
corporation shall assume Stock Awards outstanding under the Plan or shall
substitute similar Stock Awards for those outstanding under the Plan, or (ii) in
the event any surviving or acquiring corporation refuses to assume such Stock
Awards or to substitute similar Stock Awards for those outstanding under the
Plan, (A) with respect to Stock Awards held by persons then performing services
as Employees, Directors or Consultants, the vesting of such Stock Awards and the
time during which such Stock Awards may be exercised shall be accelerated prior
to such event and the Stock Awards terminated if not exercised after such
acceleration and at or prior to such event, and (B) with respect to any other
Stock Awards outstanding under the Plan, such Stock Awards shall be terminated
if not exercised prior to such event.
For purposes of this Plan, "Change in Control" means: (1) a dissolution,
liquidation, or sale of all or substantially all of the assets of the Company;
(2) a merger or consolidation in
10.
<PAGE>
which the Company is not the surviving corporation; (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Company's
common shares outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise; or (4) the acquisition by any person, entity or group within
the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable
successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or any Affiliate of the Company) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors.
12. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 11 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.
(b) The Board may in its sole discretion submit any other amendment to the
Plan for stockholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations thereunder regarding the exclusion of performance-based compensation
from the limit on corporate deductibility of compensation paid to certain
executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide eligible Employees,
Directors or Consultants with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.
(d) Rights and obligations under any Stock Award granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.
(e) The Board at any time, and from time to time, may amend the terms of
any one or more Stock Award; provided, however, that the rights and obligations
under any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the date the
Plan is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier. No Stock Awards may be granted under the Plan while the
Plan is suspended or after it is terminated.
11.
<PAGE>
(b) Rights and obligations under any Stock Award granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with the consent of the person to whom the Stock Award was granted.
14. STOCKHOLDER APPROVAL.
No Stock Awards granted under the Plan shall be exercisable in whole or
part unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.
12.
<PAGE>
BIEX INC.
1998 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
Pursuant to the Grant Notice and this Stock Option Agreement, the Company
has granted you an option to purchase the number of shares of the Company's
common stock ("Common Stock") indicated in the Grant Notice at the exercise
price indicated in the Grant Notice. Defined terms not explicitly defined in
this Stock Option Agreement but defined in the Plan shall have the same
definitions as in the Plan.
The details of your option are as follows:
1. VESTING. Subject to the limitations contained herein, your option
will vest as provided in the Grant Notice, provided that vesting will cease upon
the termination of your Continuous Service.
2. METHOD OF PAYMENT. Payment of the exercise price by cash or check is
due in full upon exercise of all or any part of your option, provided that you
may elect, to the extent permitted by applicable law and the Grant Notice, to
make payment of the exercise price under one of the following alternatives:
(i) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
which, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds;
(ii) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, by delivery of
already-owned shares of Common Stock, held for the period required to avoid a
charge to the Company's reported earnings, and owned free and clear of any
liens, claims, encumbrances or security interests, which Common Stock shall be
valued at its fair market value on the date of exercise; or
(iii) Payment by a combination of the above methods.
3. WHOLE SHARES. Your option may only be exercised for whole shares.
4. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, your option may not be exercised unless the shares issuable
upon exercise of your option are then registered under the Securities Act or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act.
1.
<PAGE>
5. TERM. The term of your option commences on the Date of Grant and
expires upon the earliest of:
(i) the Expiration Date indicated in the Grant Notice;
(ii) the tenth (10th) anniversary of the Date of Grant;
(iii) eighteen (18) months after your death, if you die during, or
within three (3) months after the termination of your Continuous Service;
(iv) twelve (12) months after the termination of your Continuous
Service due to disability;
(v) the termination of your Continuous Service for Cause; or
(vi) three (3) months after the termination of your Continuous
Service for any other reason, provided that if during any part of such three
(3)-month period the option is not exercisable solely because of the condition
set forth in paragraph 4 (Securities Law Compliance), in which event the option
shall not expire until the earlier of the Expiration Date or until it shall have
been exercisable for an aggregate period of three (3) months after the
termination of Continuous Service.
To obtain the federal income tax advantages associated with an "incentive
stock option," the Code requires that at all times beginning on the grant date
of the option and ending on the day three (3) months before the date of the
option's exercise, you must be an employee of the Company, except in the event
of your death or permanent and total disability. The Company cannot guarantee
that your option will be treated as an "incentive stock option" if you exercise
your option more than three (3) months after the date your employment with the
Company terminates.
6. EXERCISE.
(a) You may exercise the vested portion of your option during its
term (and the unvested portion of your option if the Grant Notice so permits) by
delivering a Notice of Exercise (in the form attached to your Grant Notice or
other form designated by the Company) together with the exercise price to the
Secretary of the Company, or to such other person as the Company may designate,
during regular business hours, together with such additional documents as the
Company may then require.
(b) By exercising your option you agree that:
(i) as a condition to any exercise of your option, the Company
may require you to enter an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of
(1) the exercise of your option; (2) the lapse of any substantial risk of
forfeiture to which the shares are subject at the time of exercise; or (3) the
disposition of shares acquired upon such exercise;
2.
<PAGE>
(ii) you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of an incentive stock option that occurs within two (2)
years after the Date of Grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option; and
(iii) the Company (or a representative of the underwriters) may,
in connection with the first underwritten registration of the offering of any
securities of the Company under the Act, require that you not sell or otherwise
transfer or dispose of any shares of Common Stock or other securities of the
Company during such period (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed
under the Securities Act as may be requested by the Company or the
representative of the underwriters. You further agree that the Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such period.
7. TRANSFERABILITY. Your option is not transferable, except by will or
by the laws of descent and distribution or pursuant to a domestic relation
order, and is exercisable during your life only by you (or any transferee
pursuant to such order. Notwithstanding the foregoing, by delivering written
notice to the Company, in a form satisfactory to the Company, you may designate
a third party who, in the event of your death, shall thereafter be entitled to
exercise your option.
8. OPTION NOT A SERVICE CONTRACT. Your option is not an employment
contract and nothing in your option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company. In addition,
nothing in your option shall obligate the Company, its shareholders, Board of
Directors, officers or employees to continue any relationship which you might
have as a Director or Consultant for the Company.
9. NOTICES. Any notices provided for in your option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after deposit in
the United States mail, postage prepaid, addressed to you at the last address
you provided to the Company.
10. GOVERNING PLAN DOCUMENT. Your option is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of your option,
including without limitation the provisions of the Plan relating to option
provisions, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan shall control.
3.
<PAGE>
BIEX, INC.
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED ON MARCH 9, 1998
APPROVED BY STOCKHOLDERS _____________, 1998
1. PURPOSE.
(a) The purpose of the 1998 Non-Employee Directors' Stock Option Plan (the
"Plan") is to provide a means by which each director of Biex, Inc. (the
"Company") who is not otherwise at the time of grant an employee of the Company
or of any Affiliate of the Company (each such person being hereafter referred to
as a "Non-Employee Director") will be given an opportunity to purchase stock of
the Company.
(b) The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-Employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(b).
(b) The Board may delegate administration of the Plan to a committee
composed of two (2) or more members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to options granted under
the Plan shall not exceed in the aggregate one hundred fifty thousand (150,000)
shares (such number reflecting the reverse stock split effected by the Company
in connection with the Company's initial public offering) of the Company's
common stock. If any option granted under the Plan shall for any reason expire
or otherwise terminate without having been exercised in full, the stock not
purchased under such option shall again become available for the Plan.
1.
<PAGE>
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY.
Options shall be granted only to Non-Employee Directors of the Company.
5. NON-DISCRETIONARY GRANTS.
(b) Each person who is first elected or appointed to the Board as a
Non-Employee Director after the date of the Company's initial public offering
shall automatically be granted, on the date of such initial election or
appointment, an option upon the terms and conditions set forth herein
(hereinafter, an "Initial Grant"). Such Initial Grant shall be exercisable for
that number of shares equal to seven thousand five hundred (7,500) multiplied by
the fraction, the numerator equaling the number of whole months remaining during
the calendar year of such initial election or appointment and the denominator
equaling 12.
(c) Each Non-Employee Director who is serving on January 1 of each
calendar year, commencing with the 1999 calendar year, and who has previously
been granted an Initial Grant, shall automatically be granted, on each such
January 1, an option to purchase seven thousand five hundred (7,500) shares of
common stock of the Company on the terms and conditions set forth herein
(hereinafter, an "Annual Grant").
6. OPTION PROVISIONS.
Each option shall be subject to the following terms and conditions:
(a) The term of each option commences on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date ("Expiration
Date") ten (10) years from the date of grant. If the optionee's service as a
Non-Employee Director or employee of or consultant to the Company or any
Affiliate terminates for any reason or for no reason, the option shall terminate
on the earlier of the Expiration Date or the date twelve (12) months following
the date of termination of all such service; PROVIDED, HOWEVER, that if such
termination of service is due to the optionee's death, the option shall
terminate on the earlier of the Expiration Date or eighteen (18) months
following the date of the optionee's death. In any and all circumstances, an
option may be exercised following termination of the optionee's service as a
Non-Employee Director or employee of or consultant to the Company or any
Affiliate only as to that number of shares as to which it was exercisable as of
the date of termination of all such service under the provisions of subparagraph
6(e).
(b) The exercise price of each option shall be equal to one hundred
percent (100%) of the Fair Market Value of the stock (as such term is defined in
subsection 9(e) of this Plan) subject to such option on the date such option is
granted.
(c) The optionee may elect to make payment of the exercise price under one
of the following alternatives:
(i) In cash (or check) at the time of exercise;
2.
<PAGE>
(ii) Provided that at the time of the exercise the Company's common
stock is publicly traded and quoted regularly in THE WALL STREET JOURNAL,
payment by delivery of shares of common stock of the Company already owned by
the optionee, held for the period required to avoid a charge to the Company's
reported earnings, and owned free and clear of any liens, claims, encumbrances
or security interest, which common stock shall be valued at its Fair Market
Value on the date immediately preceding the date of exercise; or
(iii) Provided that at the time of the exercise the Company's common
stock is publicly traded and quoted regularly in THE WALL STREET JOURNAL,
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board which results in the receipt of cash (or check) by the Company
either prior to the issuance of shares of the Company's common stock or pursuant
to the terms of irrevocable instructions issued by the optionee prior to the
issuance of shares of the Company's common stock.
(iv) Payment by a combination of the methods of payment specified in
subparagraph 6(c)(i) through 6(c)(iii) above.
(d) An option shall be transferable only to the extent specifically
provided in the option agreement; PROVIDED, HOWEVER, that if the option
agreement does not specifically provide for the transferability of an option,
then the option shall not be transferable except by will or by the laws of
descent and distribution, or pursuant to a domestic relations, and shall be
exercisable during the lifetime of the person to whom the option is granted only
by such person (or by his guardian or legal representative) or transferee
pursuant to such an order. Notwithstanding the foregoing, the optionee may, by
delivering written notice to the Company in a form satisfactory to the Company,
designate a third party who, in the event of the death of the optionee, shall
thereafter be entitled to exercise the option.
(e) (i) Initial Grants and Annual Grants shall become vested and
exercisable in twelve (12) equal monthly installments measured from the date of
grant, PROVIDED THAT, with respect to any grant under the Plan, the optionee
has, during the entire period prior to such vesting installment date,
continuously served as a Non-Employee Director or employee of or consultant to
the Company or any Affiliate of the Company, whereupon such option shall become
fully exercisable in accordance with its terms with respect to that portion of
the shares represented by that installment.
(f) The Company may require any optionee, or any person to whom an option
is transferred under subparagraph 6(d), as a condition of exercising any such
option: (i) to give written assurances satisfactory to the Company as to the
optionee's knowledge and experience in financial and business matters; and
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (x) the issuance of the shares upon the
exercise of the option has been registered under a then currently-effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), or (y) as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may
require any optionee to provide such other
3.
<PAGE>
representations, written assurances or information which the Company shall
determine is necessary, desirable or appropriate to comply with applicable
securities laws as a condition of granting an option to the optionee or
permitting the optionee to exercise the option. The Company may, upon advice of
counsel to the Company, place legends on stock certificates issued under the
Plan as such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends restricting
the transfer of the stock.
(g) Notwithstanding anything to the contrary contained herein, an option
may not be exercised unless the shares issuable upon exercise of such option are
then registered under the Securities Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; PROVIDED HOWEVER, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan, or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such options.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the Plan
shall constitute general funds of the Company.
9. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(b) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the service
of the Company or any Affiliate in any capacity or shall affect any right of the
Company, its Board or stockholders or any Affiliate, to remove any Non-Employee
Director pursuant to the Company's Bylaws and the provisions of Delaware General
Corporations Law.
(c) No Non-Employee Director, individually or as a member of a group, and
no beneficiary or other person claiming under or through him, shall have any
right, title or interest
4.
<PAGE>
in or to any option reserved for the purposes of the Plan except as to such
shares of common stock, if any, as shall have been reserved for him pursuant to
an option granted to him.
(d) In connection with each option made pursuant to the Plan, it shall be
a condition precedent to the Company's obligation to issue or transfer shares to
a Non-Employee Director, or to evidence the removal of any restrictions on
transfer, that such Non-Employee Director make arrangements satisfactory to the
Company to insure that the amount of any federal, state or local withholding tax
required to be withheld with respect to such sale or transfer, or such removal
or lapse, is made available to the Company for timely payment of such tax.
(e) As used in this Plan, "Fair Market Value" means, as of any date, the
value of the common stock of the Company determined as follows:
(i) If the common stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap, the Fair Market Value of a share of common stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in common stock) on the last market trading day prior
to the day of determination, as reported in THE WALL STREET JOURNAL or such
other source as the Board deems reliable; or
(ii) In the absence of an established market for the common stock, the
Fair Market Value shall be determined in good faith by the Board.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving
the receipt of consideration by the Company), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price
per share of stock subject to outstanding options. Such adjustments shall be
made by the Board, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company
shall not be treated as a "transaction not involving the receipt of
consideration by the Company.")
(b) In the event of: (1) a dissolution, liquidation, or sale of all or
substantially all of the assets of the Company; (2) a merger or consolidation
in which the Company is not the surviving corporation; (3) a reverse merger
in which the Company is the surviving corporation but the shares of the
Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise; or (4) the acquisition by any person, entity
or group within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any comparable
successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or any Affiliate of the Company) of
the beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or
5.
<PAGE>
comparable successor rule) of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the
election of directors, then to the extent not prohibited by applicable law,
the time during which options outstanding under the Plan may be exercised
shall be accelerated prior to such event and the options terminated if not
exercised after such acceleration and at or prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan
and/or some or all outstanding options granted under the Plan. However,
except as provided in paragraph 10 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to
satisfy the requirements of Rule 16b-3 promulgated under the Exchange Act or
any Nasdaq or securities exchange listing requirements.
(b) Rights and obligations under any option granted before any
amendment of the Plan shall not be impaired by such amendment unless (i) the
Company requests the consent of the person to whom the option was granted and
(ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on March 8, 2008. No options may
be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom the option was granted.
(c) The Plan shall terminate upon the occurrence of any of the events
described in Section 10(b) above.
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(a) The Plan shall become effective upon adoption by the Board.
(b) No option granted under the Plan shall be exercised or become
exercisable unless and until the Plan is approved by the stockholders of the
Company.
6.
<PAGE>
BIEX, INC.
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION
___________________, Optionee:
On __________________, 19___, an option was automatically granted to you
(the "Optionee") pursuant to the Biex, Inc. (the "Company") 1998 Non-Employee
Directors' Stock Option Plan (the "Plan") to purchase shares of the Company's
common stock ("Common Stock"). This option is NOT intended to qualify and
will not be treated as an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance
of the Company's compensatory benefit plan for Non-Employee Directors (as
defined in the Plan).
The details of your option are as follows:
1. This option is an Initial Grant / Annual Grant (please circle one).
2. The total number of shares of Common Stock subject to this option
is _________.
3. The exercise price of this option is __________________ ($________)
per share, the Fair Market Value (as defined in the Plan) of the Common Stock
on the date of grant.
4. This option shall vest in accordance with Section 6(e) of the Plan
5. (a) This option may be exercised, to the extent specified above,
by delivering a Notice of Exercise (in the form attached hereto or such other
form designated by the Company) together with the exercise price to the
Secretary of the Company, or to such other person as the Company may
designate, during regular business hours, together with such additional
documents as the Company may then require pursuant to Section 6 of the Plan.
(b) This option may only be exercised for whole shares.
(c) You may elect to pay the exercise price under one of the
following alternatives:
(i) In cash (or check) at the time of exercise;
(ii) Provided that at the time of the exercise the Common Stock
is publicly traded and quoted regularly in THE WALL STREET JOURNAL, payment by
delivery of shares of Common Stock already owned by you, held for the period
required to avoid a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security interest, which Common
Stock shall be valued at its Fair Market Value on the date immediately preceding
the date of exercise; or
1.
<PAGE>
(iii) Provided that at the time of the exercise the Common Stock
is publicly traded and quoted regularly in THE WALL STREET JOURNAL, payment
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board which results in the receipt of cash (or check) by the Company
either prior to the issuance of shares of the Common Stock or pursuant to the
terms of irrevocable instructions issued by you prior to the issuance of shares
of the Common Stock.
(iv) Payment by a combination of the methods of payment
specified in subparagraphs (i) through (iii) above.
(d) By exercising this option you agree that the Company may require
you to enter an arrangement providing for the cash payment by you to the Company
of any tax withholding obligation of the Company arising by reason of the
exercise of this option.
6. The term of this option is ten (10) years measured from the date of
grant, subject, to earlier termination upon your termination of service, as set
forth in Section 6(a) of the Plan.
7. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
8. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of Section 6 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated the ____ day of ____________, 19__.
Very truly yours,
BIEX, INC.
By:
-----------------------------------
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS: Notice of Exercise
1998 Non-Employee Directors' Stock Option Plan
2.
<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned Optionee and the Company
and its Affiliates regarding the acquisition of Common Stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options and any other stock awards previously granted and
delivered to the undersigned under stock award plans of the Company, and (ii)
the following agreements only:
NONE:
-----------------------
(Initial)
OTHER:
------------------------------
------------------------------
------------------------------
------------------------------
Optionee
Address:
------------------------------
------------------------------
3.
<PAGE>
BIEX, INC.
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
NOTICE OF EXERCISE
Biex, Inc.
- -------------------
- ------------------- Date of Exercise:
Ladies and Gentlemen: --------------------
This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.
Type of option: Nonstatutory
Stock option dated: ----------------------
Number of shares for
which option is exercised: ----------------------
Certificates to be
issued in name of: ----------------------
Total exercise price: $----------------------
Cash payment delivered
herewith: $----------------------
Value of ______ shares of
common stock delivered herewith(1) $----------------------
By this exercise, I agree (i) to provide such additional documents as you
may require pursuant to the terms of the Company's 1998 Non-Employee Directors'
Stock Option Plan and (ii) to provide for the payment by me to you (in the
manner designated by you) of your withholding obligation, if any, relating to
the exercise of this option.
Very truly yours,
- -------------------------------
- -----------------------------
(1) Shares must meet the public trading requirements set forth in the option.
Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.
1.
<PAGE>
BIEX, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
ADOPTED MARCH 9, 1998
APPROVED BY THE STOCKHOLDERS ______________, 1998
1. PURPOSE.
(a) The purpose of the 1998 Employee Stock Purchase Plan (the "Plan") is
to provide a means by which employees of Biex Inc., a Delaware corporation (the
"Company"), and its Affiliates, as defined in subparagraph 1(b), which are
designated as provided in subparagraph 2(b), may be given an opportunity to
purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company, as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of its
employees, to secure and retain the services of new employees, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company.
(d) The Company intends that the rights to purchase stock of the Company
granted under the Plan be considered options issued under an "employee stock
purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the "Board")
of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the Company
shall be granted and the provisions of each offering of such rights (which need
not be identical).
(ii) To designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent
it shall deem necessary or expedient to make the Plan fully effective.
1.
<PAGE>
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company and its Affiliates and to carry out the intent that the Plan be treated
as an "employee stock purchase plan" within the meaning of Section 423 of the
Code.
(c) The Board may delegate administration of the Plan to a Committee
composed of two (2) or more members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to rights granted under
the Plan shall not exceed in the aggregate two hundred fifty thousand (250,000)
shares (such number reflects the reverse stock split effected by the Company in
connection with the Company's initial public offering) of the Company's common
stock (the "Common Stock"). If any right granted under the Plan shall for any
reason terminate without having been exercised, the Common Stock not purchased
under such right shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
(a) The Board or the Committee may from time to time grant or provide for
the grant of rights to purchase Common Stock of the Company under the Plan to
eligible employees (an "Offering") on a date or dates (the "Offering Date(s)")
selected by the Board or the Committee. Each Offering shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall deem
appropriate, which shall comply with the requirements of Section 423(b)(5) of
the Code that all employees granted rights to purchase stock under the Plan
shall have the same rights and privileges. The terms and conditions of an
Offering shall be incorporated by reference into the Plan and treated as part of
the Plan. The provisions of separate Offerings need not be identical, but each
Offering shall include (through incorporation of the provisions of this Plan by
reference in the document comprising the Offering or otherwise) the period
during which the Offering shall be effective, which period shall not exceed
twenty-seven (27) months beginning with the Offering Date, and the substance of
the provisions contained in paragraphs 5 through 8, inclusive.
(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
2.
<PAGE>
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be equal to or greater than
two (2) years. In addition, unless otherwise determined by the Board or the
Committee and set forth in the terms of the applicable Offering, no employee of
the Company or any Affiliate shall be eligible to be granted rights under the
Plan, unless, on the Offering Date, such employee's customary employment with
the Company or such Affiliate is for at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b) The Board or the Committee may provide that each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the
same characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the "Offering
Date" of such right for all purposes, including determination of the exercise
price of such right;
(ii) the period of the Offering with respect to such right shall begin
on its Offering Date and end coincident with the end of such Offering; and
(iii) the Board or the Committee may provide that if such person
first becomes an eligible employee within a specified period of time before the
end of the Offering, he or she will not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of
this subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if such
rights, together with any other rights granted under "employee stock purchase
plans" of the Company and any Affiliates, as specified by Section 423(b)(8) of
the Code, do not permit such employee's
3.
<PAGE>
rights to purchase stock of the Company or any Affiliate to accrue at a rate
which exceeds twenty-five thousand dollars ($25,000) of fair market value of
such stock (determined at the time such rights are granted) for each calendar
year in which such rights are outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be eligible
to participate in Offerings under the Plan, provided, however, that the Board
may provide in an Offering that certain employees who are highly compensated
employees within the meaning of Section 423(b)(4)(D) of the Code shall not be
eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an Offering
made under the Plan, shall be granted the right to purchase up to the number of
shares of Common Stock of the Company purchasable with a percentage designated
by the Board or the Committee not exceeding fifteen percent (15%) of such
employee's Earnings (as defined in subparagraph 7(a)) during the period which
begins on the Offering Date (or such later date as the Board or the Committee
determines for a particular Offering) and ends on the date stated in the
Offering, which date shall be no later than the end of the Offering. The Board
or the Committee shall establish one or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock carried out in accordance with such Offering.
(b) In connection with each Offering made under the Plan, the Board or the
Committee may specify a maximum number of shares that may be purchased by any
employee as well as a maximum aggregate number of shares that may be purchased
by all eligible employees pursuant to such Offering. In addition, in connection
with each Offering that contains more than one Purchase Date, the Board or the
Committee may specify a maximum aggregate number of shares which may be
purchased by all eligible employees on any given Purchase Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the Committee shall make a pro rata allocation of the shares available in as
nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
(c) The purchase price of stock acquired pursuant to rights granted under
the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan pursuant to
an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such
4.
<PAGE>
employee's Earnings during the Offering. "Earnings" is defined as an
employee's regular salary or wages (including amounts thereof elected to be
deferred by the employee, that would otherwise have been paid, under any
arrangement established by the Company intended to comply with Section
401(k), Section 402(e)(3), Section 125, Section 402(h), or Section 403(b) of
the Code, and also including any deferrals under a non-qualified deferred
compensation plan or arrangement established by the Company), any may also
include or exclude (as provided for each Offering) the following items of
compensation: bonuses, commissions, overtime pay, incentive pay, profit
sharing, other remuneration paid directly to the employee, the cost of
employee benefits paid for by the Company or an Affiliate, education or
tuition reimbursements, imputed income arising under any group insurance or
benefit program, traveling expenses, business and moving expense
reimbursements, income received in connection with stock options,
contributions made by the Company or an Affiliate under any employee benefit
plan, and similar items of compensation, as determined by the Board or
Committee. The payroll deductions made for each participant shall be
credited to an account for such participant under the Plan and shall be
deposited with the general funds of the Company. A participant may reduce
(including to zero) or increase such payroll deductions, and an eligible
employee may begin such payroll deductions, after the beginning of any
Offering only as provided for in the Offering. A participant may make
additional payments into his or her account only if specifically provided for
in the Offering and only if the participant has not had the maximum amount
withheld during the Offering.
(b) At any time during an Offering, a participant may terminate his or her
payroll deductions under the Plan and withdraw from the Offering by delivering
to the Company a notice of withdrawal in such form as the Company provides.
Such withdrawal may be elected at any time prior to the end of the Offering
except as provided by the Board or the Committee in the Offering. Upon such
withdrawal from the Offering by a participant, the Company shall distribute to
such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall terminate
immediately upon cessation of a participant's employment with the Company and
any designated Affiliate, for any reason, and the Company shall distribute to
such terminated employee all of his or her accumulated payroll deductions
(reduced to the extent, if any, such deductions have been used to acquire stock
for the terminated employee), under the Offering, without interest.
(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and distribution, or
by a beneficiary designation as provided in paragraph 14 and, otherwise during
his or her lifetime, shall be exercisable only by the person to whom such rights
are granted.
5.
<PAGE>
8. EXERCISE.
(a) On each Purchase Date specified in the relevant Offering, each
participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of whole shares of stock of the Company, up to
the maximum number of shares permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional shares shall be issued upon the exercise of rights granted under the
Plan, unless the Offering document specifically provides otherwise. The amount,
if any, of accumulated payroll deductions remaining in each participant's
account after the purchase of shares which is less than the amount required to
purchase one share of stock on the final Purchase Date of an Offering shall be
held in each such participant's account for the purchase of shares under the
next Offering under the Plan, unless such participant withdraws from such next
Offering, as provided in subparagraph 7(b), or is no longer eligible to be
granted rights under the Plan, as provided in paragraph 5, in which case such
amount shall be distributed to the participant after such final Purchase Date,
without interest. The amount, if any, of accumulated payroll deductions
remaining in any participant's account after the purchase of shares which is
equal to the amount required to purchase whole shares of stock on the final
Purchase Date of an Offering shall be distributed in full to the participant
after such Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent unless
the shares to be issued upon such exercise under the Plan (including rights
granted thereunder) are covered by an effective registration statement pursuant
to the Securities Act of 1933, as amended (the "Securities Act") and the Plan is
in material compliance with all applicable state, foreign and other securities
and other laws applicable to the Plan. If on a Purchase Date in any Offering
hereunder the Plan is not so registered or in such compliance, no rights granted
under the Plan or any Offering shall be exercised on such Purchase Date, and the
Purchase Date shall be delayed until the Plan is subject to such an effective
registration statement and such compliance, except that the Purchase Date shall
not be delayed more than twelve (12) months and the Purchase Date shall in no
event be more than twenty-seven (27) months from the Offering Date. If on the
Purchase Date of any Offering hereunder, as delayed to the maximum extent
permissible, the Plan is not registered and in such compliance, no rights
granted under the Plan or any Offering shall be exercised and all payroll
deductions accumulated during the Offering (reduced to the extent, if any, such
deductions have been used to acquire stock) shall be distributed to the
participants, without interest.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each federal, state, foreign or
other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of stock upon exercise of
the rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance
6.
<PAGE>
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such rights
unless and until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the Plan
shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shares acquired upon exercise
of rights hereunder are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding rights will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding rights. Such adjustments shall be made by the Board or
the Committee, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a "transaction not involving the receipt of consideration by
the Company.")
(b) In the event of: (1) a dissolution or liquidation of the Company; (2)
a merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) the acquisition by any person,
entity or group within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or any comparable
successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or any Affiliate of the Company) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors, then, as determined by the Board in its
sole discretion (i) any surviving or acquiring corporation may assume
outstanding rights or substitute similar rights for those under the Plan, (ii)
such rights may continue in full force and effect, or (iii) participants'
accumulated payroll deductions may be used to purchase Common Stock immediately
prior to the transaction described above and the participants' rights under the
ongoing Offering terminated.
7.
<PAGE>
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment if such amendment requires stockholder approval in order for the Plan
to obtain employee stock purchase plan treatment under Section 423 of the Code
or to comply with the requirements of Rule 16b-3 promulgated under the Exchange
Act or any Nasdaq or securities exchange requirements.
(b) The Board may amend the Plan in any respect the Board deems necessary
or advisable to provide eligible employees with the maximum benefits provided or
to be provided under the provisions of the Code and the regulations promulgated
thereunder relating to employee stock purchase plans and/or to bring the Plan
and/or rights granted under it into compliance therewith.
(c) Rights and obligations under any rights granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan, except
with the consent of the person to whom such rights were granted, or except as
necessary to comply with any laws or governmental regulations, or except as
necessary to ensure that the Plan and/or rights granted under the Plan comply
with the requirements of Section 423 of the Code.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who is
to receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to the participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death during an Offering.
(b) Such designation of beneficiary may be changed by the participant at
any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its sole discretion, may deliver such shares
and/or cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board in its discretion, may suspend or terminate the Plan at any
time. No rights may be granted under the Plan while the Plan is suspended or
after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except as expressly provided
8.
<PAGE>
in the Plan or with the consent of the person to whom such rights were
granted, or except as necessary to comply with any laws or governmental
regulation, or except as necessary to ensure that the Plan and/or rights
granted under the Plan comply with the requirements of Section 423 of the
Code.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon the Company's initial public offering
of shares of common stock (the "Effective Date"), but no rights granted under
the Plan shall be exercised unless and until the Plan has been approved by the
stockholders of the Company within twelve (12) months before or after the date
the Plan is adopted by the Board or the Committee, which date may be prior to
the Effective Date.
9.
<PAGE>
BIEX, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN OFFERING
ADOPTED BY THE BOARD OF DIRECTORS ON MARCH 9, 1998
1. GRANT; OFFERING DATE.
(a) The Board of Directors (the "Board") of Biex, Inc. (the "Company"),
pursuant to the Company's 1998 Employee Stock Purchase Plan (the "Plan"), hereby
authorizes the grant of rights to purchase shares of the common stock of the
Company ("Common Stock") to all Eligible Employees (an "Offering"). The first
Offering shall begin on the effective date of the initial public offering of the
Company's Common Stock and end on July 31, 2000 (the "Initial Offering").
Thereafter, an Offering shall begin on August 1 every two (2) years, beginning
with calendar year 2000, and shall end on the day prior to the second
anniversary of its Offering Date. The first day of an Offering is that
Offering's "Offering Date."
(b) Notwithstanding anything to the contrary, in the event that the fair
market value of a share of Common Stock on any Purchase Date (as defined in
Section 6 hereof) during an Offering is less than the fair market value of a
share of Common Stock on the Offering Date of the Offering, then following the
purchase of Common Stock on such Purchase Date (i) the Offering shall terminate,
(ii) a new Offering shall commence on the day following the Purchase Date and
shall end on the day prior to the second anniversary of such new Offering's
Offering Date, and (iii) all participants in the just-terminated Offering shall
automatically be enrolled in the new Offering.
(c) Prior to the commencement of any Offering, the Board (or the Committee
described in subparagraph 2(c) of the Plan, if any) may change any or all terms
of such Offering and any subsequent Offerings. The granting of rights pursuant
to each Offering hereunder shall occur on each respective Offering Date unless,
prior to such date (a) the Board (or such Committee) determines that such
Offering shall not occur, or (b) no shares remain available for issuance under
the Plan in connection with the Offering.
2. ELIGIBLE EMPLOYEES.
(a) All employees of the Company and each of its Affiliates (as defined in
the Plan) incorporated in the United States shall be granted rights to purchase
Common Stock under each Offering on the Offering Date of such Offering, provided
that each such employee otherwise meets the employment requirements of
subparagraph 5(a) of the Plan (an "Eligible Employee"). Notwithstanding the
foregoing, the following employees shall NOT be Eligible Employees or be granted
rights under an Offering: (i) part-time or seasonal employees whose customary
employment is less than twenty (20) hours per week or five (5) months per
calendar year or (ii) 5% stockholders (including ownership through unexercised
and/or unvested stock options) described in subparagraph 5(c) of the Plan.
(b) Each person who first becomes an Eligible Employee during any Offering
and at least six (6) months prior to the final Purchase Date of the Offering
will, on the next August 1 or
1.
<PAGE>
February 1 during that Offering, receive a right under such Offering, which
right shall thereafter be deemed to be a part of the Offering. Such right
shall have the same characteristics as any rights originally granted under
the Offering except that:
(i) the date on which such right is granted shall be the "Offering
Date" of such right for all purposes, including determination of the exercise
price of such right; and
(i) the Offering for such right shall begin on its Offering Date and
end coincident with the end of the ongoing Offering.
3. RIGHTS.
(a) Subject to the limitations contained herein and in the Plan, on each
Offering Date each Eligible Employee shall be granted the right to purchase the
number of shares of Common Stock purchasable with up to ten percent (10%) of
such employee's Earnings paid during the period of such Offering beginning after
such Eligible Employee first commences participation; provided, however, that no
employee may purchase Common Stock on a particular Purchase Date that would
result in more than ten percent (10%) of such employee's Earnings in the period
from the Offering Date to such Purchase Date having been applied to purchase
shares under all ongoing Offerings under the Plan and all other plans of the
Company intended to qualify as "employee stock purchase plans" under Section 423
of the Internal Revenue Code of 1986, as amended (the "Code"). For this
Offering, "Earnings" means the base salary or wages paid to an employee
(including all amounts elected to be deferred by the employee, that would
otherwise have been paid, under any cash or deferred arrangement established by
the Company), but does not include overtime pay, commissions, bonuses, and other
remuneration paid directly to the employee, profit sharing, the cost of employee
benefits paid for by the Company, education or tuition reimbursements, imputed
income arising under any Company group insurance or benefit program, traveling
expenses, business and moving expense reimbursements, income received in
connection with stock options, contributions made by the Company under any
employee benefit plan, and similar items of compensation.
(b) Notwithstanding the foregoing, the maximum number of shares of Common
Stock an Eligible Employee may purchase on any Purchase Date in an Offering
shall be such number of shares as has a fair market value (determined as of the
Offering Date for such Offering) equal to (x) $25,000 multiplied by the number
of calendar years in which the right under such Offering has been outstanding at
any time, minus (y) the fair market value of any other shares of Common Stock
(determined as of the relevant Offering Date with respect to such shares) which,
for purposes of the limitation of Section 423(b)(8) of the Code, are attributed
to any of such calendar years in which the right is outstanding. The amount in
clause (y) of the previous sentence shall be determined in accordance with
regulations applicable under Section 423(b)(8) of the Code based on (i) the
number of shares previously purchased with respect to such calendar years
pursuant to such Offering or any other Offering under the Plan, or pursuant to
any other Company plans intended to qualify as "employee stock purchase plans"
under Section 423 of the Code, and (ii) the number of shares subject to other
rights outstanding on the Offering Date for such Offering pursuant to the Plan
or any other such Company plan.
2.
<PAGE>
(c) The maximum aggregate number of shares available to be purchased by
all Eligible Employees under an Offering shall be the number of shares remaining
available under the Plan on the Offering Date. If the aggregate purchase of
shares of Common Stock upon exercise of rights granted under the Offering would
exceed the maximum aggregate number of shares available, the Board shall make a
pro rata allocation of the shares available in a uniform and equitable manner.
4. PURCHASE PRICE.
The purchase price of the Common Stock under the Offering shall be the
lesser of: (i) eighty-five percent (85%) of the fair market value of the Common
Stock on the Offering Date or (ii) or eighty-five percent (85%) of the fair
market value of the Common Stock on the Purchase Date, in each case rounded up
to the nearest whole cent per share. For the Initial Offering, the fair market
value of the Common Stock at the time when the Offering commences shall be the
price per share at which shares of Common Stock are first sold to the public in
the Company's initial public offering as specified in the final prospectus with
respect to that public offering.
5. PARTICIPATION.
(a) Except as otherwise provided in this paragraph 5 or in the Plan, an
Eligible Employee may elect to participate in an Offering only at the
beginning of the Offering or as of the day following a Purchase Date during
such Offering. An Eligible Employee shall become a participant in an Offering
by delivering an agreement authorizing payroll deductions. Such deductions
must be in whole percentages of Earnings, with a minimum percentage of one
percent (1%) and a maximum percentage of ten percent (10%). A participant
may not make additional payments into his or her account. The agreement
shall be made on such enrollment form as the Company provides, and must be
delivered to the Company prior to the date participation is to be effective,
unless a later time for filing the enrollment form is set by the Company for
all Eligible Employees with respect to a given participation date. For the
Initial Offering, the time for filing an enrollment form and commencing
participation for individuals who are Eligible Employees on the Offering Date
for the Initial Offering shall be determined by the Company and communicated
to such Eligible Employees.
(b) A participant may decrease his or her participation level during
the course of a six (6)-month purchase interval one (1) time, and only by
delivering notice to the Company at least ten (10) days in advance of the
Purchase Date in such form as the Company prescribes; provided that a
participant may (i) reduce his or her deductions to zero percent (0%) upon
ten (10) days' prior notice by delivering a notice in such form as the
Company provides, (ii) may increase or decrease his or her participation
level at any time to become effective on the day following the next
subsequent Purchase Date or (iii) may withdraw from an Offering and receive
his or her accumulated payroll deductions from the Offering (reduced to the
extent, if any, such deductions have been used to acquire Common Stock for
the participant on any prior Purchase Dates) without interest, at any time
prior to the end of the Offering, excluding only each ten (10)-day period
immediately preceding a Purchase Date, by delivering a withdrawal notice to
the Company in such form as the Company provides. A participant who has
withdrawn from an Offering shall not again participate in such Offering, but
may participant in subsequent Offerings under the Plan in accordance with the
terms thereof.
3.
<PAGE>
6. PURCHASES.
Subject to the limitations contained herein, on each Purchase Date, each
participant's accumulated payroll deductions (without any increase for interest)
shall be applied to the purchase of whole shares of Common Stock, up to the
maximum number of shares permitted under the Plan and the Offering. "Purchase
Date" shall be defined as each January 31 and July 31, except that the first
Purchase Date under this Offering shall be January 31, 1999, and not July 31,
1998.
7. NOTICES AND AGREEMENTS.
Any notices or agreements provided for in an Offering or the Plan shall be
given in writing, in a form provided by the Company, and unless specifically
provided for in the Plan or this Offering, shall be deemed effectively given
upon receipt or, in the case of notices and agreements delivered by the Company,
five (5) days after deposit in the United States mail, postage prepaid.
8. EXERCISE CONTINGENT ON STOCKHOLDER APPROVAL.
The rights granted under an Offering are subject to the approval of the
Plan by the stockholders as required for the Plan to obtain treatment as a
tax-qualified employee stock purchase plan under Section 423 of the Code and
to comply with the requirements of exemption from potential liability under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") set forth in Rule 16b-3 promulgated under the Exchange Act.
9. OFFERING SUBJECT TO PLAN.
Each Offering is subject to all the provisions of the Plan, and its
provisions are hereby made a part of the Offering, and is further subject to
all interpretations, amendments, rules and regulations which may from time to
time be promulgated and adopted pursuant to the Plan. In the event of any
conflict between the provisions of an Offering and those of the Plan
(including interpretations, amendments, rules and regulations which may from
time to time be promulgated and adopted pursuant to the Plan), the provisions
of the Plan shall control.
4.
<PAGE>
June 4, 1996
Mr. James A. Edlund
4502 Pond Apple Drive
Naples, FL 33999
RE: BIEX, INC. EMPLOYMENT TERMS
Dear Jim:
Biex, Inc. is pleased to offer you the position of President and Chief
Executive Officer, on the terms set forth below (the "Agreement").
You will be responsible for all of the duties customarily associated with
the position of Chief Executive Officer and will be a member of the Board of
Directors. You will start on June 24, 1996.
Your initial annual base salary will be $205,000 less payroll deductions
and required withholdings, paid semi-monthly.
The Company will grant you stock options to acquire 442,177 shares of the
Company's common stock at its fair market value, as determined by the Board, on
the first day of your employment, which should be approximately $.20 per share.
The option to acquire 442,177 shares will become exercisable ("vest") as to one
quarter of the shares twelve months after your hire date and as to one
forty-eighth of the shares each month thereafter, such vesting to occur on the
date of the month corresponding to your hire date.
In addition, the Company will grant you additional stock options to acquire
an additional number of shares of the Company's common stock equal to (a) 5% of
the number of shares that are purchased with the first $3,500,000 of future
equity investment in the next venture capital round or rounds prior the
Company's initial public offering, and (b) 5% of the increase in the number of
shares in the Company's stock option pool from the date of this letter until the
earlier of (i) the date the first $3,500,000 has been invested in the Company in
the next venture capital round or rounds or (ii) the date of the Company's
initial public offering (but excluding from such calculation the number of
shares in the stock option pool reserved for grant in the period after the
initial public offering). Each such option for additional shares will be at an
exercise price equal to the fair market value of the Company's common stock, as
determined by the Board, on the date of grant of such stock option. Each such
additional option will vest as to one quarter of the shares twelve months after
your hire date and as to one forty-eighth of the shares each month thereafter,
such vesting to occur on the date corresponding to your hire date.
The vesting schedule set forth above will be accelerated, and all options
will
<PAGE>
Mr. James A. Edlund
June 4, 1996
Page 2
become immediately vested, upon a change of control of the Company during your
service as Chief Executive Officer. The term "change of control" is defined on
Attachment 1 to this Agreement.
To the extent possible, all options will be designed to receive the
preferential tax treatment awarded to incentive stock options under the Internal
Revenue Code. The other terms of both option grants will be subject to the
terms and conditions set forth in the applicable Stock Option Plan and the
Company's Stock Option Agreement, which will be delivered to you separately, and
governing tax law.
For your move to the Bay Area you will also receive reimbursement for:
The actual reasonable cost of moving normal household goods and
personal possessions from the former place of residence to the new
location (with estimates cleared with the Company in advance of the
move);
Payment of the actual cost of up to four house hunting trips for you
and your spouse;
Reasonable interim living expenses for up to one month (with accomodations
cleared with the Company in advance);
Shipment of two cars to the new location (not to exceed $2000.00).
In addition, you will receive vacation leave, medical and dental insurance
coverage, and other standard benefits consistent with the Company's policy for
exempt employees.
As a Biex employee, you will be expected to abide by Company rules and
regulations, and sign and comply with a Proprietary Information and Inventions
Agreement, which prohibits unauthorized use or disclosure of Biex proprietary
information.
Either you or the Company may terminate your employment relationship at any
time for any reason whatsoever, with or without cause or advance notice.
To ensure rapid and economical resolution of disputes or claims which may
arise from or relate to your employment relationship with Biex, any such
disputes or claims (including, but not limited to, all state and federal
statutory and discrimination claims) will be resolved by final and binding
arbitration (rather than by a court, jury, or administrative agency) conducted
in San Francisco, California by the Judicial Arbitration and Mediation
Services/Endispute, Inc. under the then current rules of that organization.
<PAGE>
Mr. James A. Edlund
June 4, 1996
Page 3
This letter constitutes the entire statement of the terms of your
employment and it replaces prior agreements or representations concerning your
employment relationship. It can only be modified in a writing signed by you and
a duly authorized officer of Biex, which is approved by the Board.
Please sign and date this letter, and return it to me by June 7, 1996, if
you wish to accept employment at Biex, Inc. under the terms described above.
We look forward to your favorable reply and to a productive and enjoyable
working relationship.
Sincerely,
Biex, Inc.
