-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RZko+8veNABUTaTzroI5kbHvHblAkBf7hKLn30ueGydTXqhUA3rg0Di9JG8Z0sXi ymNKPVfHEdyr33kVYwPegQ== 0000899140-00-000013.txt : 20000202 0000899140-00-000013.hdr.sgml : 20000202 ACCESSION NUMBER: 0000899140-00-000013 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20000111 GROUP MEMBERS: E.M. WARBURG, PINCUS & CO., LLC GROUP MEMBERS: WARBURG PINCUS EQUITY PARTNERS LP GROUP MEMBERS: WARBURG, PINCUS & CO. GROUP MEMBERS: WARBURG, PINCUS EQUITY PARTNERS, L.P. GROUP MEMBERS: WARBURG, PINCUS VENTURES INTERNATIONAL, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: VISIBLE GENETICS INC CENTRAL INDEX KEY: 0001010819 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-49801 FILM NUMBER: 505315 BUSINESS ADDRESS: STREET 1: 700 BAY ST STREET 2: SUITE 1000 CITY: TORONTO ONTARIO CANA STATE: A6 BUSINESS PHONE: 2127025700 MAIL ADDRESS: STREET 1: 700 BAY ST STE 1000 STREET 2: TORONTO ONTARIO CANADA CITY: M5G 1Z6 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS EQUITY PARTNERS LP CENTRAL INDEX KEY: 0001075598 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVE. CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2128780600 SC 13D/A 1 AMENDMENT NO. 1 TO SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Amendment No. 1) Under the Securities Exchange Act of 1934 Visible Genetics Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Shares, without par value - -------------------------------------------------------------------------------- (Title of Class of Securities) 92829S104 - -------------------------------------------------------------------------------- (CUSIP Number of Class of Securities) Stephen Distler E.M. Warburg, Pincus & Co., LLC 466 Lexington Avenue New York, New York 10017 (212) 878-0600 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copies to: Peter H. Jakes, Esq. Willkie Farr & Gallagher 787 Seventh Avenue New York, NY 10019-6099 (212) 728-8000 December 14, 1999 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Schedule) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following: [ ] SCHEDULE 13D - ------------------- ------------------ CUSIP No. 92829S104 Page 2 of 26 Pages - ------------------- ------------------ - ----------- -------------------------------------------------------------------- 1 NAME OF REPORT PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Warburg, Pincus Equity Partners, L.P. I.D. #13-3986317 - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ----------- -------------------------------------------------------------------- 3 SEC USE ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - --------------------- --------- ------------------------------------------------ 7 SOLE VOTING POWER 0 --------- ------------------------------------------------ NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING 1,987,936 PERSON WITH --------- ------------------------------------------------ 9 SOLE DISPOSITIVE POWER 0 --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER 1,987,936 - ----------- -------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 1,987,936 - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 14.8% - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - ----------- -------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ------------------- ------------------ CUSIP No. 92829S104 Page 3 of 26 Pages - ------------------- ------------------ - ----------- -------------------------------------------------------------------- 1 NAME OF REPORT PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Warburg, Pincus & Co. I.D. #13-6358475 - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ----------- -------------------------------------------------------------------- 3 SEC USE ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - --------------------- --------- ------------------------------------------------ 7 SOLE VOTING POWER 0 --------- ------------------------------------------------ NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING 4,207,273 PERSON WITH --------- ------------------------------------------------ 9 SOLE DISPOSITIVE POWER 0 --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER 4,207,273 - ----------- -------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 4,207,273 - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 27.3% - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - ----------- -------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ------------------- ------------------ CUSIP No. 92829S104 Page 4 of 26 Pages - ------------------- ------------------ - ---------- --------------------------------------------------------------------- 1 NAME OF REPORT PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON E.M. Warburg, Pincus & Co., LLC I.D. #13-3536050 - ---------- --------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ---------- --------------------------------------------------------------------- 3 SEC USE ONLY - ---------- --------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A - ---------- --------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ---------- --------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - --------------------- --------- ------------------------------------------------ 7 SOLE VOTING POWER 0 --------- ------------------------------------------------ NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING 4,207,273 PERSON WITH --------- ------------------------------------------------ 9 SOLE DISPOSITIVE POWER 0 --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER 4,207,273 - ---------- --------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 4,207,273 - ---------- --------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ---------- --------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 27.3% - ---------- --------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - ---------- --------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ------------------- ------------------ CUSIP No. 92829S104 Page 5 of 26 Pages - ------------------- ------------------ - ---------- --------------------------------------------------------------------- 1 NAME OF REPORT PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Warburg, Pincus Ventures International, L.P. - ---------- --------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ---------- --------------------------------------------------------------------- 3 SEC USE ONLY - ---------- --------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ---------- --------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ---------- --------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Bermuda - --------------------- --------- ------------------------------------------------ 7 SOLE VOTING POWER 0 --------- ------------------------------------------------ NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING 2,103,636 PERSON WITH --------- ------------------------------------------------ 9 SOLE DISPOSITIVE POWER 0 --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER 2,103,636 - ---------- --------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 2,103,636 - ---------- --------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ---------- --------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 15.6% - ---------- --------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - ---------- --------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. This Amendment No. 1 (the "Amendment") amends the Schedule 13D filed on July 22, 1999 (the "Schedule 13D") and is being filed on behalf of Warburg, Pincus Equity Partners, L.P., a Delaware limited partnership ("WPEP"), Warburg, Pincus Ventures International, L.P., a Bermuda limited partnership ("WPVI"), Warburg, Pincus & Co., a New York general partnership ("WP"), and E.M. Warburg, Pincus & Co., LLC, a New York limited liability company ("EMW" and, together with WPEP, WPVI and WP, the "Reporting Entities"). This Amendment relates to the common shares, without par value, of Visible Genetics Inc., an Ontario, Canada corporation (the "Company"). Unless the context otherwise requires, references herein to the "Common Stock" are to the common shares of Visible Genetics Inc., without par value. The holdings of Common Stock of WP and EMW in this Amendment include certain shares of Common Stock which may be deemed to be beneficially owned by Warburg, Pincus Netherlands Equity Partners I, C.V. ("WPNEPI"), Warburg, Pincus Netherlands Equity Partners II, C.V. ("WPNEPII") and Warburg, Pincus Netherlands Equity Partners III, C.V. ("WPNEPIII" and, together with WPNEPI, WPNEPII, WPVI and WPEP, the "Investors"). WP, EMW and the Investors are referred to herein as the "Group Members." 6 Unless otherwise indicated herein, each capitalized term used but not defined herein shall have the meaning assigned to such term in the Schedule 13D. Item 3 - ------ Item 3 of the Schedule 13D is hereby amended to read as follows: "The total amount of funds required by the Investors to purchase the securities of the Company as described herein was US $35,700,000 and was furnished from the working capital of the Investors." Item 5. - ------- Item 5 of the Schedule 13D is hereby amended to read as follows: "(a) The Reporting Entities beneficially own shares of Common Stock of the Company by virtue of their ownership of Common Stock, Series A Preferred Shares and Warrants which are convertible or exercisable into shares of Common Stock, as applicable. As of December 14, 1999, WP and EMW each beneficially owned 4,207,273 shares of Common Stock. Also as of this date, WPEP and WPVI beneficially owned 1,987,936 shares of Common Stock, and 2,103,636 shares of Common Stock, respectively. Of the shares beneficially owned by WP and EMW, 115,700 shares represent the aggregate Common Stock beneficially held by WPNEPI, WPNEPII and WPNEPIII. By 7 reason of WP's and EMW's respective relationships with the Investors, under Rule 13d-3 under the Exchange Act, WP and EMW may be deemed to own beneficially all of the shares of Common Stock which are beneficially owned by these entities. Assuming full conversion of the corresponding Series A Preferred Shares and the Warrants, as of December 14, 1999, the 4,207,273 shares of Common Stock beneficially held by the Reporting Entities represented approximately 27.3% of the sum of the outstanding shares of Common Stock (based on the 9,682,631 shares of Common Stock outstanding as of December 14, 1999, as represented by the Company in Section 4.3 of the Common Shares Purchase Agreement plus 1,916,000 shares of Common Stock issued pursuant to that Common Shares Purchase Agreement) together with those shares of Common Stock issuable upon conversion of the Series A Preferred Stock and Common Stock Warrants held by the Reporting Entities. Assuming full conversion of the corresponding Series A Preferred Shares and the Warrants, as of December 14, 1999, the 2,103,636 shares of Common Stock beneficially held by WPVI represented approximately 15.6% of the sum of the 11,598,631 outstanding shares of Common Stock and the 1,913,636 shares issuable on conversion of the Series A Preferred Stock and the Common Stock Warrants held by WPVI. Assuming full conversion of the corresponding Series A Preferred Shares and the Warrants, as of December 14, 1999, the 1,987,936 shares of Common Stock beneficially held by WPEP represented approximately 14.8% of the sum of the 11,598,631 outstanding 8 shares of Common Stock and the 1,808,386 shares of Common Stock issuable on conversion of the Series A Preferred Stock and Common Stock Warrants held by WPEP. As of December 14, 1999, assuming full exercise of the applicable Warrants and Shares, WPNEPI, WPNEPII and WPNEPIII held beneficial ownership of an aggregate of 115,700 shares of Common Stock, which is 0.9% of the sum of 11,598,631 and 105,250 shares of Common Stock issuable on conversion of the Series A Preferred Stock and Common Stock Warrants held by WPNEPI, WPNEPII and WPNEPIII. (b) WPEP and WPVI have beneficial ownership over 1,987,936 and 2,103,636 shares of Common Stock, respectively. WPNEPI, WPNEPII and WPNEPIII have beneficial ownership of an aggregate of 115,700 shares of Common Stock. WPEP, WPVI, WPNEPI, WPNEPII