By: /s/ Barbara Santry
-------------------------------------
Director
Accepted by:
/s/ James A. Edlund
- ----------------------------------
James A. Edlund
Dated: 6/5/96
-------------------------------
<PAGE>
Mr. James A. Edlund
June 4, 1996
Page 4
ATTACHMENT 1
A change of control means a merger or consolidation in which the Company is not
the surviving entity, except for a transaction the principal purpose of which is
to change the State of the Company's incorporation; the sale, transfer or other
disposition or all or substantially all of the assets of the Company; and any
other corporate reorganization or business combination in which fifty percent
(50%) or more of the Company's outstanding voting stock is transferred from the
present holders to different holders in a single transaction or a series of
related transactions (not including an issuance by the Company of stock to raise
investment funds).
<PAGE>
BIEX, INC.
PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT
In consideration of my employment or continued employment by BIEX, INC.
(the "Company"), and the compensation now and hereafter paid to me, I hereby
agree as follows:
1. RECOGNITION OF COMPANY'S RIGHTS; NONDISCLOSURE. At all times during
the term of my employment and thereafter, I will hold in strictest confidence
and will not disclose, use, lecture upon or publish any of the Company's
Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or
unless an officer of the Company expressly authorizes such in writing. I hereby
assign to the Company any rights I may have or acquire in such Proprietary
Information and recognize that all Proprietary Information shall be the sole
property of the Company and its assigns and the Company and its assigns shall be
the sole owner of all trade secret rights, patent rights, copyrights, mask work
rights and all other rights throughout the world (collectively, "Proprietary
Rights") in connection therewith.
The term "Proprietary Information" shall mean trade secrets, confidential
knowledge, data or any other proprietary information of the Company. By way of
illustration but not limitation, "Proprietary Information" includes tangible and
intangible information relating to antibodies and other biological materials,
cell lines, samples of assay components, media and/or cell lines and procedures
and formulations for producing any such assay components, media and/or cell
lines, formulations, products, processes, know-how, designs, formulas, methods,
developmental or experimental work, clinical data, improvements, discoveries,
plans for research, new products, marketing and selling, business plans, budgets
and unpublished financial statements, licenses, prices and costs, suppliers and
customers, and information regarding the skills and compensation of other
employees of the Company.
2. THIRD PARTY INFORMATION. I understand, in addition, that the Company
has received and in the future will receive from third parties confidential or
proprietary information ("Third Party Information") subject to a duty on the
Company's part to maintain the confidentiality of such information and to use it
only for certain limited purposes. During the term of my employment and
thereafter, I will hold Third Party Information in the strictest confidence and
will not disclose (to anyone other than Company personnel who need to know such
information in connection with their work for the Company) or use, except in
connection with my work for the Company, Third Party Information unless
expressly authorized by an officer of the Company in writing.
1.
<PAGE>
3. ASSIGNMENT OF INVENTIONS.
3.1 ASSIGNMENT. I hereby assign to the Company all my right, title
and interest in and to any and all Inventions (and all Proprietary Rights with
respect thereto) whether or not patentable or registrable under copyright or
similar statutes, made or conceived or reduced to practice or learned by me,
either alone or jointly with others, during the period of my employment with the
Company. Inventions assigned to or as directed by the Company by this
paragraph 3 are hereinafter referred to as "Company Inventions." I recognize
that this Agreement does not require assignment of any invention which qualifies
fully for protection under Section 2870 of the California Labor Code
(hereinafter "Section 2870"), which provides as follows:
(a) Any provision in an employment agreement which provides that
an employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to
practice of the invention to the employer's business, or actual or demonstrably
anticipated research or development of the employer.
(2) Result from any work performed by the employee for the
employer.
(b) To the extent a provision in an employment agreement
purports to require an employee to assign an invention otherwise excluded from
being required to be assigned under subdivision (i), the provision is against
the public policy of this state and is unenforceable.
3.2 GOVERNMENT. I also assign to or as directed by the Company all
my right, title and interest in and to any and all Inventions, full title to
which is required to be in the United States by a contract between the Company
and the United States or any of its agencies.
3.3 WORKS FOR HIRE. I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the scope
of my employment and which are protectable by copyright are "works made for
hire," as that term is defined in the United States Copyright Act (17 U.S.C.,
Section 101).
4. ENFORCEMENT OF PROPRIETARY RIGHTS. I will assist the Company in every
proper way to obtain and from time to time enforce United States and foreign
Proprietary Rights relating to Company Inventions in any and all countries. To
that end I will execute, verify and deliver such documents and perform such
other acts (including appearances as a witness) as the Company may reasonably
request for use in applying for, obtaining, perfecting, evidencing,
2.
<PAGE>
sustaining and enforcing such Proprietary Rights and the assignment thereof. In
addition, I will execute, verify and deliver assignments of such Proprietary
Rights to the Company or its designee. My obligation to assist the Company with
respect to Proprietary Rights relating to such Company Inventions in any and all
countries shall continue beyond the termination of my employment, but the
Company shall compensate me at a reasonable rate after my termination for the
time actually spent by me at the Company's request on such assistance.
In the event the Company is unable for any reason, after reasonable effort,
to secure my signature on any document needed in connection with the actions
specified in the preceding paragraph, I hereby irrevocably designate and appoint
the Company and its duly authorized officers and agents as my agent and attorney
in fact, which appointment is coupled with an interest, to act for and in my
behalf to execute, verify and file any such documents and to do all other
lawfully permitted acts to further the purposes of the preceding paragraph with
the same legal force and effect as if executed by me. I hereby waive and
quitclaim to the Company any and all claims, of any nature whatsoever, which I
now or may hereafter have for infringement of any Proprietary Rights assigned
hereunder to the Company.
5. OBLIGATION TO KEEP COMPANY INFORMED. During the period of my
employment and for six (6) months after termination of my employment with the
Company, I will promptly disclose to the Company fully and in writing all
Inventions authored, conceived or reduced to practice by me, either alone or
jointly with others. In addition, I will promptly disclose to the Company all
patent applications filed by me or on my behalf within a year after termination
of employment. At the time of each such disclosure, I will advise the Company
in writing of any Inventions that I believe fully qualify for protection under
Section 2870; and I will at that time provide to the Company in writing all
evidence necessary to substantiate that belief. The Company will keep in
confidence and will not disclose to third parties without my consent any
proprietary information disclosed in writing to the Company pursuant to this
Agreement relating to Inventions that qualify fully for protection under the
provisions of Section 2870. I will preserve the confidentiality of any
Invention that does not fully qualify for protection under Section 2870.
I agree to keep and maintain adequate and current records (in the form of
notes, sketches, drawings and in any other form that may be required by the
Company) of all Proprietary Information developed by me and all Inventions made
by me during the period of my employment at the Company, which records shall be
available to and remain the sole property of the Company at all times.
6. PRIOR INVENTIONS. Inventions, if any, patented or unpatented, which I
made prior to the commencement of my employment with the Company are excluded
from the scope of this Agreement. To preclude any possible uncertainty, I have
set forth on Exhibit A attached hereto a complete list of all Inventions that I
have, alone or jointly with others, conceived, developed or reduced to practice
or caused to be conceived, developed or reduced to practice prior to the
commencement of my employment with the Company, that I consider to be my
property or the property of third parties and that I wish to have excluded from
the scope of this Agreement. If disclosure of any such Invention on Exhibit A
would cause me to violate any prior confidentiality
3.
<PAGE>
agreement, I understand that I am not to list such Inventions in Exhibit A but
am to inform the Company that all such Inventions have not been listed for that
reason.
7. ADDITIONAL ACTIVITIES. I agree that during the period of my
employment by the Company I will not, without the Company's express written
consent, engage in any employment or business activity other than for the
Company. I agree further that for the period of my employment by the Company
and for one (l) year after the date of termination of my employment by the
Company I will not (i) induce any employee of the Company to leave the employ of
the Company or (ii) solicit the business of any client or customer of the
Company (other than on behalf of the Company).
8. NO IMPROPER USE OF MATERIALS. During my employment by the Company I
will not improperly use or disclose any confidential information or trade
secrets, if any, of any former employer or any other person to whom I have an
obligation of confidentiality, and I will not bring onto the premises of the
Company any unpublished documents or any property belonging to any former
employer or any other person to whom I have an obligation of confidentiality
unless consented to in writing by that former employer or person. I will use in
the performance of my duties only information which is generally known and used
by persons with training and experience comparable to my own, which is common
knowledge in the industry or otherwise legally in the public domain, or which is
otherwise provided or developed by the Company.
9. NO CONFLICTING OBLIGATION. I represent that my performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence information acquired by me in
confidence or in trust prior to my employment by the Company. I have not
entered into, and I agree I will not enter into, any agreement either written or
oral in conflict herewith.
10. RETURN OF COMPANY DOCUMENTS. When I leave the employ of the Company,
I will deliver to the Company any and all drawings, notes, memoranda,
specifications, devices, formulas, and documents, together with all copies
thereof, and any other material containing or disclosing any Company Inventions,
Third Party Information or Proprietary Information of the Company. I further
agree that any property situated on the Company's premises and owned by the
Company, including disks and other storage media, filing cabinets or other work
areas, is subject to inspection by Company personnel at any time with or without
notice. Prior to leaving, I will cooperate with the Company in completing and
signing the Company's termination statement for technical and management
personnel.
11. LEGAL AND EQUITABLE REMEDIES. Because my services are personal and
unique and because I may have access to and become acquainted with the
Proprietary Information of the Company, the Company shall have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief, without bond and without prejudice to any
other rights and remedies that the Company may have for a breach of this
Agreement.
4.
<PAGE>
12. NOTICES. Any notices required or permitted hereunder shall be given
to the appropriate party at the address specified below or at such other address
as the party shall specify in writing. Such notice shall be deemed given upon
personal delivery to the appropriate address or if sent by certified or
registered mail, three (3) days after the date of mailing.
13. GENERAL PROVISIONS.
13.1 GOVERNING LAW. This Agreement will be governed by and
construed according to the laws of the State of California.
13.2 ENTIRE AGREEMENT. This Agreement is the final, complete and
exclusive agreement of the parties with respect to the subject matter hereof and
supersedes and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this Agreement,
will be effective unless in writing and signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement. As used in this Agreement, the
period of my employment includes any time during which I may be retained by the
Company as a consultant.
13.3 SEVERABILITY. If one or more of the provisions in this
Agreement are deemed unenforceable by law, then such provision will be deemed
stricken from this Agreement and the remaining provisions will continue in full
force and effect.
13.4 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon
my heirs, executors, administrators and other legal representatives and will be
for the benefit of the Company, its successors, and its assigns.
13.5 SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the Company
to any successor in interest or other assignee.
13.6 EMPLOYMENT. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment by
the Company, nor shall it interfere in any way with my right or the Company's
right to terminate my employment at any time, with or without cause.
13.7 WAIVER. No waiver by the Company of any breach of this
Agreement shall be a waiver of any preceding or succeeding breach. No waiver by
the Company of any right under this Agreement shall be construed as a waiver of
any other right. The Company shall not be required to give notice to enforce
strict adherence to all terms of this Agreement.
This Agreement shall be effective as of the first day of my employment with
the Company.
5.
<PAGE>
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT.
Dated:
- ----------------------------------- ----------------------------------------
SIGNATURE
----------------------------------------
(PRINTED NAME)
ACCEPTED AND AGREED TO:
BIEX, INC.
By: 6693 Sierra Lane, Suite F
-------------------------------- Dublin, CA 94568
Title:
-----------------------------
6.
<PAGE>
EXHIBIT A
Biex, Inc.
6693 Sierra Lane, Suite F
Dublin, CA 94568
Gentlemen:
1. The following is a complete list of all inventions or improvements
relevant to the subject matter of my employment by Biex, Inc. (the "Company")
that have been made or conceived or first reduced to practice by me alone or
jointly with others prior to my engagement by the Company:
/ / No inventions or improvements.
/ / See below:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
/ / Due to confidentiality agreements with prior employer, I cannot
disclose certain inventions that would otherwise be included on the
above-described list.
/ / Additional sheets attached.
2. I propose to bring to my employment the following devices, materials
and documents of a former employer or other person to whom I have an obligation
of confidentiality that are not generally available to the public, which
materials and documents may be used in my employment pursuant to the express
written authorization of my former employer or such other person (a copy of
which is attached hereto):
/ / No material.
/ / See below:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
/ / Additional sheets attached.
Date:
- ----------------------------------- ------------------------------
Employee
1.
<PAGE>
COVENANT NOT TO COMPETE
THIS COVENANT NOT TO COMPETE (the "Agreement"), dated as of July 23, 1993,
is between BIEX, INC., a Delaware corporation (the "Company"), and VIVIAN
DULLIEN ("Employee").
RECITALS
WHEREAS, Employee acknowledges that Employee is one of the principal
persons involved in the development of the Company's products and services and
Employee is an officer of the Company;
WHEREAS, Employee further acknowledges that (i) the Company's products and
services will be sold nationally and internationally, (ii) a company producing
products and services similar to those of the Company, regardless of its
geographic location, is likely to jeopardize the Company's business, and
(iii) the ability of the Company to attain its goals is likely to be materially
jeopardized and its value reduced if Employee competes with the Company or
assists other persons in competing with the Company;
WHEREAS, Employee has signed the Company's Proprietary Information and
Inventions Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1. During her employment with the Company, and for a period of two (2)
years after the date of termination of Employee's employment with the Company
(whether voluntary or involuntary, with or without cause), Employee will not
directly or indirectly (through one or more intermediaries), whether
individually, or as an officer, director, employee or consultant, compete in
whole or in part with, or assist any corporation or business enterprise in
competing in whole or in part with, the business then engaged in by the
Company or any business in which the Company during the term of her
employment planned to engage in or conducted research or development, nor
will Employee directly or indirectly interfere with employees of the Company
or suppliers, manufacturers, distributors, wholesalers or other such
companies with which the Company transacts business for any purpose having an
adverse effect upon the Company's business activities; PROVIDED, HOWEVER,
nothing contained herein shall prevent Employee from owning less than 10% of
the outstanding equity interests of any such type of corporation, the shares
of which are publicly traded on a nationally recognized stock exchange.
2. Employee agrees not to entice, induce or encourage any of the
Company's other employees to engage in any activity which, were it done by
Employee, would violate any provision of this Covenant Not To Compete.
3. Employee acknowledges that a breach of this Agreement is likely to
result in
1.
<PAGE>
irreparable and unreasonable harm to the Company, and that injunctive relief, as
well as damages, would be appropriate. If Employee breaches this Agreement,
Employee shall promptly reimburse the Company for all legal fees (and
disbursements) incurred by the Company to enforce this Agreement or to pursue
remedies arising as a result of such breach.
4. In the event that Employee's employment is terminated by the Company
without cause (as defined herein), Employee shall be entitled to receive
severance pay in an amount equal to six months of Employee's then-current annual
salary, such amount to be paid to Employee in full upon the effective date of
Employee's termination. For purposes of this paragraph 4, "cause" shall mean a
determination by the Company's Board of Directors in good faith that Employee
has continued to neglect the duties of Employee's employment, has engaged in
willful misconduct in connection with the performance of Employee's employment,
or has engaged in drug or alcohol abuse or any other conduct involving
dishonesty or moral turpitude.
5. This Agreement shall be binding upon Employee, her heirs, executors,
assigns and administrators and shall inure to the benefit of the Company, its
successors and assigns.
6. If Employee currently has a written employment agreement with the
Company, this Agreement will supersede those provisions of such employment
agreement that cover the same subject matter as this Agreement. Wherever there
is any conflict between any provision of this Agreement and any statute, law,
regulation or judicial precedent, the latter shall prevail, but in such event
the provisions of this Agreement thus affected shall be curtailed and limited
only to the extent necessary to bring it within the requirement of the law. In
the event that any part, section, paragraph or clause of this Agreement shall be
held by a court or proper jurisdiction to be indefinite, invalid or otherwise
unenforceable, the entire Agreement shall not fail on account thereof, but the
balance of the Agreement shall continue in full force and effect unless such
construction would clearly be contrary to the intention of the parties or would
result in an unconscionable injustice.
7. The validity, interpretation, enforceability and performance of this
Agreement shall be governed by and construed in accordance with the laws of the
State in which it is sought to be enforced. Venue for any action brought to
enforce this Agreement or as a result of a dispute hereunder shall be in
Colorado or in the State in which enforcement is sought, at the discretion of
the party seeking enforcement.
BIEX, INC. EMPLOYEE
By: /s/ Vivian Dullien By: /s/ Vivian Dullien
-------------------------------- -------------------------------------
Vivian Dullien Name: Vivian Dullien
President -----------------------------------
2.
<PAGE>
SINCO INTERNATIONAL INVESTMENTS, INC.
TO: Mr. Roger Wunderling
FROM: Paul Forsberg
DATE: February 28, 1997
SUBJECT: Lease Renewal at Highland
March 31, 1997 is the anniversary date of your current lease extension for
two executive offices at the Historic Highland Building in Boulder, Colorado.
We have enjoyed having Biex as a long term tenant in our building and hope
that your staff have had an enjoyable and productive year here.
I have discussed the additional extension of your lease with Sina and we
propose to extend your lease at a rate of $1,675 per month through March 31,
1998. All the other terms and conditions of the lease shall remain the same
as stipulated in the original lease of January 30, 1995 and the Addendum
dated May 10, 1996.
Specifically, the following terms of the 5/10/1996 Addendum will remain in
effect:
- - The Leased Premises shall consist of the two adjacent offices in the
Northwest corner of the 2nd floor North suite.
- - The lease will continue on a month-to-month basis with a 60 day notice to
vacate required. Additionally, the date for termination cannot fall in the
period from November 1, 1997 through January 31, 1998.
Please note that in addition, only two parking spaces will be available for
Biex employees and/or guests. Due to our recent parking problems, parking
provisions will be rigorously enforced this year.
If this proposal is acceptable to you, please sign in the space provided
below and return a copy for our files. If you have any questions or would
like to further discuss the extension terms, please call either me or Sina
Simantob at (303) 447-2641. We wish your operation continuing success at
Highland and look forward to being of service to your staff in the upcoming
year.
Accepted:
/s/ ROGER WUNDERLING 3-26-97
- --------------------------------------------
Roger Wunderling, CFO Date
Biex, Inc.
<PAGE>
LEASE AGREEMENT
This lease agreement, made and entered into this 30th day of January,
1995, by and between Sina Simantob, Highland School Offices, 885 Arapahoe,
Boulder, Colorado, hereinafter referred to as "Landlord" and Biex, Inc., 885
Arapahoe Ave. Boulder, hereinafter referred to as "Tenant";
Witnesseth:
In consideration of the covenants, terms, conditions, agreements and
payments as hereinafter set forth, the parties hereto covenant and agree as
follows:
1. PROPERTY--LEASED PREMISES
Landlord hereby leases unto Tenant the following described premises:
3 single offices in the 2nd floor North executive suite plus furniture in 3rd
office -- VD G.G.
which shall hereinafter be referred to as the "leased premises"; the leasing
of which shall be covered by the terms of this agreement.
2. TERM
The term of this Lease shall commence at 12:00 noon on the 1st day of
February, 1995, and unless terminated as herein provided, for, shall end at
12:00 noon on the 31st day of January, 1996.
3. RENT
Tenant shall pay to Landlord, at the address of Landlord as herein set
forth, the following as rental for the leased premises:
A. The base rental for the full term hereof shall be TWENTY FOUR THOUSAND
AND THREE HUNDRED DOLLARS ($24,300). Said rental shall be payable in monthly
installments (basic monthly rental) of TWO THOUSAND AND TWENTY FIVE Dollars
($2,025.00) in advance on the first day of each month during the term hereof.
Landlord acknowledges receipt of sum of FOUR HUNDRED AND FIFTY Dollars
($450.00) paid by Tenant upon the execution hereof to be held as security by
Landlord throughout the term of this Lease and any extension for the faithful
performance of Tenant's obligations, covenants, and agreements hereunder.
Landlord shall have the right to apply all or any portion of such deposit to
cure any and all defaults of Tenant, and, in the event that any of such
deposit or part thereof shall be expended prior to the termination of this
Lease, Tenant agrees promptly to reimburse Landlord for any such
expenditures. The deposit will be returned to the Tenant by the Landlord with
interest paid for the period held at ZERO percent (0%)/annum.
4. TAXES -- REAL PROPERTY -- RESPONSIBILITY
Landlord shall be responsible for the general real property taxes and for
the real property and the improvements of which the leased premises are a
part as levied and assessed for each year during the term hereof.
5. TAXES -- PERSONAL PROPERTY -- RESPONSIBILITY
Tenant shall be responsible and pay for any and all taxes and or
assessments levied and or assessed against any furniture, fixtures, equipment
and items of a similar nature installed and/or located in or about the
leased premises by Tenant, except for furniture rented from Highland
Office -- VD G.G.
6. UTILITY SERVICES
Landlord shall be responsible for and promptly pay charges for heat,
water, gas, electricity, sewer, and any other utility service used or
consumed on the premises.
7. HOLDING OVER
If, after expiration of the term of this Lease, Tenant shall remain in
possession of the leased premises and continue to pay rent without a written
agreement as to such possession, then Tenant shall be deemed a
month-to-month Tenant and the rental rate during such holdover tenancy shall
be equivalent to the monthly rental paid for the last month of tenancy under
this Lease, as adjusted by increases in the Consumer Price Index, as
specified above. No holding over by Tenant shall operate to renew or extend
this Lease without the written consent of Landlord to such renewal or
extension having been first obtained.
8. MODIFICATIONS OR EXTENSIONS
No modification or extension of this Lease shall be binding unless in
writing, signed by the parties hereto and endorsed hereon or attached hereto.
9. ALTERATIONS, ADDITIONS, AND CHANGES -- RESPONSIBILITY
Tenant may, at its own cost and expense, paint or paper walls or ceiling,
or change floor coverings in the leased premises, provided that (a) the
structural integrity of the building of which the leased premises are a part
shall not be affected or diminished; and (b) the value of the building of
which the leased premises are a part shall not be diminished; and (c) the
exterior appearance of the leased premises or of the building of which the
leased premises are a part is not thereby altered or changed; and (d) the
cost of any such alteration, addition, or change does not exceed five hundred
dollars ($500.00); and (e) the sprinkler system design and function, if any,
is not thereby affected, modified, altered, or changed. In all instances,
Tenant shall secure prior approval and consent of Landlord in writing for any
proposed alteration, addition or change. At the time such approval is sought,
Tenant shall submit to Landlord written plans and specifications for such
work together with a written statement of estimated cost of such work and the
name of the contractor whom Tenant proposes to engage to perform such work.
Landlord must give prior written approval for any signs to be placed in or on
the leased premises or in or on the building of which the leased premises are
a part, regardless of size or value. As a condition to the granting of
approval for any signs, or of approval for any alterations additions, or
changes, Landlord shall have the right to require Tenant to furnish a bond or
other security acceptable to Landlord sufficient to insure completion of and
payment for any such work to be so performed.
<PAGE>
10. PARKING
Tenant, its employees, agents, and visitors shall have the right to use a
total of three (3) parking spaces provided on the property described on
Exhibit III, attached hereto. Tenant agrees to pay Zero Dollars ($-0-) in
advance as monthly rental for said parking spaces, to be payable concurrently
with the rental for the leased premises as provided for in this lease.
Tenant, its employees, agents, and visitors agree to obey and abide by all
rules and regulations as established, modified, or amended from time to time
by Landlord for the safety, protection, cleanliness, preservation of order
and for other purposes in connection with such parking spaces, ingress and
egress and other automobile and pedestrian use of said property. Landlord
reserves the right to specifically assign and reassign from time to time any
or all of said parking spaces among the tenants of the building in any manner
in which Landlord deems reasonable in Landlord's sole judgement and opinion
provided that in no event shall Landlord diminish the total number of parking
spaces for the Tenant as set forth above. Landlord shall not be responsible
to Tenant, its employees, agents or visitors for any other tenant, visitor or
user of said parking spaces.
11. CARE OF LEASED PREMISES -- RESPONSIBILITY
During the term of this Lease, Tenant agrees to keep clean and maintain
the interior of the leased premises in good condition and repair at Tenant's
cost and expense. Tenant further agrees at the end of the term to return the
leased premises to Landlord in substantially as good condition, as when
received, except for usual and ordinary wear and tear. Tenant further agrees
to be responsible for any repairs and/or maintenance required for any part of
the improvements of which the leased premises are a part where such repair
and/or maintenance is necessitated by actions or inactions of Tenant and/or
activities conducted by Tenant on the leased premises.
12. CONTROL OF COMMON AREAS AND FACILITIES
Entrances and exits, common areas, local telephone service and other
facilities furnished by Landlord in, on or near the improvements of which the
leased premises are a portion, shall at all times be subject to the exclusive
control and management of Landlord, and Landlord shall have the right from
time to time to establish, modify and enforce reasonable written rules and
regulations with respect to said facilities and areas and charges therefor.
13. CARE OF PROPERTY -- RESPONSIBILITY
Landlord shall keep and maintain the roof and exterior of the building,
the exterior grounds and all common areas of the improvements of which the
leased premises are a part in good repair and condition.
14. USE OF PREMISES AND CARE OF GROUNDS -- TENANTS
Tenant shall conform to all present and future laws and ordinances of any
governmental authority having jurisdiction over the leased premises. Tenant
shall not allow any accumulation of trash or debris on the leased premises or
within any portion of the improvements of which the leased premises are a
part. All receiving and delivery of goods and merchandise and all removal of
garbage and refuse shall be made only by way of the rear and/or other service
door provided therefor as specified by Landlord. In the event the leased
premises shall have no such door, then these matters shall be handled in a
manner satisfactory to Landlord. No storage of any material outside of the
leased premises shall be allowed unless first approved by Landlord in
writing, and then in only such areas as are designated by Landlord. Tenant
shall not commit or suffer any waste on the leased premises nor shall Tenant
permit any nuisance to be maintained on the leased premises or permit any
disorderly conduct, common noise or other activity having a tendency to annoy
or disturb any occupants of any part of the improvements of which the leased
premises are a part and/or any adjoining property.
15. LIABILITY FOR OVERLOAD
Tenant shall be liable for the cost of any damage to the leased premises,
the improvements of which the leased premises are a part, or the sidewalks and
pavements adjoining the same which will result from the movement of heavy
articles. Tenant shall not unduly load or overload the floors or any part of
the leased premises.
16. GLASS AND DOOR RESPONSIBILITY
17. RULES AND REGULATIONS
Landlord reserves the right to adopt and promulgate rules and regulations
applicable to the leased premises and the land and improvements of which the
leased premises are a part and from time to time to amend or supplement said
rules or regulations. Notice of such rules and regulations and amendments and
supplements thereto shall be given to Tenant, and Tenant agrees to comply
with and observe such rules and regulations and amendments and supplements
thereto, provided, however, the same shall apply uniformly to all tenants of
the improvements of which the leased premises are a part.
18. USE OF PREMISES
Tenant shall use the leased premises for professional offices which shall
include the sale and offering for sale of all of the goods, wares and
merchandise and the performance of such services as are usually incidental
to such business but shall refrain from the sale of merchandise and
performance of services not usually incidental to such business. The
operation of any other business on the leased premises is hereby expressly
prohibited. Tenant shall keep the business being conducted on the leased
premises open for business during normal business hours of all business days
applicable to such business. Nothing in this Lease shall be construed as
granting Tenant an exclusive right to the sale or furnishing or any
particular merchandise or service. Tenant shall continuously and
uninterruptedly during the term of the Lease, occupy and use the leased
premises for the purposes hereinabove specified unless prevented from so
doing by causes beyond Tenant's control. No auction, fire or bankruptcy sales
may be conducted in the leased premises without the prior written approval
and consent of Landlord. Tenant shall not carry any stock of goods or do
anything in or about the leased premises which will, in any way, void or make
voidable or tend to increase the rates for any insurance on the leased
premises and/or the improvements of which the leased premises are a part
and/or the real property on which said improvements are located. Tenant
agrees to pay, as additional rent, an amount equal to any increase in the
insurance premiums that may be charged during the term of this Lease for the
amount of the insurance carried by Landlord on the total improvements of
which the leased premises are a part when such increase results from
activities carried on by Tenant on the leased premises, whether or not
Landlord has consented to the same.
19. INSURANCE -- RESPONSIBILITY OF TENANT
Tenant shall procure, pay for and maintain comprehensive public liability
insurance for the mutual benefit of Landlord and Tenant providing coverage
from any loss or damage occasioned by an accident or casualty, on, about or
adjacent to the leased premises, which policy shall be written on an
"occurrence basis" with limits on not less than $100,000 liability coverage
and $10,000 property damage coverage. In addition thereto, Tenant shall at
all times procure, pay for and maintain fire legal liability insurance
coverage and water damage legal liability insurance coverage on the leased
premises. Certificates of such insurance shall be delivered to Landlord and
shall provide that said coverage shall not be changed, modified, reduced or
cancelled without thirty (30) days prior written notice thereof being given
to Landlord.
20. INSURANCE -- RESPONSIBILITY OF TENANT
The Landlord shall have and maintain in effect at all times, fire,
extended coverage and vandalism and malicious mischief insurance in such
amounts as shall be determined appropriate by Landlord.
21. REGULATIONS ON USE -- TENANT RESPONSIBILITY
It shall be Tenant's sole and exclusive responsibility to meet all fire
regulations of any governmental unit having jurisdiction over the leased
premises as such regulation affect Tenant's operations, all at Tenant's sole
cost and expense. Tenant further agrees not to install any electrical
equipment that overloads any electrical paneling, circuitry or wiring and
further agrees to comply with the requirements of the insurance underwriter
or any governmental authorities having jurisdiction thereof.
<PAGE>
22. DAMAGE TO LEASED PREMISES
In the event the leased premises and/or the improvements of which the
leased premises are a part shall be totally destroyed by fire or other
casualty or so badly damaged that, in the opinion of Landlord, it is not
feasible to repair or rebuild same, Landlord shall have the right to
terminate this Lease upon written notice to Tenant. If the leased premises
shall be partially damaged by fire or other casualty, except if caused by
Tenant's negligence, and said leased premises are not rendered untenantable
thereby, as determined by Landlord, an appropriate reduction of the rent
shall be allowed for the unoccupied portion of the leased premises until
repair thereof shall be substantially completed. If the leased premises are
rendered untenantable thereby, except if caused by Tenant's negligence,
Tenant may, at its election, terminate this Lease as of the day of the
damage. If Tenant elects not to terminate the Lease, the rent shall abate in
proportion to the loss of use of the leased premises by Tenant during such
untenantability.
23. INSPECTION OF AND RIGHT OF ENTRY TO LEASED PREMISES
A. Tenant has inspected the leased premises and accepts the same in the
condition that exists as of the date hereof.
B. Landlord, and/or Landlord's agents and employees, shall have the right
to enter the leased premises at all times during regular business hours and,
at all times during emergencies, to examine the leased premises, to make such
repairs, alterations, improvements or additions as Landlord may deem
necessary or desirable, and Landlord shall be allowed to take all materials
into and upon said premises that may be required therefor without the same
constituting an eviction of Tenant in whole or in part, and the rent reserved
shall in no way abate while such repairs, alterations, improvements or
additions are being made, for reason of loss or interruption or business of
Tenant or otherwise. Landlord reserves the right, at any time during the term
hereof, to exhibit the leased premises to any prospective purchaser of the
improvements of which the leased premises are a part and/or to place upon the
leased premises and/or the improvements of which the leased premises are a
part a notice or sign indicating the property is for sale, and, during the
six months prior to the expiration of the term of this Lease or any renewal
thereof. Landlord may exhibit the premises to prospective tenants and may
place upon the leased premises the usual notices indicating the leased
premises are for lease.
24. DEFAULT -- REMEDIES OF LANDLORD
If Tenant shall default in the payment of rent or in the keeping of any of
the terms, covenants or conditions of this lease to be kept and or performed
by Tenant, Landlord may immediately, or at any time thereafter, reenter the
leased premises, remove all persons and property therefrom without being
liable to indictment, prosecution for damage therefor, or for forcible entry
and detainer, and repossess and enjoy the leased premises, together with all
additions thereto or alterations and improvements thereof. If Tenant shall
default in any payment or in keeping any term of this Lease, Landlord's claim
against Tenant for such default shall give rise to a lien on any fixtures,
additions, furniture, and the like belonging to Tenant on the leased
premises. Landlord may, at its option, at any time and from time to time
thereafter, relet the leased premises or any part therefor for the account of
Tenant or otherwise, and receive and collect the rents there for and apply the
same first to the payment of such expenses as Landlord may have incurred in
recovering possession and for putting the same in good order and condition
for rerental, and expense, commissions and charges paid by Landlord in
reletting the leased premises. Any such reletting may be for the remainder of
the term of this Lease or for a longer or shorter period. In lieu of
reletting such leased premises, Landlord may occupy the same or cause the
same to be occupied by others. Whether or not the leased premises or any part
thereof be relet. Tenant shall pay the Landlord the rent and all other
charges required to be paid by Tenant up to the time of the expiration of
this Lease or of such recovered possession, as the case may be, and
thereafter, Tenant, if required by Landlord, shall pay to Landlord until the
end of the term of this Lease, the equivalent of the amount of all rent
reserved herein and all other charges required to be paid by Tenant, less the
net amount received by Landlord for such reletting, if any. If the leased
premises shall be reoccupied by Landlord, then, from and after the date of
repossession, Tenant shall be discharged of any obligations to Landlord under
the provisions hereof for the payment of rent. In event of any default by
Tenant, and regardless of whether the premises shall be relet or possessed by
Landlord, any fixtures, additions, furniture, and the like then on the
premises may be retained by Landlord. In the event Tenant is in default under
the terms hereof and, by the sole determination of Landlord, has abandoned
the leased premises, Landlord shall have the right to remove all the Tenant's
property from the leased premises and dispose of said property in such manner
as determined best by Landlord, all at the cost and expense of Tenant and
without liability of Landlord for the actions so taken. In the event an
assignment of Tenant's business or property shall be made for the benefit of
creditors, or, if the Tenant's leasehold interest under the terms of this
Agreement shall be levied upon by execution or seized by virtue of any writ
of any court of law, or, if application be made for the appointment of a
receiver for the business or property of Tenant, or, if a petition in
bankruptcy shall be filed by or against Tenant, then and in any such case, at
Landlord's option, with or without notice, Landlord may terminate this Lease
and immediately retake possession of the leased premises without the same
working any forfeiture of the obligations of Tenant hereunder. In addition to
remedy granted to Landlord by the terms hereof, Landlord shall have available
any and all rights and remedies available under the Statutes of the State of
Colorado. No remedy herein or otherwise conferred upon or reserved to
Landlord shall be considered exclusive of any other remedy but shall be
cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by Statute. Further, all
powers and remedies given by this Lease to Landlord may be exercised, from
time to time, and as often as occasion may arise or as may be deemed
expedient. No delay or omission of Landlord to exercise any right or power
arising from any default shall impair any such right or power or shall be
considered to be a waiver of any such default or acquiescence thereof. The
acceptance of rental by Landlord shall not be deemed to be a waiver of any
breach of any of the covenants herein contained or of any of the rights of
Landlord to any remedies herein given.
25. LEGAL PROCEEDINGS -- RESPONSIBILITY
In the event of any proceeding at law or in equity wherein Landlord,
without being in default as to its covenants under the terms hereof, shall be
made a party to any litigation by reason of Tenant's interest in the leased
premises or, in the event Landlord shall be required to commence any legal
proceedings relating to the leased premises and/or Tenant's occupancy thereof
and/or Tenant's relation thereto, Landlord shall be allowed and Tenant shall
be liable for and shall pay all costs and expenses incurred by Landlord,
including reasonable attorney's fees.
26. INDEMNITY
Tenant hereby agrees to defend, pay, indemnify, and save free and harmless
Landlord, from and against any and all claims, demands, fines, suits,
actions, proceedings, orders, decrees, and judgments of any kind or nature by
or in favor of anyone whomsoever and from and against any and all costs and
expenses, including reasonable attorney's fees, resulting from or in
connection with loss of life, bodily or personal injury or property damage
arising, directly or indirectly, out of or from or on account of any
occurrence in, upon, at, or from the premises or occasioned wholly or in
part through the use and occupancy of the premises or any improvement therein
or appurtenances thereto, or by any act or omission or negligence of Tenant
or any subtenant, concessionaire or licensee of Tenant, or their respective
employees, agents or contractors, in, upon, at, or from the leased premises or
its appurtenances.
In case any action or proceeding be brought against Landlord by reason of
any obligation on Tenant's part to be performed under the terms of this lease,
or arising from any act of negligence of the Tenant, or of its agents or
employees, Tenant upon notice from Landlord shall defend the same at Tenant's
expense by counsel reasonably satisfactory to Landlord.
27. ASSIGNMENT OR SUBLETTING
Tenant may not assign the Lease, or sublet the leased premises without
the written consent of Landlord.
28. WARRANTY OF TITLE
Landlord covenants it has good right to lease the leased premises in the
manner described herein and that Tenant shall peaceably and quietly have,
hold, occupy, and enjoy the premises during the term of the Lease.
29. ACCESS
Landlord shall provide Tenant non-exclusive access to the leased premises
through and across land and/or other improvements owned by Landlord. Landlord
shall have the right to designate, during the term of this Lease, all such
non-exclusive access and other common facilities of the land and/or
improvements of which the leased premises are a part.
30. GOVERNMENTAL ACQUISITION OF PROPERTY
The parties agree that Landlord shall have complete freedom of
negotiation and settlement of all matters pertaining to the acquisition of
such property, it being understood and agreed that any financial settlement
respecting land to be taken whether resulting from negotiation and agreement
or condemnation proceedings, shall be the exclusive property of Landlord,
there being no sharing whatsoever between Landlord and Tenant of any sum
received in settlement. Landlord shall, after the taking of the property,
provide the same amount of square feet of land area and useable building
space for Tenant's operations in the general vicinity of the leased premises
and in the event Landlord cannot so do, Tenant shall have the right to
terminate this Lease, but shall not receive payment of any form of
compensation. The taking of land as noted herein shall not be considered as a
breach of this Lease by Landlord, nor give rise to any claims in Tenant for
damages or compensation from Landlord.
31. CHANGES AND ADDITIONS TO IMPROVEMENTS
Landlord reserves the right at any time to make alterations or additions
to the improvements of which the leased premises are a part and/or to build
additions or other structures adjoining said improvements. Landlord also
reserves the right to construct other buildings and/or improvements in the
immediate area of the improvements in which the leased premises are located
and to make alterations or additions thereto, all as Landlord shall
determine. Easements for light and air are not included in the leasing of the
leased premises to Tenant. Landlord further reserves the right at any time to
relocate, vary and adjust the size of any of the improvements, parking areas
or other common areas relating to the land and/or improvements of which the
leased premises are a part, provided, however, that all such changes shall be
in compliance with the minimum requirements of governmental authorities
having jurisdiction over the property.
<PAGE>
32. ENCUMBRANCES
This Lease and all rights of the tenant hereunder are and shall be subject
and subordinate to any mortgages or deeds of trust constituting a lien on the
leased property, or any part thereof, whether such mortgages or deeds of
trust have heretofor been, or may hereafter be placed upon the leased
property to secure any indebtedness to any lender, institutional or private,
and to any renewal, modification, consolidation, replacement, or extension of
any such mortgages or deeds of trust. Tenant agrees to execute any documents
which may be required by any Mortgagee or prospective Mortgagee confirming
the provisions of this section.
In the event that any mortgage is foreclosed for any reason, and the
Mortgagee succeeds to the interest of the Landlord under the Lease, the
Tenant shall be bound to the Mortgagee under all of the terms of the Lease
for the balance of the term thereof remaining with the same force and effect
as if the Mortgagee were the Landlord under the Lease, and the Tenant hereby
attorns to the Mortgagee as its Landlord, such attornment to be effective and
self-operative, without the execution of any further instrument on the part
of either of the parties hereto, immediately upon the Mortgagee succeeding to
the interest of the Landlord under the Lease. Tenant shall give notice in
writing to any mortgage lender or holder of a deed of trust constituting a
lien on the leased property of any alleged default by the Landlord and permit
the lender or holder a reasonable opportunity to correct such alleged
defaults. Tenant shall deliver a written certification to Landlord at
Landlord's request certifying that Tenant is not in default under its
obligations to third parties. Landlord is hereby irrevocably appointed and
authorized as agent and attorney-in-fact of Tenant to execute all necessary
subordination instruments in the event Tenant fails to execute said
instruments within five (5) days after notice from Landlord demanding the
execution thereof.
33. OPTION TO EXTEND
34. GUARANTEE AND FINANCIAL STATEMENTS
This Lease, and Tenant's performance hereunder shall be personally
guaranteed by VIVIAN K. DULLIEN, by the execution of the Guarantee Agreement
set forth herein. A current financial statement of Tenant and of any parties
so guaranteeing this Lease shall be provided to Landlord upon execution
hereof and annually thereafter, if so requested by Landlord.
35. INTEREST ON PAST DUE OBLIGATIONS
Any amount due to Landlord not paid when due shall bear interest at one
and one-half percent (1 1/2%) per month from due date until paid. Payment of
such interest shall not excuse or cure any default by Tenant under this Lease.
36. LATE CHARGE
The Landlord shall have the right to collect from Tenant, in addition to
any amounts due under paragraph #6 and #35 above, a monthly collection
service charge for any payment due to Landlord hereunder which is delinquent
ten days or longer, said charge being Twenty-Five and No 100ths Dollars
($25.00) or three percent of said payment, whichever sum shall be greater.
37. MEMORANDUM OF LEASE -- RECORDING
The parties hereto agree this Lease shall not be recorded.
38. NOTICE PROCEDURE
All notices, demands, and requests which may or are required to be given
by either party to the other shall be in writing and such that are to be
given to Tenant shall be deemed to have been properly given if served on
Tenant or an employee of Tenant or sent to Tenant by United States registered
mail, return receipt requested, properly sealed, stamped, and addressed to
Tenant at 885 ARAPAHOE AVE., BOULDER, COLO. 80302 or at such other place as
Tenant may from time to time designate in a written notice to Landlord, and,
such as are to be given to Landlord shall be deemed to have been properly
given if personally served on Landlord or if sent to Landlord, United States
registered mail, return receipt requested, properly sealed, stamped and
addressed to Landlord at 885 Arapahoe, Boulder, Colorado 80302, or at such
other place as Landlord may from time to time designate in a written notice
to Tenant. Any notice given by mailing shall be effective as of the date of
mailing as shown by the receipt given therefor.
39. CONTROLLING LAW
The Lease, and all terms hereunder shall be construed consistent with the
laws of the State of Colorado.
40. BINDING UPON SUCCESSORS
The covenants and agreements herein contained shall bind and inure to the
benefit of Landlord and Tenant and their respective successors. This Lease
shall be signed by the parties in duplicate, each of which shall be a complete
and effective original Lease.
41. PARTIAL INVALIDITY
If any term, covenant or condition of this Lease or the application
thereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Lease or the application of such term,
covenant or condition to persons and circumstances other than those to which
it has been held invalid or unenforceable, shall not be affected thereby, and
each term, covenant and condition of this Lease shall be valid and shall be
enforced to the fullest extent permitted by law.
42. MISCELLANEOUS
All marginal notations and paragraph headings are for purposes of
reference and shall not affect the true meaning and intent of the terms
hereof. Throughout this Lease, wherever the words "Landlord" and "Tenant"
are used, they shall include and imply to the singular, plural, persons both
male and female, companies, partnerships and corporations, and in reading
said Lease, the necessary grammatical changes required to make the provisions
hereof mean and apply as aforesaid shall be made in the same manner as though
originally included in said Lease.
- - The monthly lease rate of $2025 includes the use of Bldg. common areas,
kitchen, spa and conference room; In addition, Landlord shall provide
janitorial service, telephone system and telephone reception services
inclusive of the rental rate, subject to rules and regulations established
for all tenants in the Bldg., plus furniture in 3rd office (desk, credenza,
filing cabinet, bare shelves), and chair. Also use of copy and fax machines.
- - Tenant agrees to limit the number of cars parked in the parking lot to no
more than [COPY TO COME]. This lease is subject to cancellation by either
party with a 60 day notice to [COPY TO COME].
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
hereof.