and WPNEPIII each share voting power and dispositive power over their holdings of such shares with EMW and WP. (c) Except for securities acquired pursuant to the Purchase Agreement, during the last sixty days there were no transactions effected by the Reporting Entities or by any of the persons set forth on Schedule I hereto. (d) Except as set forth in this Item 5, no person other than each respective record owner referred to herein of securities is known to have the right to receive or the power 9 to direct the receipt of dividends from, or the proceeds from the sale of, such securities. (e) Not applicable." Item 6. - ------- Item 6 of the Schedule 13D is hereby amended to add the following: "A Common Shares Purchase Agreement by and among the Investors and the Company was entered into on December 14, 1999, which provides for the purchase of shares of Common Stock of the Company by various investors at a price of US$15 per share. The Common Stock is not transferable in the absence of registration under the Securities Act or an exemption therefrom. In connection with this transaction, a Registration Rights Agreement was also entered into by these parties on that date. It requires the Company to prepare and file with the Commission a Registration Statement on Form F-3 within 30 days of the Closing (as defined in the Common Stock Purchase Agreement) and to use its best efforts to cause the Registration Statement to become effective at the earliest possible time. The Company is required to keep such Registration Statement effective for a period of two years following the date on which it becomes effective, or such shorter period ending on the date when all securities covered 10 by the Registration Statement have been sold or are eligible to be sold without registration under Rule 144 of the Securities Act. The foregoing summary of the Common Shares Purchase Agreement and Registration Rights Agreement is qualified in its entirety by reference to the Common Stock Purchase Agreement and the Registration Rights Agreement, a copy of which are set forth as Exhibit 6 and Exhibit 7 respectively." Item 7. Material to be Filed as Exhibits. - ----------------------------------------- 6. Common Stock Purchase Agreement, dated as of December 14, 1999, by and among the Investors and the Company. 7. Registration Rights Agreement, dated as of December 14, 1999, by and among the Investors and the Company. 11 SIGNATURES After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. Dated: January 10, 2000 WARBURG, PINCUS EQUITY PARTNERS, L.P. By: Warburg, Pincus & Co., General Partner By: /s/ Stephen Distler ------------------------------ Stephen Distler Partner Dated: January 10, 2000 WARBURG, PINCUS & CO. By: /s/ Stephen Distler ------------------------------ Stephen Distler Partner Dated: January 10, 2000 E.M. WARBURG, PINCUS & CO., LLC By: /s/ Stephen Distler ------------------------------ Stephen Distler Member Dated: January 10, 2000 WARBURG, PINCUS VENTURES INTERNATIONAL, L.P. By: Warburg, Pincus & Co., General Partner By: /s/ Stephen Distler ------------------------------ Stephen Distler Partner 12 SCHEDULE I ---------- Set forth below is the name, position and present principal occupation of each of the general partners of WP and members of EMW. WP is the sole general partner of WPEP, WPVI, WPNEPI, WPNEPII and WPNEPIII. Except as otherwise indicated, the business address of each of such persons is 466 Lexington Avenue, New York, New York 10017, and each of such persons is a citizen of the United States. GENERAL PARTNERS OF WP ---------------------- - ----------------------------- -------------------------------------------------- PRESENT PRINCIPAL OCCUPATION IN ADDITION TO POSITION WITH WP, AND POSITIONS NAME WITH THE REPORTING ENTITIES - ----------------------------- -------------------------------------------------- Joel Ackerman Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Harold Brown Partner of WP; Member and Senior Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- W. Bowman Cutter Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Cary J. Davis Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Stephen Distler Partner of WP; Member, Managing Director and Treasurer of EMW LLC - ----------------------------- -------------------------------------------------- Stewart K. P. Gross Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Patrick T. Hackett Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Jeffrey A. Harris Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- William H. Janeway Partner of WP; Member and Senior Managing Director of EMW LLC 13 - ----------------------------- -------------------------------------------------- Douglas M. Karp Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Charles R. Kaye Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Henry Kressel Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Joseph P. Landy Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Sidney Lapidus Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Kewsong Lee Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Reuben S. Leibowitz Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- David E. Libowitz Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Nancy Martin Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Edward J. McKinley Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Rodman W. Moorhead III Partner of WP; Member and Senior Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Howard H. Newman Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Gary D. Nusbaum Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Dalip Pathak Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Lionel I. Pincus Managing Partner of WP; Managing Member, Chairman of the Board and Chief Executive Officer of EMW LLC - ----------------------------- -------------------------------------------------- Ernest H. Pomerantz Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- John D. Santoleri Partner of WP; Member and Managing Director of EMW LLC 14 - ----------------------------- -------------------------------------------------- Steven G. Schneider Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- James E. Thomas Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- John L. Vogelstein Partner of WP; Member and Vice Chairman of EMW LLC - ----------------------------- -------------------------------------------------- Elizabeth H. Weatherman Partner of WP; Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Pincus & Co.* - ----------------------------- -------------------------------------------------- NL & Co.** - ----------------------------- -------------------------------------------------- - --------------------- * New York limited partnership; primary activity is ownership interest in WP and EMW LLC. ** New York limited partnership; primary activity is ownership interest in WP. As of 12/14/99 15 MEMBERS OF EMW LLC ------------------ - ----------------------------- -------------------------------------------------- PRESENT PRINCIPAL OCCUPATION IN ADDITION TO POSITION WITH EMW LLC, AND POSITIONS NAME WITH THE REPORTING ENTITIES - ----------------------------- -------------------------------------------------- Joel Ackerman Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Harold Brown Member and Senior Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- W. Bowman Cutter Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Cary J. Davis Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Stephen Distler Member, Managing Director, and Treasurer of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Stewart K. P. Gross Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Patrick T. Hackett Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Jeffrey A. Harris Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- William H. Janeway Member and Senior Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Douglas M. Karp Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Charles R. Kaye Member and Managing Director of EMW LLC; Partner of WP 16 - ----------------------------- -------------------------------------------------- Henry Kressel Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Rajiv B. Lall (1) Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Joseph P. Landy Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Sidney Lapidus Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Kewsong Lee Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Reuben S. Leibowitz Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- David E. Libowitz Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- John W. MacIntosh (2) Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Nancy Martin Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Edward J. McKinley Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- James McNaught-Davis (3) Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Rodman W. Moorhead III Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Howard H. Newman Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Gary D. Nusbaum Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Dalip Pathak Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Lionel I. Pincus Managing Member, Chairman of the Board and Chief Executive of EMW LLC; Managing Partner of WP - ----------------------------- -------------------------------------------------- Ernest H. Pomerantz Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- John D. Santoleri Member and Managing Director of EMW LLC; Partner of WP 17 - ----------------------------- -------------------------------------------------- Steven G. Schneider Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Dominic H. Shorthouse Member and Managing Director of EMW LLC (3) - ----------------------------- -------------------------------------------------- Chang Q. Sun (4) Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- James E. Thomas Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- John L. Vogelstein Member and Vice Chairman of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Elizabeth H. Weatherman Member and Managing Director of EMW LLC; Partner of WP - ----------------------------- -------------------------------------------------- Jeremy S. Young (3) Member and Managing Director of EMW LLC - ----------------------------- -------------------------------------------------- Pincus & Co.* - ----------------------------- -------------------------------------------------- - --------------------- (1) - Citizen of India (2) - Citizen of Canada (3) - Citizen of United Kingdom (4) - Citizen of China * New York limited partnership; primary activity is ownership interest in WP and EMW LLC As of 12/14/99 18 Joint Filing Agreement The undersigned hereby agree that the statement on Schedule 13D with respect to the common shares of Visible Genetics Inc. is, and any amendment thereto signed by each of the undersigned shall be, filed on behalf of each undersigned pursuant to and in accordance with the provisions of 13d-1(k) under the Securities Exchange Act of 1934, as amended. Dated: January 10, 2000 WARBURG, PINCUS EQUITY PARTNERS, L.P. By: Warburg, Pincus & Co., General Partner By: /s/ Stephen Distler ------------------------------ Stephen Distler Partner WARBURG, PINCUS VENTURES INTERNATIONAL, L.P. By: Warburg, Pincus & Co., General Partner By: /s/ Stephen Distler ------------------------------ Stephen Distler Partner WARBURG, PINCUS & CO. By: /s/ Stephen Distler ------------------------------ Stephen Distler Partner E.M. WARBURG, PINCUS & CO., LLC By: /s/ Stephen Distler ------------------------------ Stephen Distler Member EX-99.1 2 COMMON STOCK PURCHASE AGREEMENT Execution Copy VISIBLE GENETICS INC. COMMON SHARES PURCHASE AGREEMENT DECEMBER 14, 1999 TO EACH OF THE INVESTORS WHO ARE SIGNATORIES HERETO Ladies and Gentlemen: Visible Genetics Inc., an Ontario corporation (the "Company"), hereby agrees with each of you as follows: 1. Authorization of Sale of the Securities. The Company has, or before the Closing (as defined below) will have, authorized the sale and issuance of shares of its common shares, no par value (the "Common Stock"). The Common Stock sold hereunder shall be referred to herein as the "Shares." 2. Agreement to Sell and Purchase the Shares. 