LANDLORD; HIGHLAND SCHOOL OFFICES, 885 Arapahoe, Boulder, CO 80302
By: [TO COME]
---------------------------------------------------------------
TENANT:
-----------------------------------------------------------
By: /s/ VIVIAN DULLIEN
---------------------------------------------------------------
GUARANTEE
For and in consideration of the execution of this Lease Agreement by the
parties hereto and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the undersigned, by their
execution hereof, personally guarantee, jointly and severally, any and all
obligations and payments of Tenant as herein set forth and contained.
IN WITNESS WHEREOF, the undersigned have executed this document as of the
date hereof.
/s/ VIVIAN DULLIEN
- -------------------------------------- --------------------------------------
Guarantor Guarantor
- -------------------------------------- --------------------------------------
Guarantor Guarantor
STATE OF COLORADO ]
ss.
COUNTY OF ______________
The foregoing instrument was acknowledged before me this _____ day of
_____________, 197____. Witness my hand and official seal.
--------------------------------------
Notary Public
My commission expires:
<PAGE>
FIRST AMENDMENT TO LEASE
THIS AMENDMENT, dated this 6th day of March, 1998, between SIERRA
TRINITY INDUSTRIAL PARK, a property of RREEF PERFORMANCE PARTNERSHIP-I, L.P.,
an Illinois limited partnership ("Landlord") and BIEX, INC., a Delaware
corporation ("Tenant"), for the Premises located in the City of Dublin,
County of Alameda, State of California, commonly known as 6693 Sierra Lane,
Suite F.
1. RECITALS.
Landlord and Tenant, being parties to that certain Lease dated November 13,
1995, as amended by letter dated November 28, 1995 and attached hereto as
Exhibit "A", hereby express their mutual desire and intent to extend the
terms of the Lease and amend by this writing those terms, covenants and
conditions contained in MULTI-TENANT INDUSTRIAL GROSS LEASE REFERENCE PAGE
"LANDLORD'S ADDRESS:", MULTI-TENANT INDUSTRIAL GROSS LEASE REFERENCE PAGE
"PREMISES:", MULTI-TENANT INDUSTRIAL GROSS LEASE REFERENCE PAGE "RENTABLE
AREA:", MULTI-TENANT INDUSTRIAL GROSS LEASE REFERENCE PAGE "BASE YEAR (DIRECT
EXPENSES):", MULTI-TENANT INDUSTRIAL GROSS LEASE REFERENCE PAGE "BASE YEAR
(TAXES):", MULTI-TENANT INDUSTRIAL GROSS LEASE REFERENCE PAGE "TENANT'S
PROPORTIONATE SHARE:", Article 2, "TERM.", Article 3. "RENT.", Article 5.
"SECURITY DEPOSIT.", and add Article 42. "RENEWAL OPTION.", Article 43.
"LANDLORD'S AND TENANT'S IMPROVEMENTS.", and Article 44. "LANDLORD'S
CONDITIONAL AGREEMENT." as hereinafter provided.
2. AMENDMENTS.
MULTI-TENANT INDUSTRIAL GROSS LEASE REFERENCE PAGE "LANDLORD'S ADDRESS:"
shall hereafter additionally provide as follows:
RREEF Management Company
6735 Sierra Court, Suite A
Dublin, California 94568
MULTI-TENANT INDUSTRIAL GROSS LEASE REFERENCE PAGE "PREMISES:" shall
hereafter additionally provide as follows:
Effective April 1, 1998, Tenant shall expand its Premises to include 6693
Sierra Lane, Suite C, Dublin, California 94568 approximately 6,059 square
feet, hereafter known as "Expansion Premises" as shown on Exhibit "A"
attached hereto.
MULTI-TENANT INDUSTRIAL GROSS LEASE REFERENCE PAGE "RENTABLE AREA:" shall
hereafter additionally provide as follows:
Effective April 1, 1998, Tenant's square footage shall increase by
approximately 6,059 square feet from approximately 4,956 square feet to
approximately 11,015 square feet.
MULTI-TENANT INDUSTRIAL GROSS LEASE REFERENCE PAGE "BASE YEAR (DIRECT
EXPENSES):" shall hereafter additionally provide as follows:
Effective April 1, 1998 Tenant's Base Year (Direct Expenses) shall be
actual expenses incurred in calendar year 1998.
MULTI-TENANT INDUSTRIAL GROSS LEASE REFERENCE PAGE "BASE YEAR (TAXES):" shall
hereafter additionally provide as follows:
Effective April 1, 1998 Tenant's Base Year (Taxes) shall be actual expenses
incurred in tax year 1997/98.
1.
<PAGE>
MULTI-TENANT INDUSTRIAL GROSS LEASE REFERENCE PAGE "TENANT'S PROPORTIONATE
SHARE:" shall hereafter additionally provide as follows:
Effective April 1, 1998, Tenant's Proportionate Share shall increase by
2.71% from 2.22% to 4.93% of Sierra Trinity Industrial Park.
ARTICLE 2. "TERM." shall hereafter additionally provide as follows:
The term of the Expansion Premises shall be for five (5) years commencing
on April 1, 1998 and ending on March 31, 2003.
The term of the Lease shall be extended for two (2) years and four (4)
months commencing on December 1, 2000 and ending on March 31, 2003.
ARTICLE 3. "RENT." shall hereafter additionally provide as follows:
Effective April 1, 1998 through March 31, 2003 the Minimum Monthly Rent for
the Expansion Premises shall be as follows:
<TABLE>
<S> <C>
April 1, 1998 - March 31, 1999: $8,179.65 per month or $98,155.80 per year;
April 1, 1999 - March 31, 2000: $8,603.78 per month or $103,245.36 per year;
April 1, 2000 - March 31, 2001: $9,027.91 per month or $108,334.92 per year;
April 1, 2001 - March 31, 2002: $9,452.04 per month or $113,424.48 per year;
April 1, 2002 - March 31, 2003: $9,936.76 per month or $119,241.12 per year.
</TABLE>
Effective December 1, 2000 through March 31, 2003 the Minimum Monthly Rent
for the Leased Premises shall be as follows:
<TABLE>
<S> <C>
December 1, 2000 - March 31, 2001: $7,384.44 per month or $88,613.28 per year;
April 1, 2001 - March 31, 2002: $7,731.36 per month or $92,776.32 per year;
April 1, 2002 - March 31,2003: $8,127.84 per month or $97,534.08 per year.
</TABLE>
ARTICLE 5. "SECURITY DEPOSIT." shall hereafter additionally provide as follows:
Landlord presently holds $4,800.00 as Security Deposit under the Lease
dated November 13, 1995, for the Premises located at 6693 Sierra Lane,
Suite F, Dublin, California, leaving an amount due for the Expansion
Premises upon execution of this Amendment of $10,000.00 for a total
Security Deposit held under this Lease of $14,800.00.
ARTICLE 42. "RENEWAL OPTION." shall hereafter be added and provide as follows:
Tenant shall, provided the Lease is in full force and effect and Tenant is
not in default under any of the other terms and conditions of the Lease at
the time of notification or commencement, have one (1) option to renew this
Lease for a term of five (5) years, for the portion of the Premises being
leased by Tenant as of the date the renewal term is to commence, on the same
terms and conditions set forth in the Lease, except as modified by the terms,
covenants and conditions as set forth below:
(a) If Tenant elects to exercise said option, then Tenant shall provide
Landlord with written notice no earlier than the date which is one
hundred eighty (180) days prior to the expiration of the then current
term of the Lease but no later than the date which is one hundred
twenty (120) days prior to the expiration of the then current term of
this Lease. If Tenant fails to provide such notice, Tenant shall have
no further or additional right to extend or renew the term of the
Lease.
(b) The Annual Rent and Monthly Installment in effect at the expiration of
the then current term of the Lease shall be increased to reflect the
current fair market rental for comparable space in the Building and in
other similar buildings in the same rental market as of the date the
renewal term is to commence, taking into account the specific
provisions of the Lease which will remain constant. Landlord shall
2.
<PAGE>
advise Tenant of the new Annual Rent and Monthly Installment for the
Premises no later than thirty (30) days after receipt of Tenant's
written request therefor. Said request shall be made no earlier than
thirty (30) days prior to the first date on which Tenant may exercise
its option under this Paragraph. Said notification of the new Annual
Rent may include a provision for its escalation to provide for a
change in fair market rental between the time of notification and the
commencement of the renewal term. In no event shall the Annual Rent
and Monthly Installment for any option period be less than the Annual
Rent and Monthly Installment in the preceding period.
(c) This option is not transferable; the parties hereto acknowledge and
agree that they intend that the aforesaid option to renew this Lease
shall be "personal" to Tenant as set forth above and that in no event
will any assignee or sublessee have any rights to exercise the
aforesaid option to renew.
ARTICLE 43. "LANDLORD'S AND TENANT'S IMPROVEMENTS." shall hereafter be added and
provide as follows:
Landlord hereby agrees to reimburse Tenant up to a maximum of $5.00 per
square foot (Fifty Thousand Five Hundred Seventy Five and 00/100 Dollars
($55,075.00) upon receipt of paid invoices and lien releases to be applied
toward all cost related to the general construction of Tenant's improvements
to the Leased Premises, as per the plans and specifications to be attached
hereto, including the following costs by way of illustration, but not
limitation: interior design, architectural, and engineering fees and
reimbursable expenses, general contractor's fees, permits and construction
costs as itemized in contractor's proposal and bid. In no event will Landlord
contribute to the cost of decorative items, i.e. wallpaper, decorative
lighting, desks, furniture, etc., or any business equipment, machinery or any
other business fixture. Any additional improvements or changes to the plans
that increase the total project cost above budget, shall be done at Tenant's
sole cost and expense, further the Commencement Date of this Amendment shall
not be altered, nor delayed, nor Rent be abated as a result of such
additional improvement work or changes.
Tenant shall be responsible for the performance and construction of its own
improvement work. Tenant accepts full responsibility that all work be
performed in a workmanlike manner by a licensed contractor in accordance with
Article 6 of this Lease and that no lien will be placed against Landlord
resulting from such work. If Tenant Improvements performed by Tenant trigger
governmental codes i.e. ADA or Title 24, etc., the cost of the compliance
with the respective code shall be paid out of the Improvement Allowance.
If Tenant has not substantially completed construction of the Improvements by
June 30, 1998, Tenant shall forfeit any uncommitted balance of the Fifty
Thousand Five Hundred Seventy Five and 00/100 ($55,075.00) Landlord
contributed to Tenant's cost. In that event, all other terms and conditions
of the Lease shall prevail.
ARTICLE 44. "LANDLORD'S CONDITIONAL AGREEMENT." shall hereafter be added and
provide as follows:
Landlord's acceptance of this First Amendment to Lease is contingent upon
successful execution of the Termination of Lease dated March 5, 1998 by and
between SIERRA TRINITY INDUSTRIAL PARK, a property of RREEF Performance
Partnership-I, L.P., an Illinois limited partnership and Pacific
Cyber/Metrix, Inc., a California corporation for the Premises located in
the city of Dublin, County of Alameda, State of California, commonly known
as 6693 Sierra Lane, Suite C, to be effective March 31, 1998.
3. INCORPORATION.
Except as modified herein, all other terms and conditions of the Lease between
the parties above described, as attached hereto, shall continue in full force
and effect.
3.
<PAGE>
4. CORPORATE AUTHORITY.
If Tenant is a corporation, Tenant represents and warrants that this
Amendment and the undersigned's execution of this Amendment has been duly
authorized and approved by the corporation's Board of Directors. The
undersigned officers and representatives of the corporation executing this
Amendment on behalf of the corporation represent and warrant that they are
officers of the corporation with authority to execute this Amendment on
behalf of the corporation.
5. LIMITATION OF LANDLORD'S LIABILITY.
Redress for any claims against Landlord under this Amendment shall only be
made against Landlord to the extent of Landlord's interest in the property to
which the Leased Premises are a part. The obligations of Landlord under this
Amendment shall not be personally binding on, nor shall any resort be had to
the private properties of, any of its trustees or board of directors and
officers, as the case may be, the general partners thereof or any
beneficiaries, stockholders, employees or agents of Landlord, or the
investment manager.
The parties hereto have executed this Amendment on the dates specified
immediately below their respective signatures.
LANDLORD: TENANT:
SIERRA TRINITY INDUSTRIAL PARK, BIEX, INC.,
a property of RREEF Performance Partnership-I, a Delaware corporation
L.P., an Illinois limited partnership
By: RREEF MANAGEMENT COMPANY,
a California corporation
By: By:
----------------------------- -----------------------------
Stacy A. Vergano
Title:District Manager Title:
Dated: Dated:
-------------------------- --------------------------
4.
<PAGE>
EXHIBIT "A"
Attached to and made a part of that certain First Amendment to Lease dated
March 6, 1998 by and between Sierra Trinity Industrial Park, a property of
RREEF Performance Partnership-I, L.P., an Illinois limited partnership and
Biex, Inc., a Delaware corporation.
PREMISES
Exhibit A is intended only to show the general layout of the Premises as of
the beginning of the Term of this Lease. It does not in any way supersede
any of Landlord's rights set forth in Section 17.2 with respect to
arrangements and/or locations of public parts of the Building and changes in
such arrangements and/or locations. It is not to scale; any measurements or
distances shown should be taken as approximate.
[GRAPHIC OMITTED]
Exhibit "A"
1
<PAGE>
EXHIBIT "B"
Attached to and made a part of that certain First Amendment to Lease dated
March 6, 1998 by and between Sierra Trinity Industrial Park, a property of
RREEF Performance Partnership-I, L.P., an Illinois limited partnership and
Biex, Inc., a Delaware corporation.
ORIGINAL LEASE DOCUMENTS
(attached hereto)
Exhibit "B"
1
<PAGE>
RREEF (Graphic)
The RREEF Funds
November 28, 1995
Mr. Fred Voss
BIEX, INC.
6693 Sierra Lane, Suite F
Dublin, CA 94568
Re: Amendment to Lease for Biex, Inc., a Delaware corporation dated
November 13, 1995, for the Leased Premises at 6693 Sierra Court, Suite F,
Dublin, California
Dear Mr. Voss:
This letter shall serve to amend the Multi-Tenant Industrial Gross Lease
Reference Page "PREMISES:" of the above referenced Lease as follows:
Sierra Court shall be deleted and replaced with Sierra Lane. The Premises
shall hereafter be known as 6693 Sierra Lane, Suite F, Dublin, California,
94568.
All other terms and conditions of the lease will remain in full force and
effect.
Please indicate acceptance of the foregoing by signing each copy in the space
provided and return three (3) copies back to this office as time is of the
essence. Once they are received, one fully executed copy will be sent back
to you for your files.
Sincerely,
RREEF MANAGEMENT COMPANY
/s/ Sherie Dunn
Sherie L. Dunn
Vice President
Property Management
OWNER: AGREED AND ACCEPTED:
SIERRA TRINITY INDUSTRIAL PARK, BIEX, INC.,
a property of RREEF Performance Partnership-I, a Delaware corporation
L.P., an Illinois limited partnership
By: RREEF MANAGEMENT COMPANY,
a California corporation
By: /s/ Sherie Dunn By: /s/ H. Fred Voss
----------------------------- -----------------------------
Sherie L. Dunn
Title: Vice President, Property Management Title: VP R & D and Operations
--------------------------
Dated: 10/4/95 Dated: Dec. 6, 1995
-------------------------- --------------------------
<PAGE>
TENANT'S ACCEPTANCE STATEMENT
Biex, Inc., a Delaware corporation, as Tenant, hereby acknowledges that
Sierra Trinity Industrial Park, a property of RREEF Performance
Partnership-I, L.P., an Illinois limited partnership, as Landlord has
provided the premises located in the city of Dublin, County of Alameda, State
of California, commonly known as 6693 Sierra Court, Suite F (the "Premises").
Landlord and Tenant mutually agree that Tenant Improvements specified on
Exhibit B of the lease Agreement dated November 13, 1995, between Landlord
and Tenant will be completed while Tenant is in possession of the Premises.
Any delay of completion of Tenant Improvements shall not alter the Lease
Commencement of November 16, 1995, or Commencement of rent on December 15,
1995.
The improvements on the Premises and the common areas and parking area in
connection therewith have been completed, or will be completed as specified
above, in accordance with the terms and conditions of the Lease and all have
been accepted by the undersigned.
Lease Commencement Date: November 16, 1995
Rent and Additional Rent Commencement: December 15, 1995
Lease Termination Date: November 30, 2000
COMMENTS:
Check hot water
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LANDLORD: TENANT:
SIERRA TRINITY INDUSTRIAL PARK, BIEX, INC.
A property of RREEF Performance a Delaware corporation
Partnership-I, L.P., an Illinois limited
Partnership
By: RREEF Management Company,
a California corporation
By: By: /s/ H. Fred Voss
----------------------------- -----------------------------
Title: Leasing Rep Title: VP R & D/Operations
-------------------------- --------------------------
Date: Nov. 16, 1995 Date: Nov. 16, 1995
--------------------------- ---------------------------
<PAGE>
MULTI-TENANT INDUSTRIAL
GROSS LEASE REFERENCE PAGE
<TABLE>
<CAPTION>
<S> <C>
PROPERTY: Sierra Trinity Industrial Park
LANDLORD: SIERRA TRINITY INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P., an Illinois limited
partnership
LANDLORD'S ADDRESS: 155-A Moffett Park Drive, #240, Sunnyvale, California 94089
TENANT: Biex, Inc., a Delaware corporation
TENANT'S ADDRESS: 6693 Sierra Court, Suite F, Dublin, California 94568
LEASE REFERENCE DATE: November 13, 1995
PREMISES: 6693 Sierra Court, Suite F, Dublin, California, 94568 (see
Exhibit "A" for outline of Premises, attached hereto and
incorporated herein by reference.)
USE: Medical research and development
PREMISES RENTABLE AREA: approximately 4,956 square feet
COMMENCEMENT DATE: December 15, 1995
TERMINATION DATE: November 30, 2000
TERM OF LEASE: Five (5) years beginning on the Commencement Date and
ending on the Termination Date (unless sooner terminated
pursuant to the Lease.)
INITIAL ANNUAL RENT (Article 3): $53,520.00 (See also Article 40. "SCHEDULE OF RENTS.")
INITIAL MONTHLY INSTALLMENT OF
ANNUAL RENT (Article 3): $4,460.00 (See also Article 40. "SCHEDULE OF RENTS.")
BASE YEAR (DIRECT EXPENSES): 1995 = To be determined
BASE YEAR (TAXES): 1994/95 = $191,311.16
TENANT'S PROPORTIONATE SHARE: 2.22% of Sierra Trinity Industrial Park
SECURITY DEPOSIT: $4,800.00
ASSIGNMENT/SUBLETTING FEE: $1,000.00
REAL ESTATE BROKER DUE COMMISSION: Lee & Associates
DECLARATION OF RESTRICTIONS: Date of Recordation FEBRUARY 29, 1968 Reel 2134 Image 548
Instrument Number BA21667
</TABLE>
The Reference Page information is incorporated into and made a part of this
Lease. In the event of any conflict between any Reference Page information and
this Lease, this Lease shall control. This Lease includes Exhibits "A" through
"D", all of which are made a part hereof.
LANDLORD: TENANT:
SIERRA TRINITY INDUSTRIAL PARK, Biex, Inc.,
a property of RREEF Performance a Delaware corporation
Partnership-I, L.P.,
an Illinois limited partnership
By: RREEF MANAGEMENT COMPANY,
a California corporation
By: /s/ Sherie Dunn By: /s/ H. Fred Voss
----------------------------- -----------------------------
Sherie L. Dunn
Title: Vice President Title: VP Operations and R & D
Property Management -----------------------------
Dated: Dated:
----------------------------- -----------------------------
ii
<PAGE>
LEASE
By this Lease Landlord leases to Tenant and Tenant leases from Landlord the
Premises in the Building as set forth and described on the Reference Page. The
Reference Page, including all terms defined thereon, is incorporated as part of
this Lease.
1. USE AND RESTRICTIONS ON USE.
1.1 The Premises are to be used solely for the purposes stated on the
Reference Page. Tenant shall not do or permit anything to be done in or about
the Premises which will in any way obstruct or interfere with the rights of
other tenants or occupants of the Building or injure, annoy, or disturb them or
allow the Premises to be used for any improper, immoral, unlawful, or
objectionable purpose. Tenant shall not do, permit or suffer in, on, or about
the Premises the sale of any alcoholic liquor without the written consent of
Landlord first obtained, or the commission of any waste. Tenant shall comply
with all governmental laws, ordinances and regulations applicable to the use of
the Premises and its occupancy and shall promptly comply with all governmental
orders and directions for the correction, prevention and abatement of any
violations in or upon, or in connection with, the Premises, all at Tenant's sole
expense. Tenant shall not do or permit anything to be done on or about the
Premises or bring or keep anything into the Premises which will in any way
increase the rate of, invalidate or prevent the procuring of any insurance
protecting against loss or damage to the Building or any of its contents by fire
or other casually or against liability for damage to property or injury to
persons in or about the Building or any part thereof.
2. TERM.
2.1 The Term of this Lease shall begin on the date ("Commencement Date")
which shall be the later of the Scheduled Commencement Date as shown on the
Reference Page and the date that Landlord shall tender possession of the
Premises to Tenant. Landlord shall tender possession of the Premises with all
the work, if any, to be performed by Landlord pursuant to Exhibit B to this
Lease substantially completed. Tenant shall deliver a punch list of items not
completed within 30 days after Landlord tenders possession of the Premises and
Landlord agrees to proceed with due diligence to perform its obligations
regarding such items. Landlord and Tenant shall execute a memorandum setting
forth the actual Commencement Date and Termination Date.
2.2 Tenant agrees that in the event of the inability of Landlord to
deliver possession of the Premises on the Scheduled Commencement Date, Landlord
shall not be liable for any damage resulting from such inability, but Tenant
shall not be liable for any rent until the time when Landlord can, after notice
to Tenant, deliver possession of the Premises to Tenant. No such failure to
give possession on the Scheduled Commencement Date shall affect the other
obligations of Tenant under this Lease, except that if Landlord is unable to
deliver possession of the Premises within one hundred twenty (120) days of the
Scheduled Commencement Date (other than as a result strikes, shortages of
materials or similar matters beyond the reasonable control of Landlord and
Tenant is notified by Landlord in writing as to such delay), Tenant shall have
the option to terminate
1
<PAGE>
this Lease unless said delay is as a result of: (a) Tenant's failure to agree
to plans and specifications; (b) Tenant's request for materials, finishes or
installations other than the Landlord's stand except those, if any, that
Landlord shall have expressly agreed to furnish without extension of time agreed
by Landlord; (c) Tenant's change in any plans or specifications; or
(d) performance or completion by a party employed by Tenant. If any delay is
the result of any of the foregoing, the Commencement Date and the payment of
rent under this Lease shall be accelerated by the number of days of such delay.
2.3 In the event Landlord shall permit Tenant to occupy the Premises prior
to the Commencement Date, such occupancy shall be subject to all the provisions
of this Lease. Said early possession shall not advance the Termination Date.
3. RENT. (See also Article 40. "SCHEDULE OF RENTS.")
3.1 Tenant agrees to pay to Landlord the Annual Rent in effect from time
to time by paying the Monthly Installment of Rent then in effect on or before
the first day of each full calendar month during the Term, except that the first
month's rent shall be paid upon the execution of this Lease. The Monthly
Installment of Rent in effect at any time shall be one-twelfth of the Annual
Rent in effect at such time. Rent for any period during the Term which is less
than a full month shall be a prorated portion of the Monthly Installment of Rent
based upon a thirty (30) day month. Said rent shall be paid to Landlord,
without deduction or offset and without notice or demand, at the Landlord's
address, as set forth on the Reference Page, or to such other person or at such
other place as Landlord may from time to time designate in writing.
3.2 Tenant recognizes that late payment of any rent or other sum due under
this Lease will result in administrative expense to Landlord, the extent of
which additional expense is extremely difficult and economically impractical to
ascertain. Tenant therefore agrees that if rent or any other sum is not paid
when due and payable pursuant to this Lease, a late charge shall be imposed in
an amount equal to the greater of: (a) Fifty Dollars ($50.00), or (b) a sum
equal to five percent (5%) per month of the unpaid rent or other payment. The
amount of the late charge to be paid by Tenant shall be reassessed and added to
Tenant's obligation for each successive monthly period until paid. The
provisions of this Section 3.2 in no way relieve Tenant of the obligation to pay
rent or other payments on or before the date on which they are due, nor do the
terms of this Section 3.2 in any way affect Landlord's remedies pursuant to
Article 19 in the event said rent or other payment is unpaid after date due.
4. RENT ADJUSTMENTS.
4.1 For the purpose of this Article 4, the following terms are defined as
follows:
4.1.1 Lease Year: Each calendar year falling partly or wholly
within the Term.
4.1.2 Direct Expense: All direct costs of operation, maintenance,
repair and management of the Building (including the amount of any credits which
Landlord may grant to particular tenants of the Building in lieu of providing
any standard services or paying any standard costs described in this
Section 4.1.2 for similar tenants), as determined in accordance with generally
accepted principles, including the following costs by way of illustration, but
not limitation: water and sewer charges; insurance charges of or relating to
all insurance policies and endorsements deemed by Landlord to be reasonably
necessary or desirable and relating in any manner to the protection,
preservation, or operation of the Building or any part thereof; utility costs,
including, but not limited to, the cost of heat, light, power, steam, gas and
waste disposal; the cost of janitorial services; the cost of security and alarm
services (including any central station signalling system); window cleaning
costs, labor costs; costs and expenses of managing the Building including
management fees; air conditioning maintenance costs; elevator maintenance fees
and supplies; material costs; equipment costs of equipment other than capital
items, current rental and leasing costs of items which would be amortizable
capital items if purchased; tool costs; licenses; permits and inspection fees;
wages and salaries; employee benefits and payroll taxes; accounting and legal
fees; any sales, use or service taxes incurred in connection therewith. Direct
Expenses shall not include deprecation or amortization of the Building or
equipment in the Building except as provided herein, loan principal payments,
costs of alterations of tenants' premises, leasing commissions, interest
expenses on long-term borrowings, advertising costs or management salaries for
executive personnel other than personnel located at the Building. In addition,
Landlord shall be entitled to amortize and include as an additional rental
adjustment: (i) an allocable portion of the cost of capital improvement items
which are reasonably calculated to reduce operating expenses; (ii) fire
sprinklers and suppression systems and other life safety systems; and
(iii) other capital expenses which are required under any governmental laws,
regulations or ordinances which were not applicable to the Building at the time
it was constructed. All such costs shall be amortized over the reasonable life
of such improvements in accordance with such reasonable life and amortization
schedules as shall be determined by Landlord in accordance with generally
accepted accounting principles, with interest on the unamortized amount at one
percent (1%) in excess of the prime lending rate announced from time to time as
such by The Northern Trust Company of Chicago, Illinois.
2
<PAGE>
4.1.3 Taxes: Real estate taxes and any other taxes, charges and
assessment which are levied with respect to the Building or the land appurtenant
to the Building, or with respect to any improvements, fixtures and equipment or
other property of Landlord, real or personal, located in the Building and used
in connection with the operation of the Building and said land, any payments to
any ground lessor in reimbursement of tax payments made by such lessor; and all
fees, expenses and costs incurred by Landlord in investigating, protesting,
contesting or in any way seeking to reduce or avoid increase in any assessments,
levies or the tax rate pertaining to any Taxes to be paid by Landlord in any
Lease Year. Taxes should not include any corporate franchise, or estate,
inheritance or net income tax, or tax imposed upon any transfer by Landlord of
its interest in this Lease or the Building.
4.2 If in any Lease Year, (i) Direct Expenses paid or incurred shall
exceed Direct Expenses paid or incurred in the Base Year (Direct Expenses)
and/or (ii) Taxes paid or incurred by Landlord in any Lease Year shall exceed
the amount of such Taxes which became due and payable in the Base Year (Taxes),
Tenant shall pay as additional rent for such Lease Year Tenant's Proportionate
Share of such excess.
4.3 The annual determination of Direct Expenses shall be made by Landlord
and, if certified by a nationally recognized firm of public accountants selected
by Landlord, shall be binding upon Landlord and Tenant. Tenant may review the
books and records supporting such determination in the office of Landlord, or
Landlord's agent, during normal business hours, upon giving Landlord five (5)
days advance written notice within sixty (60) days after receipt of such
determination, but in no event more often than once in any one period. In the
event that during all or any portion of any Lease Year, the Building is to fully
rented and occupied Landlord may make any appropriate adjustment in
occupancy-related Direct Expenses for such year for the purpose of avoiding
distortion of the amount of such Direct Expenses to be attributed to Tenant by
reason of variation in total occupancy of the Building, by employing sound
accounting and management principles to determine Direct Expenses that would
have been paid or incurred by Landlord had the Building been fully rented and
occupied, and the amounts so determined shall be deemed to have been Direct
Expenses for such Lease Year.
4.4 Prior to the actual determination thereof for a Lease Year, Landlord
may from time to time estimate Tenant's liability for Direct Expenses and/or
Taxes under Section 4.2, Article 6 and Article 29 for the Lease Year or portion
thereof. Landlord will give Tenant written notification of the amount of such
estimate and Tenant agrees that it will pay, by increase of its Monthly
Installments of Rent due in such Lease Year, additional rent in the amount of
such estimate. Any such increased rate of Monthly Installments of Rent pursuant
to this Section 4.4 shall remain in effect until further written notification to
Tenant pursuant hereto.
4.5 When the above mentioned actual determination of Tenant's liability
for Direct Expenses and/or Taxes is made for any Lease Year and when Tenant is
so notified in writing, then:
4.5.1 If the total additional rent Tenant actually paid pursuant
to Section 4.3 on account of Direct Expenses and/or Taxes for the Lease Year is
less than Tenant's liability for Direct Expenses and/or Taxes, then Tenant shall
pay such deficiency to Landlord as additional rent in one lump sum within thirty
(30) days of receipt of Landlord's bill therefor; and
4.5.2 If the total additional rent Tenant actually paid pursuant
to Section 4.3 on account of Direct Expenses and/or Taxes for the Lease Year is
more than Tenant's liability for Direct Expenses and/or Taxes, then Landlord
shall credit the difference against the then next due payments to be made by
Tenant under this Article 4. Tenant shall not be entitled to a credit by reason
of actual Direct Expenses and/or Taxes in any Lease year being less than Direct
Expenses and/or Taxes in the Base Year (Direct Expenses and/or Taxes).
4.6 If the Commencement Date is other than January 1 or if the Termination
Date is other than December 31, Tenant's liability for Direct Expenses and Taxes
for the Lease Year in which said Date occurs shall be prorated based upon a
three hundred sixty-five (365) day year.
5. SECURITY DEPOSIT.
Tenant shall deposit the Security Deposit with Landlord upon the execution of
this Lease. Said sum shall be held by Landlord as security for the faithful
performance by Tenant of all the terms, covenants and conditions of this Lease
to be kept and performed by Tenant and not as an advance rental deposit or as a
measure of Landlord's damage in case of Tenant's default. If Tenant defaults
with respect to any provision of this Lease, Landlord may use any part of the
Security Deposit for the payment of any rent or any other sum in default, or for
the payments of any amount which Landlord may spend or become obligated to spend
by reason of Tenant's default, or to compensate Landlord for any other loss or
damage which Landlord may suffer by
3
<PAGE>
reason of Tenant's default. If any portion is so used, Tenant shall within five
(5) days after written demand for, deposit with Landlord an amount sufficient to
restore the Security Deposit to its original amount and Tenant's failure to do
so shall be a material breach of this Lease. Except to such extent, if any, as
shall be required by law, Landlord shall not be required to keep the Security
Deposit separate from its general funds, and Tenant shall not be entitled to
interest on such deposit. If Tenant shall fully and faithfully perform every
provision of this Lease to be performed by it, the Security Deposit or any
balance thereof shall be returned to Tenant at such time after termination of
this Lease when Landlord shall have determined that all of Tenant's obligations
under this Lease have been fulfilled.
6. ALTERATIONS.
6.1 Except for those, if any, specifically provided for in Exhibit B to
this Lease, Tenant shall not make or suffer to be made any alterations,
additions, or improvements, including, but not limited to, the attachment of any
fixtures or equipment in, on, or to the Premises or any part thereof or the
making of any improvements as required by Article 7, without the prior written
consent of Landlord. When applying for such consent, Tenant shall, if requested
by Landlord, furnish complete plans and specifications for such alterations,
additions and improvements.
6.2 In the event Landlord consents to the making of any such alteration,
addition or improvement by Tenant, the same shall be made using Landlord's
contractor (unless Landlord agrees otherwise) at Tenant's sole cost and expense.
If Tenant shall employ any Contractor other than Landlord's Contractor and such
other Contractor or any Subcontractor of such other Contractor shall employ any
non-union labor or supplier, Tenant shall be responsible for any and all delays,
damages and extra costs suffered by Landlord as a result of any dispute with any
labor unions concerning the wage, hours, terms or conditions of the employment
of any such labor. In any event Landlord may charge Tenant a reasonable charge
to cover its overhead as it relates to such proposed work.
6.3 All alterations, additions or improvements proposed by Tenant shall be
constructed in accordance with all governmental laws, ordinances, rules and
regulations and Tenant shall, prior to construction, provide the additional
insurance required under Article 11 in such case, and also all such assurances
to Landlord, including but not limited to, waivers of lien, surety company
performance bonds and personal guaranties of individuals of substance as
Landlord shall require to assure payment of the costs thereof and to protect
Landlord and the Building and appurtenant land against any loss from any
mechanic's, materialmen's or other liens. Tenant shall pay in addition to any
sums due pursuant to Article 4, any increase in real estate or attributable to
any such alteration, addition or improvement for so long, during the Term, as
such increase is ascertainable; at Landlord's election said sums shall be paid
in the same way as sums due under Article 4.
6.4 All alterations, additions, and improvements in, on, or to the
Premises made or installed by Tenant, including carpeting, shall be and remain
the property of Tenant during the Term but, excepting furniture, furnishings,
movable partitions of less than full height from floor to ceiling and other
trade fixtures, shall become a party of the realty and belong to Landlord
without compensation to Tenant upon the expiration or sooner termination of the
Term, at which time shall pass to Landlord under this Lease as by a bill of
sale, unless Landlord elects otherwise. Upon such election by Landlord, Tenant
shall upon demand by Landlord, at Tenant's sole cost and expense, forthwith and
with all due diligence remove any such alterations, additions or improvements
which are designated by Landlord to be removed, and Tenant shall forthwith and
with all due diligence, at its sole cost and expense, repair and restore the
Premises to their original condition, reasonable wear and tear and damage by
fire or other casualty excepted.
7. REPAIR.
7.1 Landlord shall have no obligation to alter, remodel, improve, repair,
decorate or paint the Premises, except as specified in Exhibit B if attached to
this Lease and except that Landlord shall repair and maintain the structural
portions of the roof, walls and foundation of the Building. By taking
possession of the Premises, Tenant accepts them as being in good order,
condition and repair and in the condition in which Landlord is obligated to
deliver them. It is hereby understood and agreed that no representations
respecting the condition of the Premises or the Building have been made by
Landlord to Tenant, except as specifically set forth in this Lease. Landlord
shall not be liable for any failure to make any repairs or to perform any
maintenance unless such failure shall persist for an unreasonable time after
written notice of the need of such repairs or maintenance is given to Landlord
by Tenant.
7.2 Tenant hereby waives and releases tits right to make repairs at
Landlord's expense under Section 1941 and 1942 of the California Civil Code and
its right to terminate the Lease under Section 1932(1) of the California Civil
Code or under any similar law, statute or ordinance now or hereafter in effect.
4
<PAGE>
7.3 Tenant shall at its own costs and expense keep and maintain all parts
of the Premises and such portion of the Building and improvements as are within
the exclusive control of Tenant in good condition, promptly making all necessary
repairs and replacements, whether ordinary or extraordinary, with materials and
workmanship of the same character, kind and quality as the original (including,
but not limited to, repair and replacement of all fixtures installed by Tenant,
water heaters serving the Premises, windows, glass and plate glass, doors,
exterior stairs, skylights any special office entries, interior walls and finish
work, floors and floor coverings, heating and air conditioning systems serving
the Premises, electrical systems and fixtures, sprinkler systems, dock boards,
truck doors, dock bumpers, plumbing work and fixtures, and performance of
regular removal of trash and debris). Tenant as part of its obligations
hereunder shall keep the Premises in a clean and sanitary condition. Tenant
will, as far as possible keep all such parts of the Premises from deterioration
due to ordinary wear and from falling temporarily out of repair, and upon
termination of this Lease in any way Tenant will yield up the Premises to
Landlord in good condition and repair, loss by fire or other casualty excepted
(but not excepting any damage to glass). Tenant shall, at its own cost and
expense, repair any damage to the Premises or the Building resulting from and/or
caused in whole or in part by the negligence or misconduct of Tenant, its
agents, employees, invitees, or any other person entering upon the Premises
as a result of Tenant's business activities or caused by Tenant's default
hereunder.
7.4 Except as provided in Article 22, there shall be no abatement of
rent and no liability of Landlord by reason of any injury to or interference
with Tenant's business arising from the making of any repairs, alterations or
improvements in or to any portion of the Building or the Premises or to
fixtures, appurtenances and equipment in the Building. Except to the extent,
if any, prohibited by law, Tenant waives the right to make repairs at
Landlord's expense under any law, statute or ordinance now or hereafter in
effect.
7.5 Tenant shall, at its own cost and expense, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance
contractor approved by Landlord for servicing all heating and air
conditioning systems and equipment serving the Premises (and a copy thereof
shall be furnished to Landlord). The service contract must include all
services suggested by the equipment manufacturer in the operation/maintenance
manual and must become effective within thirty (30) days of the date Tenant
takes possession of the Premises. Landlord may, upon notice to Tenant, enter
into such a maintenance/service contract on behalf of Tenant or perform the
work and in either case, charge Tenant the cost thereof along with a
reasonable amount for Landlord's overhead.
7.6 Landlord shall coordinate any repairs and other maintenance of any
railroad tracks serving the Building and, if Tenant uses such rail tracks,
Tenant shall reimburse Landlord or the railroad company from time to time
upon demand, as additional rent, for its share of the costs of such repair
and maintenance and for any other sums specified in any agreement to which
Landlord or Tenant is a party respecting such tracks, such costs to be borne
proportionately by all tenants in the Building using such rail tracks, based
upon the actual number of rail cars shipped and received by such tenant
during each calendar year during the Term.
8. LIENS.
Tenant shall keep the Premises, the Building and appurtenant land and
Tenant's leasehold interest in the Premises free from any liens arising out
of any services, work or materials performed, furnished, or contracted for by
Tenant, or obligations incurred by Tenant. In the event that Tenant shall
not, within ten (10) days following the imposition of any such lien, either
cause the same to be released of record or provide Landlord with insurance
against the same issued by a major title insurance company or such other
protection against the same as Landlord shall accept, Landlord shall have the
right to cause the same to be released by such means as it shall deem proper,
including payment of the claim giving rise to such lien. All such sums paid
by Landlord and all expenses incurred by it in connection therewith shall be
considered additional rent and shall be payable to it by Tenant on demand.
Landlord shall have the right at all times to post and keep posted on the
Premises any notices permitted or required by law, or that Landlord shall
deem proper, for the protection of Landlord, the Premises, the Building, and
any other party having an interest therein, from mechanics' and materialmen's
liens, and Tenant shall give to Landlord at least five business days' prior
notice of commencement of any construction on the Premises.
9. ASSIGNMENT AND SUBLETTING.
9.1 Tenant shall not have the right to assign or pledge this Lease or
to sublet the whole or any part of the Premises whether voluntarily or by
operation of law, or permit the use or occupancy of the Premises by anyone
other than Tenant, and shall not make, suffer or permit such assignment,
subleasing or occupancy, without the prior written consent of Landlord, and
said restrictions shall be binding upon any and all assignees of the Lease
and subtenants of the Premises. In the event Tenant desires to sublet, or
permit such occupancy of, the Premises, or any portion thereof, or assign
this Lease, Tenant shall give written notice thereof to Landlord at least
ninety (90) days but no more than one hundred eighty (180) days prior to the
proposed commencement date of such subletting or assignment, which notice
shall set forth the name of the proposed subtenant or assignee, the relevant
terms of any sublease or assignment and copies of financial reports and other
relevant financial reports and other relevant financial information of the
proposed subtenant or assignee.
9.2 Notwithstanding any assignment or subletting, permitted or
otherwise, Tenant shall at all times remain directly, primarily and fully
responsible and liable for the payment of the rent specified in this Lease
and for compliance with all of its other obligations under the terms,
provisions and covenants of this Lease. Upon the occurrence of an Event of
Default, if the Premises or any part of them are then assigned or sublet,
Landlord, in addition to any other remedies provided in this Lease or
provided by law, may, at its option, collect directly from such assignee or
subtenant all rents due and becoming due to Tenant under such assignment or
sublease and apply such rent against any sums due to Landlord from Tenant
under this Lease, and no such collection shall be construed to constitute a
novation or release of Tenant from the further performance of Tenant's
obligations under this Lease.
9.3 In addition to Landlord's right to approve of any subtenant or
assignee, Landlord shall have the option, in its sole discretion, in the
event of any proposed subletting or assignment, to terminate this Lease, or
in the case of a proposed subletting of less than the entire Premises, to
recapture the portion of the Premises to be sublet, as of the date the
subletting or assignment is to be effective. The option shall be exercised,
if at all, by Landlord giving Tenant written notice given by Landlord to
Tenant within sixty (60) days following Landlord's receipt of Tenant's
written notice as required above. If this Lease shall be terminated with
respect to the entire Premises pursuant to this Section, the Term of this
Lease shall end on the date stated in Tenant's notice as the effective date
of the sublease or assignment as if that date had been originally fixed in
this Lease for the expiration of the Term. If Landlord recaptures under this
Section only a portion of the Premises, the rent to be paid from time to time
during the unexpired Term shall abate proportionately based on the proportion
by which the approximate square footage of the remaining portion of the
Premises shall be less than that of the Premises as of the date immediately
prior to such recapture. Tenant shall, at Tenant's own cost and expense,
discharge in full any outstanding commission obligation on the part of
Landlord with respect to this Lease, andy any commissions which may be due
and owing as a result of any proposed assignment or subletting, whether or
not the Premises are recaptured pursuant to this Section 9.3 and rented by
Landlord to the proposed tenant or any other tenant.
9.4 In the event that Tenant sells, sublets, assigns or transfers this
Lease, Tenant shall pay to Landlord as additional rent an amount equal to one
hundred percent (100%) of any Increased Rent (as defined below) when and as such
Increased Rent is received by Tenant. As used in this Section, "Increased Rent"
shall mean the excess of (i) all rent and other consideration which Tenant is
entitled to receive by reason of any sale, sublease, assignment or other
transfer of the Lease, over (ii) the rent otherwise payable by Tenant under this
Lease at such time. For purposes of the foregoing, any consideration received
by Tenant in form other than cash shall be valued at its fair market value as
determined by Landlord in good faith.
9.5 Notwithstanding any other provision hereof, Tenant shall have no right
to make (and Landlord shall have the absolute right to refuse to) any assignment
of this Lease or sublease of any portion of the Premises if at the time of
either Tenant's notice of the proposed assignment or sublease or the proposed
commencement date thereof, there shall exist any uncured default of Tenant or
matter which will become a default of Tenant with passage of time unless cured,
or if the proposed assignee or sublessee is an entity: (a) with which Landlord
is already in negotiation as evidenced by the issuance of a written proposal;
(b) is already an occupant of the Building unless Landlord is unable to provide
the amount of space required by such occupant; (c) is a governmental agency; (d)
is incompatible with the character of occupancy of the Building; or (e) would
subject the Premises to a use which would: (i) involve increased personnel or
wear upon the Building; (ii) violate any exclusive right granted to another
tenant of the Building; (iii) require any addition to or modification of the
Premises or the Building in order to comply with building code or other
governmental requirements; or, (iv) involve a violation of Section 1.2. Tenant
expressly agrees that Landlord shall have the absolute right to refuse consent
to any such assignment or sublease and that for the purposes of any statutory or
other requirement of reasonableness on the part of the Landlord such refusal
shall be reasonable.