2.1 Sale of Shares. Subject to the terms of this Common Shares Purchase Agreement (this "Purchase Agreement"), at the Closing (as defined in Section 3.1 hereof), the Company agrees to sell to each of the Investors who has executed a counterpart execution page to this Purchase Agreement (each, "Investor"), and each Investor agrees to purchase from the Company, the aggregate number of Shares set forth above such Investor's signature on the counterpart execution page hereof, at a purchase price of US$15 per Share, provided that the aggregate purchase price for the Shares sold to the Investors pursuant to this Agreement shall not be less than $15 million. 2.2 Separate Agreement. Each Investor shall severally, and not jointly, be liable for only the purchase of the Shares that appears above such Investor's signature and that relates to such Investor. The Company's agreement with each of the Investors is a separate agreement, and the sale of Shares to each of the Investors is a separate sale. The obligations of each Investor hereunder are expressly not conditioned on the purchase by any or all of the other Shares such other Investors have agreed to purchase. 2.3 Acceptance of Proposed Purchase of Shares. Each Investor understands and agrees that the Company, in its sole discretion, reserves the right to accept or reject, in whole or in part, any proposed purchase of Shares. The Company shall have no obligation hereunder with respect to any Investors until the Company shall execute and deliver to such Investors an executed copy of this Purchase Agreement. If this Purchase Agreement is not executed and -1- delivered by the Company or the offering is terminated, this Purchase Agreement shall be of no further force and effect. 3. Closing and Delivery. 3.1 Closing. The closing of the purchase and sale of the Shares pursuant to this Purchase Agreement (the "Closing") shall be held contemporaneously (the "Closing Date") with the satisfaction or waiver of all conditions to Closing set forth in Sections 6 and 7 hereof, at 10:00 a.m. (New York Time) at the offices of Baer Marks Upham LLP, located at 805 Third Avenue, New York, New York, or on such other date and place as may be agreed to by the Company and the Investors. Prior to the Closing, each Investors shall execute any related agreements or other documents required to be executed hereunder. 3.2 Delivery of the Shares at the Closing. At the Closing, the Company shall deliver to each Investor stock certificates registered in the name of such Investor, or in such nominee name(s) as designated by such Investor, representing the Shares to be purchased by such Investor at the Closing as set forth in the Schedule of Investors against payment of the purchase price for such Shares by means of a wire transfer of same day funds to an account designated by the Company in a written notice to PaineWebber Incorporated. The name(s) in which the stock certificates are to be issued to each Investor are set forth in the Investor's counterpart execution page hereto, as completed by each Investor. 4. Representations and Warranties of the Company. The Company represents and warrants to the Investors that: 4.1 Corporate Organization (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the Province of Ontario. True and complete copies of the Company's Restated Articles of Incorporation and By-law No. 3 (collectively, the "Organizational Documents") have been filed by the Company with the United States Securities and Exchange Commission (the "SEC") and provided to the Investors. (b) The Company has all requisite power and authority and has all necessary approvals, licenses, permits and authorization to own, operate or lease its properties and to carry on its business as now conducted, except where the failure to have any such approval, license, permit or authorization would not reasonably be expected to have a material adverse effect on the business, properties, or financial condition of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"). The Company has all requisite power and authority to execute and deliver this Purchase Agreement and the Registration Rights Agreement dated the date hereof between the Company and the Investors (the "Registration Rights Agreement" and with the Purchase Agreement, the "Transaction Documents") and to perform its obligations hereunder and thereunder. (c) The Company has filed all necessary documents to qualify to do business as a foreign corporation in, and the Company is in good standing under the laws of, each jurisdiction -2- in which the conduct of the Company's business or the nature of the properties owned or leased by the Company requires such qualification, except where the failure to so qualify would not reasonably be expected to have a Material Adverse Effect. 4.2 Subsidiaries (a) Schedule 4.2 sets forth; (i) the name of each subsidiary of the Company, other than subsidiaries that are dormant or that do not carry on business activities; (ii) the name of each corporation, partnership, joint venture or other entity (other than such subsidiaries) in which the Company or any of its subsidiaries has, or pursuant to any agreement has the right or obligation to acquire at any time by any means, directly or indirectly, an equity interest or investment; (iii) in the case of each of such corporations described in clauses (i) and (ii) above, (A) the jurisdiction of incorporation and (B) the capitalization thereof and the percentage of each class of voting capital stock owned by the Company or any of its subsidiaries. (b) Each subsidiary of the Company listed on Schedule 4.2 has been duly organized, is validly existing and in good standing under the laws of the jurisdiction of its organization, has the corporate power and authority to own and lease its properties and to conduct its business and is duly registered, qualified and authorized to transact business and is in good standing in each jurisdiction in which the conduct of its business or the nature of its properties requires such registration, qualification or authorization, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect. All of the issued and outstanding equity or other participating interests of each subsidiary have been duly authorized and validly issued, are fully paid and non-assessable, and, to the extent owned by the Company as indicated on Schedule 4.2, are owned free and clear of any mortgage, pledge, lien, encumbrance, security interest, claim or equity, except as set forth on Schedule 4.2. (c) For purposes of this Purchase Agreement, "subsidiary" shall mean any (i) Person (as hereinafter defined in Section 4.5) of which the Company (or other specified Person) shall own directly or indirectly through a subsidiary, a nominee arrangement or otherwise (A) at least a majority of the outstanding voting capital stock (or other outstanding voting shares of beneficial interest) or (B) at least a majority of the partnership, membership, joint venture or similar interests, or (ii) in which the Company (or other specified Person) is a general partner or joint venturer. 4.3 Capitalization (a) The authorized capital stock of the Company consists of an unlimited number of shares of Common Stock and an unlimited number of preferred shares, without par value ("Preferred Stock"). As of the close of business on the date one business day prior to the date hereof, 9,682,631 shares of Common Stock were issued and outstanding, (ii) 33,948 shares of Series A Convertible Preferred Stock were issued and outstanding, (iii) 3,208,680 shares of Common Stock were reserved for issuance under the Company's employee stock option plans listed on Schedule 4.3(a) in the amounts stated in such schedule, (iv) 5,207,739 shares of Common Stock were reserved for issuance under the Company's outstanding warrants and convertible securities, and (v) there were no bonds, debentures, notes or other evidences of -3- indebtedness issued or outstanding having the right to vote on any matters on which the Company's stockholders may vote. (b) All of the outstanding shares of Common Stock and Preferred Stock of the Company have been duly and validly issued and are fully paid and non-assessable, and were issued in accordance with all applicable United States federal and state and Canadian federal and provincial securities laws. Upon issuance, sale and delivery as contemplated by this Purchase Agreement, the Shares will be duly authorized, validly issued, fully paid and non-assessable shares, free of all preemptive or similar rights. (c) Except for the rights which attach to the outstanding Series A Convertible Preferred Stock as described in the Restated Articles of Incorporation of the Company and the options which are listed on Schedule 4.3(a) and the warrants, options and convertible securities which are listed on Schedule 4.3(c) hereto, on the Closing Date, there will be no shares of Common Stock, Preferred Stock or any other equity security of the Company issuable upon exercise, conversion or exchange of any security of the Company nor will there be any rights, options or warrants outstanding or other agreements to acquire shares of Common Stock or any other equity security of the Company nor will the Company be contractually obligated to purchase, redeem or otherwise acquire any outstanding shares of Common Stock. Except as set forth on Schedule 4.3(c), (i) no stockholder of the Company is entitled to any preemptive or similar rights to subscribe for shares of capital stock of the Company, (ii) the Company has not agreed to register any of its securities under the Securities Act (other than pursuant to the Registration Rights Agreement) and (iii) there are no existing voting trusts or similar agreements to which the Company or any of its subsidiaries is a party with respect to the voting of the capital stock of the Company or any of its subsidiaries. 4.4 Corporate Proceedings, etc. The Company has full corporate power to execute and deliver each Transaction Document, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of the Transaction Documents by the Company and each of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company. No other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance of the Transaction Documents by the Company and each of the transactions contemplated hereby and thereby, and upon such execution and delivery (assuming the Transaction Documents are executed and delivered by the other parties thereto), each of the Transaction Documents shall constitute a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except that (i) the enforceability hereof and thereof may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereinafter in effect, affecting creditors rights generally, and (ii) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. 4.5 Consents and Approvals. Except as set forth in Schedule 4.5, the execution and delivery by the Company of the Transaction Documents, the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions -4- contemplated hereby and thereby do not require the Company or any of its subsidiaries to obtain any consent, approval or action of, or make any filing with or give any notice to, any individual, firm, corporation, partnership, limited liability company, trust or other entity (collectively, "Person") or public, governmental or judicial authority or agency (collectively, "Governmental Entity"), including, but not limited to, pursuant to the Competition Act (Canada) and the Investment Canada Act, as amended. 4.6 Absence of Conflicts, etc. Except as set forth in Schedule 4.6, the execution and delivery by the Company of the Transaction Documents do not, and, the fulfillment of the terms hereof and thereof by the Company, and the issuance of the Shares, will not, result in a breach of any of the terms, conditions or provisions of, or constitute a default under, or permit the acceleration of rights under or termination of, the Organizational Documents, any material agreement to which the Company or its subsidiaries is a party, or any order, judgment, rule or regulation of any Governmental Entity having jurisdiction over the Company or any, of its subsidiaries or over their respective properties or businesses, except for such defaults that would not reasonably be expected to have a Material Adverse Effect. 4.7 SEC Reports (a) The Company has filed with the SEC, among other reports (i) Annual Reports on Form 20-F for the fiscal years ended December 31, 1997 and 1998 as filed with the United States Securities and Exchange Commission (the "SEC"), (ii) all other documents filed with the SEC (pursuant to Section 13, 14(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) and the Canadian securities regulatory authorities since January 1, 1996 and (iii) all registration statements filed with the SEC since January 1, 1996, which are all the documents (other than preliminary material) that the Company filed or was required to file with the SEC or the Canadian securities regulatory authorities from that date through the date hereof (clauses (i) through (iii) being referred to herein collectively as the "SEC Reports"). Except to the extent they may have been subsequently amended or otherwise modified prior to the date hereof by subsequent reporting or filings, as of their respective dates, the SEC Reports (as the same may have been amended or otherwise modified) complied in all material respects with the requirements of the Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act and the rules and regulations of the SEC thereunder applicable to such reports and registration statements. Except to the extent they may have been subsequently amended or otherwise modified prior to the date hereof by subsequent reporting or filings, as of their respective dates, the SEC Reports did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) The audited consolidated financial statements as at and for the period ended December 31, 1998 of the Company included in the SEC Reports (the "1998 Financial Statements") comply as to form in all material respects with accounting requirements of the Securities Act or the Exchange Act, as applicable, and with the published rules and regulations of the SEC with respect thereto. The 1998 Financial Statements (i) have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") applied on a consistent basis (except as may be indicated therein or in the notes -5- thereto), (ii) present fairly, in all material respects, the financial position of the Company and its subsidiaries as of the dates thereof and the results of their operations and cash flows for the periods then ended and (iii) are in all material respects in agreement with the books and records of the Company and its subsidiaries. (c) Except as otherwise disclosed in a Form 6-K filed by the Company on July 7, 1999, the unaudited interim financial statements of the Company as at and for all periods commencing on or after January 1, 1999 included in the SEC Reports comply as to form in all material respects with accounting requirements of the Securities Act or the Exchange Act, as applicable, and with the published rules and regulations of the SEC with respect thereto. Except as otherwise disclosed in a Form 6-K filed by the Company on July 7, 1999, the condensed financial statements included in the SEC Reports: (i) have been prepared in accordance with GAAP applied on a consistent basis (except as may be indicated therein or in the notes thereto); (ii) present fairly, in all material respects, the financial position of the Company and its subsidiaries as of the dates thereof and the results of their operations and cash flows for the periods then ended subject to normal year-end audit adjustments and any other adjustments described therein and the fact that certain information and notes have been condensed or omitted in accordance with the Exchange Act and the rules and regulations promulgated thereunder; and (iii) are in all material respects in agreement with the books and records of the Company and its subsidiaries. (d) The Company and its subsidiaries keep proper accounting records in which all material assets and liabilities, and all material transactions, of the Company and its subsidiaries are recorded in conformity with applicable accounting principles. No part of the Company's or any of its subsidiaries, accounting system or records, or access thereto, is under the control of a Person who is not an employee of the Company or such subsidiary. (e) The Company, along with its subsidiaries, had less than $25,000,000 of aggregate sales in the United States in the most recently completed fiscal year, and as of September 30, 1999 owned, either directly or indirectly, assets in the United States with an aggregate book value of less than $15,000,000. 4.8 Absence of Certain Developments. Except as disclosed in the SEC Reports filed with the SEC on or prior to the date hereof or in Schedule 4.8, and except for the transactions contemplated by this Purchase Agreement, since December 31, 1998, (i) the Company and each of its subsidiaries has conducted its business only in the ordinary and usual course in accordance with past practice, and (ii) there have not occurred any events or changes (including the incurrence of any liabilities of any nature, whether or not accrued, contingent or otherwise) that have had, or is reasonably likely in the future to have, individually or in the aggregate, a Material Adverse Effect. 4.9 Compliance with Law (a) Neither the Company nor any of its subsidiaries is in violation of any laws, ordinances, governmental rules or regulations to which it is subject, except for violations which would not reasonably be expected to have a Material Adverse Effect, including without limitation laws or regulations relating to human therapeutic or diagnostic products or devices, the -6- environment or to occupational health and safety and, except as set forth in Schedule 4.9, no material expenditures are or will be required in order to cause its current operations or properties to comply with any such law, ordinances, governmental rules or regulations. Neither the Company nor any of its subsidiaries has received written notice of violation of any law, ordinance, governmental rule or regulation, which if violated, would reasonably be expected to have a Material Adverse Effect. No investigation or review by any Governmental Entity with respect to the Company or any of its subsidiaries is pending or, to the best of the Company's knowledge, threatened nor has any Governmental Entity indicated an intention to conduct the same, except for an investigation or review conducted as a result of an application or other filing made by the Company. (b) Neither the Company or any of its subsidiaries nor, to the Company's knowledge, any of the officers, directors, employees, agents or other representatives of the Company or any of its subsidiaries or affiliates (as that term is defined in Rule 405 promulgated under the Securities Act ("Affiliates")), has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or the holder of or any aspirant to any elective or appointive public office except as permitted by applicable law and for personal political contributions not involving the direct or indirect use of funds of the Company or any of its subsidiaries. (c) The Company and its subsidiaries have all licenses, permits, franchises or other governmental authorizations necessary to the ownership of their property or to the conduct of their respective businesses, except for those which if violated or not obtained would reasonably be expected (and except for any of the foregoing relating to Intellectual Property which are covered by the provisions of Section 4.18) to have a Material Adverse Effect. Neither the Company nor any subsidiary has finally been denied any application for any such licenses, permits, franchises or other governmental authorizations necessary to its business. 4.10 Litigation. There is no legal action, suit, arbitration or other legal, administrative or other governmental investigation, inquiry or proceeding (whether federal, state, local or foreign) pending or, to the best of the Company's knowledge, threatened against or affecting the Company or any subsidiary or any of their respective properties, assets or businesses which, either alone or in the aggregate, would reasonably be expected to have a Material Adverse Effect or prevent or delay the consummation of the transactions contemplated by the Transaction Documents. The Company is not aware of any fact which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding. Except as set forth in Schedule 4.10, neither the Company nor any subsidiary is subject to any order, writ, judgment, injunction, decree, determination or award of any Governmental Entity against it. 4.11 Material Contracts. Neither the Company nor any of its subsidiaries is in default (or would be in default with notice or lapse of time, or both) under, is in violation (or would be in violation with notice or lapse of time, or both) of, or has otherwise breached, any material indenture, note, credit agreement, loan document, lease, license or other agreement (unless such default has been waived), which default, alone or in the aggregate with all other such defaults, would reasonably be expected to have a Material Adverse Effect. All material agreements to -7- which the Company or any of its subsidiaries is a party, reflecting all amendments thereto through the date of filing, have been filed by the Company with the SEC pursuant to the requirements of the Securities Act and the Exchange Act. Except as set forth in Schedule 4.11, each material agreement to which the Company or any of its subsidiaries is a party is in full force and effect and is binding upon the Company and, to the best of the Company's knowledge, is binding upon such other parties, in each case in accordance with its terms. There are no material unresolved disputes involving the Company or any of its subsidiaries under any material agreement. 4.12 Absence of Undisclosed Liabilities. Except as disclosed on Schedule 4.12 and except for indebtedness or liabilities that are reflected or reserved against in the most recent financial statements included in the SEC Reports, neither the Company nor any of its subsidiaries has any debt, obligation or liability of a kind required by GAAP to be reflected on a balance sheet (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due and whether or not known to the Company) arising out of any transaction entered into at or prior to the Closing, or any act or omission at or prior to the Closing, or any state of facts existing at or prior to the Closing, except current liabilities incurred and obligations under agreements entered into since December 31, 1998, each in the usual and ordinary course of business none of which (individually or in the aggregate) would reasonably be expected to have a Material Adverse Effect. 