9.6 Upon any request to assign or sublet, Tenant will pay to Landlord the
Assignment/Subletter Fee plus; on demand, a sum equal to all of Landlord's
costs, including attorney's fees, incurred in investigating and considering any
proposed or purported assignment or pledge of this Lease or sublease of any of
the Premises, regardless of whether Landlord shall consent to, refuse consent,
or determine that Landlord's consent is not required for, such assignment,
pledge or sublease. Any purported sale, assignment, mortgage, transfer of this
Lease or subletting which does not comply with the provisions of this Article 9
shall be void.
9.7 If Tenant is a corporation, partnership or trust, any transfer or
transfers of or change or changes within any twelve month period in the number
of the outstanding voting shares of the corporation, the general partnership
interests in the partnership or the identity of the persons or entities
controlling the activities of such partnership or trust resulting in the persons
or entities owning or controlling a majority of such shares, partnership
interests or activities of such partnership or trust at the beginning of such
period no longer having such ownership or control shall be regarded as
equivalent to an assignment of this
5
<PAGE>
Lease to the persons or entities acquiring such ownership or control and shall
be subject to all the provisions of this Article 9 to the same extent and for
all intents and purposes as though such an assignment.
10. INDEMNIFICATION.
None of the Landlord entities shall be liable and Tenant hereby waives all
claims against them for any damage to any property or any injury to any person
in or about the Premises or the Building by or from any cause whatsoever
(including without limited the foregoing, rain or water leakage of any character
from the roof, windows, walls, basement, pipes, plumbing works or appliances,
the Building not being in good condition or repair, gas, fir, oil, electricity
or theft), except to the extent caused by or arising from the gross negligence
or willful misconduct of landlord or its agents, employees or contractors.
Tenant shall protect, indemnify and hold the Landlord Entities harmless from and
against any and all loss, claims, liability or costs (including court costs and
attorney's fees) incurred by reason of (a) any damage to any property (including
but not limited to property of any Landlord Entity) or any injury (including but
not limited to death) to any person occurring in, on or about the Premises or
the Building to the extent that such injury or damage shall be caused by or
arise from any actual or alleged act, neglect, fault, or omission by or of
Tenant, its agents, servants, employees, invitees, or visitors to meet any
standards imposed by any duty with respect to the injury or damage; (b) the
conduct or management of any work or thing whatsoever done by the Tenant in or
about the Premises or from transactions of the Tenant concerning the Premises;
(c) Tenant's failure to comply with any and all governmental laws, ordinances
and regulations applicable to the condition or use of the Premises or its
occupancy; or (d) any breach or default on the part of the Tenant in the
performance of any covenant or agreement on the part of the Tenant to be
performed pursuant to this Lease. The provision of this Article shall survive
the termination of this Lease with respect to any claims or liability accruing
prior to such termination.
11. INSURANCE.
11.1 Tenant shall keep in force throughout the Term: (a) a Commercial
General Liability insurance policy or policies to protect the Landlord Entities
against any liability to the public or to any invitee of Tenant or a Landlord
Entity incidental to the use of or resulting from any accident occurring in or
upon the Premises with a limit of not less than $1,000,000.00 per occurrence and
not less than $2,000,000.00 in the annual aggregate, or such larger amount as
Landlord may prudently require from time to time, covering bodily injury and
property damage liability and $1,000,000 products/completed operations
aggregate; (b) Business Auto Liability covering owned, non-owned and hired
vehicles with a limit of not less than $1,000,000 per accident; (c) insurance
protecting against liability under Worker's Compensation Laws with limits at
least as required by statute; (d) Employers Liability with limits of $500,000
each accident, $500,000 disease policy limit, $500,000 disease--each employee;
(e) All Risk or Special Form coverage protecting Tenant against loss of or
damage to Tenant's alterations, additions, improvements, carpeting, floor
coverings, paneling, decorations, fixtures, inventory and other business
personal property situated in or about the Premises to the full replacement
value of the property so insured; and (f) Business Interruption Insurance with
limit of liability representing loss of at least approximately six months of
income.
11.2 Each of the aforesaid policies shall (a) be provided at Tenant's
expense; (b) name the Landlord and the building management company, if any, as
additional insureds; (c) be used by an insurance company with a minimum Best's
ration of "A:VII" during the Term; and (d) provide that said insurance shall not
be cancelled unless thirty (30) days prior written notice (ten days for
non-payment of premium) shall have been given to Landlord; and said policy or
policies or certificates thereof shall be delivered to Landlord by Tenant upon
the Commencement Date and at least thirty (30) days prior to each renewal of
said insurance.
11.3 Whenever Tenant shall undertake any alterations, additions or
improvements in, to or about the Premises ("Work") the aforesaid insurance
protection must extend to and include injuries to persons and damage to property
arising in connection with such Work, without limitation including liability
under any applicable structural work act, and such other insurance as Landlord
shall require; and the policies of or certificates evidencing such insurance
must be delivered to Landlord prior to the commencement of any such Work.
12. WAIVER OF SUBROGATION.
So long as their respective insurers so permit, Tenant and Landlord hereby
mutually waive their respective rights of recovery against each other for any
loss insured by fire, extended coverage, All Risks or other insurance now or
hereafter existing for the benefit of the respective party but only to the
extent of the net insurance proceeds payable under such policies. Each party
shall obtain any special endorsements required by their insurer to evidence
compliance with the aforementioned waiver.
6
<PAGE>
13. SERVICES AND UTILITIES.
Tenant shall pay for all water, gas, heat, light, power, telephone, sewer,
sprinkler system charges and other utilities and services used on or from the
Premises, together with any taxes, penalties, and surcharges or the like
pertaining thereto and any maintenance charges for utilities. Tenant shall
furnish all electric light bulbs, tubes and ballasts, battery packs for
emergency lighting and fire extinguishers. If any such services are not
separately metered to Tenant, Tenant shall pay such proportion of all charges
jointly metered with other premises as determined by Landlord, in its sole
discretion, to be reasonable. Any such charges paid by Landlord and assessed
against Tenant shall be immediately payable to Landlord on demand and shall be
additional to rent hereunder. Landlord shall in no event be liable for any
interruption or failure of utility services on or to the Premises.
14. HOLDING OVER.
Tenant shall pay Landlord for each day Tenant retains possession of the Premises
or part of them after termination of this Lease by lapse of time or otherwise at
the rate ("Holdover Rate") which shall be 150% of the greater of: (a) the amount
of the Annual Rent for the last period prior to the date of such termination
plus all Rent Adjustments under Article 4; and, (b) the then market rental value
of the Premises as determined by Landlord assuming a new lease of the Premises
of the then usual duration and other terms, in either case prorated on a daily
basis, and also pay all damages sustained by Landlord by reason of such
retention. If Landlord gives notice to Tenant of Landlord's election to that
effect, such holding over shall constitute renewal of this Lease for a period
from month to month or one year, whichever shall be specified in such notice, in
either case at the Holdover Rate, but if the Landlord does not so elect, no such
renewal shall result notwithstanding acceptance by Landlord of any sums due
hereunder after such termination; and instead, a tenancy at sufferance at the
Holdover Rate shall be deemed to have been created. In any event, no provision
of this Article 14 shall be deemed to waive Landlord's right of reentry or any
other right under this Lease or at law.
15. SUBORDINATION.
Without the necessity of any additional document being executed by Tenant for
the purpose of effecting a subordination, this Lease shall be subject and
subordinate at all times to ground or underlying leases and to the lien of any
mortgages or deeds of trust now or hereafter placed on, against or affecting the
Building, Landlord's interest or estate in the Building, or any ground or
underlying lease; provide,d however, that if the lessor, mortgagee, trustee, or
holder of any such mortgage or deed of trust elects to have Tenant's interest in
this Lease be superior to any such instrument, then, by notice to Tenant, this
Lease shall be deemed superior, whether this Lease was executed before or after
said instrument. Notwithstanding the foregoing, Tenant covenants and agrees to
execute and delivery upon demand such further instruments evidencing such
subordination or superiority of this Lease as may be required by Landlord.
16. RULES AND REGULATIONS.
Tenant shall faithfully observe and comply with all the rules and regulations as
set forth in Exhibit C to this Lease and all reasonable modifications of an
additions to them from time to time put into effect by Landlord. Landlord shall
not be responsible to Tenant for the non-performance by any other tenant or
occupant of the Building of any such rules and regulations.
17. REENTRY BY LANDLORD.
17.1 Landlord reserves and hall at all times have the right to re-enter the
Premises to inspect the same, to show said Premises to prospective purchasers,
mortgagees, or tenants, and to alter, improve or repair the Premises and any
portion of the Building, without abatement of rent, and may for that purpose
erect, use and maintain scaffolding, pipes, conduits and other necessary
structures and open any wall, ceiling or floor in and through the Building and
Premises where reasonably required by the character of the work to be performed,
provided entrance to the Premises shall not be blocked thereby, and further
provided that the business of Tenant shall not be interfered with unreasonably.
NOTWITHSTANDING THE FOREGOING, LANDLORD SHALL BE (1) PERMITTED ONLY TO ENTER
UPON REASONABLE PRIOR NOTICE AND THE ONLY WHEN ACCOMPANIED BY A REPRESENTATIVE
OF TENANT, AND (2) PRECLUDED FROM SPECIFIC AREAS WHERE THERE IS RISK OF INJURY
OR CONTAMINATION OF LANDLORD OR CONTAMINATION OF TENANT'S WORK ENVIRONMENT.
17.2 Landlord shall have the right at any time to change the arrangement
and/or locations of entrances, or passageways, doors and doorways, and
corridors, windows, elevators, stairs, toilets or other public parts of the
Building and to change the name, number or designation by which the Building is
commonly known. In the event that Landlord damages any portion of any wall or
wall covering, ceiling, or floor or floor covering within the Premises, Landlord
shall repair or replace
7
<PAGE>
the damaged portion to match the original as nearly as commercially reasonable
but shall not be required to repair or replace more than the portion actually
damaged.
17.3 Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned by any action
of Landlord authorized by this Article 17. Tenant agrees to reimburse Landlord,
on demand, as additional rent, for any expenses which Landlord may incur in thus
effecting compliance with Tenant's obligation under this Lease.
17.4 For each of the aforesaid purposes, Landlord shall at all times have
and retain a key with which to unlock all of the doors in the Premises,
excluding Tenant's vaults and safes or special security areas (designated in
advance), and Landlord shall have the right to use any and all means which
Landlord may deem property to open said doors in an emergency to obtain entry to
any portion of the Premises. As to any portion to which access cannot be had by
means of a key or keys in Landlord's possession, Landlord is authorized to gain
access by such means as Landlord shall elect and the cost of repairing any
damage occurring in doing so shall be borne by Tenant and paid to Landlord as
additional rent upon demand.
18. DEFAULT.
18.1 Except as otherwise provided in Article 20, the following events shall
be deemed to be Events of Default under this Lease:
18.1.1 Tenant shall fail to pay when due any sum of money becoming
due to be paid to Landlord under this Lease, whether such sum be any installment
of the rent reserved by this Lease, any other amount treated as additional rent
under this Lease, or any other payment or reimbursement to Landlord required by
this Lease, whether or not treated as additional rent under this Lease, and such
failure shall continue for a period of five days after written notice that such
payment was not made when due, but if any such notice shall be given, for the
twelve month period commencing with the date of such notice, the failure to pay
within five days after due any additional sum of money becoming due to be paid
to Landlord under this Lease during such period shall be an Event of Default,
without notice.
18.1.2 Tenant shall fail to comply with any term, provision or
covenant of this Lease which is not provided for in another Section of this
Article and shall not cure such failure within twenty (20) days (forthwith, if
the failure involves a hazardous condition) after written notice of such failure
to Tenant.
18.1.3 Tenant shall fail to vacate the Premises immediately upon
termination of this Lease, by lapse of time or otherwise, or upon termination of
Tenant's right to possession only.
18.1.4 Tenant shall become insolvent, admit in writing its
inability to pay its debts generally as they become due, file a petition in
bankruptcy or a petition to take advantage of any insolvency statute, make an
assignment for the benefit of creditors, make a transfer in fraud of creditors,
apply for or consent to the appointment of a receiver of itself or of the whole
or any substantial part of its property, or file a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws, as now in
effect or hereafter amended, or any other applicable law or statute of the
United States or any state thereof.
18.1.5 A court of competent jurisdiction shall enter an order,
judgment or decree adjudicating Tenant bankrupt, or appointing a receiver of
Tenant, or of the whole or any substantial part of its property, without the
consent of Tenant, or approving a petition filed against Tenant seeking
reorganization or arrangement of Tenant under the bankruptcy laws of the United
States, as now in effect or hereafter amended, or any state thereof, and such
order, judgment or decree shall not be vacated or set aside or stayed within
thirty (30) days from the date of entry thereof.
19. REMEDIES.
19.1 Upon the occurrence of any of such events of default described in
Article 18.1 or elsewhere in this Lease, Landlord shall have the following
rights and remedies in addition to all other rights or remedies available to
Landlord in law or equity:
19.1.1 The rights and remedies provided by California Civil Code
Section 1951.2, including, but not limited to, the right to terminate Tenant's
right to possession of the Premises and to recover the worth at the time of
award of the amount by which the unpaid rent for the balance of the Term after
the time of award exceeds the amount of rental loss for
8
<PAGE>
the same period that the Tenant proves could be reasonably avoided, as
computed pursuant to subsection (b) of said Section 1951.2;
19.1.2 The rights and remedies provided by California Civil Code
Section 1951.4, that allows Landlord to continue this Lease in effect and to
enforce all of its rights and remedies under this Lease, including the right to
recover rent as it becomes due, for so long as Landlord does not terminate
Tenant's right to possession; provided, however, if Landlord elects to exercise
its remedies described in this subsection and Landlord does not terminate this
Lease, and if Tenant requests Landlord's consent to an assignment of this Lease
or a sublease of the Premises at such time as Tenant is in default, Landlord
shall not unreasonably withhold its consent to such assignment or sublease.
Acts of maintenance or preservation, efforts to relet the Premises or the
appointment of a receiver upon Landlord's initiative to protect its interest
under this Lease shall not constitute a termination of Tenant's right to
possession;
19.1.3 The right to terminate this Lease by giving notice to Tenant
in accordance with applicable law;
19.1.4 The right and power, as attorney-in-fact for Tenant, to
enter the Premises and remove therefrom all persons and property, to store such
property in a public warehouse or elsewhere at the cost of and for the account
of Tenant, and to sell such property and apply the proceeds therefrom pursuant
to applicable California law. Landlord, as attorney-in-fact for Tenant, may
from time to time sublet the Premises or any part thereof for such term or terms
(which may extend beyond the Term) and at such rent and such other terms as
Landlord in its sole discretion may deem advisable, with the right to make
alterations and repairs to the Premises. Upon each such subletting, (i) Tenant
shall be immediately liable for payment to Landlord of, in addition indebtedness
other than rent due hereunder, the cost of such subletting and such alterations
and repairs incurred by Landlord and the amount, if any, by which the rent for
the period of such subletting (to the extent such period does not exceed the
Term) exceeds the amount to be paid as rent for the Premises for such period, or
(ii) at the option of Landlord, rents received from such subletting shall be
applied, first, to payment of any indebtedness other than rent due hereunder
from Tenant to Landlord; second, to the payment of any costs of such subletting
and of such alterations and repairs; third, to payment of rent due and unpaid
hereunder; and the residue, if any, shall be held by Landlord and applied in
payment of future rent as the same become due hereunder. If Tenant has been
credited with any rent to be received by such subletting under clause (i) and
such rent shall not be promptly paid to Landlord by the subtenant(s), of or such
rentals received from such subletting under clause (i) during any month are less
than those to be paid during that month by Tenant hereunder, Tenant shall pay
any such deficiency to Landlord. Such deficiency shall be calculated and paid
monthly. For all purposes set forth in this subparagraph, Landlord is hereby
irrevocably appointed attorney-in-fact for Tenant, with power of substitution.
No taking of possession of the Premises by Landlord, as attorney-in-fact for
Tenant, shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention is given to Tenant. Notwithstanding
any such subletting without termination, Landlord may at any time thereafter
elect to terminate this Lease for such previous breach; and
19.1.5 The right to have a receiver appointed for Tenant upon
application by Landlord, to take possession of the Premises and to apply any
rental collected from the Premises and to exercise all other rights and remedies
granted to Landlord as attorney-in-fact for Tenant pursuant to subparagraph
19.1.4.
19.1.6 For purposes of this Article 19: "worth at the time of
award" shall be computed by allowing interest at a per annum rate of ten percent
and rent with respect to each month shall be deemed to be a monthly rental
arrived at by adding (i) one twelfth of the Annual Rent, plus (ii) an amount
equal to the monthly average of all the percentage rental received by or payable
to Landlord during the period that Tenant was conducting Tenant's business in
the Premises in the manner and to the extent required by this Lease, plus (iii)
one twelfth of any items of additional rent paid or payable by Tenant hereunder
during the 12 consecutive month period prior to the month in which Tenant's
default occurs or one twelfth of the annualized amount of additional rent paid
or payable and the last day of the calendar month prior to the month in which
such default occurs, if such default occurs during the first 12 calendar months
of the Term).
19.2 If on account of any breach or default by Tenant in Tenant's
obligations under the terms and conditions of this Lease, it shall become
necessary or appropriate for Landlord to employ or consult with an attorney
concerning or to enforce or defend any of Landlord's rights or remedies arising
under this Lease, Tenant agrees to pay all Landlord's attorney's fees so
incurred. Tenant expressly waives any right to: (a) trial by jury; and
(b) service of any notice required by an present or future law or ordinance
applicable to landlords or tenants but not required by the terms of this Lease.
19.3 Pursuit of any of the foregoing remedies shall not preclude pursuit of
any of the other remedies provided in this Lease or any other remedies provided
by law (all such remedies being cumulative), nor shall pursuit of any remedy
provided in this Lease constitute a forfeiture or waiver of any rent due to
Landlord under this Lease or of any damages accruing to Landlord by reason of
the violation of any of the terms, provisions and covenants contained in this
Lease.
9
<PAGE>
19.4 No act or thing done by Landlord or its agents during the Term
shall be deemed a termination of this Lease or an acceptance of the surrender
of the Premises, and no agreement to terminate this Lease or accept a
surrender of said Premises shall be valid, unless in writing signed by
Landlord. No waiver by Landlord or any violation or breach of any of the
terms, provisions and covenants contained in this Lease shall be deemed or
construed to constitute a waiver of any other violation or breach of any of
the terms, provisions and covenants contained in this Lease. Landlord's
acceptance of the payment of rental or other payments after the occurrence of
an Event of Default shall not be construed as a waiver of such Default,
unless Landlord so notifies Tenant in writing. Forbearance by Landlord in
enforcing one or more of the remedies provided in this Lease upon an Event of
Default shall not be deemed or construed to constitute a waiver of such
Default or of Landlord's right to enforce any such remedies with respect to
such Default or any subsequent Default.
19.5 To secure the payment of all rentals and other sums of money
becoming due from Tenant under this Lease, Landlord shall have and Tenant
grants to Landlord a first lien upon the leasehold interest of Tenant under
this Lease, which lien may be enforced in equity, and a continuing security
interest upon all goods, wares, equipment, fixtures, furniture, inventory,
accounts, contract rights, chattel paper and other personal property of
Tenant situated on the Premises, and such property shall not be removed
therefrom without the consent of Landlord until all arrearages in rent as
well as any and all other sums of money then due to Landlord under this Lease
shall first have been paid and discharged. In the event of a Default under
this Lease, Landlord shall have, in addition to any other remedies provided
in this Lease or by law, all rights and remedies under the Uniform Commercial
Code, including without limitation the right to sell the property described
in this Section 19.5 at public or private sale upon five (5) days' notice to
Tenant. Tenant shall execute all such financing statements and other
instruments as shall be deemed necessary or desirable in Landlord's
discretion to perfect the security interest hereby created.
20. TENANT'S BANKRUPTCY OR INSOLVENCY.
20.1 If at any time and for so long as Tenant shall be subjected to
the provisions of the United States Bankruptcy Code or other law of the
United States or any state thereof for the protection of debtors as in effect
at such time (each a "Debtor's Law"):
20.1.1 Tenant, Tenant as debtor-in-possession, and any trustee
or receiver of Tenant's assets (each a "Tenant's Representative") shall have
no greater right to assume or assign this Lease or any interest in this
Lease, or to sublease any of the Premises than accorded to Tenant in Article
9, except to the extent Landlord shall be required to permit such assumption,
assignment or sublease by the provisions of such Debtor's Law. Without
limitation of the generality of the foregoing, any right of any Tenant's
Representative to assume or assign this Lease or to sublease any of the
Premises shall be subject to the conditions that:
20.1.1.1 Such Debtor's Law shall provide to Tenant's
Representative a right of assumption of this Lease which Tenant's
Representative shall have timely exercised and Tenant's Representative shall
have fully cured any default of Tenant under this Lease.
20.1.1.2 Tenant's Representative or the proposed
assignee, as the case shall be, shall have deposited with Landlord as
security for the timely payment of rent an amount equal to the larger of:
(a) three months' rent and other monetary charges accruing under this Lease;
and (b) any sum specified in Article 5; and shall have provided Landlord with
adequate other assurance of the future performance of the obligations of the
Tenant under this Lease. Without limitation, such assurances shall include,
at least, in the case of assumption of this Lease, demonstration to the
satisfaction of the Landlord that Tenant's Representative has and will
continue to have sufficient unencumbered assets after the payment of all
secured obligations and administrative expenses to assure Landlord that
Tenant's Representative will have sufficient funds to fulfill the obligations
of Tenant under this Lease; and, in the case of assignment, submission of
current financial statements of the proposed assignee, audited by an
independent certified public accountant reasonably acceptable to Landlord and
showing a net worth and working capital in amounts determined by Landlord to
be sufficient to assure the future performance by such assignee of all of the
Tenant's obligations under this Lease.
20.1.1.3 The assumption or any contemplated
assignment of this Lease or subleasing any part of the Premises, as shall be
the case, will not breach any provision in any other lease, mortgage,
financing agreement or other agreement by which Landlord is bound.
20.1.1.4 Landlord shall have, or would have had
absent the Debtor's Law, no right under Article 9 to refuse consent to the
proposed assignment or sublease by reason of the identity or nature of the
proposed assignee or sublessee or the proposed use of the Premises concerned.
10
<PAGE>
21. QUIET ENJOYMENT.
Landlord represents and warrants that it has full right and authority to enter
into this Lease and that Tenant, while paying the rental and performing its
other covenants and agreements contained in this Lease, shall peaceably and
quietly have, hold and enjoy the Premises for the Term without hinderance or
molestation from Landlord subject to the terms and provisions of this Lease.
Landlord shall not be liable for any interference or disturbance by other
tenants or third parties, nor shall Tenant be released from any of the
obligations of this Lease because of such interference or disturbance.
22. DAMAGE BY FIRE, ETC.
22.1 In the event the Premises or the Building are damaged by fire or
other cause and in Landlord's reasonable estimation such damage can be
materially restored within two hundred fifth (250) days, Landlord shall
forthwith repair the same and this Lease shall remain in full force and
effect, except that Tenant shall be entitled to a proportionate abatement in
rent from the date of such damage. Such abatement of rent shall be made pro
rata in accordance with the extent to which the damage and the making of such
repairs shall interfere with the use and occupancy by Tenant of the Premises
from time to time. Within forty-five (45) days from the date of such damage,
Landlord shall notify Tenant, in writing, of Landlord's reasonable estimation
of the length of time within which material restoration can be made, and
Landlord's determination shall be binding on Tenant. For purposes of this
Lease, the Building or Premises shall be deemed "materially restored" if they
are in such condition as would not prevent or materially interfere with
Tenant's use of the Premises for the purpose for which it was being used
immediately before such damage.
22.2 If such repairs cannot, in Landlord's reasonably estimation, be made
within two hundred fifty (250) days, Landlord and Tenant shall each have the
option of giving the other, at any time within sixty (60) days after such
damage, notice terminating this Lease as of the date of such damage. In the
event of the giving of such notice, this Lease shall expire and all interest of
the Tenant in the Premises shall terminate as of the date of such damage as if
such date had been originally fixed in this Lease for the expiration of the
Term. In the event that neither Landlord nor Tenant exercises its option to
terminate this Lease, then Landlord shall repair or restore such damage, this
Lease continuing in full force and effect, and the rent hereunder shall be
proportionately abated as provided in Section 22.1.
22.3 Landlord shall not be required to repair or replace any damage or
loss by or from fire or other cause to any panelings, decorations,
partitions, additions, railings, ceilings, floor coverings, office fixtures
or any other property or improvements installed on the Premises or belonging
to Tenant. Any insurance which may be carried by Landlord or Tenant against
loss or damage to the Building or Premises shall be for the sole benefit of
the party carrying such insurance and under its sole control.
22.4 IN the event that Landlord should fail to complete such repairs and
material restoration within sixty (60) days after the date estimated by Landlord
therefor as extended by this Section 22.4, Tenant may at its option and as its
sole remedy terminate this Lease by delivering written notice to Landlord,
within fifteen (15) days after the expiration of said period of time, whereupon
the Lease shall end on the date of such notice or such later date fixed in such
notice as if the date of such notice was the date originally fixed in this Lease
for the expiration of the Term; provided, however, that if construction is
delayed because of changes, deletions or additions in construction requested by
Tenant, strikes, lockouts, casualties, Acts of God, war, material or labor
shortages, government regulation or control or other causes beyond the
reasonable control of Landlord, the period for restoration, repair or rebuilding
shall be extended for the amount of time Landlord is so delayed.
22.5 Notwithstanding anything to the contrary contained in this Article:
(a) Landlord shall not have any obligation whatsoever to repair, reconstruct, or
restore the Premises when the damages resulting from any casualty covered by the
provisions of this Article 22 occur during the last twelve (12) months of the
Term or any extension thereof, but if Landlord determines not to repair such
damages Landlord shall notify Tenant and if such damages shall render any
material portion of the Premises untenantable Tenant shall have the right to
terminate this Lease by notice to Landlord within fifteen (15) days after
receipt of Landlord's notice; and (b) in the event the holder of any
indebtedness secured by a mortgage or deed of trust covering the Premises or
Building requires that any insurance proceeds by applied to such indebtedness,
then Landlord shall have the right to terminate this Lease by delivering written
notice of termination to Tenant within fifteen (15) days after such requirement
is made by any such holder, whereupon this Lease shall end on the date of such
damage as if the date of such damage were the date originally fixed in this
Lease for the expiration of the Term.
22.6 In the event of any damage or destruction to the Building or
Premises by any peril covered by the provisions of this Article 22, it shall
be Tenant's responsibility to properly secure the Premises and upon notice
from Landlord to remove
11
<PAGE>
forthwith, at its sole cost and expense, such portion of all of the
property belonging to Tenant or its licensees from such portion or all of the
Building or Premises as Landlord shall request.
22.7 The provisions of this Lease, including this Article, constitute an
express agreement between Landlord and Tenant with respect to any and all damage
to, or destruction of, all or any party of the Premises or the Building and any
statute or regulation of the State of California, including, without
limitation, Sections 1932(2) and 1934(4) of the California Civil Code, with
respect to any rights or obligations concerning damage or destruction in the
absence of an express agreement between the parties, and any other statute or
regulation, now or hereafter in effect, shall have no application to the Lease
or any damage or destruction to all or any part of the Premises or the Building.
23. EMINENT DOMAIN.
If all or any substantial part of the Premises shall be taken or appropriated by
any public or quasi-public authority under the power of eminent domain, or
conveyance in lieu of such appropriation, either party to this Lease shall have
the right, at its option, of giving the other, at any time within thirty (30)
days after such taking, notice terminating this Lease, except that Tenant may
only terminate this Lease by reason of taking or appropriation, if such taking
or appropriation shall be so substantial as to materially interfere with
Tenant's use and occupancy of the Premises. If neither party to this Lease
shall so elect to terminate this Lease, the rental thereafter to be paid shall
be adjusted on a fair and equitable basis under the circumstances. In addition
to the rights of Landlord above, if any substantial part of the Building shall
be taken or appropriated by andy public or quasi-public authority under the
power of eminent domain or conveyance in lieu thereof, and regardless of whether
the Premises or any part thereof are so taken or appropriated, Landlord shall
have the right, at its sole option, to terminate this Lease. Landlord shall be
entitled to any and all income, rent, award, or any interest whatsoever in or
upon any such sum, which may be paid or made in connection with any such public
or quasi-public use or purpose, and Tenant hereby assigns to Landlord any
interest it may have in or claim to all or any part of such sums, other than any
separate award which may be made with respect to Tenant's trade fixtures and
moving expenses; Tenant shall make no claim for the value of any unexpired Term.
24. SALE BY LANDLORD.
In event of a sale or conveyance by Landlord of the Building, the same shall
operate to release Landlord from any future liability upon any of the covenants
or conditions, expressed or implied, contained in this Lease in favor of Tenant,
and in such event Tenant agrees to look solely to the responsibility of the
successor in interest of Landlord in and to this Lease. Except as set forth in
this Article 24, this Lease shall not be affected by any such sale and Tenant
agrees to attorn to the purchaser or assignee. If any security has been given
by Tenant to secure the faithful performance of any of the covenants of this
Lease, Landlord may transfer or deliver said security, as such, to Landlord's
successor in interest and thereupon Landlord shall be discharged from any
further liability with regard to said security.
25. ESTOPPEL CERTIFICATES.
Within ten (10) days following any written request which Landlord may make from
time to time, Tenant shall execute and deliver to Landlord or mortgagee or
prospective mortgagee a sworn statement certifying: (a) the date of
commencement of this Lease; (b) the fact that this Lease is unmodified and in
full force and effect (or, if there have been modifications to this Lease, that
this Lease is in full force and effect, as modified, and stating the date and
nature of such modifications); (c) the date to which the rent and other sums
payable under this Lease have been paid; (d) the fact that there are no current
defaults under this Lease by either Landlord or Tenant except as specified in
Tenant's statement; and (e) such other matters as amy be requested by Landlord.
Landlord and Tenant intend that any statement delivered pursuant to this
Article 25 may be relied upon by any mortgagee, beneficiary or purchaser and
Tenant shall be liable for all loss, cost or expense resulting from the failure
of any sale or funding of any loan caused by any material misstatement contained
in such estoppel certificate.
26. SURRENDER OF PREMISES.
26.1 Tenant shall, at least thirty (30) days before the last day of the
Term, arrange to meet Landlord for a joint inspection of the Premises. In the
event of Tenant's failure to arrange such joint inspection to be held prior to
vacating the Premises, Landlord's inspection at or after Tenant's vacating the
Premises shall be conclusively deemed correct for purposes of determining
Tenant's responsibility for repairs and restoration.
12
<PAGE>
26.2 At the end of the Term or any renewal of the Term or other sooner
termination of this Lease, Tenant will peaceably deliver up to Landlord
possession of the Premises, together with all improvements or additions upon
or belonging to the same, by whomsoever made, in the same conditions received
or first installed, broom clean and free of all debris, excepting only
ordinary wear and tear and damage by fire or other casualty. Tenant may, and
at Landlord's request shall, at Tenant's sole cost, remove upon termination
of this Lease, any and all furniture, furnishings, movable partitions of less
than full height from floor to ceiling, trade fixtures and other property
installed by Tenant, title to which shall not be in or pass automatically to
Landlord upon such termination, repairing all damage caused by such removal.
Property not so removed shall, unless requested to be removed, be deemed
abandoned by the Tenant and title to the same shall thereupon pass to
Landlord under this Lease as by a bill of sale. All other alterations,
additions and improvements in, on or to the Premises shall be dealt with and
disposed of as provided in Article 6.
26.3 All obligations of Tenant under this Lease not fully performed as
of the expiration or earlier termination of the Term shall survive the
expiration or earlier termination of the Term. In the event that Tenant's
failure to perform prevents Landlord from releasing the Premises, Tenant
shall continue to pay rent pursuant to the provisions of Article 14 until
such performance is complete. Upon the expiration or earlier termination of
the Term, Tenant shall pay to Landlord the amount, as estimated by Landlord,
necessary to repair and restore the Premises as provided in this Lease and/or
to discharge Tenant's obligation for unpaid amounts due or to become due to
Landlord. All such amounts shall be used and held by Landlord, or with any
excess to be returned to Tenant after all such obligations have been
determined and satisfied. Any otherwise unused Security Deposit shall be
credited against the amount payable by Tenant under this Lease.
27. NOTICES.
Any notice or document required or permitted to be delivered under this Lease
shall be addressed to the intended recipient, shall be transmitted personally,
by fully prepaid registered or certified United States Mail return receipt
requested, or by reputable independent contract delivery service furnishing a
written record of attempted or actual delivery, and shall be deemed to be
delivered when tendered for delivery to the addressee at its address set forth
on the Reference Page, or at such other address as it has then last specified by
written notice delivered in accordance with this Article 27, or if to Tenant at
either its aforesaid address or its last known registered office or home of a
general partner or individual owner, whether or not actually accepted or
received by the addressee.
28. TAXES PAYABLE BY TENANT.
In addition to rent and other charges to be paid by Tenant under this Lease,
Tenant shall reimburse to Landlord, upon demand, any and all taxes payable to
Landlord (other than net income taxes) whether or not now customary or within
the contemplation of the parties to this Lease: (a) upon, allocable to, or
measured by or on the gross or net rent payable under this Lease, including
without limitation any gross income tax or excise tax levied by the State, any
political subdivision thereof, or the Federal Government with respect to the
receipt of such rent; (b) upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy of the
Premises or any portion thereof, including any sales, use or service tax imposed
as a result thereof; (c) upon or measured by the Tenant's gross receipts or
payroll or the value of Tenant's equipment, furniture, fixtures and other
personal property of Tenant or leasehold improvements, alterations or additions
located in the Premises; or (d) upon this transaction or any document to which
Tenant is a party creating or transferring any interest of Tenant in this Lease
or the Premises. In addition to the foregoing, Tenant agrees to pay, before
delinquency, any and all taxes levied or assessed against Tenant and which
become payable during the term hereof upon Tenant's equipment, furniture,
fixtures and other personal property of Tenant located in the Premises.
13
<PAGE>
30. DEFINED TERMS AND HEADINGS.
The Article headings shown in this Lease ar for convenience of reference and
shall in no way define, increase, limit or describe the scope or intent of any
provision of this Lease. Any indemnification or insurance of Landlord shall
apply to and inure to the benefit of all the following "Landlord Entities",
being Landlord, Landlord's investment manager, and the trustees, board of
directors, officers, general partners, beneficiaries, stockholders, employees
and agents of each of them. Any option granted to Landlord shall also include
or be exercisable by Landlord's trustee, beneficiary, agents and employees, as
the case may be. In any case where this Lease is signed by more than one
person, the obligations under this Lease shall be joint and several. The terms
"Tenant" and "Landlord" or any pronoun used in place thereof shall indicate and
include the masculine or feminine, the singular or plural number, individuals,
firms or corporations, and each of their respective successors, executors,
administrators and permitted assigns, according to the context hereof. The term
"rentable area" shall mean the rentable area of the Premises or the Building as
calculated by the Landlord on the basis of the plans and specifications of the
Building including a proportionate share of any common areas. Tenant hereby
accepts and agrees to be bound by the figures for the rentable space footage of
the Premises and Tenant's Proportionate Share shown on the Reference Page.
31. TENANT'S AUTHORITY.
If Tenant signs as a corporation each of the persons executing this Lease on
behalf of Tenant represents and warrants that Tenant has been and is qualified
to do business in the state in which the Building is located, that the
corporation has fully right and authority to enter into this Lease, and that all
persons signing on behalf of the corporation were authorized to do so by
appropriate corporate actions. If Tenant signs as a partnership, trust or other
legal entity, each of the persons executing this Lease on behalf of Tenant
represents and warrants that Tenant has complied with all applicable laws, rules
and governmental regulations relative to its right to do business in the state
and that such entity on behalf of the Tenant was authorized to do so my any and
all appropriate partnership, trust or other actions. Tenant agrees to furnish
promptly upon request a corporate resolution, proof of due authorization by
partners, or other appropriate documentation evidencing the due authorization of
Tenant to enter into this Lease.
32. COMMISSIONS.
Each of the parties represents and warrants to the other that it has not dealt
with any broker or finder in connection with this Lease, except as described on
the Reference page.
33. TIME AND APPLICABLE LAW.
Time is of the essence of this Lease and all of its provisions. This Lease
shall in all respects be governed by the laws of the state in which the Building
is located.
34. SUCCESSORS AND ASSIGNS.
Subject to the provisions of Article 9, the terms, covenants and conditions
contained in this Lease shall be binding upon and inure to the benefit of the
heirs, successors, executors, administrators and assigns of the parties to this
Lease.
35. ENTIRE AGREEMENT.
This Lease, together with its exhibits, contains all agreements of the parties
to this Lease and supersedes any previous negotiations. There have been no
representations made by the Landlord or understandings made between the parties
other than those set forth in this Lease and its exhibits. This Lease may not
be modified except by a written instrument duly executed by the parties to this
Lease.
36. EXAMINATION NOT OPTION.
Submission of this Lease shall not be deemed to be a reservation of the
Premises. Landlord shall not be bound by this Lease until it has received a
copy of this Lease duly executed by Tenant and has delivered to Tenant a copy of
this Lease duly executed by Landlord, and until such delivery Landlord reserves
the right to exhibit and lease the Premises to other prospective tenants.
Notwithstanding anything contained in this Lease to the contrary, Landlord may
withhold delivery of possession of the Premises from Tenant until such time as
Tenant has paid to Landlord any security deposit required by Article 5, the
first month's rent as set forth in Article 3 and any sum owed pursuant to this
Lease.
14
<PAGE>
37. RECORDATION.
Tenant shall not record or register this Lease or a short form memorandum hereof
without the prior written consent of Landlord, and then shall pay all charges
and taxes incident such recording or registration.
38. AUTHORIZATION OF FINANCIAL INFORMATION.
Tenant hereby authorizes Landlord to verify past and present business and
employment earning records, bank accounts, stock holdings, and any other asset
balances Landlord deems necessary to verify Tenant's financial and credit
situation. Tenant further authorized Landlord to order a consumer credit report
and to verify other credit information, including past and present loans,
extensions of credit, and landlord references. This authorization includes the
reverification of any of the information that the Landlord shall be originally
authorized to obtain and verify and such information may be obtained and
verified by Landlord's agents and/or affiliates and any investors and/or
assigns.
39. HAZARDOUS MATERIALS.
(a) Tenant agrees that Tenant, its agents and contractors, licensees,
or invitees shall not handle, use, manufacture, store or dispose of any
flammables, explosives, radioactive materials, hazardous wastes or materials,
toxic wastes or materials, or other similar substances, petroleum products or
derivatives (collectively "Hazardous Materials") on, under, or about the
Premises, without Landlord's prior written consent (which consent shall not
be unreasonably withheld as long as (i) such Hazardous Materials are
necessary or useful to Tenant's business and Tenant demonstrates and
documents to Landlord's reasonable satisfaction that such Hazardous Materials
will be used, kept, and stored in compliance with all laws relating to any
Hazardous Materials so brought or used or kept in or about the Premises; and
(ii) that Tenant will give all notices required by applicable governmental
agencies concerning the presence in or on the Premises or the release of such
Hazardous Materials from the Premises) provided that Tenant may handle,
store, use or dispose of products containing small quantities of Hazardous
Materials, which products are of a type customarily found in offices and
households (such as aerosol cans containing insecticides, toner for copiers,
paints, paint remover, and the like), provided further that Tenant shall
handle, store, use and dispose of any such Hazardous Materials in a safe and
lawful manner and shall not allow such Hazardous Materials to contaminate the
Premises or the environment.
(b) Tenant further agrees that Tenant will not permit any substance
suspected of causing cancer of reproductive toxicity to come into contact
with groundwater under the Premises. Any such substance coming into contact
with groundwater shall be considered a Hazardous Material for purposes of
this Rider.
(c) (i) Notwithstanding the provisions of Paragraph (a), Tenant may
handle, store, and use Hazardous Materials, limited to the types, amounts,
and use identified in the Hazardous Materials Exhibit attached hereto. If no
Hazardous Materials Exhibit is attached to this Lease, then this Paragraph
(c) shall be of no force and effect. Tenant hereby certifies to Landlord
that the information provided by Tenant pursuant to this Paragraph is true,
correct, and complete. Tenant covenants to comply with the use restrictions
shown on the attached Hazardous Materials Exhibit. Tenant's business and
operations, and more especially its handling, storage, use and disposal of
Hazardous Materials shall at all times comply with all applicable laws
pertaining to Hazardous Materials. Tenant shall secure and abide by all
permits necessary for Tenant's operations on the Premises. Tenant shall give
or post all notices required by all applicable laws pertaining to Hazardous
Materials. If Tenant shall at any time fail to comply with this Paragraph,
Tenant shall immediately notify Landlord in writing of such noncompliance.
(ii) Tenant shall maintain all records required by applicable
governmental agencies including any Material Safety Data Sheets (as required by
the Occupational Safety and Health Act) relating to any Hazardous Materials to
be used, kept, or stored at or on the Premises. Landlord shall be entitled to
view and copy such records upon reasonable advance notice. In addition Tenant
shall provide Landlord copies of any reports required to be made to applicable
governmental agencies at the time such reports are made.
(iii) Tenant shall not store hazardous wastes on the Premises for more
than 90 days; "hazardous waste" has the meaning given it by the Resource
Conservation and Recovery Act of 1976, as amended. Tenant shall not install any
underground or above ground storage tanks on the Premises. Tenant shall not
dispose of any Hazardous Material or sold waste on the Premises. In performing
any alterations of the Premises permitted by the Lease, Tenant shall not install
any Hazardous Material in the Premises without the specific consent of Landlord
attached as an exhibit to this Rider.
(iv) Any increase in the premiums for necessary insurance on the
Property which arises form Tenant's use and/or storage of Hazardous Materials
shall be solely at Tenant's expense. Tenant shall procure and maintain at its
sole
15
<PAGE>
expense such additional insurance as may be necessary to comply with any
requirement of any Federal, State or local governmental agency with
jurisdiction.
(d) If Landlord, in its sole discretion, believes that the Premises or the
environment have become contaminated with Hazardous Materials that must be
removed under the laws of the state where the Premises are located, in breach by
Tenant of the provisions of this Lease, Landlord, in addition to its other
rights under this Lease, may enter upon the Premises and obtain samples from the
Premises, including without limitation the soil and groundwater under the
Premises, for the purposes of analyzing the same to determine whether and to
what extent the Premises or the environment have become so contaminated. Tenant
shall reimburse Landlord for the costs of any inspection, sampling and analysis
that discloses contamination for which Tenant is liable under the terms of this
Rider. Tenant may not perform any sampling, testing, or drilling to locate any
Hazardous Materials on the Premises without Landlord's prior written consent not
to be unreasonably withheld.
(e) Without limiting the above, Tenant shall reimburse, defend, indemnify
and hold Landlord harmless from and against any and all claims, losses,
liabilities, damages, costs and expenses, including without limitation, loss of
rental income, loss due to business interruption, and attorneys fees and costs,
arising out of or in any way connected with the use, manufacture, storage, or
disposal of Hazardous Materials by Tenant, its agents or contractors on, under
or about the Premises including, without limitation, the costs of any required
or necessary investigation, repair, cleanup or detoxification and the
preparation of any closure or other required plans in connection herewith,
whether voluntary or compelled by governmental authority. The indemnity
obligations of Tenant under this clause shall survive any termination of this
Lease. At Landlord's option, Tenant shall perform any required or necessary
investigation, repair, cleanup, or detoxification of the Premises. In such
case, Landlord shall have the right, in its sole discretion, to approve all
plans, consultants, and cleanup standards. Tenant shall provide Landlord on a
timely basis with (i) copies of all documents, reports, and communications with
governmental authorities; and (ii) notice and an opportunity to attend all
meetings with regulatory authorities. Tenant shall comply with all notice
requirements and Landlord and Tenant agree to cooperate with governmental
authorities seeking access to the Premises for purposes of sampling or
inspection. No disturbance of Tenant's use of the Premises resulting from
activities conducted pursuant to this Paragraph shall constitute an actual or
constructive eviction of Tenant from the Premises. In the event that such
cleanup extends beyond the termination of this Lease, Tenant's obligation to pay
rent (including additional rent and percentage rent, if any) shall continue
until such cleanup is completed and any certificate of clearance or similar
document has been delivered to Landlord. Rent during such holdover period shall
be at market rent; if the parties are unable to agree upon the amount of such
market rent, then Landlord shall have the option of (a) increasing the rent for
the period of such holdover based upon the increase in the cost-of-living from
the third month preceding the commencement date to the third month preceding the
start of the holdover period, using such indices and assumptions and
calculations as Landlord in its sole reasonable judgement shall determine are
necessary; or (b) having Landlord and Tenant each appoint a qualified MAI
appraiser doing business in the area; in turn, these two independent MAI
appraisers shall appoint a third MAI appraiser and the majority shall decide
upon the fair market rental for Premises as of the expiration of the then
current term. Landlord and Tenant shall equally share in the expense of this
appraisal except that in the event the rent is found to be within fifteen
percent of the original rate quoted by Landlord, then Tenant shall bear the full
cost of all the appraisal process. In no event shall the rent be subject to
determination or modification by any person, entity, court, or authority other
than as set forth expressly herein, and in no event shall the rent for any
holdover period be less than the rent due in the preceding period.
(f) Notwithstanding anything set forth in this Lease, Tenant shall only be
responsible for contamination of Hazardous Materials or any cleanup resulting
directly therefrom, resulting directly from matters occurring or Hazardous
Materials deposited (other than by contractors, agents or representatives
controlled by Landlord) during the Lease term, and any other period of time
during which Tenant is in actual or constructive occupancy of the Premises.
Tenant shall take reasonable precautions to prevent the contamination of the
Premises with Hazardous Materials by third parties.
(g) It shall not be unreasonable for Landlord to withhold its consent to
any proposed Assignment or Sublease if (i) the proposed Assignee's or
Sublessee's anticipated use of the Premises involves the generation, storage,
use, treatment or disposal of Hazardous Materials; (ii) the proposed Assignee or
Sublessee has been required by any prior landlord, lender, or governmental
authority to take remedial action in connection with Hazardous Materials
contaminating a property if the contamination resulted from such Assignee's or
Sublessee's actions or use of the property in question; or (iii) the proposed
Assignee or Sublessee is subject to an enforcement order issued by any
governmental authority in connection with the use, disposal, or storage of a
hazardous material.
(h) Any of Tenant's insurance insuring against claims of the type dealt
with in this Rider shall be considered primary coverage for claims against the
Property arising out of or under this Paragraph.
16
<PAGE>
(i) In the event of (i) any transfer of Tenant's interest under this
Lease; or (ii) the termination of this Lease, by lapse of time or otherwise,
Tenant shall be solely responsible for compliance with any and all then
effective federal, state or local laws concerning (i) the physical condition of
the Premises, Building, or Property; or (ii) the presence of hazardous or toxic
materials in or on the Premises, Building, or Property (for example, the New
Jersey Environmental Cleanup Responsibility Act, the Illinois Responsible
Property Transfer Act, or similar applicable state laws), including but not
limited to any reporting or filing requirements imposed by such laws. Tenant's
duty to pay rent, additional rent, and percentage rent shall continue until the
obligations imposed by such laws are satisfied in full and any certificate of
clearance or similar document has been delivered to Landlord.
(j) All consents given by Landlord pursuant to this Article shall be in
writing and shall be attached as amendments to this Lease. If such consents are
not attached to this Lease, then such consents will be deemed withheld.
40. SCHEDULE OF RENTS.
In accordance with Article 3, the Annual Rent and Monthly Installment of Rent
shall increase per the schedule shown below:
<TABLE>
<S> <C>
December 1, 1995 - November 30, 1997: $4,460.00 per month or $53,520.00 per year;
December 1, 1997 - November 30, 1998: $4,638.40 per month or $55,660.80 per year;
December 1, 1998 - November 30, 1999: $4,824.24 per month or $57,890.88 per year;
December 1, 1999 - November 30, 2000: $5,017.21 per month or $60,206.52 per year;
</TABLE>
41. LIMITATION OF LANDLORD'S LIABILITY.
Redress for any claim against Landlord under this Lease shall be limited to and
enforceable only against and to the extent of Landlord's interest in the
Building. The obligations of Landlord under this Lease are not intended to and
shall not be personally binding on, nor shall any resort be had to the private
properties of, any of its trustees or board of directors and officers, as the
case may be, its investment manager, the general partners thereof, or any
beneficiaries, stockholders, employees, or agents of Landlord or the investment
manager.
LANDLORD: TENANT:
SIERRA TRINITY INDUSTRIAL PARK, Biex, Inc.
a property of RREEF Performance Partnership-I, L.P., a Delaware corporation
an Illinois limited partnership
By: RREEF MANAGEMENT COMPANY,
a California corporation
By: /s/ Sherie Dunn By: /s/ H. Fred Voss
------------------------- ---------------------
Sherie L. Dunn
Title: Vice President Title: VP Operations
Property Management and R & D
------------------
Dated: Nov. 14, 1995
------------------
Dated: 11/15/95
------------------------
17
<PAGE>
EXHIBIT "A"
attached to and made a part of that certain Lease Agreement dated November 13,
1995, by and between SIERRA TRINITY INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P., an Illinois limited partnership, as Landlord,
and Biex, Inc., a Delaware corporation, as Tenant, for the Premises commonly
known as 6693 Sierra Court, Suite F, Dublin, California.
PREMISES
Exhibit A is intended only to show the general layout of the Premises as of the
beginning of the Term of this Lease. It does not in any way supersede any of
Landlord's rights set forth in Section 17.2 with respect to arrangements and/or
locations of public parts of the Building and changes in such arrangements
and/or locations. It is not to scale; any measurements or distances shown
should be taken as approximate.
[GRAPHIC OMITTED]
EXHIBIT "A"
page one of one
<PAGE>
EXHIBIT "B"
attached to and made a part of that certain Lease Agreement dated November 13,
1995, by and between SIERRA TRINITY INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P., an Illinois limited partnership, as Landlord,
and Biex, Inc., a Delaware corporation, as Tenant.
INITIAL ALTERATIONS
Landlord shall, at its sole cost and expense, improve the Lease Premises per
plans and specifications by Michael J. Huyck Construction dated October 17, 1995
as shown on the plan below in accordance with Tenant Work Letter attached
hereto.
Demolition - Watts [GRAPHIC OMITTED]
Carpentry Framing & Material & Wall Bracing
Carpentry Finish
City Building Permits
Insulation R-11 & R-10
Drywall - Hang, Tape & Finish
Painting @ Walls, (4) Door Frames & (4) Doors-Except Walls & Ceil'g @ Bathrms'
Fire Sprinkler System- Add (1) hd., relocate (2) hds. & plug (1). (Does not
include engineered drawings or fire sprinkler permit or plan check fee or review
of building plans)
Electrical-Remove E. Receptacles, Safe-end & install 23 New Receptables, 18 New
Switches, excludes rough-in of phone outlets
T-Bar Ceiling - Patch @ removed walls & new ceil'g @ new office areas allows for
840 S.F.
(2) New 3'x7' S.C. Stain Grade Birch Doors & (4) New Hollow Metal Frames w/20
min. label
(3) Finish Door Hardware-Pasage Latches, (4) Doorstops
Floor Prep.
Carpet @ New Offices. w/ Atlas/Mayfair 20 oz.
Remove E. glue on floor in preparation of new V.C.T.
Vinyl Composition Tile w/ 4" Rubber base-Armstrong Exceion in choice of
following colors: $ 51839, $51858, $51899, $51903, $519094.
4" Rubber base @ carpet & Existing V.C.T. areas
H.V.A.C. - (3) new returns & (1) new supplies
Debris Box
Overhead & Profit
Total Basebid
mates: Not included in above costs or scope of work.
Rough-in phone outlets, conduit & box, no wire - each
Add (3) New Fxtres @ Office "E" of Faxed Bid Plan
Add 3-way switches @ Office "E" of Faxed Bid Plan
Add For Engineered Drawings and Fire Sprinkler permit-but does not include plan
check fee for review of building plans for fire district.
__usions:
__ctural Engineering Fees, City, Fire Dept., municipality fees and permits
(other than those officially included), telephone and communications, computer,
security, signage, window _ring, moving or storage of tenants' supplies,
furniture, equipment, etc., and final janitorial services and any reconstructing
or repair or alteration of the building or systems not specified on budget
estimate. No architectural drawings for City permit.
Extinguisher w/ bracket (no cabinet) & mounting - unit price
EXHIBIT "B"
page one of three
<PAGE>
EXHIBIT "B"
attached to and made a part of that certain Lease Agreement dated November 13,
1995, by and between SIERRA TRINITY INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P., an Illinois limited partnership, as Landlord,
and Biex, Inc., a Delaware corporation, as Tenant.
TENANT WORK LETTER
The undersigned, a Landlord and Tenant respectively, are executing
simultaneously with this Work Agreement, a written Lease covering premises as
described in the Lease and hereby attach this Work Agreement to said Lease as
Exhibit B thereto.
1. (a) Except to the extent otherwise provided in Subparagraphs (b) and (c)
of this Paragraph, Landlord shall, up to a maximum of $24,780.00
($5.00 psf), perform improvements per the space plans provided by
Michael J. Huyck Construction, dated October 17, 1995, required for
the performance of the work (hereinafter referred to as "Building
Standard Work") hereinafter described.
(b) Tenant may request work (hereinafter referred to as "Building
Non-Standard Work") not conforming with, or in addition to, Building
Standard Work. If Landlord approves such request, any architectural,
mechanical, and electrical plans and specifications required for such
Building Non-Standard Work shall be furnished, at Tenant's sole cost
and expense, by Landlord's architects and engineers.
(c) Any interior decorating services, such as selection of wall paint
colors and/or wall coverings, fixtures, non-building standard carpet,
and any or all other decorator items required by Tenant in the
performance of said work referred to hereinabove in Subparagraphs (a)
and (b) shall be at the Tenant's sole cost and expense.
(d) All plans and specifications referred to hereinabove in Subparagraphs
(a), (b) and (c) are subject to the Landlord's approval, which the
Landlord agrees shall not be unreasonably withheld.
(e) Landlord and Tenant shall diligently pursue the preparation of all
plans and specifications for the improvements provided for in
Paragraphs 2. and 3. All such plans shall be approved by both
Landlord and Tenant, which approval shall not be unreasonably withheld
by either party. Complete plans and specifications and a cost
estimate for the portion of the work covered thereby to be borne by
Tenant shall be approved by Tenant three weeks from Lease Execution.
2. Landlord will, at its sole cost and expense, furnish and install all of the
"Building Standard Work" (see attached schedule of Building Standards)
specified by Landlord and as indicated on Tenant's final approved plans:
Michael J. Huyck Construction dated October 17, 1995.
3. Provided Tenant's plans and specifications are furnished by the date
provided hereinabove in Paragraph 1.(e) and approved by Landlord, Landlord
shall cause Tenant's "Building Non-Standard Work" to be installed by
Landlord's contractor, but at Tenant's sole cost and expense. Prior to
commencing any such work, Landlord, its contractor, or its architects and
engineers, shall submit to Tenant a written estimate of the cost thereof.
If Tenant shall fail to approve any such estimate within ten (10) days
after submission thereof, such failure shall be deemed a disapproval
thereof, and Landlord's contractor shall not proceed with such work.
Tenant agrees to pay Landlord within thirty (30) days upon being billed
therefor, the cost to Landlord of all such Building Non-Standard Work.
Such bills may be rendered during the progress of the performance of the
work and the furnishings and installation of the materials to which such
bills relate. Landlord may require Tenant to deposit the estimated costs
of such work with Landlord prior to the commencement of such work.
EXHIBIT "B"
page two of three
<PAGE>
EXHIBIT "B"
attached to and made a part of that certain Lease Agreement dated November 13,
1995, by and between SIERRA TRINITY INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P., an Illinois limited partnership, as Landlord,
and Biex, Inc., a Delaware corporation, as Tenant.
4. When Landlord's architect has furnished Landlord with a certificate that
the work to be done by Landlord pursuant to Paragraphs 2. and 3. above have
been substantially completed, the Premises completed and possession thereof
deemed delivered to Tenant, for all purposes of Lease, including, without
limitation Paragraph 2. thereof.
Agreed To and Accepted:
LANDLORD: TENANT:
SIERRA TRINITY INDUSTRIAL PARK, Biex, Inc.
a property of RREEF Performance a Delaware corporation
Partnership-I, L.P., an Illinois
limited partnership
By: RREEF MANAGEMENT COMPANY,
a California corporation
By: /s/ Sherie Dunn By: /s/ H. Fred Voss
--------------------------- -------------------------------
Sherie L. Dunn
Title: Vice President Title: VP R & D and Operations
Property Management -------------------------------
Dated: Nov. 14, 1995
Dated: 11/15/95 -------------------------------
---------------------------
EXHIBIT "B"
page three of three
<PAGE>
EXHIBIT "C"
attached to and made a part of that certain Lease Agreement dated November 13,
1995, by and between SIERRA TRINITY INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P., an Illinois limited partnership, as Landlord,
and Biex, Inc., a Delaware corporation, as Tenant.
EXHIBIT "C"
page one of three
<PAGE>
EXHIBIT "C"
attached to and made a part of that certain Lease Agreement dated November 13,
1995, by and between SIERRA TRINITY INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P., an Illinois limited partnership, as Landlord,
and Biex, Inc., a Delaware corporation, as Tenant.
RULES AND REGULATIONS
10. Tenant shall close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus and electricity, gas or air outlets
before Tenant and its employees leave the Premises. Tenant shall be responsible
for any damage or injuries sustained by other tenants or occupants of the
Building or by Landlord for noncompliance with this rule.
11. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed, no
foreign substance of any kind whatsoever shall be thrown therein, and the
expense of any breakage, stoppage or damage resulting from the violation of this
rule shall be borne by the Tenant who, or whose employees or invitees, shall
have caused it.
12. Tenant shall not install any radio or television antenna, loudspeaker or
other device on the roof or exterior walls of the Building. Tenant shall not
interfere with radio or television broadcasting or reception from or in the
Building or elsewhere.
13. Except as approved by Landlord, Tenant shall not mark, drive nails, screw
or drill into the partitions, woodwork or plaster or in any way deface the
Premises. Tenant shall not cut or bore holes for wires. Tenant shall not affix
any floor covering to the floor of the Premises in any manner except as approved
by Landlord. Tenant shall repair any damage resulting from noncompliance with
this rule.
14. Tenant shall not install, maintain or operate upon the Premises any vending
machine.
15. Tenant shall store all its trash and garbage within its Premises. Tenant
shall not place into any trash box or receptacle any material which cannot be
disposed of in the ordinary and customary manner of trash and garbage disposal.
All garbage and refuse disposal shall be made in accordance with directions
issued from time to time by Landlord.
16. No cooking shall be done or permitted by any Tenant on the Premises, except
that use by the Tenant of Underwriters' Laboratory approved equipment for
brewing coffee, tea, hot chocolate and similar beverages shall be permitted,
provided that such equipment and use is in accordance with all applicable
federal, state and city laws, codes, ordinances, rules and regulations.
17. Tenant shall not use any space or in the public halls or the Building any
hand trucks except those equipped with the rubber tires and side guards or such
other material-handling equipment as Landlord may approve. Tenant shall not
bring any other vehicles of any kind into the Building.
18. Tenant shall not use the name of the Building in connection with or in
promoting or advertising the business of Tenant except as Tenant's address.
19. The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual.
Employees of Landlord shall not perform any work or do anything outside of their
regular duties unless under special instructions from Landlord, and no employee
of Landlord will admit any person (Tenant or otherwise) to any space without
specific instructions from Landlord.
20. Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenant or tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of any
other tenant or tenants, nor prevent Landlord from thereafter enforcing any such
Rules and Regulations against any or all of the tenants of the Building.
21. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease of premises in the Building.
EXHIBIT "C"
page two of three
<PAGE>
EXHIBIT "C"
attached to and made a part of that certain Lease Agreement dated November 13,
1995, by and between SIERRA TRINITY INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P., an Illinois limited partnership, as Landlord,
and Biex, Inc., a Delaware corporation, as Tenant.
22. Landlord reserves the right to make such other and reasonable rules and
restrictions as in its judgement may from time to time be needed for safety and
security, for care and cleanliness of the Building and for the preservation of
good order therein. Tenant agrees to abide by all such rules and regulations
hereinabove stated and any additional rules and regulations which are adopted.
23. Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and guests.
EXHIBIT "C"
page three of three
<PAGE>
EXHIBIT "D"
attached to and made a part of that certain Lease Agreement dated November 13,
1995, by and between SIERRA TRINITY INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P., an Illinois limited partnership, as Landlord,
and Biex, Inc., a Delaware corporation, as Tenant.
HAZARDOUS MATERIALS EXHIBIT
The following chemicals are currently used by Tenant in the course of some
part of its laboratory effort. These chemicals appear in the California
Hazardous Substances List (The Director's List, included here for
information) and are provided as an Exhibit to the Lease between Biex, Inc.,
a Delaware corporation and SIERRA TRINITY INDUSTRIAL PARK, a property of
RREEF Performance Partnership-I, L.P., an Illinois limited partnership.
In addition, Tenant work may require that we obtain and utilize other chemical
compounds from time to time and that some of these other chemical compounds may
be on the Director's List. In no instance will Tenant have more than one (1)
Kilogram, in the case of dry chemicals, or one (1) gallon, in the case of liquid
chemicals, of any compound that appears on the Director's List. Tenant will be
in compliance with all City, State and Federal regulations regarding the
possession and handling of all of the materials that Tenant maintain in the
Premises.
Tenant will provide Landlord with an update to this list on a semi-annual basis.
Chemical Common Name Form
Dimethyl Sulfoxide DMSO Liquid
Dimethyl Formamide DMF Liquid
Ethyl Alcohol Ethanol Liquid
Sodium Azide ----- Powder
Sodium Phosphate Dibasic ----- Powder
Polyvinylpyrrolidone PVP Powder
EXHIBIT "D"
page one of one
<PAGE>
TABLE OF CONTENTS
ARTICLE PAGE
REFERENCE PAGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
1. USE AND RESTRICTIONS ON USE . . . . . . . . . . . . . . . . . . . . . 1
2. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. RENT ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. SECURITY DEPOSIT. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. REPAIR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8. LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . 5
10. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
11. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
12. WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . . . . . . . 6
13. SERVICES AND UTILITIES. . . . . . . . . . . . . . . . . . . . . . . . 7
14. HOLDING OVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
15. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
16. RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . 7
17. REENTRY BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . . 7
18. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
19. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
20. TENANT'S BANKRUPTCY OR INSOLVENCY . . . . . . . . . . . . . . . . . . 10
21. QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
22. DAMAGE BY FIRE, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . 11
23. EMINENT DOMAIN. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
24. SALE BY LANDLORD. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
25. ESTOPPEL CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . 12
26. SURRENDER OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . 12
27. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
28. TAXES PAYABLE BY TENANT . . . . . . . . . . . . . . . . . . . . . . . 13
30. DEFINED TERMS AND HEADINGS. . . . . . . . . . . . . . . . . . . . . . 14
31. TENANT'S AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . 14
32. COMMISSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
33. TIME AND APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . 14
34. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . . . . 14
35. ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
36. EXAMINATION NOT OPTION. . . . . . . . . . . . . . . . . . . . . . . . 14
37. RECORDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
38. AUTHORIZATION OF FINANCIAL INFORMATION. . . . . . . . . . . . . . . . 15
39. HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . . . . . . . . . . 15
40. SCHEDULE OF RENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 17
41. LIMITATION OF LANDLORD'S LIABILITY. . . . . . . . . . . . . . . . . . 17
EXHIBIT A - PREMISES
EXHIBIT B - INITIAL ALTERATIONS/TENANT WORK LETTER
EXHIBIT C - RULES AND REGULATIONS
EXHIBIT D - HAZARDOUS MATERIALS EXHIBIT
<PAGE>
CORPORATE RESOLUTION TO LEASE
RESOLVED: That this corporation, BIEX, INC., lease from PHOENIX LEASING
INCORPORATED, a California corporation, hereinafter referred to as Lessor, such
items of personal property, and upon such terms and conditions, as the officer
or officers hereinafter authorized, in their discretion, may deem necessary or
advisable; provided, however, that the original actual cost of such items of
personal property under the lease shall not exceed the sum of $1,000,000.
RESOLVED FURTHER: That:
EDGAR LUCE CHIEF FINANCIAL OFFICER /s/ Edgar Luce
-------------------- --------------------------- --------------------
(Print or type name) (Title of Corporate Officer) (specimen signature)
or
JIM EDLUND PRESIDENT & C.E.O /s/ James A. Edlund
-------------------- --------------------------- --------------------
(Print or type name) (Title of Corporate Officer) (specimen signature)
of this corporation (this officer or officers authorized to act pursuant hereto
being hereinafter designated as "authorized officers"), be, and they hereby are,
individually authorized, directed and empowered, in the name of this
corporation, to execute and deliver to Lessor, and Lessor is requested to
accept, any lease that may be required by Lessor in connection with such leasing
of personal property.
RESOLVED FURTHER: That the authorized officers be, and they hereby are,
individually authorized, directed and empowered, in the name of this
corporation, to do or cause to be done all such further acts and things as they
shall deem necessary, advisable, convenient, or proper in connection with the
execution and delivery of any such lease and in connection with or incidental to
the carrying of the same into effect, including, without limitation the
execution, acknowledgment, and delivery of any and all instruments and documents
which may reasonably be required by Lessor under or in connection with any such
lease.
RESOLVED FURTHER: That Lessor is authorized to act upon this resolution until
written notice of its revocation is delivered to Lessor, and that the authority
hereby granted shall apply with equal force and effect to the successors in
office of the officers herein named.
I, VIVIAN DULLIEN, Secretary of BIEX, INC., a corporation incorporated under the
laws of the State of Delaware do hereby certify that the foregoing is a full,
true and correct copy of resolutions of the Board of Directors of the said
corporation, duly and regularly passed or adopted by the Board of Directors of
said corporation as required by law and by the by-laws of the said corporation
on the 11 day of August, 1997.
I further certify that said resolutions are still in full force and effect and
have not been amended or revoked and that the specimen signatures appearing
above are the signatures of the officers authorized to sign for this corporation
by virtue of the said resolutions.
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary, and affixed
the corporate seal of the said corporation, this 29 day of September, 1997.
AFFIX CORPORATE /s/ Vivian Dullien
SEAL HERE ----------------------------------
SECRETARY OF BIEX, INC.
<PAGE>
AMENDMENT NO. 2 TO MASTER EQUIPMENT LEASE AGREEMENT NO. 053-0002
----------------------------------------------------------------
THIS AMENDMENT No. 2 TO MASTER EQUIPMENT LEASE AGREEMENT NO. 053-0002
("Amendment") is dated as of September 25, 1997, by and between BIEX, INC.
("Lessee") and PHOENIX LEASING INCORPORATED ("Lessor").
RECITALS
--------
WHEREAS, Lessee and Lessor entered into that certain Master Equipment Lease
Agreement No. 053-0002, dated as of December 31, 1995 which was amended by
Amendment No. 1 dated as of August 22, 1996 (the "Lease"), pursuant to which
Lessee is leasing or intends to lease equipment with an aggregate purchase price
of $250,000 (the "Initial Commitment");
WHEREAS, Lessee has requested that Lessor increase the dollar limit on the
aggregate purchase price of equipment which Lessor is willing to lease to Lessee
under the Lease by an additional $750,000, (such increase hereinafter referred
to as the "Additional Commitment");
WHEREAS, Lessor is willing to provide the Additional Commitment, on the terms
set forth herein and Lessee is willing to agree to such terms; and
WHEREAS, Lessee and Lessor now desire to amend the Lease to provide for the
Additional Commitment, and as otherwise provided in this Amendment;
NOW, THEREFORE, IT IS AGREED THAT:
1. DEFINITIONS. Unless otherwise indicated, words and terms which are defined
in the Lease shall have the same meaning where used herein. Upon execution of
this Amendment, (i) the term "Lease" shall be deemed to include this Amendment;
(ii) the term "Equipment" shall be deemed to include the "Additional Equipment"
and certain custom use equipment, installation and delivery costs, purchase tax,
toolings, software specifically designed for Lessee, items located outside the
United States of America, and items generally considered fungible or expendable
or other items generally considered "Soft Costs" in accordance with GAAP,
consistently applied ("Soft Costs"); and (iii) the term "Schedule(s)" shall be
deemed to include any "Additional Commitment Schedule(s)," as these terms are
defined herein.
2. AMENDMENTS. The Lease is hereby amended as follows:
(a) Following Section 3, a new Section 3A is added as follows:
3A. LESSOR ADDITIONAL COMMITMENT. So long as no Event of Default or
event which with the giving of notice or passage of time, or both, could become
an Event of Default has occurred or is continuing, upon full funding of the
Initial Commitment, Lessor agrees to provide the Additional Commitment and to
lease to Lessee the groups of equipment (the "Additional Equipment") described
on each schedule created pursuant to the Additional Commitment (each an
"Additional Commitment Schedule"), subject to the following conditions: (i) that
in no event shall Lessor be obligated to lease Additional Equipment to Lessee
pursuant to the Additional Commitment where the aggregate purchase price of all
Additional Equipment leased to Lessee pursuant to the Additional Commitment
would exceed $750,000 but in any event, the Initial Commitment together with the
Additional Commitment shall not exceed $1,000,000 ("Total Commitment"); of which
Total
1
<PAGE>
Commitment amount Lessor may purchase Soft Costs for lease to Lessee having an
aggregate purchase price not exceeding an amount equal to 20% of the utilized
Total Commitment; (ii) the amount of Additional Equipment purchased by Lessor at
any one time shall be at least equal to $25,000 except for a final advance which
may be less than $25,000; (iii) Lessor shall not be obligated to purchase
Additional Equipment hereunder after June 30, 1998, provided that the funding
period may be extended to September 30, 1998 if Lessor has received and
approved in its sole discretion Lessee's monthly P&L Projections, Balance
Sheet and/or cash projections, in a monthly format acceptable to Lessor,
viable through September 30, 1998 ("1998 Plan"); (iv) all Lease
documentation relevant to the Additional Commitment required by Lessor has been
executed by Lessee or provided by Lessee no later than October 10, 1997;(v) the
equipment described on the Additional Commitment Schedule is acceptable to
Lessor;(vi) with respect to each funding Lessee has provided to Lessor each of
the closing documents and other items described in Exhibit A hereto (which
documents shall be in form and substance acceptable to Lessor) and which list
may be modified for each subsequent funding; (vii) there is no material adverse
change in Lessee's condition, financial or otherwise, as determined by Lessor,
and Lessee so certifies, from (yy) the date of the most recent financial
statements delivered by Lessee to Lessor prior to execution of this Amendment to
(zz) the date of Lessor's purchase of the Additional Equipment; (viii) at all
fundings, Lessee is performing according to its financial forecasts and
projections referred to as "Biex, Inc. P&L Forecast for Period 7/1/97 - 6/30/98
dated 7/23/97, viable through June 30, 1998", as may be amended by Lessee's 1998
Plan and otherwise from time to time in form and substance acceptable to
Lessor (collectively, "Additional Commitment Business Plan"); (ix) Lessor or its
agent has inspected and placed identification labels on the Additional
Equipment; (x) Lessee shall offer to Lessor, on an exclusive basis, all lease
transactions for equipment contemplated by Lessee until expiration of all
Additional Commitment Schedules; however if Lessor declines to finance any such
transaction or Lessee and Lessor cannot agree upon terms, then Lessee shall be
free to seek such financing from any other third party; (xi) prior to each
funding, Lessee shall notify Lessor regarding the placement of any Additional
Equipment at Bioserve Corporation and obtain an agreement from Bioserve
Corporation in the form attached hereto as Exhibit B; (xii) Lessor shall not be
obligated to finance equipment which could be identified as fixtures; and (xiii)
Lessor has received in form and substance acceptable to Lessor: (A) Lessee's
interim financial statements signed by a financial officer of Lessee; and (B)
evidence of Lessee's $527,659 cash position as of June 30, 1997.
(b) SECTION 8. LOCATION; INSPECTION; LABELS. is amended by adding the
following sentence after the first sentence thereof: "Lessee agrees that if any
Equipment is placed at Bioserve Corporation, Lessee will obtain from Bioserve
Corporation an agreement in the form attached as Exhibit B.
(c) Following Section 34, a new Section 34A is added as follows:
34A. ADDITIONAL COMMITMENT FEE. Lessee has paid to Lessor a
commitment fee ("Additional Commitment Fee") of $7,500 with respect to the
Additional Commitment. The Additional Commitment Fee shall be applied by Lessor
first to reimburse Lessor for all out-of-pocket UCC search costs, inspections
and appraisal fees incurred by Lessor, and then proportionally to the first
month's rent for each Additional Commitment Schedule, in the proportion that the
purchase price of the Additional Equipment leased pursuant to the Additional
Commitment Schedule bears to the Additional Commitment. However, the portion of
the Additional Fee which is not applied to rental shall be non-refundable except
if Lessor defaults in its obligations pursuant to Section 3A.
3. REPRESENTATIONS AND WARRANTIES: Lessee hereby reconfirms as of the date
hereof, its representations and warranties set forth in Section 5 of the
Lease.
2
<PAGE>
4. CONTINUED VALIDITY OF LEASE. Except as amended by this Amendment, the
Lease shall continue in full force and effect as originally constituted and
is ratified and affirmed by the parties hereto. Such Amendment shall not
amend or otherwise affect any of the Schedules executed and delivered by
Lessee prior to the date hereof.
5. AUTHORIZATION. Each party represents to the other that the individual
executing this Amendment on its behalf is the duly appointed signatory of
such party to this Amendment and that such individual is authorized to
execute this Amendment by or on behalf of such party and to take all action
required by the terms of this Amendment.
6. WHEN AMENDMENT IS EFFECTIVE. This Amendment shall be binding and deemed
effective when executed by Lessee and accepted and executed by Lessor. Upon
such effectiveness this Amendment shall be deemed to have amended the Lease
as provided herein.
7. CAPTIONS. Section headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each section applies equally to this entire Amendment.
8. NO NOVATION. This Amendment is not intended to be, and shall not be
construed to create, a novation or accord and satisfaction, and, except as
otherwise provided herein, the Lease shall remain in full force and effect.
9. SEVERABILITY. Each provision of this Amendment shall be severable from
every other provision of this Amendment for the purpose of determining the
legal enforceability of any specific provision.
10. ENTIRE AGREEMENT. The Lease as amended by this Amendment constitutes the
entire agreement between Lessee and Lessor with respect to the subject matter
hereof and supersedes all prior and contemporaneous negotiations,
communications, discussions and agreements concerning such subject matter.
Lessee acknowledges and agrees that Lessor has not made any representation,
warranty or covenant in connection with this Amendment.
11. CONFLICTS. In the event of any conflict between the terms of this
Amendment and terms of the Master Equipment Lease Agreement No. 053-0002 as
amended by Amendment No. 1, the terms of this Amendment shall prevail.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first set forth above.
LESSOR: LESSEE:
PHOENIX LEASING INCORPORATED BIEX, INC.
By: By: /s/ Edgar Luce
-------------------------------- --------------------------------
Title: Contract Administrator Title: Chief Financial Officer
-------------------------------- --------------------------------
3
<PAGE>
Exhibit A to Amendment No. 2
to MASTER EQUIPMENT LEASE NO. 053-0002
Dated as of December 31, 1995
CLOSING MEMORANDUM
1.* Duly executed Amendment No. 2 marked "Original."
2. Duly executed Additional Commitment Schedule marked "Original."
3. Duly executed Certificate of Acceptance. [EXECUTE UPON ACCEPTANCE OF
EQUIPMENT]
4. Insurance Certificates.
5.* Resolutions of Lessee's Board of Directors, including an incumbency
certificate.
6.** Real Property Waiver.
7. UCC Financing Statements.
8. Bill of Sale (for Sale-Leaseback Equipment).
9. UCC search.
10.* Payment of Commitment Fee.
11. Equipment List, in form and substance satisfactory to Lessor.
12. Lessee's most recent financial statements.
13. Certificate of Chief Financial Officer stating that no event of default
has occurred, there is no adverse change in the financial condition
of Lessee and that the Additional Equipment is free of any encumbrances.
14. See Section 3A of Amendment No. 2 for additional preconditions to
closing.
15. Intercreditor Agreement, if applicable.
16.*** Agreement of Bioserve Corporation
* First Schedule Only.
** Required if any Equipment is a fixture, i.e., attached to real property,
or located in certain states.
*** Required if Equipment is located at Bioserve Corporation
<PAGE>
MASTER EQUIPMENT LEASE NO. 053-0002
Under this Master Equipment Lease No. 053-0002 (the "Lease"), dated as of
December 31, 1995, Phoenix Leasing Incorporated, a California corporation
("Lessor"), hereby leases to Biex, Inc., a Delaware corporation ("Lessee"),
and Lessee hereby leases from Lessor, the equipment (herein called
"Equipment") which is described on the schedule attached hereto or any
subsequently-executed schedule entered into by Lessor and Lessee and which
incorporates this Lease by reference. Any such schedules shall hereinafter
individually be referred to as a "Schedule" and collectively be referred to
as the "Schedules." Lessor hereby leases the Equipment to Lessee upon the
following terms and conditions:
1. TERM OF AGREEMENT. The term of this Lease begins on the date set
forth above and shall continue thereafter and be in effect so long as and at
any time any Schedule entered into pursuant to this Lease is in effect. The
Initial Term and rent payable with respect to each leased item of Equipment
shall be as set forth in and as stated in the respective Schedule(s). The
terms of each Schedule hereto are subject to all conditions and provisions
of this Lease as it may at any time be amended. Each Schedule shall
constitute a separate and independent lease and contractual obligation of
Lessee and shall incorporate the terms and conditions of this Master
Equipment Lease and any additional provisions contained in such Schedule. In
the event of a conflict between the terms and conditions of this Lease and
any additional provisions of such Schedule, the additional provisions of such
Schedule shall prevail with respect to such Schedule only.
2. NON-CANCELLABLE LEASE. This Lease and any Schedule cannot be
cancelled or terminated except as expressly provided herein. This Lease
(including all Schedules to this Lease) constitutes a net lease and Lessee
agrees that its obligations to pay all rent and other sums payable hereunder
(and under any Schedule) and the rights of Lessor and assignee in and to such
rent and other sums, are absolute and unconditional and are not subject to
any abatement, reduction, setoff, defense, counterclaim or recoupment due or
alleged to be due to, or by reason of, any past, present or future claims
which Lessee may have against Lessor, any assignee, the manufacturer or
seller of the Equipment, or against any person for any reason whatsoever.
3. LESSOR COMMITMENT. So long as no Event of Default or event which with
the giving of notice or passage of time, or both, could become an Event of
Default has occurred or is continuing, Lessor agrees to lease to Lessee the
groups of Equipment described on each Schedule, subject to the following
conditions: (i) that in no event shall Lessor be obligated to lease Equipment
to Lessee hereunder where the aggregate purchase price of all Equipment
leased to Lessee hereunder would exceed $250,000.00; (ii) the amount of
Equipment purchased by Lessor at any one time shall be at lease equal to
$25,000.00 except for a final advance which may be less than $25,000.00;
(iii) Lessor shall not be obligated to purchase Equipment hereunder after
December 31, 1996; (iv) all Lease documentation required by Lessor has been
executed by Lessee or provided by Lessee no later than December 31, 1995; (v)
the equipment described on the Schedule is acceptable to Lessor; (vi) with
respect to each funding Lessee has provided to Lessor each of the closing
documents and other items described in Exhibit A hereto (which documents
shall be in form and substance acceptable to Lessor) and which list may be
modified for each subsequent funding; (vii) there is no material adverse
change in Lessee's condition, financial or otherwise, as determined by
Lessor, and Lessee so certifies, from (yy) the date of the most recent
financial statements delivered by Lessee to Lessor prior to execution of this
Lease, to (zz) the date of the proposed lease of the Equipment; (viii) Lessee
is performing according to its business plan referred to as "Biex, Inc.
Proforma Income Statement and Balance Sheet November 1994 through March 1997
(Schedules A-1, A-2, A-3, B-1, B-2, B-3 and D" as may be amended from time to
time in form and substance
-1-
<PAGE>
acceptable to Lessor ("Business Plan"); (ix) Lessor or its agent has
inspected and placed identification labels on the Equipment; (x) Lessee shall
offer to Lessor, on an exclusive basis, all lease transactions for equipment
contemplated by Lessee until expiration of all Schedules; however if Lessor
declines to finance any such transaction or Lessee and Lessor cannot agree
upon terms, then Lessee shall be free to seek such financing from any other
third party; and (xi) Lessor has received in form and substance acceptable to
Lessor: (a) Lessee's interim financial statements signed by a financial
officer of Lessee; (b) evidence of Lessee's receipt of $1,000,000.00 equity
by December 1995; and (c) evidence of Lessee's $506,000.00 cash position as
of October 31, 1995.
4. NO WARRANTIES BY LESSOR. (a) Lessee has selected both (i) the
Equipment and (ii) the suppliers (herein called "Vendor") from whom Lessor is
to purchase the Equipment. LESSOR MAKES NO WARRANTY EXPRESS OR IMPLIED AS TO
ANY MATTER WHATSOEVER, INCLUDING THE CONDITION OF THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, AND AS TO LESSOR,
LESSEE LEASES THE EQUIPMENT "AS IS" AND WITH ALL FAULTS. (b) If the Equipment
is not properly installed, does not operate as represented or warranted by
Vendor or is unsatisfactory for any reason, Lessee shall make any claim on
account thereof solely against Vendor and shall, nevertheless, pay Lessor all
rent payable under this Lease, Lessee hereby waiving any such claims as
against Lessor. Lessor hereby agrees to assign to Lessee solely for the
purpose of making and prosecuting any said claim, to the extent assignable,
all of the rights which Lessor has against Vendor for breach of warranty or
other representation respecting the Equipment. Lessor shall have no
responsibility for delay or failure to fill the order. (c) Lessee understands
and agrees that neither the Vendor nor any salesman or other agent of the
Vendor is an agent of Lessor. No salesman or agent of Vendor is authorized to
waive or alter any term or condition of this Lease, and no representations as
to the Equipment or any other matter by the Vendor shall in any way affect
Lessee's duty to pay the rent and perform its other obligations as set forth
in this Lease. (d) Lessee hereby requests Lessor to purchase Equipment from
Vendor and to lease Equipment to Lessee on the terms and conditions of the
Lease set forth herein. (e) Lessee hereby authorizes Lessor to insert in this
Lease and each Schedule hereto the serial numbers and other identification
data of the Equipment when determined by Lessor.
5. LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee represents and
warrants that (a) it is a corporation in good standing under the laws of the
state of its incorporation, and duly qualified to do business, and will
remain duly qualified during the term of this Lease, in each state where the
Equipment will be located, as specified on each Schedule hereto; (b) it has
full authority to execute and deliver this Lease and perform the terms
hereof, and this Lease has been duly authorized and constitutes valid and
binding obligations of Lessee enforceable in accordance with its terms; (c)
this Lease will not contravene any law, regulation or judgment affecting
Lessee or result in any breach of any agreement or other instrument binding
on Lessee; (d) no consent of Lessee's shareholders or holder of any
indebtedness, or filing with, or approval of, any governmental agency or
commission, is a condition to the performance of the terms hereof; (e) there
is no action or proceeding pending or threatened against Lessee before any
court or administrative agency which might have a materially adverse effect
on the business, financial condition or operations of Lessee; (f) no deed of
trust, mortgage or third party interest arising through Lessee will attach to
the Equipment or the Lease; (g) the Equipment will remain at all times under
applicable law, removable personal property, free and clear of any lien or
encumbrance in favor of Lessee or any other person, notwithstanding the
manner in which the Equipment may be attached to any real property; (h) all
credit, financial and any other information submitted to Lessor herewith or
any other time is true and correct; and (i) Lessee has provided, or will
provide if requested, Lessee's tax identification number.
-2-
<PAGE>
6. EQUIPMENT ORDERING. Lessee shall be responsible for all packing,
rigging, transportation and installation charges for the Equipment and Lessor
may separately invoice Lessee for such charges. Lessee has selected the
Equipment itself and shall arrange for delivery of Equipment so that it can
be accepted in accordance with Section 7 hereof. Lessee hereby agrees to
indemnify and hold Lessor harmless from any claims, liabilities, costs and
expenses, including reasonable attorneys' fees, incurred by Lessor arising
out of any purchase orders or assignments executed by Lessor with respect to
any Equipment or services relating thereto.
7. LESSEE ACCEPTANCE. Lessee shall return to Lessor the signed and dated
Acceptance Notice attached to each Schedule hereto (a) acknowledging the
Equipment has been received, installed and is ready for use and (b) accepting
it as satisfactory in all respects for the purposes of this Lease. Lessor is
authorized to fill in the Rent Start Date on each Schedule in accordance with
the foregoing.
8. LOCATION; INSPECTION; LABELS. Equipment shall be delivered to and
shall not be removed from the Equipment "Location" shown on each Schedule
without Lessor's prior written consent, which "Location" shall in all events
be within the United States. Lessor shall have the right to inspect Equipment
at any reasonable time. Lessee shall be responsible for all labor, material
and freight charges incurred in connection with any removal or relocation of
such Equipment which is requested by the Lessee and consented to by Lessor,
as well as for any charges due to the installation or moving of the
Equipment. The rental payments shall continue during any period in which the
Equipment is in transit during a relocation. Lessor or its agent shall mark
and label Equipment, which labels shall state Equipment is owned by Lessor,
and Lessee shall keep such labels on the Equipment as labeled by Lessor or
its agent.
9. EQUIPMENT MAINTENANCE. (a) GENERAL. Lessee will locate or base each
item of Equipment where designated in an Acceptance Notice and will
reasonably permit Lessor to inspect such item of Equipment and its
maintenance records. Lessee will at its sole expense comply with all
applicable laws, rules, regulations, requirements and orders with respect to
the use, maintenance, repair, condition, storage and operation of each item
of Equipment. Except as required herein, Lessee will not make any addition or
improvement to any item of Equipment that is not readily removable without
causing material damage to any item or impairing its original value or
utility. Any addition or improvement that is so required or cannot be so
removed will immediately become the property of Lessor. (b) SERVICE AND
REPAIR. With respect to computer equipment, other than personal computers,
Lessee has entered into, and will maintain in effect, Vendor's standard
maintenance contact or another contract satisfactory to Lessor for a period
equal to the term of each Schedule and extensions thereto which provides for
the maintenance of the Equipment and repairs and replacement parts thereof in
good condition and working order, all in accordance with the terms of such
maintenance contract. Lessee shall have the Equipment certified for the
Vendor's standard maintenance agreement prior to delivery to Lessor upon
expiration of this Lease. With respect to any other Equipment, Lessee will,
at its sole expense, maintain and service, and repair any damage to, each
item of Equipment in a manner consistent with prudent industry practice and
Lessee's own practice so that such item of Equipment is at all times (i) in
the same condition as when delivered to Lessee, except for ordinary wear and
tear, (ii) in good operating order for the function intended by its
manufacturer's warranties and recommendations.
10. LOSS OR DAMAGE. Lessee assumes the entire risk of loss to the
Equipment through use, operation or otherwise. Lessee hereby indemnifies and
holds harmless Lessor from and against all claims, loss of rental payments,
costs, damages, and expenses relating to or resulting from any loss, damage
or destructive of the Equipment, any such
-3-
<PAGE>
occurrence being hereinafter called a "Casualty Occurrence." On the first
rental payment date following such Casualty Occurrence, or, if there is no
such rental payment date, thirty (30) days after such Casualty Occurrence,
Lessee shall (i) repair the Equipment, returning it to good operating
condition or (ii) replace the Equipment with identical equipment in good
condition and repair, the title to which shall vest in Lessor and which
thereafter shall be subject to the terms of this Lease; or (iii) pay to
Lessor (a) any unpaid accrued amounts relating to such Equipment due Lessor
under this Lease up to the date of the Casualty Occurrence, and (b) a sum
equal to the Casualty Value as set forth in the Casualty Value table attached
to each Schedule hereto for such Equipment. Upon the making of such payment,
the term of this Lease as to each unit of Equipment with respect to which the
Casualty Value was paid shall terminate.