4.13 Labor Relations and Employment (a) Except as set forth in Schedule 4.13(a), (i) to the best of the Company's knowledge, there are no union claims to represent the employees of the Company or any of its subsidiaries; (ii) neither the Company nor any of its subsidiaries is a party to or bound by any collective bargaining or similar agreement with any labor organization, or work rules or practices agreed to with any labor organization or employee association applicable to employees of the Company or any of its subsidiaries; (iii) none of the employees of the Company or any of its subsidiaries is represented by any labor organization and the Company does not have any knowledge of any current union organizing activities among the employees of the Company or any of its subsidiaries, nor to the Company's knowledge does any question concerning representation exist concerning such employees; (iv) the Company and its subsidiaries are in compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment, wages, hours of work, occupational safety and health, equal opportunity, collective bargaining and payment of social security or social insurance premiums, as applicable, except where the failure to be in compliance would not reasonably be expected to have a Material Adverse Effect, and are not engaged in any discriminatory employment practices or unfair labor practices under applicable law, ordinance or regulation; (v) there is no unfair labor practice charge or complaint against the Company or any of its subsidiaries pending or, to the best of the Company's knowledge, threatened before any state or foreign agency; (vi) neither the Company nor any of its subsidiaries has received written notice of the intent of any federal, state, local or foreign agency responsible for the enforcement of labor or employment laws to conduct an investigation with respect to or relating to the Company or any of its subsidiaries and no such investigation is in progress; and (vii) there are no complaints, lawsuits or other proceedings pending or, to the best of the Company's knowledge, threatened in any forum by or on behalf of any present or former employee of the Company or any of its subsidiaries alleging breach of any -8- express or implied contract of employment, any law or regulation governing employment or the termination thereof or other discriminatory, wrongful or tortious conduct in connection with the employment relationship, except for any complaints, lawsuits or other proceedings which would not reasonably be expected to have a Material Adverse Effect. (b) Except as set forth in Schedule 4.13(b), the employment of all Persons and officers employed by the Company or any of its subsidiaries is terminable at will without any penalty or severance obligation of any kind on the part of the Company or such subsidiary. All sums due for employee compensation and benefits, including, without limitation, retiree benefits, and all vacation time owing to any employees of the Company or any of its subsidiaries have been duly and adequately accrued in all material respects on the accounting records of the Company and its subsidiaries in accordance with GAAP. (c) Except as set forth on Schedule 4.13(c), the Company and its subsidiaries have in force written confidentiality and non-disclosure agreements and patent/copyright/invention assignment agreements with, and requires as a condition of employment the execution of such agreements by, all of its technical research employees, all research consultants, all of its officers and such other members of its staff as in the regular course of their duties are reasonably likely to receive material confidential information regarding the Company, its Intellectual Property (as hereinafter defined) and its current and prospective business plans. (d) The Company is not aware that any of its officers or key employees or any officers or key employees of its subsidiaries is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any Governmental Entity, that would interfere with the use of such employee's best efforts to promote the interests of the Company or that would conflict with the Company's business as currently conducted. (e) Except as set forth in Schedule 4.13(e), the Company is not aware that any officer or key employee, or that any group of key employees, intends to terminate their employment with the Company or any of its subsidiaries, nor does the Company have a present intention to terminate the employment of any of the foregoing. 4.14 Employee Benefit Plans. (a) With respect to Employee Benefit Plans (as hereinafter defined) of the Company and its subsidiaries: (i) the fair market value of the assets of each funded Employee Benefit Plan, if any, the liability of each insurer for any Employee Benefit Plan funded through insurance or any book reserve established for any other Employee Benefit Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations, as of the date hereof, with respect to all current and former participants in such Employee Benefit Plan according to the actuarial assumptions and valuations, if any, most recently used to determine employer contributions to and liabilities of such Employee Benefit Plan, and no transaction contemplated by this Purchase Agreement shall cause such assets or insurance obligations or any book reserve to be less than such benefit obligations; (ii) each Employee Benefit Plan has been maintained and administered, in all material respects, in accordance with its terms and with all -9- applicable provisions of law (including rules and regulations thereunder); and (iii) each Employee Benefit Plan which is required to be registered with any Governmental Entity has been registered and maintained in good standing with the appropriate Governmental Entity, except where the failure to be so registered or to maintain good standing would not reasonably be expected to have a Material Adverse Effect. (b) For purposes of this Purchase Agreement, "Employee Benefit Plan" shall mean all material employee benefit or executive compensation arrangements, perquisite programs or payroll practices, including, without limitation, any such arrangements or payroll practices providing severance pay, sick leave, vacation pay, salary continuation for disability, retirement benefits, deferred compensation, bonus pay, incentives pay, stock options (including those held by Directors, employees, and consultants), hospitalization insurance, medical insurance, life insurance, scholarships or tuition reimbursements, that are maintained by the Company or any of its subsidiaries or to which the Company or any subsidiary is obligated to contribute thereunder for current or former employees of the Company or any subsidiary. 4.15 Real Property (a) The Company and its subsidiaries do not own any real property in whole or in part. (b) Schedule 4.15 lists all real property leased by the Company or its subsidiaries as well as the commencement and expiration dates of all leases relating thereto (the "Leased Real Property"). The Company or one of its subsidiaries has a valid and existing lease or sublease for each property subsumed within the Leased Real Property. All leases covering any of the Leased Real Property are valid and enforceable by the Company or one of its subsidiaries, as the case may be, in accordance with their respective terms, are in full force and effect, except that the enforceability thereof may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereinafter in effect, affecting creditors rights generally, and the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought, and have not been modified, supplemented or terminated in any material respect except as set forth in Schedule 4.15, and there is not under any such lease any default by the Company or one of its subsidiaries or, to the best of the Company's knowledge, by any landlord or lessor under any such lease except for any such default which would not reasonably be expected to have a Material Adverse Effect. The facilities and real properties covered by the Leased Real Property constitute all of the facilities and real properties presently used by the Company or its subsidiaries. -10- 4.16 Condition of Properties. All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Company and its subsidiaries are in good operating condition and repair (normal wear and tear excepted), are reasonably fit and usable for the purposes for which they are being used, are adequate and sufficient for the Company's or such subsidiary's business and conform with all applicable ordinances, regulations and laws except where the failure to conform with the applicable ordinances, regulations or laws would not reasonably be expected to have a Material Adverse Effect. 4.17 Environmental Matters. (a) The Company and its subsidiaries (i) are in compliance with all Environmental Laws; (ii) have obtained all necessary Environmental Permits, all of which are in full force and effect; and (iii) are in compliance with all terms and conditions of such Environmental Permits, except for any failure to comply or the absence of any such permit which would not reasonably be expected to have a Material Adverse Effect. (b) Neither the Company nor any of its subsidiaries has violated or done any act which would reasonably be expected to result in liability under, or have otherwise failed to act in a manner which would reasonably be expected to expose any of them to liability under, any Environmental Law except for any liability that would not reasonably be expected to have a Material Adverse Effect. No event has occurred which, upon the passage of time, the giving of notice, or failure to act would reasonably be expected to give rise to liability to the Company or any of its subsidiaries under any Environmental Law except for any liability that would not reasonably be expected to have a Material Adverse Effect. (c) No Hazardous Material has been released, spilled, discharged, dumped, or disposed of, by the Company, or otherwise come to be located in, at, beneath or near any of the Leased Real Property as a result of the Company's action including properties formerly owned, operated or otherwise controlled by the Company or any of its subsidiaries (i) in violation of any Environmental Law or (ii) in such manner as would reasonably be expected to result in environmental liability to the Company or any of its subsidiaries. (d) To the Company's knowledge, there have been and are no: (i) aboveground or underground storage tanks; (ii) surface impoundments for Hazardous Materials; (iii) wetlands as defined under any Environmental Law; or (iv) asbestos or asbestos containing materials or polychlorinated biphenyl ("PCB") or PCB-containing equipment, located within any portion of the Leased Real Property. (e) No liens currently encumber any Leased Real Property in connection with any actual or alleged liability of the Company under any Environmental Law. (f) (i) Neither the Company nor any of its subsidiaries has received any written notice, claim, demand, suit or request for information from any Governmental Entity or private entity with respect to any liability or alleged liability under any Environmental Law, nor to the knowledge of the Company has any other entity whose liability, in whole or in part, may be attributed to the Company or any of its subsidiaries, received any such notice, claim, demand, suit -11- or request for information; (ii) neither the Company nor any of its subsidiaries has ongoing negotiations with or agreements with any Governmental Entity or other Person or entity relating to any Remedial Action or other claim arising under or related to any Environmental Law. (g) Neither the Company nor any of its subsidiaries has disposed, or arranged for the disposal, of any Hazardous Materials at any facility that is or has ever been the subject of investigation or response action under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq. ("CERCLA"), Resource Conservation and Recovery Act, 42 U.S. C. ss. 6901 et seq. ("RCRA"), or any state or Canadian law of similar effect. (h) The Company does not have in its possession any environmental studies and reports pertaining to any of the Leased Real Property. For purposes of this Purchase Agreement, the following terms shall have the following meanings: "Environmental Laws" shall mean any statute, regulation, ordinance, order, decree, treaty, agreement, compact, common law duty or other requirement of United States, Canadian or international law relating to protection of human health, safety or the environment (including, without limitation, ambient air, surface water, groundwater, wetlands, soil, surface and subsurface strata). "Environmental Permits" shall mean all permits, licenses, approvals, authorizations, consents or registrations required under any applicable Environmental Law. "Hazardous Materials" shall mean any chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, hazardous materials, hazardous wastes, radioactive materials, petroleum or petroleum products. "Remedial Action" shall mean any action required to: (i) clean up, remove or treat Hazardous Materials; (ii) prevent a release or threat of release of any Hazardous Material; (iii) perform pre-remedial studies, investigations or post-remedial monitoring and care; or (iv) cure a violation of Environmental Law 4.18 Intellectual Property (a) Except as described in Schedule 4.18(a), the Company or one of its subsidiaries owns or has the valid right to use, free and clear of all liens and other encumbrances or claims of any nature, except for liens or other encumbrances that are not material, all of the Intellectual Property necessary for the conduct of the business of the Company or any of its subsidiaries, except where the failure to own or have the right to use any item of Intellectual Property would not reasonably be expected to have a Material Adverse Effect. Except as noted on Schedule 4.18(a), all Intellectual Property that is material to the Company, is valid, subsisting, unexpired, in proper form and enforceable and all renewal fees and other maintenance fees that have fallen due on or prior to the effective date of this Agreement have been paid. -12- (b) Except as set forth on Schedule 4.18(b), there is no claim, suit, action or proceeding pending or, to the best of the Company's knowledge, threatened against the Company or one of its subsidiaries: (i) alleging any conflict or infringement with any third party's proprietary rights; or (ii) challenging the Company or one of its subsidiaries, ownership or use, or the validity or enforceability of any Intellectual Property; and to the Company's knowledge no listed application or registration/patent of the Company is the subject of any patent interference proceeding or similar proceeding. Except as set forth on Schedule 4.18(b), there is no claim, suit, action or proceeding pending or, to best of the Company's knowledge, threatened by the Company or one of its subsidiaries, alleging any third party's intellectual property rights conflict or infringe the Intellectual Property of the Company or one of its subsidiaries. (c) Any (i) material license, sublicense and other agreements in which the Company or one of its subsidiaries grant rights to any Person to use the Intellectual Property; (ii) material license, sublicense and other agreement in which any Person grants rights to the Company or one of its subsidiaries to use the Intellectual Property of such Person; or (iii) material consent, indemnification, forbearance to sue, settlement agreement or cross-licensing arrangement relating to the Intellectual Property or the intellectual property of any third party to which the Company or one of its subsidiaries is a party, which is described by the Company in its Annual Report on Form 20-F for the year ended December 31, 1998 or in any subsequent filing made with the SEC, is correct in all material respects except as the same may have been supplemented or modified by a later filing with the SEC. Except as previously disclosed, neither the Company nor any of its subsidiaries is under any obligation to pay royalties or similar payments in connection with any license, nor will the Company or any of its subsidiaries be, as a result of the execution and delivery of the Transaction Documents or the performance of its obligations hereunder or thereunder, in breach of any license, sublicense or other agreement relating to the Intellectual Property except for any such breach which would not reasonably be expected to have a Material Adverse Effect. As to each material license agreement to which the Company or one of its subsidiaries is a party, the Company or such subsidiary is current in the payment of all royalties due thereunder. (d) Except as set forth in Schedule 4.18(d), no former or present employee, officer or director of the Company or any of its subsidiaries holds any right, title or interest, directly or indirectly, in whole or in part, in or to any Intellectual Property. (e) The Company or one of its subsidiaries owns or has the right to use all computer software, software systems and databases and all other information systems currently used in the business of the Company or any of its subsidiaries, including, without limitation, all computer software used in the business of the Company on personal computers by employees of the Company or any of its subsidiaries. For purposes of this Purchase Agreement, "Intellectual Property" shall mean all of the following, owned or used in the business of the Company or any of its subsidiaries: (i) trademarks and service marks (registered or unregistered), trade dress, trade names and other names and slogans embodying business or product goodwill or indications of origin, all applications or registrations in any jurisdiction pertaining to the foregoing and all goodwill associated therewith; (ii) patents, patentable inventions, discoveries, improvements, ideas, know-how, formula -13- methodology, processes, technology and computer programs, software and databases (including source code, object code, development documentation, programming tools, drawings, specifications and data) and all applications or registrations in any jurisdiction pertaining to the foregoing, including all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof; (iii) trade secrets, including confidential and other non-public information, and the right in any jurisdiction to limit the use or disclosure thereof; (iv) copyrights in writings, designs, mask works or other works, and applications or registrations in any jurisdiction for the foregoing; (v) database rights; (vi) Internet Web sites, domain names and registrations or applications for registration thereof; (vii) licenses, immunities, covenants not to sue and the like relating to any of the foregoing; (viii) books and records describing or used in connection with any of the foregoing; and (ix) claims or causes of action arising out of or related to infringement or misappropriation of any of the foregoing. 4.19 Regulatory Matters (a) As to each product subject to the jurisdiction of the U.S. Food and Drug Administration ("FDA") under the Federal Food, Drug and Cosmetic Act and the regulations thereunder ("FDCA") (each such product, a "Regulated Product") that is manufactured, tested, distributed and/or marketed by the Company or any of its subsidiaries, such Regulated Product is being manufactured, tested, distributed and/or marketed in substantial compliance with all applicable requirements under FDCA and similar state and foreign laws and regulations, including but not limited to those relating to investigational use, premarket clearance, good manufacturing practices, labeling, advertising, record keeping, filing of reports and security. (b) To the Company's knowledge, there are no rule making or similar proceedings before the FDA or comparable federal, Canadian, state, provincial, local or foreign government bodies which involve or, to the Company's actual knowledge, affect the Company or any of its subsidiaries which, if the subject of an action unfavorable to the Company or any of its subsidiaries, would have a Material Adverse Effect. (c) The description of the results of tests or evaluations contained in the Company's Investigational Device Exemption submission, dated November 11, 1998 (the "IDE"), are accurate and complete in all material respects, and the Company has no knowledge-of any other tests or evaluations, the results of which reasonably call into question the results described or referred to in the IDE. Except as set forth on Schedule 4.19, neither the Company nor any of its subsidiaries has received any written notices or correspondence from the FDA or any other governmental agency requiring the termination, suspension or modification of any tests or evaluations conducted on behalf of the Company or any of its subsidiaries. 4.20 Year 2000. Except as set forth in Schedule 4.20, in the SEC Reports or as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, the Company's computer software, hardware, firmware and other similar or related items of automated, computerized and/or software system(s) that are relied on by, or sold or provided with equipment or materials sold or provided by, the Company or its subsidiaries in the conduct of their respective businesses, (A) will not malfunction prior to, on, or after January 1, 2000 as a consequence of the change of century or millennium associated with that date, and (B) are, as -14- applicable, able to process dates and calculate spans of dates within and between the twentieth and twenty-first centuries prior to, including and following January 1, 2000, including by: (i) correctly recognizing all valid dates, including September 9, 1999 and January 1, 2001, (ii) properly recognizing leap years, including recognizing year 2000 as a leap year with 366 days and February 29, 2000 as a leap year day, and (iii) properly interfacing with the same or other systems, where designed to have the capacity to interface, so as to preserve proper processing of date information, including by automatic conversion of date information into and from a four digit and two digit date format as appropriate, provided, however, that (a) the representations and warranties contained in this Section 4.20 shall only apply if the software, firmware or hardware is used in accordance with the documentation therefor, and all other products used in combination with such software, firmware or hardware properly exchange date data with the software, firmware or hardware and (b) to the extent that any of the representations and warranties contained in this Section 4.20 are made by the Company with respect to computer software, hardware, firmware and other similar or related items of automated, computerized and/or software systems that are manufactured, assembled or provided by parties other than the Company or its subsidiaries, the representations and warranties provided by the Company are provided to the best of the Company's knowledge. 4.21 Tax Matters. Except as set forth on Schedule 4.21, there are no United States or Canadian federal, state, provincial, county, municipal or local taxes or comparable foreign taxes due and payable by the Company or any of its subsidiaries which have not been paid. The provisions for taxes on the consolidated balance sheet of the Company for the year ended December 31, 1998 are sufficient for the payment of all accrued and unpaid United States and Canadian federal, state, provincial, county, municipal and local taxes or comparable foreign taxes of the Company and its subsidiaries whether or not assessed or disputed as of the date of such balance sheet. The Company and each of its subsidiaries has duly filed all United States and Canadian federal, state, provincial, county, municipal and local or comparable foreign tax returns required to have been filed by it and there are in effect no waivers of applicable statutes of limitations with respect to taxes for any year. Except as set forth on Schedule 4.21, neither the Company nor any of its subsidiaries has been subject to a tax audit of any kind, whether in Canada, the United States or other jurisdiction in which such entity conducts business. 4.22 Insurance. The Company and its subsidiaries and their respective properties are insured in such amounts, against such losses and with such insurers as are prudent when considered in light of the nature of the properties and businesses of the Company and its subsidiaries. Schedule 4.22 sets forth a complete and accurate list of the insurance policies of the Company and its subsidiaries as in effect on the date hereof, including in each case the applicable coverage limits, deductibles and the policy expiration dates. No written notice of any termination or threatened termination of any of such policies has been received by the Company or any of its subsidiaries and such policies are in full force and effect. 4.23 Transactions with Related Parties. Except as set forth in the Company's Annual Report on Form 20-F for its fiscal year ended December 31, 1998 or in Schedule 4.23, neither the Company nor any subsidiary is a party to any agreement with any of the Company's directors, officers or shareholders or any Affiliate or family member of any of the foregoing under which it: (i) leases any real or personal property other than automobiles (either to or from such Person), (ii) -15- licenses real or personal property or Intellectual Property (either to or from such Person), (iii) is obligated to purchase any tangible or intangible asset from or sell such asset to such Person, (iv) purchases products or services from such Person, or (v) has borrowed money from or lent money to such Person. Except as set forth in Schedule 4.23, to the best of the Company's knowledge, there exist no agreements among shareholders of the Company, except as contemplated by the Transaction Documents, to act in concert with respect to their voting or holding of Company securities. 