11. GENERAL INDEMNITY. Lessee will protect, indemnify and save
harmless Lessor from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses, imposed upon or
incurred by or asserted against Lessor or any assignee of Lessor by Lessee or
any third party by reason of the occurrence or existence (or alleged
occurrence or existence) of any act or event relating to or caused by the
Equipment, including but not limited to, consequential or special damages of
any kind, or any failure on the part of Lessee to perform or comply with any
of the terms of this Lease. In the event that any action, suit or proceeding
is brought against Lessor by reason of any such occurrence, Lessee, upon
request of Lessor, will at Lessee's expense resist and defend such action,
suit or proceeding or cause the same to be resisted and defended by counsel
designated and approved by Lessor. Lessee's obligations under this Section 11
shall survive the expiration of this Lease with respect to acts or events
occurring or alleged to have occurred prior to the return of the Equipment to
Lessor at the end of the Lease term.
12. INSURANCE. Lessee at its expense shall keep the Equipment insured
for the entire term and any extensions of this Lease against all risks for at
least the replacement value of such Equipment and shall provide for (a) loss
payable endorsement to Lessor or any assignee of Lessor. Lessee shall
maintain public liability and property damage insurance in an amount not less
than $2,000,000, naming Lessor as additional insured. Such insurance shall
contain insurer's agreement to give thirty (30) days written notice to Lessor
before cancellation or material change of any policy of insurance. Lessee
will provide Lessor and any assignee of Lessor with a certificate of
insurance from the insurer evidencing Lessor's or such assignee's interest in
the policy of insurance. Such insurance shall cover any Casualty Occurrence
to any unit of Equipment. Notwithstanding anything in Section 10 or this
Section 12 to the contrary, this Lease and Lessee's obligations hereunder and
under each Schedule shall remain in full force and effect with respect to any
unit of Equipment which is not subject to a Casualty Occurrence. If Lessee
fails to provide or maintain insurance as required herein, Lessor shall have
the right, but shall not be obligated to obtain such insurance. In that
event, Lessee shall pay to Lessor the cost thereof.
13. TAXES. Lessee agrees to reimburse Lessor for, (or pay directly if
instructed by Lessor), and agrees to indemnify and hold Lessor harmless from,
all fees (including, but not limited to, license, documentation, recording
and registration fees), and all sales, use, gross receipts, personal
property, occupational, value added or other taxes, levies, imposts, duties,
assessments, charges, or withholdings of any nature whatsoever, together with
any penalties, fines, additions to tax, or interest thereon (all of the
foregoing being hereafter referred to as "Impositions") except same as may be
attributable to Lessor's income, arising at any time prior to or during the
term of this Lease, or upon termination or early termination of this Lease
and levied or imposed upon Lessor directly or otherwise by any Federal, state
or local government in the United States or by any
-4-
<PAGE>
foreign country or foreign or international taxing authority upon or with
respect to (i) the Equipment, (ii) the exportation, importation,
registration, purchase, ownership, delivery, leasing, possession, use,
operation, storage, maintenance, repair, return, sale, transfer of title, or
other disposition thereof, (iii) the rentals, receipts, or earnings arising
from the Equipment, or any disposition of the rights to such rentals,
receipts, or earnings, (iv) any payment pursuant to this Lease, and (v) this
Lease or the transaction or any part thereof. Lessee's obligations under this
Section 13 shall survive the expiration of this Lease with respect to acts or
events occurring or alleged to have occurred prior to the return of the
Equipment to Lessor at the end of the Lease term.
14. PAYMENT BY LESSOR. If Lessee shall fail to make any payment or
perform any act required hereunder, then Lessor may, but shall not be
required to, after such notice to Lessee as is reasonable under the
circumstances, make such payment or perform such act with the same effect as
if made or performed by Lessee. Lessee will upon demand reimburse Lessor for
all sums paid and all costs and expenses incurred in connection with the
performance of any such act.
15. SURRENDER OF EQUIPMENT. Upon termination or expiration of this
Lease, with respect to each group of Equipment, Lessee will forthwith
surrender the Equipment to Lessor delivered in as good order and condition as
originally delivered, reasonable wear and tear excepted. Lessor may, at its
sole option, arrange for removal and transportation of the Equipment provided
that Lessee's obligations under Sections 10, 11 and 12 shall not be released.
Lessee shall bear all expenses of delivering (which include, but are not
limited to, the de-installation, insurance, packaging and transportation of)
the Equipment to Lessor's location or other location within the United States
as Lessor may request. In the event Lessee fails to deliver the Equipment as
directed above, all obligations of Lessee under this Lease, including rental
payments, shall remain in full force and effect until Lessee delivers the
Equipment to Lessor.
16. ASSIGNMENT. WITHOUT LESSOR'S PRIOR WRITTEN CONSENT, SUCH CONSENT
NOT TO BE UNREASONABLY WITHHELD, LESSEE SHALL NOT (a) ASSIGN, TRANSFER,
PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS LEASE, EQUIPMENT, OR ANY
INTEREST THEREIN, OR (b) SUBLET OR LEND EQUIPMENT OR PERMIT IT TO BE USED BY
ANYONE OTHER THAN LESSEE OR LESSEE'S EMPLOYEES. LESSOR MAY ASSIGN THIS LEASE
OR GRANT A SECURITY INTEREST IN ANY OR ALL EQUIPMENT, OR BOTH, IN WHOLE OR IN
PART TO ONE OR MORE ASSIGNEES OR SECURED PARTIES WITHOUT NOTICE TO LESSEE. If
Lessee is given notice of such assignment it agrees to acknowledge receipt
thereof in writing and Lessee shall execute such additional documentation as
Lessor's assignee shall require. Each such assignee and/or secured party
shall have all of the rights, but none of the obligations, of Lessor under
this Lease, unless such assignee or secured party expressly agrees to assume
such obligations in writing. Lessee shall not assert against any assignee
and/or secured party any defense, counterclaim or offset that Lessee may have
against Lessor. Notwithstanding any such assignment, and providing no Event
of Default has occurred and is continuing, Lessor, or its assignees, secured
parties, or their agents or assigns, shall not interfere with Lessee's right
to quietly enjoy use of Equipment subject to the terms and conditions of this
Lease. Subject to the foregoing, this Lease inures to the benefit of and is
binding upon the successors and assignees of the parties hereto. Lessee
acknowledges that any such assignment by Lessor will not materially change
Lessee's duties or obligations under the Lease or increase any burden of risk
on Lessee.
17. DEFAULT. (a) EVENT OF DEFAULT. Any of the following events or
conditions shall constitute an "Event of Default" hereunder: (i) Lessee's
failure to pay any monies due to Lessor hereunder or under any Schedule
beyond the tenth (10th) day after receipt of notice that the same is due;
(ii) Lessee's failure to comply with its obligations under Section 12 or
Section 16;
-5-
<PAGE>
(iii) Lessee's failure to comply with or perform any term, covenant,
condition, warranty or representation of this Lease or any Schedule hereto or
under any other agreement between Lessee and Lessor or under any lease of
real property covering the location of Equipment if such failure to comply or
perform is not cured by Lessee within thirty (30) days of receipt of notice
thereof; (iv) seizure of the Equipment under legal process; (v) the filing by
or against Lessee of a petition for reorganization or liquidation under the
Bankruptcy Code or any amendment thereto or under any other insolvency law
providing for the relief of debtors; (vi) the voluntary or involuntary making
of an assignment of a substantial portion of its assets by Lessee, or any
guarantor ("Guarantor") under any guaranty executed in connection with this
Lease ("Guaranty"), for the benefit of its creditors, the appointment of a
receiver or trustee for Lessee or any Guarantor for any of Lessee's or
Guarantor's assets, the institution by or against Lessee or any Guarantor of
any formal or informal proceeding for dissolution, liquidation, settlement of
claims against or winding up of the affairs of Lessee or any Guarantor,
PROVIDED that in the case of all such involuntary proceedings, same are not
dismissed within sixty (60) days after commencement; or (vii) the making by
Lessee or any Guarantor of a transfer of all or a material portion of
Lessee's or Guarantor's assets or inventory not in the ordinary course of
business.
(b) REMEDIES. If any Event of Default shall have occurred:
(i) Lessor may proceed by appropriate court action or actions either at
law or in equity to enforce performance by Lessee, of the applicable
covenants of this Lease, or to recover damages therefor; or
(ii) Lessee will, without demand, on the next rent payment date
following the Event of Default, pay to Lessor as liquidated damages which the
parties agree are fair and reasonable under the circumstances existing at the
time this Lease is entered into, and not as a penalty, an amount equal to the
Casualty Value of the Equipment set forth in Exhibit C together with any rent
or other amounts past due and owing by Lessee hereunder; and
(iii) Lessor may, without notice to or demand upon Lessee;
(a) Take possession of the Equipment and lease or sell the same or
any portion thereof, for such period, amount, and to such entity as Lessor
shall elect. The proceeds of such lease or sale will be applied by Lessor (A)
first, to pay all costs and expenses, including reasonable legal fees and
disbursements, incurred by Lessor as a result of the default and the exercise
of its remedies with respect thereto, (B) second, to pay Lessor an amount
equal to any unpaid rent or other amounts past due and payable plus the
Casualty Value, to the extent not previously paid by Lessee, and (C) third,
to reimburse Lessee for the Casualty Value to the extent previously paid. Any
surplus remaining thereafter will be retained by Lessor.
(b) Take possession of the Equipment and hold and keep idle the
same or any portion thereof.
Lessee agrees to pay all internal and out-of-pocket costs of
Lessor related to the exercise of its remedies, including direct costs of its
in-house counsel and out-of-pocket legal fees and expenses. At Lessor's
request, Lessee shall assemble the Equipment and make it available to Lessor
at such location as Lessor may designate. Lessee waives any right it may have
to redeem the Equipment.
-6-
<PAGE>
Repossession of any or all Equipment shall not terminate this Lease or any
Schedule unless Lessor notifies Lessee in writing. Any amount required to be
paid under this Section shall be increased by a service charge at the rate of
2.0% per month, or the highest rate of interest permitted by applicable law,
whichever is less, accruing from the date the Casualty Value or other amounts
are payable hereunder until such amounts are paid.
None of the above remedies is intended to be exclusive, but each is
cumulative and in addition to any other remedy available to Lessor, and all may
be enforced separately or concurrently.
18. LATE PAYMENTS. Lessee shall pay to Lender an amount equal to the
greater of 18% of all amounts owed Lessor by Lessee which are not paid when due
or $100, but in no event an amount greater than the highest rate permitted by
applicable law. If such funds have not been received by Lessor at Lessor's
place of business or by Lessor's designated agent by the date such funds are
due under this Lease, Lessor shall bill Lessee for such charges. Lessee
acknowledges that invoices for rentals due hereunder are sent by Lessor for
Lessee's convenience only. Lessee's non-receipt of an invoice will not relieve
Lessee of its obligation to make rent payments hereunder.
19. LESSOR'S EXPENSE. Lessee shall pay Lessor all costs and expenses
including reasonable attorney's fees and the fees of the collection agencies,
incurred by Lessor in enforcing any of the terms, conditions or provisions
hereof.
20. OWNERSHIP; PERSONAL PROPERTY. The Equipment shall be and remain
personal property of Lessor, and Lessee shall have no right, title or interest
therein or thereto except as expressly set forth in this Lease,
notwithstanding the manner in which it may be attached or affixed to real
property, and upon termination or expiration of the Lease term, Lessee shall
have the duty and Lessor shall have the right to remove the Equipment from the
premises where the same be located whether or not affixed or attached to the
real property or any building, at the cost and expense of Lessee.
21. ALTERATIONS; ATTACHMENTS. No alterations or attachments shall be
made to the Equipment without Lessor's prior written consent, which shall not
be given for changes that will affect the reliability and utility of the
Equipment or which cannot be removed without damage to the Equipment, or which
in any way affect the value of the Equipment for purposes or resale or
re-lease.
22. FINANCING STATEMENT. Lessee will execute financing statements
pursuant to the Uniform Commercial Code. Lessee authorizes Lessor to file
financing statements signed only by Lessor (where such authorization is
permitted by law) at all places where Lessor deems necessary.
23. MISCELLANEOUS. (a) Lessee shall provide Lessor with such corporate
resolutions, financial statements and other documents as Lessor shall request
from time to time. (b) Lessee represents that the Equipment is being leased
hereunder for business purposes. (c) Time is of the essence with respect to
this Lease. (d) Lessee shall keep its books and records in accordance with
generally accepted accounting principles and practices consistently applied and
shall deliver to Lessor its annual audited financial statements, unaudited
monthly financial statements to include any financial information given to
Lessee's Board of Directors, and signed by an officer of Lessee and such other
unaudited financial statements as may be reasonably requested by Lessor. (e)
Any action
-7-
<PAGE>
by Lessee against Lessor for any default by Lessor under this Lease, including
breach of warranty or indemnity, shall be commenced within one (1) year after
any such cause of action accrues.
24. NOTICES. All notices hereunder shall be in writing, by registered
mail, or reliable messenger or delivery service and shall be directed, as the
case may be, to Lessor at 2401 Kerner Boulevard, San Rafael, California 94901,
Attention: Account Management and to Lessee at 6693 Sierra Lane, Suite F,
Dublin, CA 94568, Attention: ____________________________.
25. ENTIRE AGREEMENT. Lessee acknowledges that Lessee has read this
Lease, understands it and agrees to be bound by its terms, and further agrees
that it and each Schedule constitute the entire agreement between Lessor and
Lessee with respect to the subject matter hereof and supersedes all previous
agreements, promises, or representations. The terms and conditions hereof shall
prevail notwithstanding any variance with the terms of any purchase order
submitted by the Lessee with respect to any Equipment covered hereby.
26. AMENDMENT. This Lease may not be changed, altered or modified except
by an instrument in writing signed by an officer of the Lessor and the Lessee.
27. WAIVER. Any failure of Lessor to require strict performance by
Lessee or any waiver by Lessor of any provision herein shall not be construed
as a consent or waiver of any other breach of the same or any other provision.
28. SEVERABILITY. If any provision of this Lease is held invalid, such
invalidity shall not affect any other provision hereof.
29. JURISDICTION AND WAIVER OF JURY TRIAL. This Lease shall be governed
by and construed under the laws of the State of California. It is agreed that
exclusive jurisdiction and venue for any legal action between the parties
arising out of this Lease shall be in the Superior Court for Marin County,
California, or, in cases where Federal diversity jurisdiction is available, in
the United States District Court for the Northern District of California.
LESSEE, TO THE EXTENT IT MAY LAWFULLY DO SO, HEREBY WAIVES ITS RIGHT TO TRIAL
BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS LEASE, ANY SCHEDULE,
OR ANY AGREEMENT EXECUTED IN CONNECTION HEREWITH.
30. NATURE OF TRANSACTION. Lessor makes no representation whatsoever,
express or implied, concerning the legal character of the transaction evidenced
hereby, for tax or any other purpose.
31. SECURITY INTEREST. (a) One executed copy of the Lease will be
marked "Original" and all other counterparts will be duplicates. To the
extent, if any, that this Lease constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction) no security interest in the lease may be created in any
documents other than the "Original." (b) There shall be only one original of
each Schedule and it shall be marked "Original," and all other counterparts
will be duplicates. To the extent, if any, that any Schedule(s) to this Lease
constitutes chattel paper (or as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction) no security
interest in any Schedule(s) may be created in any documents other than
"Original."
-8-
<PAGE>
32. SUSPENSION OF OBLIGATIONS. The obligations of Lessor hereunder will
be suspended to the extent that it is hindered or prevented from complying
therewith because of labor disturbances, including but not limited to strikes
and lockouts, acts of God, fires, storms, accidents, failure of the manufacture
to deliver any item of Equipment, governmental regulations or interference, or
any cause whatsoever not within the sole and exclusive control of Lessor.
33. SOFTWARE. For the term of this Lease, and so long as no Event of
Default has occurred and is continuing, Lessor hereby assigns to Lessee all of
Lessor's rights under any License Agreement executed by Lessor in connection
with the Equipment (except for any right of Lessor to be reimbursed for the
License Fee). Lessee agrees to be bound by the provisions of any such License
Agreement and to perform all obligations of Lessor (except Lessor's payment
obligations) thereunder. Lessee acknowledges that all of Lessee's obligations
under the Lease with respect to the Equipment will apply equally to the
software, including but not limited to Lessee's obligation to pay rent to
Lessor.
34. COMMITMENT FEE. Lessee has paid to Lessor a commitment fee ("Fee")
of $5,000.00. The Fee shall be applied by Lessor first to reimburse Lessor for
all out-of-pocket UCC search costs, inspections and appraisal fees incurred by
Lessor, and then proportionally to the first month's rent for each Schedule
hereunder in the proportion that the purchase price of the Equipment leased
pursuant to the Schedule bears to Lessor's entire commitment. However, the
portion of the Fee which is not applied to rental shall be non-refundable
except if Lessor defaults in its obligations pursuant to Section 3.
35. FINANCE LEASE. The parties agree that this lease is a "Finance
Lease" as defined by section 10-103(a)(7) of the California Commercial Code
(Cal.Com.C.). Lessee acknowledges either (a) that Lessee has reviewed and
approved any written Supply Contract (as defined by Cal.Com.C. Section
10-103(a)(25)) covering Equipment purchased from the "Supplier" (as defined by
Cal.Com.C. Section 10-103(a)(24)) thereof for lease to Lessee or (b) that
Lessor has informed or advised Lessee, in writing, either previously or by this
Lease of the following: (i) the identity of the Supplier; (ii) that the Lessee
may have rights under the Supply Contract; and (iii) that the Lessee may
contact the Supplier for a description of any such rights Lessee may have under
the Supply Contract. Lessee hereby waives any rights and remedies Lessee may
have under Cal.Com.C. Sections 10-508 through 522.
IN WITNESS WHEREOF, the parties hereto have executed this Lease.
PHOENIX LEASING INCORPORATED BIEX, INC.
By: By: /s/ Fred Feldman
---------------------------- ---------------------------
Title: V.P. Title: CEO
------------------------- ------------------------
Headquarters Location:
6693 Sierra Lane, Suite F
Dublin, CA 94568
County of Alameda
Exhibit A - Closing Memorandum
-9-
<PAGE>
Exhibit A
to MASTER EQUIPMENT LEASE
Dated December 15, 1995
CLOSING MEMORANDUM
1.* Duly executed Master Equipment Lease marked "Original."
2. Duly executed Schedule marked "Original."
3. Duly executed Certificate of Acceptance.
4. Insurance Certificates.
5.* Resolutions of Lessee's Board of Directors, including an incumbency
certificate.
6.* Copy of Lessee's articles of incorporation including all amendments,
certified by the Secretary of Lessee as being true and complete and in
full force and effect.
7.* Certificate from the Secretary of State of Lessee's state of
incorporation, from the state in which Lessee's chief executive office
is located, if different, and from each state where Lessee is qualified
to do business, stating Lessee is in good standing or is authorized to
transact business, as the case may be, dated not more than thirty days
prior to the first purchase of Equipment.
8. Agreement to Allow Removal of Personal Property.**
9. UCC Financing Statements.
10. Bill of Sale (for Sale-Leaseback Equipment).
11. UCC search.
12. Equipment List, in form and substance satisfactory to Lessor.
13. Lessee's most recent financial statements.
14. Certificate of Chief Financial Officer stating that no event of default
has occurred, there is no material adverse change in the financial
condition of Lessee and that the Equipment is free of any encumbrances.
15.* California Civil Code Section 3440 Filing and Published Notice.
16. See Section 3 of Master Equipment Lease for additional preconditions to
closing.
* First Schedule Only.
** Required if any Equipment is a fixture, i.e. attached to real property,
or located in certain states.
-10-
<PAGE>
SCHEDULE
--------
Schedule No. 1 to Lease
Dated as of December 31, 1995
Between BIEX, INC.
and PHOENIX LEASING INCORPORATED
A. DESCRIPTION AND PURCHASE PRICE OF EQUIPMENT
<TABLE>
<CAPTION>
Description of
Equipment
(quantity, model Purchase Mfr./ (Street Address
and serial number) Price Rent Vendor City, State and County)
- ----------------- -------- ---- ------ -----------------------
<S> <C> <C> <C> <C>
See Exhibit A attached hereto. Various 6693 Sierra Lane, Suite F
See Exhibit Dublin, CA 94568
"A"
Total: $72,396.97 $2,099.48
</TABLE>
B. TERMS
Initial Term: The Initial Term shall commence on the date the Equipment is
received, installed and accepted for use, as shown on the
Acceptance Notice, and continue for forty-two (42) full months
after the "Rent Start Date."
Rent Start Date: This shall be the first day of the month following the month
during which the Initial Term commences; provided, however,
that if the Equipment is accepted on the first day of the
month, the Rent Start Date shall commence on the same day
that the Initial Term commences.
Lease Rate Factor (as a percentage of Equipment's original Purchase Price):
2.9%
Monthly Rental Payments in advance.
Initial Rent Due: Payable in advance shall be (1) the first and last month's
Rental Amount including any sales or use tax and (2) an amount
equal to 1/30th of the monthly rental amount using a rate of
2.90% multiplied by the number of days, if any, between (and
including) the date the Initial Term commences and (but not
including) the Rent Start Date.
C. INVOICE INFORMATION: Lessee's and Lessor's addresses for invoice
purposes for the Equipment on the Schedule shall be as follows:
Lessee's Invoice Address: Remit Monthly Rental Amount To:
Biex, Inc. Phoenix Leasing Incorporated
6693 Sierra Lane, Suite F. P.O. Box 200432
Dublin, CA 94568 Dallas, TX 75320-0432
Attention: Accounts Payable
<PAGE>
D. CASUALTY VALUES: See attachment hereto.
E. SPECIAL PROVISIONS: 1. Lessor's payment for Equipment hereunder is
conditioned on Lessor's satisfaction that there has been no adverse
change in Lessee's financial condition subsequent to initial credit
approval, 2. Sale Leaseback Addendum, and 3. Purchase or Renewal
Requirement Rider.
LESSOR AND LESSEE AGREE THAT THIS SCHEDULE SHALL CONSTITUTE A LEASE OF THE
EQUIPMENT DESCRIBED ABOVE, SUBJECT TO THE TERMS AND CONDITIONS OF THIS
SCHEDULE AND OF THE MASTER EQUIPMENT LEASE DATED DECEMBER 31, 1995 BETWEEN
LESSEE AND LESSOR. THE TERMS AND CONDITIONS OF SUCH MASTER EQUIPMENT LEASE
ARE HEREBY INCORPORATED BY REFERENCE AND MADE A PART HEREOF TO THE SAME
EXTENT AS IF SUCH TERMS AND CONDITIONS WERE SET FORTH IN FULL HEREIN.
PHOENIX LEASING INCORPORATED BIEX, INC.
By: By: /s/ Fred Feldman
Title: V.P. Title: CEO
Date: 2/19/96 Date: 2/3/96
<PAGE>
EXHIBIT A PAGE 1 of 2
PHOENIX GROWTH CAPITAL REQUEST FOR SCHEDULE 1
LESSEE NAME: BIEX, INC.
8693 SIERRA LANE STE. F
DUBLIN, CA 94568
PHONE: 510-556-0300
Equipment Loc: SAME AS ABOVE.
<TABLE>
<CAPTION>
Equipment Serial Phx. Invoice Invoice Amt. Sales Check Check Deprec. Net $ Due Biex
Vendor Description No. tag No. no. net of exc. Tax No. Date cost Amt. Vendor Doc. #
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Anthos HT2 Anthos
Labtec Plate Reader 12500-1443 95-1197 6,996.00 0.00 4331 12/13/95 6,996.00 0.00 1
Cypress Laptop
Computer Computer-
Inc. Pentium 5200 50904705 NA 3,830.00 315.90 4216 11/6/95 3,830.00 0.00 2
Cypress NIMH Internal
Computer battery for
Inc. laptop NA NA 92.00 7.69 4216 11/6/95 92.00 0.00 2
Cypress Fax Modem
Computer for laptop
Inc. NA 1103719 285.00 23.51 4337 12/13/95 285.00 0.00 3
Battery and
Adaptor for
laptop NA 1103670 260.00 21.45 4259 11/17/95 260.00 0.00 4
Home Coleman
Depot Powermate
Portable-Elec.
Generator
Contractor cash
5000 71230855 receipt 599.00 49.42 4408 12/23/95 599.00 0.00 5
(see employee exp. (to F.
form) Voss)
Office Lateral Files
Depot NA 13540110 869.97 71.77 4399 12/23/95 869.97 0.00 6
(see employee exp. (to J. Mitlelman)
form)
Sam Clar 4 door lateral
file with lock NA 83454 1,399.95 115.50 4402 12/23/95 1,399.95 0.00 7
Office Deluxe Work
Max Table NA 50149625 249.99 20.62 4442 1/4/96 249.99 0.00 8
Office Deluxe Computer
Max Credenza NA 50149625 499.99 41.25 4442 1/4/96 499.99 0.00 8
Papler H.P. Office cash
Jet Printer SG559H2002 receipt 699.99 57.75 4309 11/29/95 699.99 0.00 10
(see employee exp. (to F.
form) Voss)
Computer AST Pentium
City P. Computer cash
16MB 435AQZ002852 receipt 2,099.99 173.25 4375 12/14/95 2,099.99 0.00 9
Computer AST Pentium
City P. Computer cash
16MB 435AQZ003106 receipt 2,099.99 173.25 4375 12/14/95 2,099.99 0.00 9
Computer AST Pentium
City P. Computer cash
16MB 435AQZ001972 receipt 2,099.99 173.25 4375 12/14/95 2,099.99 0.00 9
Computer H.P. Laserjet cash
City printer USF8027306 receipt 1,099.99 90.75 4375 12/14/95 1,099.99 0.00 9
Computer 15" Computer cash
City Monitor 8197315 receipt 469.99 38.77 4375 12/14/95 469.99 0.00 9
Computer 15" Computer cash
City Monitor 8197323 receipt 469.99 38.77 4375 12/14/95 469.99 0.00 9
Computer 15" Computer cash
City Monitor 8197301 receipt 469.99 38.77 4375 12/14/95 469.99 0.00 9
Computer CD ROM for cash
City above NA receipt 59.99 4.95 4375 12/14/95 59.99 0.00 9
Computer CD ROM for cash
City above NA receipt 59.99 4.95 4375 12/14/95 59.99 0.00 9
Computer 9 Port remote cash
City LAN Hardware NA receipt 175.99 14.52 4375 12/14/95 175.99 0.00 9
Computer (5) 16 bit
City ISA combo cash
@ 49.99 ea NA receipt 249.95 20.62 4375 12/14/95 249.95 0.00 9
Computer IBM Cable cash
City NA receipt 8.23 0.68 4375 12/14/95 8.23 0.00 9
total cash receipt 9,364.08 772.53 (to F. Voss)
(see employee exp. form for the above Computer City purchases)
Total Schedule 25,145.97 25,145.97 0.00
</TABLE>
<PAGE>
EXHIBIT A PAGE 2 of 2
PHOENIX GROWTH CAPITAL REQUEST FOR SCHEDULE 2
LESSEE NAME: BIEX, INC.
6693 SIERRA LANE STE. F
DUBLIN, CA 94568
PHONE: 510-556-0300
Equipment Loc: SAME AS ABOVE.
<TABLE>
<CAPTION>
Amt Amt
Equipment Serial Phx. Invoice Invoice Amt. Sales Check Check Deprec. paid Due Biex
Vendor Description No. tag No. no. net of exc. Tax No. Date Cost by Biex Vendor Doc. #
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
David Cold Room
Findlay 10'X10'X letter
Co. 8'3.5"H NA 11/6 10,000.00 0.00 4244 11/8/95 3,000.00 7,000.00 11
Carl Microplate
Creative Prod.
Systems Processor
Air
Compressor,
comp grade SN MWD0070894* 00652 36,000.00 0 4382 1/3/96 21,900.00 14,100.00 12
A SN 346706 00652 1,250.00 0 4382 1/3/96 0.00 1,250.00 12
*96 Pos. Disp. Head SN is SN MD062995 HM
Total and wash head SN is SN WM052095 PW 47,250.00 0.00 24,900.00 22,350.00
Funding Amount - $72,395.97
-42 Rent - 2,099.48
</TABLE>
<PAGE>
Attachment to Equipment Schedule No. 1
CASUALTY VALUES
<TABLE>
<CAPTION>
Month of Z of Original Equipment Month of Z of Original Equipment
Lease Term Purchase Price Lease Term Purchase Price
- ---------- ----------------------- ---------- -----------------------
<S> <C> <C> <C>
1 125.00 22 73.78
2 122.56 23 71.34
3 120.12 24 68.90
4 117.68 25 66.46
5 115.24 26 64.02
6 112.80 27 61.59
7 110.37 28 59.15
8 107.93 29 56.71
9 105.49 30 54.27
10 103.05 31 51.83
11 100.61 32 49.39
12 98.17 33 46.95
13 95.73 34 44.51
14 93.29 35 42.07
15 90.85 36 39.63
16 88.41 37 37.20
17 85.98 38 34.76
18 83.54 39 32.32
19 81.10 40 29.88
20 78.66 41 27.44
21 76.22 42 25.00
Thereafter 25.00
</TABLE>
Lessor's Lessee's
Initials [TO COME] Initials [TO COME]
--------- ---------
646.12.95
VC - PLI AS LESSOR SUPPORTING DOCS/1995
<PAGE>
Sale Leaseback Addendum
to Schedule No. 1
of MASTER EQUIPMENT LEASE
Dated December 31. 1995
Between BIEX, INC.
and PHOENIX LEASING INCORPORATED
This Addendum to Master Equipment Lease is made and entered into as of February
3, 1996, between Phoenix Leasing Incorporated ("Lessor") and Biex, Inc.
("Lessee").
Notwithstanding anything to the contrary contained in the Lease referenced
above, Lessor and Lessee agree as follows:
1. Lessee shall sell the Equipment to and lease the Equipment from Lessor and
Lessor shall purchase the Equipment from and lease the Equipment to Lessee
upon the terms and conditions of the Bill of Sale attached hereto as
Attachment 1.
2. Lessee represents and warrants that:
(a) Lessee has the right to sell the Equipment as set forth
herein,
(b) the Equipment and Lessee's right, title and interest in such Equipment
is, as of the date of the Bill of Sale, free from all claims, liens,
security interests and encumbrances,
(c) Lessee will defend the sale against lawful claims and demands of all
persons, and
(d) the purchase price of the Equipment is equal to the fair market value
of such Equipment at the time of sale.
PHOENIX LEASING INCORPORATED BIEX, INC.
By By Fred Feldman
--------------------------- ---------------------------
Title V.P. Title CEO
------------------------ -------------------------
<PAGE>
Rider No. I
to Schedule No. 1
of MASTER EQUIPMENT LEASE
Dated as of December 31, 1995
Between BIEX, INC.
and PHOENIX LEASING INCORPORATED
PURCHASE OR RENEWAL REQUIREMENT
At the expiration of the Initial Term of this Schedule, and notwithstanding
anything to the contrary in the Lease, upon 90 days prior written notice to
Lessor, Lessee shall either:
(1) Purchase AS-IS, WHERE-IS all, but not less than all, of the Equipment
covered under this Schedule at the expiration of the Initial Term for
fifteen percent (15%) of the Equipment's original purchase price, whereupon
Lessor shall issue to Lessee a Bill of Sale for the Equipment transferring
it to Lessee without any representation or warranty whatsoever, or
(2) Extend the Initial Term of this Schedule for an additional twelve (12)
months ("Renewal Term") at a rate of 1.50% per month of the Equipment's
original purchase price followed by an option to purchase all, but not less
than all, the Equipment AS-IS, WHERE-IS for $1.
In the event Lessee does not provide 90 days prior written notice as specified
above, Lessee shall be deemed to have selected No. 1 above.
Lessee shall be responsible for all applicable taxes in connection with any
purchase of Equipment by Lessee.
Lessor's Lessee's
Initials Initials
--------- ---------
<PAGE>
ATTACHMENT 1
BILL OF SALE
For valuable consideration Biex, Inc. ("Seller") sells to Phonix Leasing
Incorporated ("Buyer"), the property listed on Exhibit A hereof (the
"Equipment").
Seller convenants and warrants that:
(1) It is the owner of, and has absolute title to, the Equipment which is
free and clear of all claims, liens and encumbrances.
(2) It has not made any prior sale, assignment, or transfer of the Equipment.
(3) It has the present right, power, and authority to sell the Equipment to
Buyer.
(4) All action has been taken which is required to make this Bill of Sale a
legal, valid and binding obligation of Seller.
Seller shall forever warrant and defend the sale of Equipment to Buyer, its
successors and assigns, against any person claiming an interest in the
Equipment.
This Bill of Sale is binding on the successors and assigns of Seller and
inures to the benefit of the successors and assigns of Buyer.
Executed on February 3, 1996.
BIEX, INC.
By: Fred Feldman
---------------------------
Title: CEO
---------------------------
646.12.95
<PAGE>
ACCEPTANCE NOTICE
SCHEDULE NO. 2
Reference is made to the Master Equipment Lease dated as of December 31, 1995
between Phoenix Leasing Incorporated as Lessor and Biex, Inc. as Lessee (the
"Lease").
Lessee confirms that the following Equipment has been received, installed and
is ready for use by Lessee. The Equipment is satisfactory in all respects for
the purposes of this Lease as of the date Lessee executes this Notice below.
<TABLE>
<CAPTION>
Description of
Equipment
(quantity, model Purchase Mfr./ (Street Address
and serial number) Price Rent Vendor City, State and County)
- ------------------ -------- -------- ------ -----------------------
<S> <C> <C> <C> <C>
See Exhibit A Various 6693 Sierra Lane, Suite F
attached hereto. See Dublin, CA 94568
Exhibit
"A"
Total: $52,288.00 $1,516.35
</TABLE>
THE LEASE MAY NOT BE CHANGED, ALTERED OR MODIFIED EXCEPT BY AN INSTRUMENT IN
WRITING SIGNED BY AN OFFICER OF LESSOR AND A DULY AUTHORIZED REPRESENTATIVE
OF LESSEE.
IN WITNESS WHEREOF, Lessee has executed this Acceptance Notice as of 10-1-96,
1996.
BIEX, INC.
By: /s/ Roger Wunderling
--------------------
Name: ROGER WUNDERLING
--------------------
Title: CFO
--------------------
1a1/572
<PAGE>
SCHEDULE
--------
Schedule No. 3 Lease
Dated as of December 31, 1995
Between BIEX, INC.
and PHOENIX LEASING INCORPORATED
A. DESCRIPTION AND PURCHASE PRICE OF EQUIPMENT
<TABLE>
<CAPTION>
Description of
Equipment
(quantity, model Purchase Mfr./ (Street Address
and serial number) Price Rent Vendor City, State and County)
- ------------------ -------- -------- ------ -----------------------
<S> <C> <C> <C> <C>
See Exhibit A Various 6693 Sierra Lane, Suite F
attached hereto. See Dublin, CA 94568
Exhibit
"A"
Total: $35,995.00 $1,043.86
</TABLE>
B. TERMS
Initial Term: The Initial Term shall commence on the date the Equipment
is received, installed and accepted for use, as shown on
the Acceptance Notice, and continue for forty-two (42) full
months after the "Rent Start Date."
Rent Start Date: This shall be the first day of the month following the
month during which the Initial Term commences; provided,
however, that if the Equipment is accepted on the first day
of the month, the Rent Start Date shall commence on the
same day that the Initial Term commences.
Lease Rate Factor (as a percentage of Equipment's original Purchase Price): 2.9%
Monthly Rental Payments in advance.
Initial Rent Due: Payable in advance shall be (1) the first and last month's
Rental Amount including any sales or use tax and (2) an
amount equal to 1/30th of the monthly rental amount using
a rate of 2.90% multiplied by the number of days, if any,
between (and including) the date the Initial Term commences
and (but not including) the Rent Start Date.
C. INVOICE INFORMATION: Lessee's and Lessor's addresses for invoice purposes
for the Equipment on the Schedule shall be as follows:
Lessee's Invoice Address: Remit Monthly Rental Amount To:
Biex, Inc. Phoenix Leasing Incorporated
6693 Sierra Lane, Suite F. P.O. Box 200432
Dublin, CA 94568 Dallas, TX 75320-0432
Attention: Accounts Payable
1a1/572
<PAGE>
D. CASUALTY VALUES: See attachment hereto.
E. SPECIAL PROVISIONS: 1. Lessor's payment for Equipment hereunder is
conditioned on Lessor's satisfaction that there has been no adverse change
in Lessee's financial condition subsequent to initial credit approval,
2. Sale Leaseback Addendum, and 3. Purchase or Renewal Requirement
Rider.
LESSOR AND LESSEE AGREE THAT THIS SCHEDULE SHALL CONSTITUTE A LEASE OF THE
EQUIPMENT DESCRIBED ABOVE, SUBJECT TO THE TERMS AND CONDITIONS OF THIS
SCHEDULE AND OF THE MASTER EQUIPMENT LEASE DATED DECEMBER 31, 1995 BETWEEN
LESSEE AND LESSOR. THE TERMS AND CONDITIONS OF SUCH MASTER EQUIPMENT LEASE
ARE HEREBY INCORPORATED BY REFERENCE AND MADE A PART HEREOF TO THE SAME
EXTENT AS IF SUCH TERMS AND CONDITIONS WERE SET FORTH IN FULL HEREIN.
PHOENIX LEASING INCORPORATED BIEX, INC.
By: By: /s/ Roger Wunderling
----------------------- ------------------------
Title: Title:
----------------------- ------------------------
Date: Date:
----------------------- ------------------------
1a1/572
<PAGE>
<TABLE>
<CAPTION>
PHOENIX GROWTH CAPITAL REQUEST FOR SCHEDULE 3
- -----------------------------------------------------------------------------------------------------------------------------------
LESSEE NAME: BIEX, INC.
6693 SIERRA LANE, STE F
DUBLIN, CA 94568
PH: (510) 556-0300
- -----------------------------------------------------------------------------------------------------------------------------------
EQUIPMENT LOCATION: SAME AS ABOVE
- -----------------------------------------------------------------------------------------------------------------------------------
INVOICE AMT
VENDOR EQUIPMENT DESCRIPTION SERIAL NO. PHX TAG INVOICE NO. NET OF EXC
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dynatech Laboratories, Inc. Dias Automated Plate Reader w/ Internal Bar Code 13,405.00
Dynatech Laboratories, Inc. Dias Ambient Shaking Stacker Module 8,455.00
Dynatech Laboratories, Inc. Dias Ambient Plate Stacker Module 7,125.00
Dynatech Laboratories, Inc. Dias Multiple Reagent Dispenser 8 Channel Module 8,910.00
Dynatech Laboratories, Inc. Dias Strip Washer Module 6,555.00
Dynatech Laboratories, Inc. Dias Installation Kit 0.00
Dynatech Laboratories, Inc. Time Manager Software 1,500.00
Dynatech Laboratories, Inc. Spider Software 1,000.00
Dynatech Laboratories, Inc. Dias System Training & Installation Charges 2,589.75
- -----------------------------------------------------------------------------------------------------------------------------------
Total Dynatech Laboratories, Inc. 49,539.75
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PHOENIX GROWTH CAPITAL REQUEST FOR SCHEDULE 3 (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
LESSEE NAME: BIEX, INC.
6693 SIERRA LANE, STE F
DUBLIN, CA 94568
PH: (510) 556-0300
- -----------------------------------------------------------------------------------------------------------------------------------
EQUIPMENT LOCATION: SAME AS ABOVE
- -----------------------------------------------------------------------------------------------------------------------------------
SALES CHECK CHECK DEPREC. NET $ DUE BIEX
VENDOR EQUIPMENT DESCRIPTION TAX NO. DATE COST AMT. VENDOR DOC. #
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dynatech Laboratories, Inc. Dias Automated Plate
Reader w/ Internal Bar Code 13,405.00
Dynatech Laboratories, Inc. Dias Ambient Shaking
Stacker Module 8,455.00
Dynatech Laboratories, Inc. Dias Ambient Plate
Stacker Module 7,125.00
Dynatech Laboratories, Inc. Dias Multiple Reagent
Dispenser 8 Channel Module 8,910.00
Dynatech Laboratories, Inc. Dias Strip Washer Module 6,555.00
Dynatech Laboratories, Inc. Dias Installation Kit 0.00
Dynatech Laboratories, Inc. Time Manager Software 1,500.00
Dynatech Laboratories, Inc. Spider Software 1,000.00
Dynatech Laboratories, Inc. Dias System Training &
Installation Charges 2,589.75
- -----------------------------------------------------------------------------------------------------------------------------------
Total Dynatech Laboratories, Inc. 49,539.75
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE
Schedule No. 4 to Lease
Dated as of December 31, 1995
Between BIEX, INC.
and PHOENIX LEASING INCORPORATED
A. DESCRIPTION AND PURCHASE PRICE OF EQUIPMENT
<TABLE>
<CAPTION>
Description of
Equipment
(quantity, model Purchase Mfr./ (Street Address
and serial number) Price Rent Vendor City, State and County)
- ------------------ ----- ---- ------ ------------------------
<S> <C> <C> <C> <C>
See Exhibit A attached hereto.
Total: $46,415.96 $1,346.06
</TABLE>
B. TERMS
Initial Term: The Initial Term shall commence on the date the Equipment
is received, installed and accepted for use, as shown on
the Acceptance Notice, and continue for forty-two (42)
full months after the "Rent Start Date."
Rent Start Date: This shall be the first day of the month following the
month during which the Initial Term commences; provided,
however, that if the Equipment is accepted on the first
day of the month, the Rent Start Date shall commence on
the same day that the Initial Term commences.
Lease Rate Factor (as a percentage of Equipment's original Purchase
Price): 2.9%
Monthly Rental Payments in advance.
Initial Rent Due: Payable in advance shall be (1) the first and last month's
Rental Amount including any sales or use tax and (2) an
amount equal to 1/30th of the monthly rental amount using
a rate of 2.90% multiplied by the number of days, if any,
between (and including) the date the Initial Term commences
and (but not including) the Rent Start Date.
C. INVOICE INFORMATION: Lesee's and Lessor's addresses for invoice purposes
for the Equipment on the Schedule shall be as follows:
Lessee's Invoice Address: Remit Monthly Rental Amount To:
Biex, Inc. Phoenix Leasing Incorporated
6693 Sierra Lane, Suite F. P.O. Box 200432
Dublin, CA 94568 Dallas, TX 75320-0432
Attention: Accounts Payable
<PAGE>
D. CASUALTY VALUES: See attachment hereto.
E. SPECIAL PROVISIONS: 1. Lessor's payment for Equipment hereunder is
conditioned on Lessor's satisfaction that there has been no adverse
change in Lessee's financial condition subsequent to initial credit
approval, 2. Sale Leaseback Addendum, and 3. Purchase or Renewal
Requirement Rider.
LESSOR AND LESSEE AGREE THAT THIS SCHEDULE SHALL CONSTITUTE A LEASE OF THE
EQUIPMENT DESCRIBED ABOVE, SUBJECT TO THE TERMS AND CONDITIONS OF THIS
SCHEDULE AND OF THE MASTER EQUIPMENT LEASE DATED DECEMBER 31, 1995 BETWEEN
LESSEE AND LESSOR. THE TERMS AND CONDITIONS OF SUCH MASTER EQUIPMENT LEASE
ARE HEREBY INCORPORATED BY REFERENCE AND MADE A PART HEREOF TO THE SAME
EXTENT AS IF SUCH TERMS AND CONDITIONS WERE SET FORTH IN FULL HEREIN.
PHOENIX LEASING INCORPORATED BIEX, INC.
By: By: /s/ Roger Wunderling
-------------------------------- ------------------------------------
Title: Contract/Administrator Title: CFO
----------------------------- ---------------------------------
Date: 8-29-96 Date: 8-26-96
------------------------------ ----------------------------------
<PAGE>
Schedule No. 4 8/23/96
BIEX, INC.
PHOENIX LEASING FUNDING REQUEST
EXHIBIT A
Lessee Name: Biex, Inc.