4.24 Interest in Competitors. Neither the Company, nor any or its subsidiaries, nor any of their respective officers nor, to the best of the Company's knowledge, directors, has any interest, either by way of contract or by way of investment (other than as holder of not more than 2% of the outstanding capital stock of a publicly traded Person) or otherwise, directly or indirectly, in any Person other than the Company and its subsidiaries that (i) provides any services or designs, produces or sells any product or product lines or engages in any activity similar to or competitive with any activity currently conducted by the Company or any of its subsidiaries or (ii) has any direct or indirect interest in any asset or property, real or personal, tangible or intangible, of the Company. 4.25 Private Offering. Neither the Company nor anyone acting on its behalf shall offer the Shares for issue or sale to, or solicit any offer to acquire, any of the same from, anyone so as to bring the issuance and sale of the Shares within the provisions of Section 5 of the Securities Act. Based upon the representations of the Investors set forth in Section 4, the offer, issuance and sale of the Shares, are and will be exempt from the registration and prospectus delivery requirements of the Securities Act, and have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws, and are qualified for distribution or are exempt from such requirements for qualification under applicable Canadian federal and provincial securities laws. 4.26 Material Facts. This Agreement and the other Transaction Documents do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein or herein, in light of the circumstances in which they were made, not misleading. 5. Representations, Warranties and Covenants of the Investors. 5.1 Investment Representations. Each Investor, severally and not jointly, represents and warrants to and covenants with the Company that: (a) Investor is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in shares presenting an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information Investors deems relevant (including the SEC Reports) in making an informed decision to purchase the Shares. -16- (b) Investor is purchasing the Shares in the ordinary course of its business for its own account for investment only and with no present intention of distributing the Shares or any arrangement or understanding with any other persons regarding the distribution of the Shares (except for transfers to "affiliates," meaning, for purposes of this Section 5.1(b), with respect to an Investors, any other person directly or indirectly controlling, controlled by or under direct or indirect common control with such Investors). (c) Investor shall not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the securities purchased hereunder except in compliance with the Securities Act, applicable Blue Sky laws, and the rules and regulations promulgated thereunder, and any applicable Canadian laws, rules or regulations. (d) Investor has completed or caused to be completed the information requested on the Investors' counterpart execution page and the Registration Questionnaire, attached as Appendix I to the Registration Rights Agreement for use in preparation of the Registration Statement, and the answers thereto are true and correct in all material respects as of the date hereof and will be true and correct, in all material respects, as of the effective date of the Registration Statement (provided that Investors shall be entitled to update such information by providing notice thereof to the Company prior to the effective date of such Registration Statement). (e) Investor has, in connection with its decision to purchase the Shares, relied with respect to the Company and its affairs solely upon the SEC Reports and the representations and warranties of the Company contained herein. (f) Investor is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act. (g) Investor has full right, power, authority and capacity to enter into this Purchase Agreement and the Registration Rights Agreement and to perform the transactions contemplated hereby and thereby. This Purchase Agreement and the Registration Rights Agreement have been duly authorized, executed and delivered by the Investor. Assuming due authorization, execution and delivery by each of the other parties hereto and thereto, this Purchase Agreement and the Registration Rights Agreement are valid and binding obligations of Investor, enforceable against it in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally or by general equitable principles 5.2 Ability to Bear Risk. Investor is able to bear the economic risk of holding the Shares for an indefinite period, including the loss of Investors' entire investment. The Shares were not offered or sold to Investors by any form of general solicitation or advertising. 5.3 Independent Advice. Investor understands that nothing in the SEC Reports, this Purchase Agreement, the Registration Rights Agreement or any other materials presented to Investors in connection with the purchase and sale of the Shares constitutes legal, tax or -17- investment advice and that no independent legal counsel retained by the Company has reviewed these documents and materials on Investor's behalf. Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares. 5.4 No Transferability. Investor understands that: (a) subject to Section 5.1(b), the Shares shall not be transferable in the absence of registration under the Securities Act or an exemption therefrom or in the absence of compliance with any term of this Purchase Agreement; (b) the Company shall provide stop transfer instructions to its transfer agent with respect to the Shares in order to enforce the restrictions contained in this Section 5.4; and (c) each certificate representing Shares shall be in the name of Investor and shall bear substantially the following legends (in addition to any legends required under applicable securities laws): "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY JURISDICTION, AND MAY ONLY BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF BY AN INVESTOR IF SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS, UNLESS EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS ARE AVAILABLE." The legend contained in this Section 5.4 may be removed from a stock certificate immediately upon receipt by the Company's transfer agent of a certificate substantially in the form of Exhibit A attached hereto, if being sold pursuant to the Registration Statement if then effective, and such other documentation as the Company's transfer agent may routinely require, including, but not limited to, an opinion of counsel. Notwithstanding the foregoing, such Shares must be held in certificated form until all restrictive legends required by applicable law may be removed in accordance with applicable law. 6. Conditions to Company's Obligations at the Closing. The Company's obligations to complete the sale and issuance of the Shares and to deliver Shares to each Investor, individually, as set forth in the Schedule of Investors shall be subject to the following conditions (to the extent not waived by the Company): 6.1 Payment for Shares. Each Investor shall have paid to the Company the purchase price for the Shares purchased by it. 6.2 Representations and Warranties Correct. The representations and warranties made by such Investors in Section 5 hereof shall be true and correct when made, and shall be true and correct on the Closing. -18- 6.3 Minimum Sale. The aggregate purchase price for the Shares sold to Investors pursuant to this Agreement shall not be less than $15 million. 7. Conditions to Investors' Obligations at the Closing. Each Investor's obligation to accept delivery of the Shares and to pay for the Shares shall be subject to the following conditions (to the extent not waived by such Investors): 7.1 Registration Rights Agreement. The Company shall have executed and delivered the Registration Rights Agreement. 7.2 Representations and Warranties Correct. The representations and warranties made by the Company in Section 4 shall be true and correct as of the Closing. 7.3 Covenants Performed. The Company shall have performed and complied in all material respects with all of its obligations under this Purchase Agreement which are to be performed or complied with on or prior to the Closing. 7.4 Legal Opinions. (a) Investors shall have received from Baer Marks & Upham LLP, counsel to the Company, an opinion letter addressed to the Investors, dated as of the date of the Closing, in a form acceptable to PaineWebber Incorporated (the "Placement Agent"), the Investors and their respective counsel, subject to customary assumptions and qualifications. (b) Investors shall have received from Goldman, Spring, Schwartz & Kichler, counsel to the Company, an opinion letter addressed to the Investors, dated as of the date of the Closing, in a form acceptable to the Placement Agent and the Investors and their respective counsel, subject to customary assumptions and qualifications. (c) Investors shall have received from Hyman, Phelps & McNamara, P.C., counsel to the Company, an opinion letter addressed to the Investors, dated as of the date of the Closing, in a form acceptable to the Placement Agent and the Investors and their respective counsel, subject to customary assumptions and qualifications. (d) Investors shall have received from Oppedahl & Larson, counsel to the Company, an opinion letter relating to intellectual property matters addressed to the Investors, dated as of the date of the Closing, in a form acceptable to the Placement Agent and the Investors and their respective counsel, subject to customary assumptions and qualifications. 7.5 Minimum Sale. The aggregate purchase price for the Shares sold to the Investors pursuant to this Agreement shall not be less than $15 million. 8. Miscellaneous. 8.1 Waivers and Amendments. Neither this Purchase Agreement nor any provision hereof may be changed, waived, discharged, terminated, modified or amended except upon the -19- written consent of the Company and holders of at least a majority of the Shares, or, in the case of non-material or ministerial amendments, upon the written consent of the Company and the Placement Agent. 8.2 Headings. The headings of the various sections of this Purchase Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Purchase Agreement. 8.3 Broker's Fee. The Company and each Investor (severally and not jointly) hereby represent that, except for amounts to be paid by the Company to the Placement Agent and certain other financial advisers as set forth in the Company's engagement letter with the Placement Agent, there are no brokers or finders entitled to compensation in connection with the sale of the Shares, and shall indemnify each other for any such fees for which they are responsible. 8.4 Severability. In case any provision contained in this Purchase Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 8.5 Notices. All notices, requests, consents and other communications 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) upon receipt when sent by first-class registered or certified mail, return receipt requested, postage prepaid, or (d) upon receipt after deposit with a nationally recognized overnight express courier, postage prepaid, specifying next day delivery with written verification of receipt. All communications shall be sent to the party to be notified at the address as set forth below or at such other address as such party may designate by ten (10) days advance written notice to the Company. All communications shall be addressed as follows: (a) if to the Company, to: Visible Genetics Inc. 700 Bay Street, Suite 1000 Toronto, Ontario M5G 1Z6 Telephone: (416) 813-3242 Facsimile: (416) 813-3250 Attention: Chief Executive Officer with a copy so mailed to: Baer Marks & Upham LLP 805 Third Avenue New York, New York 10022 Telephone: (212) 702-5700 Facsimile: (212) 702-5941 Attention: Steven S. Pretsfelder -20- and to: Goldman, Spring, Schwartz & Kichler Suite 700 40 Sheppard Avenue West Toronto, Ontario M2N 6K9 Attention: Samuel Schwartz (b) if to the Investors, at the address as set forth on the Counterpart Execution Page of this Purchase Agreement. 