6693 Sierra Lane, Suite F
Dublin, CA 94568
(510)556-0300
Equip. location: Same as above
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Funding Request
------------------------ Biex
Invoice Amt --------- Check Deprec Net Amt. Amt Due Doc
Vendor Equipment Description Serial# Invoice# Net of exc Sales Tax Check# Date Cost due Biex Vendor #
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Computer City Deskjet 660C Printer 48927 379.99 31.35 4544 02/02/96 0.83 315.39 0 1
(exp report R Wunderling)
Paradigm Micro Sys HP Jet Direct print server J2382B 16001 389.00 32.09 4523 01/29/96 0.83 322.87 0 2
UPS cable 16001 33.00 2.72 4523 01/29/96 0.83 27.39 0 2
APC BackUp UPS 600 16001 285.00 23.51 4523 01/29/96 0.83 236.55 0 2
0.83 0.00
Paradigm Micro Sys Conner MS-4000 ext tape backup 16002 625.00 51.56 4523 01/29/96 0.83 518.75 0 3
Adaptec AVA 1515 SCSI adaptor 16002 99.00 8.17 4523 01/29/96 0.83 82.17 0 3
Sony mini data cartridges (4) 16002 132.00 10.89 4523 01/29/96 0.83 109.56 0 3
Office Max Flexible Use Chairs 726548 129.99 10.72 4555 02/08/96 0.92 119.59 0 4
Flexible Use Chairs 726548 129.99 10.72 4555 02/08/96 0.92 119.59 0 4
Flexible Use Chairs 726548 129.99 10.72 4555 02/08/96 0.92 119.59 0 4
Cypress Computer 16MB RAM 1104080 350.00 4947 02/26/96 0.92 322.00 0 5
Computer City 15" SF VG monitor 43229 499.99 41.25 4503 01/15/96 0.83 414.99 0 6
15" SF VG monitor 43229 499.99 41.25 4503 01/15/96 0.83 414.99 0 6
BMB 2x3327 ons 43229 259.99 21.45 4503 01/15/96 0.83 215.79 0 6
812 P-100 8/1200 4 43229 1,799.99 148.50 4503 01/15/96 0.83 1,493.99 0 6
Surge master 6 outlet 43229 14.99 1.24 4503 01/15/96 0.83 12.44 0 6
ISA Combo ET 43229 49.99 4.12 4503 01/15/96 0.83 41.49 0 6
8MB 2x3327 ons 43229 259.99 21.45 4503 01/15/96 0.83 215.79 0 6
812 P-100 8/1200 4 43229 1,799.99 148.50 4503 01/15/96 0.83 1,493.99 0 6
Surge master 6 outlet 43229 14.99 1.24 4503 01/15/96 0.83 12.44 0 6
ISA Combo ET 43229 49.99 4.12 4503 01/15/96 0.83 41.49 0 6
(H. Fred Voss exp report)
The Good Guys Sony PD141 CD Player 927845 79.99 8.60 4503 01/15/96 0.83 66.39 0 6
(H. Fred Voss exp report)
Circuit City Refrigerator 23601050053 559.95 46.19 4996 02/26/96 0.92 515.15 0 7
(exp report Joann Mittleman)
</TABLE>
Page 1
<PAGE>
Schedule No. 4 8/23/96
BIEX, INC.
PHOENIX LEASING FUNDING REQUEST
EXHIBIT A
Lessee Name: Biex, Inc.
6693 Sierra Lane, Suite F
Dublin, CA 94568
(510)556-0300
Equip. location: Same as above
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Funding Request -
------------------------ Biex
Invoice Amt --------- Check Deprec Net Amt. Amt Due Doc
Vendor Equipment Description Serial# Invoice# Net of exc Sales Tax Check# Date Cost due Biex Vendor #
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Office Max Xerox Copier 601 5,999.00 494.92 4527 01/29/96 0.83 4,979.17 0 8
Baxter Scientific Balance, Capacity 2106 1526909 895.00 53.70 4546 02/05/96 0.92 823.40 0 9
Sam Clar 4 Dr Lateral file w/ lock 86581 1,399.95 115.50 4667 03/22/96 0.92 1,287.95 0 10
RH Oak desks 87571 309.95 25.57 4797 04/18/96 0.92 285.15 0 11
RH Comp Return Oak 87571 230.00 18.98 4797 04/18/96 0.92 211.60 0 11
RH Oak desks 87571 309.95 25.57 4797 04/18/96 0.92 285.15 0 11
RH Comp Return Oak 87571 230.00 18.98 4797 04/18/96 0.92 211.60 0 11
LH Desk 87571 369.95 30.52 4797 04/18/96 0.92 340.35 0 11
LH Comp Return Oak 87571 230.00 18.98 4797 04/18/96 0.92 211.60 0 11
Sam Clar 5 shelf bookcase 88906 99.95 8.25 4914 05/15/96 0.92 91.95 0 12
5 shelf bookcase 88906 99.95 8.24 4914 05/15/96 0.92 91.95 0 12
Credenza 88906 199.95 16.50 4914 05/15/96 0.92 183.95 0 12
Computer City Belk F3L791-07 68298 31.96 2.64 4610 03/13/96 0.92 29.40 0 13
Sony 15" Multiscan SF VGA.25 pitch 68298 449.00 37.04 4610 03/13/96 0.92 413.08 0 13
Sony 15" Multiscan SF VGA.25 pitch 68298 449.00 37.04 4610 03/13/96 0.92 413.08 0 13
GVCT NX-16BT 16 BIT ISA Combo 68298 49.99 4.12 4610 03/13/96 0.92 45.99 0 13
Asii 626 P-133 16/1200 6X 28.8 68298 2,099.99 173.25 4610 03/13/96 0.92 1,931.99 0 13
Sony 15" Multiscan SF VGA.25 pitch 68298 449.00 37.04 4610 03/13/96 0.92 431.08 0 13
GVCT NX-16BT 16 BIT ISA Combo 68298 49.99 4.12 4610 03/13/96 0.92 45.99 0 13
Asii 626 P-133 16/1200 6X 28.8 68298 2,099.99 173.25 4610 03/13/96 0.92 1,931.99 0 13
U.S. Filters Water Purification System 495579 4,596.25 379.10 4824 04/29/96 0.92 4,228.55 0 15
Office Depot 42" Lateral File 15045943-001 469.99 38.77 4839 04/30/96 0.92 432.39 0 16
Sanyo Transcriber 259.99 21.45 4839 04/30/96 0.92 239.19 0 17
Office Max Computer 173401 1,878.00 154.94 4883 05/08/96 0.92 1,878.00 0 21
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 2
<PAGE>
Schedule No. 4 8/23/96
BIEX, Inc.
Phoenix Leasing Funding Request
Exhibit A
Lessee Name: Biex, Inc.
6693 Sierra Lane, Suite F
Dublin, CA 94568
(510) 556-0300
Equip. location: Same as above
<TABLE>
<CAPTION>
Funding Request
----------------------------
Equipment Invoice Amt Check Check Deprec Net Amt. Amt. Due Biex Doc
Vendor Description Serial # Invoice # Net of exc Sales Tax # Date Cost due Biex Vendor #
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stewarts Office Desks 146619 324.00 26.73 5064 06/05/96 100% 324.00 0 22
Office Desks 146619 324.00 26.73 5064 06/05/96 100% 324.00 0 22
Office Desks 146619 324.00 26.73 5064 06/05/96 100% 324.00 0 22
Credenza 146619 303.00 25.00 5064 06/05/96 100% 303.00 0 22
Credenza 146619 303.00 25.00 5064 06/05/96 100% 303.00 0 22
Cabinet 146619 169.00 13.94 5064 06/05/96 100% 169.00 0 22
tax on shipping 3.71 5064 06/05/96 100% 22
Cypress Computers 1104756-1 2,340.00 193.05 5043 06/04/96 100% 2,340.00 0 23
Bioserve Validation document for 11106 1,000.00 5047 06/04/96 100% 1,000.00 0 24
Carl creative system
Office 2 Dr 42" Lateral File 289.99 8.26 5022 05/29/96 100% 289.99 0 25
Depot 42" 5 Drawer Lateral 579.99 16.53 5219 07/10/96 100% 579.99 0 26
OfficeMax Computer 173444 2,079.00 171.52 5219 07/10/96 100% 2,079.00 0 27
Appliance GE Freezer 2197920 531.00 43.81 5208 07/10/96 100% 531.00 0 28
Parts
Cypress 2 APC Smart UPS 700 VA 1104840-1 730.00 60.23 5190 07/03/96 100% 730.00 0 29
Computer
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 3
<PAGE>
Schedule No. 4 BIEX, Inc. 8/23/96
Phoenix Leasing Funding Request
Exhibit A
Lessee Name: Biex, Inc.
6693 Sierra Lane, Suite F
Dublin, CA 94568
(510) 556-0300
Equip. location: Bioserv Corporation
5340 Eastgate Mall
San Diego, CA 92121
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE #4
Invoice Amt Check
----------
Vendor Equipment Description Serial # Invoice # Net of exc Sales Tax Check # Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cart Creative Wet Ring Vacuum Pump
system 698 3,550.00 292.68 5030 05/30/96
Automatic Fluid
Replenish System 698 3,000.00 247.50 5030 05/30/96
Recirculation System 709 1,500.00 123.75 5030 05/30/96
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Funding Request -
-------------------------------------
Deprec Net Amt. Amt Due Biex Doc
Vendor Equipment Description Cost due Biex Vendor #
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cart Creative Wet Ring Vacuum Pump
system 0 3,550.00 0 19
Automatic Fluid
Replenish System 0 3,000.00 0 19
Recirculation System 0 1,500.00 0 20
- ----------------------------------------------------------------------------------------------------
</TABLE>
Page 4
<PAGE>
Schedule No. 4 BIEX, Inc. 8/23/96
Phoenix Leasing Funding Request
Exhibit A
Lessee Name: Biex, Inc.
6693 Sierra Lane, Suite F
Dublin, CA 94568
(510) 556-0300
Equip. location: Biex, Inc
885 Arapahoe Ave
Boulder, CO 80302
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SCHEDULE #4
Invoice Amt Check
Vendor Equipment Description Serial # Invoice # Net of exc Sales Tax Check # Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Price Club Brother Fax Machine 249.99 18.87 4735 04/05/96
(Dullien Reimbursement)
Office Max HP Office Jet 350 Printer 016176253-001 599.99 43.50 4899 05/13/96
- ----------------------------------------------------------------------------------------------------------------------------------
Total all Pages 50,026.56 3,320.48
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Funding Request -
-------------------------------------
Deprec Net Amt. Amt Due Biex Doc
Vendor Equipment Description Cost due Biex Vendor #
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Price Club Brother Fax Machine 92% 229.99 0 14
Office Max HP Office Jet 350 Printer 92% 599.99 0 18
- ----------------------------------------------------------------------------------------------------
Total all pages 46,415.96 0.00
</TABLE>
Page 5
<PAGE>
SCHEDULE
--------
Schedule No. 5 to Lease
Dated as of December 31, 1995
Between BIEX, INC.
and PHOENIX LEASING INCORPORATED
A. DESCRIPTION AND PURCHASE PRICE OF EQUIPMENT
<TABLE>
<CAPTION>
Description of
Equipment
(quantity, model Purchase Mfr./ (Street Address
and serial number) Price Rent Vendor City, State and County)
- ------------------ ---------- --------- ------ -------------------------
<S> <C> <C> <C> <C>
See Exhibit A attached hereto.
Total: $12,336.65 $357.76
</TABLE>
B. TERMS
Initial Term: The Initial Term shall commence on the date the Equipment is
received, installed and accepted for use, as shown on the
Acceptance Notice, and continue for forty-two (42) full
months after the "Rent Start Date."
Rent Start Date: This shall be the first day of the month following the
month during which the Initial Term commences; provided,
however, that if the Equipment is accepted on the first day
of the month, the Rent Start Date shall commence on the
same day that the Initial Term commences.
Lease Rate Factor (as a percentage of Equipment's original Purchase Price): 2.9:
Monthly Rental Payments in advance.
Initial Rent Due: Payable in advance shall be (1) the first and last month's
Rental Amount including any sales or use tax and (2) an
amount equal to 1/30th of the monthly rental amount using
a rate of 2.90% multiplied by the number of days, if any,
between (and including) the date the Initial Term commences
and (but not including) the Rent Start Date.
C. INVOICE INFORMATION: Lessee's and Lessor's addresses for invoice purposes
for the Equipment on the Schedule shall be as follows:
Lessee's Invoice Address: Remit Monthly Rental Amount To:
Biex, Inc. Phoenix Leasing Incorporated
6693 Sierra Lane, Suite F. P.O. Box 200432
Dublin, CA 94568 Dallas, TX 75320-0432
Attention: Accounts Payable
lal/572
<PAGE>
<TABLE>
<S> <C>
Lessee Name Biex, Inc.
6693 Sierra Lane, Suite F
Dublin, CA 94568
(510) 556-0300
Equip.
location Same as above
</TABLE>
<TABLE>
<CAPTION>
SCHEDULES
reclass Invoice Exclusions
Balance ship & Amt Net of -------------------
Vendor Equipment Description Serial # Phx Tag # Invoice # Per GL tax axc Shipping Sales Tax
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bioserv Validation Documents QAP032 11155 1,000.00
Validation Documents QAP025 11155 1,000.00
Validation Documents QAP020 11155 1,000.00
Validation Documents QAP027 11155 1,000.00
Validation Documents QAP024 11155 1,000.00
30.00 30.00 30.00
5,030.00 5,000.00
---------
---------
Cypress
Computer Pentium 75 MHZ CPU 1105176.1 995.90 75.90 75.90
920.00
---------
---------
Appliance
Parts
Distributor GE 21 cu ft Freezer SR 161542 2210252 499.00
GE 21 cu ft Freezer SR 161538 2210252 499.00
82.34 82.34 82.34
1,080.34 998.00
---------
---------
Fry's
Electronics Computer parts + Monitor 665263 593.33 45.16 516.17 45.16
---------
---------
DataPath
Systems CCO Barcode Reader XT/AT 606739 9178 475.48 45.48 430.00 10.00 35.48
---------
---------
Data
Collection
Products Co. Printer S500 Serial 5024532 105472 1,726.00 50.00 1,676.00 50.00
---------
---------
OfficeMax 26 1/2" 2 Drawer Letter
File Cabinet 69.00
36" 2 Drawer Lateral File
Cabinet 254.99
8.38 8.38 (20.00) 28.38
352.37 343.99
---------
---------
OfficeMax 36" 2 Drawer Lateral File
Cabinet 254.99
1.04 1.04 (20.00) 21.04
258.03 254.99
---------
---------
OfficeMax Okidata Page Printer 1071099 997546 433.97
35.80 35.80 35.80
469.77 433.97
---------
---------
OfficeMax Digital Equipment 14"
Monitor 6066300082 997918 392.53
32.38 32.38 32.38
424.91 392.53
---------
---------
Comtek
Computer Pentium 100MHZW 9178 1,339.00
90.47 90.47 90.47
1,429.47 1,339.00
---------
---------
Total 12,833.60 496.95 12,336.65 0.00 406.95
---------
---------
<CAPTION>
SCHEDULES
Funding Request
---------------------------- Total Pd Total Pd
Check Deprec Amt Pd Amt Due Biex Doc These On
Vendor Check # Date Cost by Biex Vendor # Items Invoice
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bioserv 5231 07/16/96 0 5,030.00 0 1 5,030.00 5,030.00
Cypress
Computer 5315 08/14/98 0 905.00 0 2 995.90 905.90
Appliance
Parts
Distributor 5531 09/26/96 0 1,080.34 0 3 1,080.34 1,080.34
Fry's
Electronics 5534 09/26/96 0 593.33 0 4 593.33 593.33
DataPath
Systems 5627 10/30/96 0 475.48 0 5 475.48 475.48
Data
Collection
Products Co. 0 1726 6
OfficeMax 5637 10/30/96 0 352.37 0 7 1,519.91 352.37
OfficeMax 5837 10/30/96 0 258.03 0 8 1,519.91 258.03
OfficeMax 5837 10/30/96 0 469.77 0 9 1,519.91 469.77
OfficeMax 5659 11/06/96 0 424.91 0 10 949.41 424.91
Comtek
Computer 5610 10/30/96 0 1,429.47 0 11 1,429.47 1,420.47
Total 11,107.60 1,726.00 15,113.66 11,107.60
</TABLE>
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
PRODUCT PURCHASE AGREEMENT
THIS AGREEMENT, effective as of this 17 day of November, 1997 ("Effective
Date"), by and between HORIZON MEDICAL, INC., having a principal place of
business at 1719 S. Grand Ave., Santa Ana CA 92705-4808 ("Seller") and BIEX,
INC., having its principal place of business at 6693 Sierra Lane, Suite F,
Dublin, CA 94568 ("Buyer").
WHEREAS, Buyer has developed a proprietary test for screening for risk of
preterm labor and delivery;
WHEREAS, the sample for such test is performed with a saliva collection kit
consisting of a labeled tube, plunger with reagents, cap and other accessories;
WHEREAS, Seller has the capability of producing collection kits which can
be used for Buyer's proprietary test;
NOW, THEREFORE, the parties hereto agree as follows:
1. PURCHASE AND SUPPLY OBLIGATIONS.
(a) During the term of this Agreement, Seller agrees to sell and Buyer
agrees to buy the saliva collection kit (the "Product") which conforms to the
descriptions and specifications in Appendix A ("Product Specifications")
according to the terms and conditions set forth in this Agreement. Seller agrees
to meet Buyer's requirements for the Product.
(b) Buyer will supply to Seller the components of the Product listed on
Appendix B ("Buyer-Supplied Components"). Seller will incorporate the
Buyer-Supplied Components into the Product. Seller will use the Buyer-Supplied
Components solely for production of the Products under this Agreement.
(c) Seller will manufacture, perform quality control and deliver the
Product in accordance with Buyer's manufacturing processes and Seller's standard
operating procedures listed on Appendix C. Seller shall manufacture in
accordance with U.S. FDA Quality System regulations and EN46001. Seller shall
not modify applicable SOP's in a fashion which will affect Buyer's product.
(d) Seller understands that the current Product is an interim
configuration and that the final Product configuration will differ. When Buyer
provides specifications for the final Product configuration, the parties will
negotiate in good faith a new price list (Appendix D) for the final Product
configuration. Such new price list will provide approximately the same gross
margin to Seller as the prices set forth on Appendix B, except as the parties
may otherwise agree in writing.
2. PURCHASE ORDERS.
(a) Buyer will initiate purchases under this Agreement by submitting
written purchase orders to Seller any time from the Effective Date until thirty
(30) days before the termination date of the Agreement. All purchase orders
submitted by Buyer will state the
1.
<PAGE>
delivery dates, which will be at least thirty (30) days after submission of the
order, and must be submitted within the term of this Agreement. Seller shall
acknowledge promptly each purchase order in writing and confirm delivery dates.
(b) Commencing with the quarter preceding anticipated commercial launch of
the Product, Buyer will supply Seller with a rolling 12 month forecast of
Product requirements on or about the first working day of each quarter. Forecast
for each period will be considered a firm commitment for the immediate quarter.
Changes from forecast for subsequent quarters may be made subject to certain
limitations as set forth in the following table:
QUARTER FORECAST STATUS
Immediate Firm Purchase
[**********] [**************]
[**********] [**************]
[**********] [**************]
(c) The purchase order shall contain the following information relative to
purchases under this Agreement: reference to the Product Specifications,
quantity purchased, routing instructions, delivery schedule, destination of
shipment, and confirmation of price. Each purchase order will make specific
reference to this Agreement.
3. BUYER-SUPPLIED COMPONENTS.
(a) Seller shall inform Buyer at least once every month on the status
of its inventory of Buyer-Supplied Components. Seller shall inform Buyer when
the Buyer-Supplied Components if the Buyer-Supplied Components stored at
Seller's facilities are insufficient to meet a [******] supply at the maximum
output requirement of Product as set forth in the rolling forecast (including
amounts for waste materials and rejects as reasonably assumed based on past
experience). Buyer shall then procure and supply materials in such a fashion
as to allow Seller to deliver product per Buyer purchase order. Seller shall
not be responsible for late delivery penalties as defined in Section 6
Paragraph c if Buyer does not delivery needed inventory within one week of
notification that Buyer-Supplied Components if the Buyer-Supplied Components
stored at Seller's facilities are insufficient as defined herein.
(b) Seller shall store the Buyer-Supplied Components at no cost to Buyer.
The Buyer-Supplied Components will remain the property of Buyer, will be set
aside in a distinct and separate area of the Seller's storage facility, and will
be marked in such a way as to easily allow traceability of ownership. Seller
will execute the appropriate public filings to reflect such ownership of Buyer.
(c) Upon receipt of Buyer-Supplied Components, Seller will perform such
tests as the parties mutually agree from time to time in the course of this
Agreement in order to confirm the consistency of the Buyer-Supplied Components
with the Product Specifications. Buyer-Supplied Components which do not meet
such specifications in the tests performed by Seller will be replaced by Buyer
at no cost to Seller.
[*] CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE>
(d) Seller will protect and preserve the Buyer-Supplied Components and
indemnify Buyer against any loss of or damage to any Buyer-Supplied Components
while in the possession of Seller.
(e) If the manufacturing process results in waste of more than 10 % of the
amount of Buyer-Supplied Components used for a particular lot, Seller will
reimburse Buyer for the costs of procuring Buyer-Supplied Components so wasted.
4. PACKING, SHIPPING AND TITLE.
The method of packaging will be in accordance with Buyer's instructions.
Product will be shipped in accordance with Seller's standard procedures and will
be F.O.B. Seller's manufacturing plant. Buyer will be responsible for all
shipping expenses, insurance, and similar charges which, if paid by Seller, will
appear as additional items on Seller's invoice to Buyer. Title to the Product
and risk of loss will pass to Buyer upon Seller's delivery to the carrier.
Delivery time is of the essence. Products are to be delivered on the dates set
forth in purchase orders or within five days thereof.
5. ACCEPTANCE AND REJECTIONS.
(a) If Buyer discovers a Product defect, Buyer may reject the defective
Product, or lot that contains the defective Product, and will promptly notify
Seller of the rejection and the reason therefor. With regard to latent critical
defects which are not reasonably detectable at the time of acceptance, Buyer may
reject a Product, or lot containing the Product, with latent defects within 30
days from discovery of such defect. Seller shall replace the rejected Products
at no cost to Buyer, or at Buyer's or Seller's option, provide Buyer with a
refund or credit of the purchase price.
(b) The cost of Buyer-Supplied Components for replacement deliveries
will be charged to Seller, including reasonable transport and insurance
charges paid by Buyer for the delivery of Buyer-Supplied Components to Seller.
6. PRICES, DISCOUNTS AND TAXES.
(a) The purchase price for each item of Product will be as set forth in
Appendix D or as mutually agreed to by both parties in writing during the term
of this Agreement.
(b) Such purchase price includes packaging and packing and all taxes,
duties and services, except sales tax, which shall be the responsibility of
Buyer.
(c) If Seller fails to timely deliver the Product, the price of the
delayed shipment will be discounted by [**********] of delay.
[*] CONFIDENTIAL TREATMENT REQUESTED
3.
<PAGE>
7. PAYMENT.
Payment for Products will be made within 30 days from receipt of Products
that conform to Product Specifications and a corresponding invoice. Past due
accounts will be charged a 1% per month late fee. All payments will be in U.S.
dollars.
8. INDEMNITY.
(a) Each party agrees to indemnify, defend and hold harmless the other
party and its officers, directors, employees and agents ("Indemnitees") from and
against all losses and liability (including reasonable attorney fees) on account
of third party claims for personal injury, death, or property damage resulting
from any negligent act, omission or willful misconduct by such party, including
that party's agents, employees or subcontractors, or defective Product supplied
by such party to the other party, in the course of performing its obligations
under this Agreement. Seller further agrees to indemnify, defend and hold
harmless Buyer from and against all losses and liability (including reasonable
attorneys fees) on account of third party claims that the tube portion of the
Product infringes on the patent or other proprietary rights of any third party.
An Indemnitee will notify the indemnifying party of any such claim. The
Indemnitee will have the right to participate at its own expense in defense of
such claim. No settlement of a claim against the Indemnitee may be made without
its consent, which will not be unreasonably withheld.
(b) Seller will obtain and maintain in force from and after the date of
the first shipment of Product comprehensive general liability insurance in
amounts not less than [*************] per incident and [***********] annual
aggregate and naming the Buyer Indemnitees as additional insureds. Such
comprehensive general liability insurance shall provide product liability
coverage and broad form contractual liability coverage for Seller's
indemnification obligation under this Section. The amounts of insurance
coverage required hereunder shall not be construed to create a limit on
Seller's liability with respect to its indemnification under this Section.
Seller agrees to provide written evidence of such insurance upon request and
shall provide Buyer with written notice at least fifteen (15) days prior to
the cancellation, non-renewal or material change in such insurance. Seller's
obligation to maintain such insurance shall continue until 2 years after
termination or expiration of this Agreement.
9. WARRANTIES.
The Seller warrants that the Product will conform to Product
Specifications, will be manufactured using Good Manufacturing Practices current
at the time of manufacture (cGMP) and will be free from defects in
Seller-supplied materials and workmanship for a period of one year from shipment
to Buyer.
10. REGULATORY RESPONSIBILITIES.
(a) RESPONSIBILITIES OF THE BUYER.
(1) Buyer will be responsible for all FDA regulatory submissions for
Product.
(2) Buyer will maintain FDA listing for Product.
[*] CONFIDENTIAL TREATMENT REQUESTED
4.
<PAGE>
(3) Buyer is responsible for maintaining complaint handling
procedures for Product.
(4) Buyer will notify Seller of any planned inspections by either FDA
or other auditing agencies.
(5) Buyer will maintain the Product Device Master Record.
(b) RESPONSIBILITIES OF THE SELLER.
(1) Seller will notify Buyer of any site inspections that involve
Product or other products manufactured by Seller. Seller will
make available inspection reports as requested by Buyer.
(2) Seller will not rework any Product or change any raw materials or
method of producing, processing or testing any Product, or change
any subcontractor for, or site of manufacture of any Product, or
any component thereof without written authorization from Buyer.
(3) Seller agrees to cooperate with any FDA or other agency
inspections involving Product. Such cooperation should not
normally unduly disrupt Seller's operations.
(4) Seller will maintain and document environmental controls as
required in Buyer's and Seller's documentation.
(5) Seller will maintain records of cGMP and other quality assurance
records for at least three years, or such longer period as is
required by law, following termination of this Agreement.
11. REPRESENTATIONS AND WARRANTIES.
(a) Seller's Representations and Warranties. Seller hereby represents and
warrants to Buyer that:
(1) Seller is duly incorporated and in good standing under the laws
of the State of California;
(2) Seller is duly authorized to enter into this Agreement;
(3) this Agreement is binding and enforceable against Seller; and
(4) Seller is not infringing on any third party's intellectual
property rights with respect to Products.
(b) Buyer's Representations and Warranties. Buyer hereby represents and
warrants to Seller that:
5.
<PAGE>
(1) Buyer is duly incorporated and in good standing under the laws of
Delaware;
(2) Buyer is duly authorized to enter into this Agreement; and
(3) this Agreement is binding and enforceable against Buyer.
12. TERM AND TERMINATION.
(a) This Agreement will be effective on the Effective Date and will
terminate three (3) years after the Effective Date.
(b) Either party may terminate this Agreement upon the insolvency,
bankruptcy or voluntary dissolution or assignment for the benefit of creditors
of or by the other party.
(c) A non-defaulting party may terminate this Agreement upon the failure
of a defaulting party to cure a material default in the performance of any
provision hereof within thirty (30) days after written notice thereof is given
by the non-defaulting party. Failure to make a payment shall not be considered a
default if such payment is being contested in good faith.
(d) The provisions of Sections 8, 9, 10, 13, 14, 16 and 17 hereof shall
survive the termination of this Agreement for any reason.
(e) Upon termination of this Agreement, Seller shall, upon Buyer's request
and at Buyer's expense, provide to Buyer any documentation and readily
transferable know-how that Buyer may require to manufacture or otherwise obtain
a continuing source of Products. Upon Seller's breach or termination of this
Agreement, Buyer shall have the right to purchase components, or machinery or
other capital investments purchased or developed specifically for the Products
or their manufacture, at a price to be agreed upon by the parties, but in no
event to exceed the reasonable value of the component, machinery or other
capital investment, prorated for any applicable depreciation.
13. CONFIDENTIAL INFORMATION.
(a) All proprietary information which is specifically designated as such,
which is disclosed by either party to the other, in any form in connection with
this Agreement, shall be kept confidential by the recipient.
(b) Any such proprietary information shall be used solely for the purposes
of this Agreement, or by Buyer solely in connection with regulatory approval and
sale of its products, and shall be protected by the recipient from disclosure to
others with at least the same degree of care as that which is accorded to its
own proprietary information, but in no event with less than reasonable care.
(c) Without limiting the foregoing, Seller expressly agrees that any
know-how, designs, engineering details, Production Procedures, formulations,
information concerning conjugates or antiserum, and other data pertaining to
Buyer's products and processes, shall, without further need for designation, be
deemed proprietary and confidential information of
6.
<PAGE>
Buyer under this Section 8. Notwithstanding the foregoing, Buyer shall not be
considered to have received any proprietary information of Seller unless Buyer
expressly agrees in advance in writing to accept such specific information in
confidence.
(d) As used herein, "proprietary information" shall not include
information which is generally known and available in the public domain through
no fault of the recipient.
14. INTELLECTUAL PROPERTY.
(a) Buyer shall own all Intellectual Property (which specifically relates
to Buyer's Product) invented, made or developed by Seller or any of its
subcontractors during the performance of this Agreement. Seller shall promptly
report to Buyer any inventions that are potentially patentable, but will not be
responsible for carrying out any prosecution efforts with respect to such
inventions, PROVIDED, HOWEVER, that Seller will, at Buyer's expense, provide all
reasonable assistance to Buyer in the prosecution of any patents covering any
such inventions.
(b) With regard to any intellectual property of Seller relating to the
Products and developed during the term of this Agreement, Seller hereby grants
to Buyer a non-exclusive, royalty-free, irrevocable, worldwide right and
license, with the right to sublicense, to make, have made, use and sell Product.
15. TRADEMARKS AND TRADE NAMES.
During the term of this Agreement, Buyer shall have the right to indicate
to the public that its systems utilize Seller's Product. Buyer does not have the
right to label its Products with Seller's name.
16. COMPLIANCE WITH LAW.
Seller represents that it is and agrees that it will remain in compliance
with all applicable federal, state and local laws, regulations and orders and in
possession of all permits necessary for the conduct of its activities under this
Agreement. Seller agrees to execute on request by Buyer and to remain in
compliance with the terms of standard state and federal contractor certification
forms which certify compliance with certain laws, regulations and executive
orders.
17. MISCELLANEOUS PROVISIONS.
(a) This Agreement shall be governed by and interpreted under the laws of
the State of California without reference to conflict of laws principles, and
excluding the United Nations Convention on the International Sale of Goods.
(b) All disputes arising out of this Agreement shall be subject to the
exclusive jurisdiction of the federal and state courts within California and the
parties agree and submit to the personal and exclusive jurisdiction and venue of
those courts.
(c) Neither party shall be liable for any loss, damage or penalty
resulting from delays or failures in performance resulting from acts of God,
war, strike, or other causes beyond such party's reasonable control; PROVIDED
THAT Seller shall notify Buyer promptly of anticipated delays
7.
<PAGE>
and use best efforts to fill any orders as soon as possible. Buyer may, in any
event, without limiting any rights or remedies, cancel any order, in whole or in
part, that is delayed more than thirty (30) days.
(d) Neither party shall assign this Agreement nor any right or license
hereunder without the prior written consent of the other party, except in
connection with a sale of substantially all of a party's business, or a merger
of acquisition of a party. Any assignment permitted hereunder shall be subject
to the written consent of the assignee to all the terms and provisions of this
Agreement.
(e) All sales of products shall be subject to this Agreement and, to the
extent they specify quantities, destinations and delivery dates or other
specifics, to Buyer purchase orders. This Agreement shall not be subject to the
terms, conditions or provisions of any confirmation or business form of Seller.
(f) Neither party shall make any public announcement of, or otherwise
disclose to a third party, the terms and conditions set forth in this Agreement,
except as necessary to provide such information to a potential corporate
partner, or as mutually agreed in writing, or as required by disclosure
obligations arising under law.
(g) No modification to this Agreement, nor any waiver of any rights, shall
be effective unless assented to in writing by the party to be charged. The
waiver of any breach or default shall not constitute a waiver of any other fight
hereunder or any subsequent breach or default.
(h) The prevailing party in any legal action hereunder shall be entitled
to reimbursement of its expenses including, without limitation, reasonable
attorney's fees.
(i) All notices and other communications hereunder will be made in writing
and shall be delivered by personal delivery or certified or registered mail,
return receipt requested, or by fax, and shall be deemed given upon personal
delivery, on the date of receipt of a document sent by mail, or upon actual
receipt of a fax. Addresses used shall be the ones set forth at the beginning of
this Agreement or any other address notified to the other party in writing.
Notices shall be addressed to the signatories of this Agreement. Notices shall
be effective upon receipt unless otherwise specified in the notice or in this
Agreement.
(j) This Agreement constitutes the entire and exclusive agreement between
the parties hereto with respect to the subject matter hereof, and supersedes any
and all prior negotiations, correspondence, understandings and agreements,
whether oral or written, between the parties with respect to the subject matter
thereof.
8.
<PAGE>
By signing below, Buyer and Seller each acknowledge that it has read,
understands and agrees to be bound by the terms and conditions of this
Agreement, and that the person signing is duly authorized to do so.
BIEX, INC. HORIZON MEDICAL
By: /s/ H. Fred Voss By: /s/ Janice A. Kennard
--------------------------- --------------------------------
Signature Signature
Name: H. Fred Voss Name: Janice A. Kennard
------------------------------
Title: Executive Vice President, Title: VP/COO
Technology ---------------------------
9.
<PAGE>
APPENDIX A
PRODUCT SPECIFICATIONS
1.
<PAGE>
LIST OF DESCRIPTIONS (MFP's) AND SPECIFICATIONS (QCS's) FOR FINISHED COMPONENTS
PRODUCED BY MEDICAL PACKAGING FOR BIEX KITS:
<TABLE>
<CAPTION>
COMPONENT P/N MFP QCS
<S> <C> <C> <C>
2 pack sample collection kit 9003 045 045
4 Pack Collection Kit 9004 040 ' 040
Single Collection Kit 9006 050 050
Collection Unit 8022 049 049
</TABLE>
2.
<PAGE>
APPENDIX B
BUYER-SUPPLIED COMPONENTS
1.
<PAGE>
LIST OF MATERIALS SUPPLIED TO MEDICAL PACKAGING FOR PRODUCTION OF BIEX KITS:
PN: 9003 2 PACK SAMPLE COLLECTION KIT
PN: 9004 4 PACK COLLECTION KIT
<TABLE>
<CAPTION>
MATERIAL P/N QCS
<S> <C> <C>
Piston Filters 4009 538
Sample Preservative 7019 018
Label, Collection Tube 5012 557
Label, Single Collection Tube Box 5028 580
Label, Collection Kit NA NA
Collection tube and filter box (2 pack) NA NA
Collection Kit Box NA NA
Mailer Envelope NA NA
Remember .... Sticker NA NA
Directional Insert 5014 559
Plastic case 6013 586
Collection Unit Box 6012 587
Enrollment Card 5036 588
Single Pack Box 6011 589
Four Pack Box 6010 590
Assembled Envelope 8023 594
Calendar Reminder 5038 593
Funnel 6014 595
</TABLE>
2.
<PAGE>
APPENDIX C
LIST OF MANUFACTURING PROCESSES
AND STANDARD OPERATING PROCEDURES
1.
<PAGE>
LIST OF PRODUCTION PROCEDURES REFERENCED IN PRODUCTION OF MATERIALS FOR
PRODUCTION OF BIEX KITS:
BIEX DOCUMENTS
ADP (ADMINISTRATIVE) Documents
<TABLE>
<CAPTION>
Doc. # TITLE Date Effective
<S> <C> <C>
001 Approval and Issue of Controlled Documents 11-20-96
</TABLE>
MFP (BATCH RECORDS) DOCUMENTS
<TABLE>
<CAPTION>
DOC. # PN TITLE DATE EFFECTIVE
<S> <C> <C> <C>
045 9003 2 pack sample collection kit 5-7-97
040 9004 4 pack collection kit 5-7-97
049 8022 Sample Collection Unit Draft
050 9006 Single Collection Kit Draft
018 7019 Sample Preservative Solution 5-7-97
</TABLE>
MFG (MANUFACTURING SOP'S)
<TABLE>
<CAPTION>
DOC. # TITLE DATE EFFECTIVE
<S> <C> <C>
005 Inventory Traceability 6-21-96
</TABLE>
QAP (QUALITY ASSURANCE SOP'S)
<TABLE>
<CAPTION>
DOC. # TITLE DATE EFFECTIVE
<S> <C> <C>
001 Inspection, sampling, and testing of components, 1-27-97
containers, and closures
002 Part Number Assignment 5-10-96
003 Lot Number Assignment 5-10-96
005 GMP Records Control 5-10-96
006 GMP Audits 5-10-96
007 Quality Assurance Document Audits 2-7-97
009 Quality Control Sample Retains 5-10-96
015 Testing and Release of GMP controlled material 2-12-97
016 Personnel Training 5-10-96
017 Equipment Cleaning, maintenance and calibration
018 Non-conforming materials and variance report 6-21-96
028 Label Copy Review and Approval 6-21-96
029 Issuance of Batch Production Records 5-10-96
035 Line-equipment sign-off and materials verification
036 Inspection, sampling, and testing of components,
containers, closures
I037 Line-equipment sign-off and materials verification 5-7-97
2.
<PAGE>
039 Controlled documents filing system 12-6-96
</TABLE>
BIEX DOCUMENTS
QCS (QUALITY CONTROL SPECIFICATIONS)
<TABLE>
<CAPTION>
DOC. # PN TITLE DATE EFFECTIVE
<S> <C> <C> <C>
508 1009 Thimerosal 7-26-96
506 1007 Tween 20 7-26-96
515 1016 Reagent Alcohol 3-12-97
538 4009 Porex Piston Filter 3-5-97
539 4010 Sample Collection Tubes 4-2-97
540 4011 Sample Collection Tube Cap 4-2-97
517 1018 FD&C Blue #1 8-19-96
557 5012 Label, Sample Collection Vial 5-30-97
558 5013 Label, Sample Collection Kit
559 5014 Package Insert, Sample Collection Kit 5-30-97
560 5015 Label, Sample Collection Kit, 4-Pack
563 6003 Box, Sample Collection Kit
564 6005 Bag, Sample Collection Kit, 4-Pack
571 1026 Water, hi purity 4-30-97
580 5028 Label, Sample Collection tube box (1 4-28-97
tube)
586 6013 Plastic Case Draft
587 6012 Collection Unit Box Draft
588 5036 Enrollment Card Draft
589 6011 Single Pack Box Draft
590 6010 Four Pack Box Draft
591 6009 Shipment Envelope Draft
592 5037 FedEx Shipment Label Draft
593 5038 Collection Reminders Draft
594 8023 Assembled Envelope Draft
595 6014 Funnel Draft
017 7018 2.5% Blue Dye 7-26-96
018 7019 Sample Preservative Solution 7-26-96
049 8022 Collection Unit Draft
040 9004 4-pack Sample Collection Kit 5-27-97
045 9003 Sample Collection Kit, 2 Pack Draft
050 9006 Single Sample Collection Kit Draft
</TABLE>
3.
<PAGE>
HORIZON DOCUMENTS
<TABLE>
<CAPTION>
REGULATORY AND COMPLIANCE PROCEDURE NUMBER REV. NUMBER
<S> <C> <C>
Compliance Audits 100.001 C
FDA Investigator Audit 100.002 N/A
Regulatory Inspections 100.003 N/A
Device Master Record 100.004 D
Device History Record 100.006 C
Complaint Handling 100.008 N/A
Master Files 100.009 N/A
Product Recalls 100.010 N/A
Document Control System 100.012 E
Non-Conforming Material 100.013 C
Corrective Action 100.014 D
Customer Product Complaints 100.015 A
Management Responsibilities 100.016 B
Contract Review 100.017 C
</TABLE>
<TABLE>
<CAPTION>
FACILITIES AND MAINTENANCE PROCEDURE NUMBER REV. NUMBER
<S> <C> <C>
Facilities Maintenance 200.001 C
CEA Maintenance Procedure 200.002 C
HMI Controlled Environment 200.003 E
CEA PM Monitoring Procedure 200.004 B
Equipment Calibration & 200.005 C
Maintenance
Fire Safety 200.006 A
</TABLE>
<TABLE>
<CAPTION>
MATERIAL CONTROL PROCEDURE NUMBER REV. NUMBER
<S> <C> <C>
Supplier control 300.017 C
Receipt & Handling of Incoming 300.018 F
Materials
Finished Product Control 300.019 B
Product Returns 300.020 N/A
Label Control 300.021 C
Purchasing 300.022 B
</TABLE>
4.
<PAGE>
HORIZON DOCUMENTS
<TABLE>
<CAPTION>
PRODUCTION AND Q.C. PROCEDURE NUMBER REV. NUMBER
<S> <C> <C>
Incoming Receiving Inspection 400.026 E
In-Process Control 400.027 G
Finished Device Rework 400.028 N/A
Production Retention 400.029 B
Horizon Processed Water (HPW) 400.032 F
Line Clearance Procedure 400.036 B
Validation/Design Verification 400.038 A
Program
Return to Stock, Finished 400.039 A
Goods
Design Control 400.040 A
</TABLE>
<TABLE>
<CAPTION>
GENERAL PROCEDURE NUMBER REV. NUMBER
<S> <C> <C>
Product Distribution 500.032 C
Weber Label Making System 500.033 A
Capital Asset Control 500.034 A
</TABLE>
<TABLE>
<CAPTION>
TRAINING PROCEDURE NUMBER REV. NUMBER
<S> <C> <C>
New Employee General Training 800.001 C
Job Description 800.002 A
</TABLE>
5.
<PAGE>
APPENDIX D
PRICES
1.
<PAGE>
[HORIZON MEDICAL, INC. LETTERHEAD]
15 August 1997
CONTRACT MANUFACTURING PROPOSAL:
SALEST SALIVA COLLECTION KIT, CLINICAL
VERSION
BIEX, INC.
6693 SIERRA LANE, SUITE F
DUBLIN, CA 94568
ATTENTION: MR. H. FRED VOSS, PH.D.,
V.P. RESEARCH & DEVELOPMENT
---------------------------------------
This proposal is intended to provide
the platform of information
necessary for Horizon Medical, Inc.
(Horizon) to provide the Clinical
SalEst Collection Kit to BIEX, INC.
(BIEX). It addresses the Scope of
Activities, Process Validation,
Process Lead Times, Raw Materials,
Documentation, Quality Assurance
Policy/Licensing and Pricing.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
ITEM DETAIL OF PRODUCT AND SERVICES PROVIDED
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
SCOPE OF ACTIVITIES Horizon will perform the following:
1. Receive all raw materials from BIEX as Q.C. released (previously
inspected) materials.
2. Introduce job work order packet.
3. Cut piston filter tube to 3 1/4".
4. Label collection tube with label at approximately 5/8" from the
tube bottom.
5. Place cap on collection tube.
6. Impregnate filter with preservative and dry.
7. Erect chipboard box.
8. Place filter tube and collection tube in box.
9. Label and seal box.
10. Bulk pack completed product into stock Horizon shipping cases.
Apply Horizon's supplied label indicating contents, part number,
lot number and quantity.
11. Perform and document all Quality Control activities.
12. Prepare product and documentation including completion of Device
History Records, for shipment.
2.
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------
ITEM DETAIL OF PRODUCT AND SERVICES PROVIDED
- -----------------------------------------------------------------------------------------------------------------------
PROCESS VALIDATION Horizon will perform the following:
1. Process Validation for piston filter impregnation.
- -----------------------------------------------------------------------------------------------------------------------
PROCESS LEAD TIMES Anticipated lead times are as follows:
-Production: Four (4) to six (6) weeks from approved
documentation and receipt of all material.
-Process Validation: Two (2) to three (3) weeks after document
approval and receipt of material. This assume a
colorimetric assay.
- -----------------------------------------------------------------------------------------------------------------------
RAW MATERIALS Customer provided raw materials are required to be provided under the
following conditions to ensure quality and regulatory compliance.
1. Clean and ready for use.
2. Adequately labeled for identification, traceability and quantity.
3. Packaged in double poly bagged lined cases.
4. Free of direct contact with chipboard, corrugated cardboard and
similar particulate contaminates.
- -----------------------------------------------------------------------------------------------------------------------
DOCUMENTATION Prior to any production activities, a complete Device Master Record (DMR)
will be created at Horizon. Contents included in the DMR:
-Manufacturing Procedures (MP).
-Parts List (PL), references appropriate drawings.
-Quality Control Instructions (QCI).
-Production Traveler (PT).
-Product Specifications (PS), where appropriate, including labeling and
applicable sterilization procedures.
A Device History Record (DHR) is a compilation of records containing the
complete production history of a finished product identified by a specific
traceable work order number. A DHR will be maintained by Horizon for each
lot of finished product to demonstrate that the product was manufactured
in accordance with it's DMR. include dates of manufacturing, quantity
produced, quantity released, lot numbers of components used, dates and
signatures of individuals performing tasks, inspection records and
sterilization process records.
- -----------------------------------------------------------------------------------------------------------------------
3.
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------
ITEM DETAIL OF PRODUCT AND SERVICES PROVIDED
- -----------------------------------------------------------------------------------------------------------------------
Horizon strongly adheres to the position that it is the Customer's right
and responsibility to review and approve Horizon's documentation for the
Customer Devices.
- -----------------------------------------------------------------------------------------------------------------------
QUALITY ASSURANCE Horizon Medical, Inc. is committed to providing our customers with
POLICY/LICENSING quality, cost-effectiveness products and services on a timely bases.
We will assure that the requirements of our customers are properly defined
so that we can consistently meet or exceed these requirements.
The management of Horizon Medical takes pride in the company's regulatory
compliance practices. Horizon Medical is committed to meeting or exceeding
customer's quality expectations the first time and every time. Horizon
Medical will consistently assure that the customer's product safety and
efficacy expectations are achieved.
In order to accomplish our goals, Horizon Medical will utilize sound
design, manufacturing controls, tests and inspections, record keeping,
audits, complaint responsiveness, corrective action and internal audits.
Horizon Medical will assure that all manufacturing and related practices
conform to F.D.A. requirements as established by law and by current
Quality System (GMP) Regulations.
Horizon Medical works with our customers, employees and suppliers and
solicits their cooperation in order to obtain these goals.
Horizon Medical is licensed and regulated by the U.S. Food and Drug
Administration and the California Department of Health Services as a
Medical Device and Pharmaceutical Manufacturer.
- -----------------------------------------------------------------------------------------------------------------------
PRICING PRODUCTION
Minimum Order Quantity * Unit Price
------------------------- -----------
30,000 Individual Collection Units [*******]
100,000 Individual Collection Units [*******]
300,000 Individual Collection Units [*******]
*Defined as a single product/delivery quantity.
Terms: Net thirty (30) days.
- -----------------------------------------------------------------------------------------------------------------------
[*] CONFIDENTIAL TREATMENT REQUESTED
4.
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------------
ITEM DETAIL OF PRODUCT AND SERVICES PROVIDED
- -----------------------------------------------------------------------------------------------------------------------
F.O.B.: Santa Ana, CA.
- -----------------------------------------------------------------------------------------------------------------------
SUMMARY Horizon looks forward to the challenge and opportunity to provide our
services to BIEX, INC. We maintain our quality and manufacturing systems
to exceed industry standards and we look forward to applying these skills
to your outsourcing needs.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Respectfully Submitted by:
/s/ Gregory W. Olson
Gregory W. Olson
National Sales Manager
Horizon Medical, Inc.
5.
<PAGE>
[HORIZON MEDICAL, INC. LETTERHEAD]
15 August 1997
Contract Manufacturing Proposal:
SALEST SALIVA COLLECTION KIT,
NON-AUTOMATED ASSEMBLY
BIEX, INC.
6693 SIERRA LANE, SUITE F
DUBLIN, CA 94568
ATTENTION: MR. H. FRED VOSS, PH.D.,
V.P. RESEARCH & DEVELOPMENT
---------------------------------------
This proposal is intended to provide
the platform of information
necessary for Horizon Medical, Inc.
(Horizon) to provide the Clinical
SalEst Collection Kit to BIEX, Inc.
(BIEX). It addresses the Scope of
Activities, Process Validation,
Process Lead Times, Raw Materials,
Documentation, Quality Assurance
Policy/Licensing and Pricing.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
ITEM DETAIL OF PRODUCT AND SERVICES PROVIDED
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
SCOPE OF ACTIVITIES Horizon will perform the following:
1. Receive all raw materials from BIEX as Q.C. released-(previously
inspected) materials.
2. Introduce job work order packet.
3. Cut piston filter tube to 3 1/4".
4. Label collection tube with label at approximately 5/8" from the
tube bottom.
5. Place cap on collection tube and tighten lightly.
6. Impregnate filter with preservative and dry.
7. Erect chipboard box.
8. Place one tube in collection unit with bar code facing opening.
9. Place funnel and piston filter in collection unit.
10. Fold mailer and place in collection unit.
11. Place DFU over inserted items and snap into collection unit.
12. Shrink wrap collection unit with seams away from opening to tube
bar code.
12. Scan bar code of four (4) shrink wrapped collection units and
place in kit case.
13. Scan bar code of one (1) pre-printed patient ID/Patient
Help/Doctor Reference Card.
14. Place in kit case.
15. Zip kit case closed.
- -----------------------------------------------------------------------------------------------------------------------
6.
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------
ITEM DETAIL OF PRODUCT AND SERVICES PROVIDED
- -----------------------------------------------------------------------------------------------------------------------
16. Place kit case in outer sleeve and shrink wrap kit.
17. Place twelve (12) shrink wrapped kits in an outer corrugated
shipper.
18. Seal shipper and apply Horizon's supplied label indicating
contents, part number, lot number and quantity.
19. Perform and document all Quality Control activities.
20. Prepare product and documentation including completion of Device
History Records, for shipment.
21. Transfer bar code data base to Biex on a per lot basis.
Horizon will provide corrugated shipper case and shipper label.
Biex will supply custom database software for data storage and retrieval.
- -----------------------------------------------------------------------------------------------------------------------
PROCESS VALIDATION Horizon will perform the following:
1. Process Validation for piston filter impregnation. Lead time is
two (2) to three (3) weeks.
2. Software Validation in conjunction with BIEX software vendor. Lead
time is approximately four (4) weeks
- -----------------------------------------------------------------------------------------------------------------------
PROCESS LEAD TIMES Anticipated lead times are as follows:
-Production: Four (4) to six (6) weeks from approved
documentation and receipt of all material.
-Software Validation: Four to six weeks from approved documentation
and receipt of all material.
- -----------------------------------------------------------------------------------------------------------------------
RAW MATERIALS Customer provided raw materials are required to be provided under the
following conditions to ensure quality and regulatory compliance.
1. Clean and ready for use.
2. Adequately labeled for identification, traceability and quantity.
3. Packaged in double poly bagged lined cases.
4. Free of direct contact with chipboard, corrugated cardboard and
similar particulate contaminates.
- -----------------------------------------------------------------------------------------------------------------------
DOCUMENTATION Prior to any production activities, a complete Device Master Record
(DMR)will be created at Horizon. Contents included in the DMR:
-Manufacturing Procedures (MP).
-Parts List (PL), references appropriate drawings.
-Quality Control Instructions (QCI).
-Production Traveler (PT).
- -----------------------------------------------------------------------------------------------------------------------
7.
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------
ITEM DETAIL OF PRODUCT AND SERVICES PROVIDED
- -----------------------------------------------------------------------------------------------------------------------
-Product Specifications (PS), where appropriate, including labeling and
applicable sterilization procedures.
- -----------------------------------------------------------------------------------------------------------------------
DOCUMENTATION A Device History Record (DHR) is a compilation of records containing the
(continued) complete production history of a finished product identified by a specific
traceable work order number. A DHR will be maintained by Horizon for each
lot of finished product to demonstrate that the product was manufactured
in accordance with it's DMR, including dates of manufacturing, quantity
produced, quantity released, lot numbers of components used, dates and
signatures of individuals performing tasks, inspection records and
sterilization process records.
Horizon strongly adheres to the position that it is the Customer's right
and responsibility to review and approve Horizon's documentation for the
Customer Devices.
- -----------------------------------------------------------------------------------------------------------------------
QUALITY ASSURANCE Horizon Medical, Inc. is committed to providing our customers with
POLICY/LICENSING quality, cost-effectiveness products and services on a timely bases.
We will assure that the requirements of our customers are properly defined
so that we can consistently meet or exceed these requirements.
The management of Horizon Medical takes pride in the company's regulatory
compliance practices. Horizon Medical is committed to meeting or exceeding
customer's quality expectations the first time and every time. Horizon
Medical will consistently assure that the customer's product safety and
efficacy expectations are achieved.
In order to accomplish our goals, Horizon Medical will utilize sound
design, manufacturing controls, tests and inspections, record keeping,
audits, complaint responsiveness, corrective action and internal audits.
Horizon Medical will assure that all manufacturing and related practices
conform to F.D.A. requirements as established by law and by current
Quality System (GMP) Regulations.
Horizon Medical works with our customers, employees and suppliers and
solicit their cooperation in order to obtain these goals.
Horizon Medical is licensed and regulated by the U.S. Food and Drug
Administration and the California Department of Health
- -----------------------------------------------------------------------------------------------------------------------
8.
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------
ITEM DETAIL OF PRODUCT AND SERVICES PROVIDED
- -----------------------------------------------------------------------------------------------------------------------
Services as a Medical Device and Pharmaceutical Manufacturer.
- -----------------------------------------------------------------------------------------------------------------------
PRICING PRODUCTION
Minimum Order Quantity * Unit Price
-------------------------- -----------
[*******] [*******]
[*******] [*******]
[*******] [*******]
*Pricing includes four (4) collection units per
kit
*Defined as a single product/delivery quantity.
Terms: Net thirty (30) days.
F.O.B.: Santa Ana, CA
- -----------------------------------------------------------------------------------------------------------------------
SUMMARY Horizon looks forward to the challenge and opportunity to provide our
services to BIEX, INC. We maintain our quality and manufacturing systems
to exceed industry standards and we look forward to applying these skills
to your outsourcing needs.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Respectfully Submitted by:
/s/ Gregory W. Olson
Gregory W. Olson
National Sales Manager
HORIZON MEDICAL, INC.
[*] CONFIDENTIAL TREATMENT REQUESTED
9.
<PAGE>
EXHIBIT 10.10
-----------------------------
BIEX, INC. 401(K)
RETIREMENT PLAN
1/1998
<PAGE>
PLAN ARRANGED BY
SEDGWICK JAMES OF CALIF
160 SPEAR ST
SAN FRANCISCO CA
94105-1542
(415) 983-5736
<PAGE>
PLAN HIGHLIGHTS
Plan Highlights briefly describes your plan. The rest of this booklet
explains in greater detail how the plan works.
We started your plan on January 1, 1998.
Your plan:
-- Lets you save from 1% to 15% of your pay. You reduce your total
taxable income by saving under the plan. That reduces your current
taxes. You will be taxed on this money when you receive it later
as a benefit.
-- May match a percentage, as determined by us, of your savings
contributions. That's extra money for you.
-- May provide more money for you through discretionary contributions.
-- Provides that your account resulting from any money you contribute
always belongs to you. Ownership of your account from other
contributions for you depends on your service.
-- Gives you tax deferral on any earnings until you receive them as
benefits.
-- Offers several different ways to receive your benefits. You choose
the right options for you.
If you are already making savings contributions, you are on your way to a
more secure future and enjoying savings today. If you haven't signed up to
make savings contributions, there's still time to start.
1
<PAGE>
ABOUT THIS BOOKLET
This booklet is the summary plan description. It explains how your plan
works, when you qualify for benefits, and other information.
The plan is much more detailed and it governs your benefits.
Ask your plan administrator if you have questions. Part 6 of this booklet
lists your plan administrator's name and address.
2
<PAGE>
TABLE OF CONTENTS
JOINING THE PLAN PART 1
-- When You Join
-- Signing Up
-- Changes in Your Membership
CONTRIBUTIONS TO THE PLAN PART 2
-- Your Savings Contributions
-- Our Matching Contributions
-- Our Discretionary Contributions
-- Helpful Terms
-- Limits
YOUR ACCOUNT: OWNERSHIP AND
GENERAL INFORMATION PART 3
-- Your Account
-- Investing Your Account
-- Vesting in Your Account
-- Before Your Vesting Percentage is 100%
-- What Happens to Forfeitures
-- You Can Borrow From Your Account
WHEN THE PLAN PAYS BENEFITS PART 4
-- At Retirement
-- Withdrawals From Your Account
-- At Termination
-- At Death
-- Tax Considerations
3
<PAGE>
HOW THE PLAN PAYS BENEFITS PART 5
-- Forms to Choose
-- Choosing at Retirement
-- Choosing Death Benefits Before Benefits Begin
IMPORTANT INFORMATION FOR YOU PART 6
-- Your Rights
-- A Spouse's Rights
-- The Plan Administrator
-- Direct Rollovers
-- Past Contributions
-- Top-heavy Plans
-- Assigning Your Benefits
-- Your Social Security Benefits
-- Claiming Benefits Under the Plan
-- Changing or Stopping the Plan
-- Our Plan and the Pension Benefit Guaranty
Corporation
-- Facts About the Plan
4
<PAGE>
PART 1 JOINING THE PLAN
---------------------
WHEN YOU JOIN
You join the plan an an active member on the January 1, April 1, July 1 or
October 1 on or after you become an employee.
SIGNING UP
To make savings contributions, you complete a "salary deferral agreement"
before the pay period in which you want to start saving. Part 2 tells you
more about these contributions.
You need to complete a form naming the person who will receive any death
benefit if you die before retirement. If you name someone other than your
spouse and you have been married one year, your spouse must agree to your
selection. Part 6 tells you more about your spouse's rights.
You must complete a form telling us how you wish to use the investment
options available for your account (see Part 3).
CHANGES IN YOUR MEMBERSHIP
You become an inactive member on the date you no longer work for us.
You stop being a member on the date you are not an employee and your account
is zero.
You rejoin the plan as an active member when you work another hour for us.
5
<PAGE>
PART 2 CONTRIBUTIONS TO THE PLAN
------------------
Plan contributions create an account for you. That account holds your money.
Contributions share in investment earnings or losses. You don't pay taxes on
any earnings until later--when you receive that money.
YOUR SAVINGS CONTRIBUTIONS
When you sign up, you tell us how much of your pay you want to save. You may
save as much as 15% or as little as 1% of your pay. You sign up by
completing a salary deferral agreement. You may begin your savings
contributions on the date you enter the plan. If you don't begin these
contributions at that time, you may only begin or change the amount of them
on any following January 1, April 1, July 1 or October 1. You may stop your
savings contributions at any time. You must complete a salary deferral
agreement in writing before the pay period in which these contributions
begin, change or stop.
Your pre-tab savings contributions:
- MAY GIVE you an additional return on your dollars through our matching
contributions.
- BUILD income for your retirement years.
- REDUCE your income taxes, letting you save for the future with dollars
you would otherwise pay in current taxes.
- MAY PROVIDE investment earnings that aren't taxed until you get your
benefits.
6
<PAGE>
Social Security tax is based on your income before you save. That means your
Social Security benefits stay the same no matter how much you save.
Federal law limits the amount you can save. You can find information about
the limits at the end of Part 2.
OUR MATCHING CONTRIBUTIONS
Our matching contributions give you an additional return on the amount you
save. As of each December 31, if you are eligible, we may make a matching
contribution equal to a percentage of your savings contributions. If we make
one, we choose the percentage.
You are eligible for a matching contribution on any December 31, if you are
an active member on that date.
OUR DISCRETIONARY CONTRIBUTIONS
We may make a discretionary contribution each plan year. "Discretionary"
means we choose the amount of the contribution and whether or not it will be
made.
We divide this contribution among members eligible for a share on December
31. You are eligible if you are an active member on that date.
To figure your share, we multiply our discretionary contribution by this
fraction:
a) your annual pay divided by
b) the total annual pay of all members getting a share.
7
<PAGE>
HELPFUL TERMS
ANNUAL PAY is your pay for the year ending on the latest December 31.
PAY is your total pay, including your savings contributions, but excluding
any expense repayments or other allowances, fringe benefits, moving expenses,
deferred compensation and welfare benefits.
SAVINGS CONTRIBUTIONS are your before-tax contributions. These are also
called "elective deferrals" or "401(k) contributions."
LIMITS
The law limits the amount you can save in any tax year. For 1998, the limit
under all plans of our type is $10,000. This limit is adjusted each year for
cost of living changes. If you are also a member of a plan of an unrelated
employer, this limit applies to the amount you save under both plans. If you
are over the limit, you should request one or both plans to pay any excess to
you. Only amounts over the limit may be paid to you, but you may choose
whether it is paid from one or both plans. If you don't have the excess paid
to you, it is taxable to you, but stays in the plans to be taxed again later
when you receive it. Under our plan, you must tell the plan administrator by
March 1 of the following year if you want any excess paid to you. If excess
savings contributions are paid to you, any matching contributions made
because of those savings contributions will be forfeited.
If you are a highly paid employee, the law may limit your contributions and
our matching contributions. Because of the limit, we will either restrict the
amount you can contribute in the future, or return your contributions over
the limit. Your returned savings contributions will be treated as regular
taxable income. If savings contributions are paid to you, any matching
contributions made because of these savings
8
<PAGE>
contributions will be forfeited. Other vested contributions over the limit
will be paid to you. The amount paid to you will include any earnings.
Matching contributions that are not vested and are over the limit will be
forfeited.
Matching contributions which are forfeited because of these limits reduce
our future contributions.
The law limits the amount of pay that may be used to determine contributions.
Certain highly paid employees and their family members are treated as a
single employee for purposes of this limit. The law also limits the
contributions and benefits under all plans of a single employer or group of
related employers to the lesser of a percent of pay or a dollar amount. The
limits are fairly high so few people should be affected unless they are
highly paid or a family member of certain highly paid employees or they are
covered by more than one plan.
Ask your plan administrator if you want to know more about these limits.
9
<PAGE>
PART 3 YOUR ACCOUNT:
OWNERSHIP AND GENERAL INFORMATION
-----------------
YOUR ACCOUNT
Your contributions and the contributions we make for you are credited to your
account. Your account equals the current value of these contributions.
INVESTING YOUR ACCOUNT
The plan funds, including your account, are invested to provide benefits under
the plan. The trustee decides which investment options are available for your
account.
Some investment options might have penalties or charges that apply when you
remove money from them. Your plan administrator can tell you more about these
and when they will apply.
You decide how to use the investment options for your savings contributions and
our contributions for you.
The plan administrator will tell you more about the investment options.
VESTING IN YOUR ACCOUNT
The part of your account you own (to which you always have a right) is called
your vested account.
You are always 100% vested in the part of your account resulting from the
following:
- Savings contributions
- Past contributions (see Part 6)
10
<PAGE>
You own a percentage of your account from all other contributions. This is your
vesting percentage.
Your vesting percentage will be 100% if you are working for us on or after the
earliest of these dates:
- The date you meet the age and service requirement(s) for early
retirement (see Part 4).
- The date you reach age 65.
- The date you become totally disabled as defined in the plan.
- The date you die.
Before that date, the schedule below determines your vesting percentage:
Years of Vesting
Vesting Service Percentage
Less than 1 0
1 25
2 50
3 75
4 or more 100
VESTING SERVICE means the sum of your periods of service. A period of service
begins when you start working for us. It ends on the earlier of the date you
stop working (you quit or are discharged) or the date you are absent from work
one year. Any period of time of less than one year when either you are not
working for us, or you are absent from work because of vacation or some other
reason, will count as a period of service.
11
<PAGE>
BEFORE YOUR VESTING PERCENTAGE IS 100%
You may have to give up (forfeit) some of your account as explained below.
If you have forfeiture date, you forfeit any part of your account that is not
vested. (You do not forfeit anything if your vesting percentage is 100%.) You
have a forfeiture date on the last day of the five consecutive one-year
breaks in service.
If you stop working for us before your vesting percentage is 100% and then
die, your vesting percentage does not change and the part of your account
that you do not own becomes a forfeiture.
You forfeit your account from our matching and discretionary contributions if
you stop working for us when your vesting percentage is zero and you receive
your vested account. We will restore this forfeited amount if you come back
to work before a forfeiture date.
If you stop working for us when your vesting percentage is between zero and
100 percent and you are paid your vested account from our matching and
discretionary contributions, the part of your account you do not own is
forfeited. You may rebuild your account by repaying these contributions if
you come back to work. The repayment must be made before the earlier of:
/ / The date five years after the date you come back to work.
/ / The end of the first period of five consecutive one-year breaks in
service beginning after you receive the payment.
12
<PAGE>
Your account will not be restored if a forfeiture date occurs before the date
repayment is made.
BREAK IN SERVICE means a period of service ends and you do not work another
hour for us within one year. Federal law delays a break in service for: your
pregnancy, birth of your child, placement of a child with you by reason of
your adoption of such child, or your caring for such child following such
birth or placement.
WHAT HAPPENS TO FORFEITURES
An amount given up by a member is called a forfeiture. Forfeitures stay under
the plan and are used to offset our next contributions.
YOU CAN BORROW FROM YOUR ACCOUNT
Loans are available under that plan. As rules issued by the Department of
Labor emphasize, however, the plan's primary purpose is to provide retirement
income for you. These rules help make sure your money is available when you
retire.
You must be a party-in-interest who is a participant or beneficiary to
receive a loan. The Employee Retirement Income Security Act of 1974 (ERISA)
defines a party-in-interest. Most people cease to be a party-in-interest when
they stop working for us. Loans are made on a reasonably equal basis under
the plan's loan policy. That means the limits and rules in the following
paragraphs apply in the same way to all such members.
The loan will be limited to the amount you may borrow without the loan being
treated as a taxable distribution to you. Generally, the loan may not be more
than 50% of your vested account or $50,000, if less. The minimum loan is
$1,000. Only one loan may be outstanding at a time. Your vested account will
provide the security for the loan. You may not use your account as security
for a loan outside the
13
<PAGE>
plan.
To apply for a loan, you must complete a written application on forms
provided by the loan administrator (see Part 6). You'll be asked for
important credit information and earnings history. This is the type of
information a bank or other lending institution would request. It's used as a
guide to grant loans and helps assure that borrowers can repay the loan as
required. You must give the loan administrator permission to check on your
credit history. Only members who are creditworthy will be granted loans.
A penalty or charge might apply if you make a loan. Talk to your loan
administrator before you complete the form.
If you are married, Federal law requires you to have your spouse's consent to
make or revise a loan. Part 6 tells you more about your spouse's rights.
The interest rate will be based on the rates available for similar loans from
commercial lending institutions. The loan administrator periodically examines
the rates such lenders are using. Once a loan is granted, the interest rate
on that loan will not change.
When you are granted a loan, you will need to sign a "promissory note." A
promissory note is your written promise to repay the loan. The note will
contain information about your loan such as the amount loaned to you, the
interest charged, and any processing fees or late charges. You must assign
the security for the loan to the plan when the loan is granted.
As you repay the loan, the principal and interest are credited to your
account. A loan to a member does not affect the account of any other member.
Payment due dates and the length of the repayment period will be set out in
the promissory note. Payments will be due at least quarterly. The repayment
period won't be longer than
14
<PAGE>
five years. Payroll deduction will be used to repay the loan if available.
You may repay the loan before it is due. A processing fee may be charged as
set out in the promissory note for payments which are not made by payroll
deduction.
When you cease to be a party-in-interest, the balance of any outstanding loan
is due.
A penalty may apply if a loan payment is late as set out in the promissory
note. A default occurs if a payment is more than 31 days late. Amounts then
due may be recovered in the following steps:
- Increased payroll deduction in later pay period.
- Separate payment.
- Use of any part of your vested account
available for distribution to you.
- Renegotiation of loan.
If any amount remains due more than 90 days, the entire loan is outstanding
and any other amount due becomes immediately due and payable. To recover the
amount due, the plan may use any part of your vested account available for
distribution to you. The outstanding loan is taxable to you.
Processing fees, late charges or extra costs incurred by the plan if you
default on a loan will be charged to your account.
If you are interested in a loan, contact the loan administrator.
15
<PAGE>
PART 4 WHEN THE PLAN PAYS BENEFITS
----------------------------------------
Your vested account will be used to provide benefits. This part describes
when those benefits are provided.
AT RETIREMENT
Unless you choose otherwise, benefits will start on your normal retirement
date if you are not working for us and you have a vested account under the
plan. You may choose to have benefits paid on this date even if you are still
working for us.
You may choose to have your benefits paid on your early retirement date.
If you continue working for us after your normal retirement date, you may
have your benefits start on your late retirement date.
NORMAL RETIREMENT DATE means the first day of the month on or after the date
you reach 65.
EARLY RETIREMENT DATE means the first day of any month you choose which is on
or after the latest of:
- The date you stop working for us.
- The date you reach age 55.
- The date you have 4 years of vesting service (see Part 3).
16
<PAGE>
LATE RETIREMENT DATE means, if you continue working for us after your normal
retirement date, the first day of the month on or after the date you stop
working. You may choose to have your benefits start on the first day of any
month after your normal retirement date and before you stop working. If you
do, that date becomes your late retirement date.
It's possible to have your benefits begin after your retirement date. If you
think you would like to delay your benefits, talk to the plan administrator
before your retirement date.
Your benefits must start by April 1 following the calendar year in which you
reach age 70 1/2, even if you are still working. Special rules apply if you
were age 70 1/2 before January 1, 1989.
WITHDRAWALS FROM YOUR ACCOUNT
If you are age 59 1/2 or older, you may withdrawal all or any part of your
vested account resulting from:
- Savings contributions
- Matching contributions
- Discretionary contributions
You may make this withdrawal two times during any one-year period.
If you have a financial hardship, you may be able to withdraw all or any part
of your vested account resulting from:
- Savings contributions (but none of the income earned on such
contributions)
- Matching contributions
17
<PAGE>
- Discretionary contributions
FINANCIAL HARDSHIP means your need is immediate and heavy. Federal rules
allow hardship withdrawals for these reasons:
- To pay medical expenses for you, your spouse or your dependents (as
defined in Section 152 of the Internal Revenue Code) which are not
repaid to you by insurance or otherwise.
- To purchase your primary home, stop eviction from your primary home,
or stop foreclosure on such home.
- To pay tuition and related educational fees for the next 12 months
of college for you or your spouse, child or dependent.
You may have a withdrawal for financial hardship only if you have received
all other withdrawals or loans available to you under our plan(s). You may
not withdraw more than the amount of your immediate and heavy financial need.
The amount of the withdrawal may include the amount of taxes that will result
from the withdrawal. After the withdrawal, you may not make savings or other
contributions to our plan(s) for 12 months. Also, the savings contributions
you make in your taxable year after the withdrawal can't be more than the
current legal limit less the amount of your savings in the year you received
the withdrawal.
Your request for withdrawal must be in writing on a form provided by the plan
administrator. You must complete and return it before the date of withdrawal.
Federal law may require you to have your spouse's consent.
A penalty or charge might apply if you make a withdrawal. Talk to your plan
administrator before you complete the form.
18
<PAGE>
AT TERMINATION
If your vested account has never been more than $3,500, it will be paid to you
in a single sum after you stop working for us.
If your vested account has been more than $3,500, you may:
- Leave your account under the plan. It will continue to participate in
the plan investments and provide benefits when you retire or die.
- Have all or any part of your vested account paid to you after you stop
working for us. You may choose from the forms of benefit described in
Part 5. If you don't choose a form or your spouse revokes consent (see
Part 6), your benefits are paid as described in Part 5.
Federal law may require you to have your spouse's consent (see Part 6).
A penalty or charge might apply if you take all or any part of your account in a
single sum. Talk with your plan administrator before making this choice.
AT DEATH
If you die before benefits start, your vested account will be paid to your
spouse or beneficiary under one or more of the forms available under the plan
(see Part 5).
If you die after you start receiving benefits, death benefits will be paid
according to the form you chose. Not all forms have death benefits.
19
<PAGE>
TAX CONSIDERATIONS
Benefits you receive are normally subject to income taxes. You may be able to
postpone or reduce the taxes that would otherwise be due. In addition, benefits
you receive before age 59 1/2 may be subject to a 10% penalty tax.
Each person's tax situation differs. Your financial advisor can help you decide
the best way for you to receive benefits.
20
<PAGE>
PART 5 HOW THE PLAN PAYS BENEFITS
---------------------------------
You make an important choice when you decide how to receive your benefit. Things
to consider include the money you will need every month, any death benefits you
want to provide, and your tax situation.
You may choose to have your vested account paid under one or more of the
optional forms available under the plan. Your plan administrator or tax advisor
can help you make your choice. You may also call The Principal Financial Group
at this toll-free number for answers to your benefit questions: 1-800-255-6613.
If your vested account has never been more than $3,500, it will be paid to you
in a single sum. There is no choice to be made.
The amount of payments will depend on the amount of your vested account, your
age, the age of your survivor and the optional form chosen.
FORMS TO CHOOSE
The plan offers the following optional forms of benefit:
/ / A monthly income to you for life. No benefits are
payable after your death.
/ / A monthly income to you for life. If you die before the end of a
period (you may choose 5, 10 or 15 years), payments continue to your
beneficiary to the end of the period.
/ / A monthly income to you for life. If you die before the total amount
paid equals your vested account, payments continue to your
beneficiary until the total does equal your vested account.
21
<PAGE>
/ / A monthly income to you for life. You choose a percentage (50%,
66 2/3%, or 100%) of your monthly income to continue for the lifetime
of a survivor you name. If both you and your survivor die before the
total amount paid equals your vested account, payments continue to
your beneficiary until the total does equal your vested account.
/ / A monthly income paid to you for a fixed period of
time (not less than 60 months).
/ / A series of flexible income payments to you. You choose the amount
you wish to receive each year. A minimum payment first applies in the
year you turn age 70 1/2, It is based on how long you and, if you are
married, your spouse, are expected to live. Each year the minimum is
refigured based on your, and if you are married, your spouse's,
current life expectancy and the value of your then remaining account.
For example, if you and your spouse are expected to live 20 years,
then 1/20th of your vested account must be paid to you that year. You
may elect a larger payment if you wish. If you die before your vested
account has been paid to you, the balance will be paid to your
beneficiary in a single sum.
After benefits begin, you may choose to have the balance of your
vested account paid to you under one of the other income forms.
/ / Your vested account paid to you in a single sum.
A penalty or charge might apply if you take all or any part of your account in a
single sum. Talk with your plan administrator before making this choice.
22
<PAGE>
CHOOSING AT RETIREMENT
You may choose any of the optional forms of benefit. Your choice must be made
within 90 days of the date benefits begin. (Federal rules may limit the forms
available to you.) You may change or cancel your choice at any time before
benefits start. Part 6 explains your spouse's rights.
If you don't have a choice in effect or your spouse revokes consent, your
benefits are paid in this way:
- If you are married, benefits are paid to you monthly for life. After your
death, 50% of your monthly income is paid to your spouse for as long as
your spouse lives. If both you and your spouse die before the total amount
paid equals your vested account, payments continue to your beneficiary
until the total does equal your vested account.
- If you are single, benefits are paid to you monthly for life. If you die
before the total amount paid equals your vested account, payments continue
to your beneficiary until the total does equal your vested account.
CHOOSING DEATH BENEFITS BEFORE BENEFITS BEGIN
You may name a beneficiary and choose an optional form for death benefits at any
time. A series of income payments with a minimum amount paid each year is
available only if you name your spouse as your beneficiary, Federal rules may
limit the forms so talk with your plan administrator about any form you wish to
choose. Part 6 explains your spouse's rights.
You may change or cancel a choice at any time.
If your vested account has never been more than $3,500, it will be paid to your
spouse or beneficiary in a single sum.
23
<PAGE>
If you don't have a choice in effect or your spouse's consent is revoked, death
benefits are paid this way:
- If you have been married for the full year before your death, death
benefits are paid to your spouse monthly for as long as your spouse lives.
If your spouse dies before the total amount paid equals your vested
account, payments continue to your spouse's beneficiary until the total
does equal your vested account.
Your spouse may choose another form of payment and may choose when benefits
start. Benefits must start before you would have reached age 70 1/2. If you
are 70 1/2 or older when you die, benefits must start by the end of the
next calendar year. If your spouse dies before benefits start, your vested
account is paid to your spouse's beneficiary in a single sum.
- If you haven't been married for the full year before your death, death
benefits are paid to your beneficiary in a single sum.
If you name a beneficiary but do not choose a form of payment, your beneficiary
may choose the form. Because of Federal rules about the starting date for
benefits, your beneficiary should contact the plan administrator less than one
year after your death.
Any choice of the form of payment by your spouse or beneficiary must be made
before benefits begin.
24
<PAGE>
PART 6 IMPORTANT INFORMATION FOR YOU
------------------------
YOUR RIGHTS
As a member of the plan you have certain rights and protections under the
Employee Retirement Income Security Act of 1974 (ERISA).
a) You can examine all plan documents, without charge, at your plan
administrator's office and at other specified locations, such as
worksites. This includes insurance contracts and all documents filed
by the plan with the U.S. Department of Labor, such as detailed annual
reports and plan descriptions.
b) You can get copies of all plan documents and other plan information
upon written request to your plan administrator. Your administrator
may make a reasonable charge for the copies.
c) You will get a summary of the plan's annual financial report.
d) You can get, once a year, a statement of your account values and what
part of these values would be yours if you stop working under the plan
now. If you don't have a right to these values, the statement will
tell you how many more years you have to work to get a right to all or
a part of these values. If you don't automatically get this statement,
you can request it.
25
<PAGE>
The government requires the following statement:
In addition to creating rights for plan members, ERISA defines the duties of
the people who operate the plan. These people are called "fiduciaries," from
the Latin word meaning "trust" or "confidence." Fiduciaries must perform
their duties in the interest of the plan members and beneficiaries.
The law also provides that you can't be fired or discriminated against to
prevent you from obtaining a benefit or exercising your rights guaranteed by
ERISA. If all or a part of your claim is denied, you must get a written
explanation of the reason for the denial. You have the right to have your claim
reviewed and reconsidered.
Under ERISA you can take certain steps to enforce the rights described above.
For example, if you request plan materials you must get them within 30 days.
However, if you haven't received the materials after about 20 days, it might be
a good idea to check with your plan administrator to see if there are problems
in giving you the materials you requested. Then, if you haven't received them
within 30 days of your request, you can file suit in Federal court. The court
can require your plan administrator to provide the materials and pay you up to
$100 for each day of delay until you get the materials, unless they weren't sent
because of reasons beyond your administrator's control. Or, if all or a part of
your claim for benefits is denied or ignored, you may file suit in a state or
Federal court or you can ask the U.S. Department of Labor for help. If you think
plan fiduciaries are misusing the plan's money, or you feel you are being
discriminated against for exercising your rights, you can get assistance from
the U.S. Department of Labor or file suit in Federal court. Any time you sue,
the court will decide who should pay court costs and fees. If you win, the
court may order the person you've sued to pay these costs and fees. If you lose,
you may have to pay these costs and fees.
26
<PAGE>
If you have any questions about the plan, contact your plan administrator. If
you have any questions about your rights under ERISA, contact the nearest Area
Office of the U.S. Labor-Management Services Administration, Department of
Labor.
A SPOUSE'S RIGHTS
Other parts of this booklet refer to a spouse's rights. Federal law gives these
rights to a spouse for his or her protection.
Your spouse must consent to the start of your benefits before the date you reach
age 65. No consent is needed if your benefits are to be paid to you monthly for
life with 50% of your monthly income paid to your spouse after your death.
Your spouse must consent to any form of benefit which does not pay a monthly
income to you for life with 50% of your monthly income paid to your spouse after
your death. Your spouse has the right to limit consent to a specific optional
form of benefit or to limit consent to a specific beneficiary for any form which
pays a death benefit. Your spouse can give up one or both of these rights.
Spousal consent may not be needed if your benefits are to be paid to you in a
form that is not a lifetime income, even if these benefits are paid to you
early.
If you have been married for a full year, your spouse must consent to any
beneficiary you name for death benefits which are payable if you die before your
benefit payments start. Any consent given by your spouse before the first day of
the plan year in which you reach age 35 will not be valid after the first day of
that year. A new consent must be obtained. If you stop working before this date,
however, any consent given by your spouse after you stop working will remain
valid for benefits from contributions made before you stopped working.
27
<PAGE>
Because a loan may reduce benefits payable to the spouse at a later date, your
spouse must consent to a loan.
Your spouse's consent may let you make future changes without his or her
consent. If it does not, you will need a new consent to make a new choice. You
do not need your spouse's consent to cancel a choice.
Your spouse may revoke consent at any time before benefits begin or before your
death, whichever applies. A spouse's consent is not valid for a former or a
future spouse of yours, except consent to a loan is binding on a future spouse.
THE PLAN ADMINISTRATOR
The plan administrator has the full power to decide what the plan provisions
mean; to answer all questions about the plan, including those about eligibility
and benefits; and to supervise the administration of the plan. The plan
administrator's decisions are final.
DIRECT ROLLOVERS
Certain benefits which are payable to you may be paid directly to another
retirement plan, individual retirement account or individual retirement annuity.
Your plan administrator will give you more specific information about this
option when it applies.
PAST CONTRIBUTIONS
Under certain circumstances, you may rollover an amount from another retirement
plan to this plan. This amount comes from contributions made because of your
past membership in that other plan. This is a rollover contribution and it
becomes a part of your vested account. Rollover contributions must meet Federal
rules so ask your plan administrator it you are interested in knowing more about
them.
28
<PAGE>
You decide how to use the investment options for your rollover contributions.
You may withdraw your rollover contributions at the same time(s) as you may
withdraw those contributions allowed to be withdrawn in Part 4.
A penalty or charge might apply if you make a withdrawal, so talk to your plan
administrator first.
TOP-HEAVY PLANS
We test our plan once a year to see if it is top-heavy. It would be top-heavy if
the account values for key employees exceed 60% of the account values for all
employees. Distributions made in the last five years are counted as an account
value.
In general, a key employee is an officer or owner. Not all officers or owners
are key employees. Factors taken into account are the number of officers or
owners and their amount of pay or percentage of ownership.
For any year in which a plan is top-heavy, there are minimum requirements for
contributions and vesting.
Your plan administrator can tell you if our plan is top-heavy and if the
minimums or reduced limits apply.
29
<PAGE>
ASSIGNING YOUR BENEFITS
Benefits under the plan cannot be assigned, transferred, or pledged to someone
else. The plan does make an exception for certain qualified domestic relations
orders such as alimony payments or marital property rights to a spouse or former
spouse. Your plan administrator will set up procedures to determine if a
domestic relations order is qualified.
YOUR SOCIAL SECURITY BENEFITS
Your benefits from this plan are in addition to your benefits from Social
Security. You should make your application for Social Security (and Medicare)
benefits three months before you wish Social Security payments to begin.
CLAIMING BENEFITS UNDER THE PLAN
Apply for benefits to your plan administrator. You'll need to complete all
necessary forms and supply needed information, such as the address where you
will get your checks.
Your claim will be reviewed and a decision made within 90 days. In some cases
the decision may be delayed for an additional 90 days. If so, you will be
notified in writing.
If you make a claim and all or part of it is refused, you'll be notified in
writing. You'll be told (1) why your claim was refused, (2) the specific
provisions of the plan governing the decision, (3) what additional information
is needed, if any, and (4) what steps you should take to have your claim
reviewed.
You have 60 days after you receive written notice your claim is refused to make
written appeal to your plan administrator. You or your representative may also
review plan documents and submit issues and comments in writing,
30
<PAGE>
A decision will be made on your appeal within 60 days. In some cases the
decision may be delayed for an additional 60 days. If so, you will be notified
in writing.
You will be notified in writing if your appeal is refused and given exact
reasons for the decision.
CHANGING OR STOPPING THE PLAN
The plan can be changed at any time. We will notify you of any changes that
affect your benefits.
Benefits you have earned as of the date the plan is changed may not be reduced
except as required by law. If the plan is changed, the plan administrator can
tell you which benefits and forms of payment are preserved for you.
An earlier version of the plan may continue to apply in certain situations. For
example, members who stop working for us have their eligibility for benefits
determined under the version in effect when they stopped working.
The plan can be terminated (stopped). If the plan is terminated, your account
will be 100% vested and nonforfeitable. Your account will be held under the plan
and continue to accrue investment earnings until it is used to provide benefits
according to the terms of the plan.
OUR PLAN AND THE PENSION BENEFIT GUARANTY CORPORATION (PBGC)
Because our plan is a defined contribution plan, we keep individual accounts
for all members, The Employee Retirement Income Security Act of 1974 (ERISA)
excludes plans like this one from insurance provided through the PBGC.
31
<PAGE>
FACTS ABOUT THE PLAN
PLAN SPONSOR AND IDENTIFICATION NUMBER
BIEX, INC.
6693 SIERRA LANE, SUITE F
DUBLIN CA 94568-2663
EIN: 84-1183276
PLAN NAME AND PLAN NUMBER
BIEX, INC. 401(K) RETIREMENT PLAN
PN: 001
TYPE OF PLAN
401(K) PROFIT SHARING
PLAN ADMINISTRATOR
BIEX, INC.
6693 SIERRA LANE, SUITE F
DUBLIN CA 94568-2663
TELEPHONE: (510) 556-0300
TYPE OF ADMINISTRATION
TRUSTEE
LOAN ADMINISTRATOR
HUMAN RESOURCES
32
<PAGE>
PLAN YEAR
JANUARY 1 THROUGH DECEMBER 31
FIRMS USED TO INVEST PLAN FUNDS
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
711 HIGH ST
DES MOINES IA 50392-0001
TRUSTEE(S) OF THE PLAN
JAMES EDLUND
PRESIDENT & CEO
6693 SIERRA LANE, SUITE F
DUBLIN CA 94568
ED LUCE
CHIEF FINANCIAL OFFICER
6693 SIERRA LANE, SUITE F
DUBLIN CA 94568
AGENT FOR LEGAL PROCESS OF THE PLAN
CHIEF FINANCIAL OFFICER
BIEX, INC.
6693 SIERRA LANE, SUITE F
DUBLIN CA 94568-2663
Service of legal process may also be made on your plan administrator or a plan
trustee.
33
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[Logo]
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
Des Moines, Iowa 50392-0001
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated March 13, 1998 and to all references to our Firm included in or
made part of this Registration Statement.
ARTHUR ANDERSEN LLP
San Jose, California
March 13, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF COUNSEL
We consent to the use of our name in the first paragraph under the caption
"Experts" in the prospectus, which constitutes a part of the Registration
Statement on Form S-1 for the common stock of Biex, Inc. We further consent to
the aforementioned use of our name in any amendments to the aforementioned
Registration Statement.
By: /S/ JOHN J. MCDONNELL
----------------------------------
John J. McDonnell
McDonnell Boehnen Hulbert &
Berghoff
Chicago, Illinois
March 12, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEETS AND STATEMENTS OF OPERATIONS FOUND ON PAGES F-3 AND F-4
OF THE COMPANY'S FORM S-1, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 194,282
<SECURITIES> 8,073,513
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,373,384
<PP&E> 135,440
<DEPRECIATION> 20,588
<TOTAL-ASSETS> 8,496,505
<CURRENT-LIABILITIES> 1,468,444
<BONDS> 0
0
0
<COMMON> 13,827
<OTHER-SE> 7,014,234
<TOTAL-LIABILITY-AND-EQUITY> 8,496,505
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (3,952,618)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,842,790)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,842,790)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,842,790)
<EPS-PRIMARY> (0.35)
<EPS-DILUTED> (0.35)
</TABLE>