8.6 Governing Law; Exclusive Jurisdiction. This Purchase Agreement shall be governed by and construed in accordance with the laws of the State of New York as applied to contracts entered into and performed entirely in New York by New York residents, without regard to conflicts of law principles. The parties hereto (a) agree that any suit, action or other proceeding arising out of this Agreement shall be brought only in the courts of the State of New York or the courts of the United States located within the State of New York, in each case in the County of New York, (b) consent and submit to the exclusive jurisdiction of each such court in any such suit, action or proceeding and (c) waive any objection which they, or any of them, may have to personal jurisdiction or the laying of venue of any such suit, action or proceeding in any of such courts, and agree not to seek to change venue. 8.7 Counterparts. This Purchase Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. 8.8 Survival of Representations, Warranties and Agreements. Notwithstanding any investigation made by any party to this Purchase Agreement, all covenants, agreements, representations and warranties made by the Company and each Investors herein and in the certificates for the securities delivered pursuant hereto shall survive the execution of this Purchase Agreement, the delivery to the Investors of the Shares and the payment therefor until the expiration of the Registration Period as defined in the Registration Rights Agreement. 8.9 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. Neither the terms "successors" nor "assigns" as used herein shall include any Person who purchases Shares from any Investor after the Closing and is not an affiliate of an Investor. 8.10 Entire Agreement. This Purchase Agreement and other documents delivered pursuant hereto, including the exhibits, constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. 8.11 Payment of Fees and Expenses. Each of the Company and the Investors shall bear its own expenses and legal fees incurred on its behalf with respect to this Purchase -21- Agreement, the Registration Rights Agreement and the transactions contemplated hereby and thereby; provided, however, that the Company shall (i) pay the costs of one legal counsel for all Investors up to a maximum of $25,000; (ii) bear the costs in connection with the Registration Statement (pursuant to the Registration Rights Agreement) and (iii) reimburse the Placement Agent for certain fees and expenses incurred by the Placement Agent in connection with the transactions contemplated hereby, as set forth in the engagement letter with the Placement Agent. If any action at law or in equity is necessary to enforce or interpret the terms of this Purchase Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 8.12 Confidentiality. Each Investor acknowledges and agrees that any information or data it has acquired or hereafter shall acquire pursuant to this Agreement or the Registration Rights Agreement from the Company was received and shall be received by such Investor in confidence except any such information or data which at the time of disclosure was in the public domain or was readily available through public sources other than as a result of any breach of the terms hereof or the Registration Rights Agreement or was known to the Investor prior to receipt from the Company or was obtained from a third party not in violation of any confidentiality, non-disclosure or similar obligations of such third party or the Investor (the "Confidential Information"). Except to the extent authorized by the Company and required by any federal or state law, rule or regulation or any decision or order of any court or regulatory authority, each Investor agrees that it will refrain from disclosing any such Confidential Information to any Person other than to any agent, attorneys, accountants, employees, officers and directors of Investor (collectively, "agents") who need to know such information in connection with Investor's purchase of the Shares, and who agree to be bound by the confidentiality provisions of this Purchase Agreement. In the event that Investor or its agents are required by federal or state or other law, rule or regulation or any decision or order of any court or regulatory authority to release such information or data, it shall give the Company sufficient prior notice so that the Company may seek a stay or other release or waiver from disclosing such information. Each Investor agrees not to use to the detriment of the Company or for the benefit of any other Person or Persons, or misuse in any way, any Confidential Information of the Company. 8.13 Knowledge. The phrases "knowledge," "to the Company's knowledge," "to the Company's best knowledge," "of which the Company is aware" and similar language as used herein shall mean the actual knowledge and current awareness, or knowledge which a reasonable person would have acquired following a reasonable investigation, of Richard T. Daley or Kingsley Thomas. [The rest of this page intentionally left blank] -22- If this Purchase Agreement is satisfactory to you, please so indicate by signing the acceptance on a counterpart execution page to this Purchase Agreement and return such counterpart to the Company whereupon this Purchase Agreement will become binding between us in accordance with its terms. Visible Genetics Inc. an Ontario corporation By:____________________________________ Name: Richard T. Daly Title: President and Chief Executive Officer -23- Common Shares Purchase Agreement Counterpart Execution Page By signing below, the undersigned agrees to the terms of the Visible Genetics Inc. Common Shares Purchase Agreement and to purchase the number of Shares set forth below. Number of Shares being purchased: ______________________________________ INVESTORS: ______________________________________ By:___________________________________ Name: Title: Address:___________________________ ___________________________ ___________________________ Facsimile:_________________________ Please complete the following: 1. The exact name that your _________________________ Shares are to be registered in (this is the name that will appear on your Shares certificate(s)). You may use a nominee name if appropriate: 2. The relationship between the _________________________ Investors of the Shares and the Registered Holder listed in response to item 1 above: 3. The mailing address and _________________________ facsimile number of the Registered Holder listed in _________________________ response to item 1 above (if different from above): Fascimile:_______________ _________________________ 4. (For United States Investors:) The Social Security Number or Tax Identification Number of the Registered Holder listed in the response to item 1 above: Exhibit A --------- VISIBLE GENETICS INC. INVESTORS' CERTIFICATE OF RESALE OF THE SHARES The undersigned, an officer of, or other person duly authorized by ____________________________________________________ hereby certifies that [fill in official name of individual of institution] he/she [said institution] is the Investors of the Shares evidenced by the attached stock certificate(s) and as such, sold such Shares on _________ in [date] accordance with registration statement number ______________ and the requirement [fill in the number of or otherwise identify registration statement] of delivering a current prospectus of the Company has been complied with in connection with such sale. Print or Type: Name of Investors (Individual or _________________________________ Institution): Name of Individual representing Investors _________________________________ (if an Institution): Title of Individual representing Investors _________________________________ (if an Institution): Signature by: Individual Investors or Individual representing Investors: _________________________________ EX-99.2 3 REGISTRATION RIGHTS AGREEMENT EXECUTION COPY VISIBLE GENETICS INC. REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Registration Rights Agreement") is entered into as of December 14, 1999, by and among VISIBLE GENETICS INC., an Ontario corporation (the "Company"), and the purchasers of Common Shares of the Company (the "Shares") who are identified as "Investors" in that certain Common Shares Purchase Agreement of even date herewith (the "Purchase Agreement") and whose signatures appear on the execution pages hereof. The purchasers of the Shares shall be referred to hereinafter as the "Investors" and each individually as an "Investor." RECITALS WHEREAS, the Company proposes to sell the Shares pursuant to the Purchase Agreement; WHEREAS, as a condition of entering into the Purchase Agreement, the Investors have requested that the Company extend to them certain registration rights and other rights as set forth below; and NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Registration Rights Agreement and in the Purchase Agreement, the parties mutually agree as follows: 1. DEFINITIONS As used in this Registration Rights Agreement the following terms shall have the following respective meanings: "Closing" has the meaning ascribed thereto under the Purchase Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Form F-3" means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC. "Holder" means any Investor or assignee permitted in accordance with 5.3 hereof owning of record Registrable Securities that have not been sold to the public. "Register," "registered," and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document. "Registrable Securities" means the Shares or any Common Shares which may be issued with respect to or in substitution for such Shares by reason of dividend, stock split, combination of shares, recapitalization, reclassification or reorganization. "Registration Statement" means any registration statement of the Company that covers the Shares and lists holders thereof as selling shareholders pursuant to the provisions of this Registration Rights Agreement, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference or deemed to be incorporated by reference therein. "SEC" or "Commission" means the Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended. 2. REGISTRATION OF SHARES 2.1 Registration Statement. Within 30 days after the date hereof, the Company shall prepare and file with the Commission a Registration Statement on Form F-3 pursuant to Rule 415 under the Securities Act covering the resale of the Registrable Securities. In addition, the Company shall: (a) Use its best efforts to cause such Registration Statement to become effective at the earliest possible time and to keep such Registration Statement continuously effective for a period of two years following the date on which the Registration Statement becomes effective under the Securities Act, or such shorter period ending on the earlier of (i) when all Registrable Securities covered by the Registration Statement have been sold or (ii) sixty (60) days after the first date when all Registrable Securities covered by the Registration Statement may immediately be sold during any 90-day period without registration under the Securities Act pursuant to the exemptions provided by Rule 144 under the Securities Act (the "Registration Period"); provided, however, that the Company shall not be deemed to have kept a Registration Statement effective during the applicable period if it voluntarily takes any action that results in Holders not being able to sell such Registrable Securities pursuant to applicable securities laws during that period (and the time period during which such Registration Statement is required to remain effective hereunder shall be extended by the number of days during which such Holders are not able to sell Registrable Securities) unless such action is required under applicable law or regulation or court order. (b) Prepare and file with the SEC such pre-effective and post-effective amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to cause the Registration Statement to become effective, to keep the Registration Statement continuously effective during the Registration Period and not misleading, and as may otherwise be required or applicable under, and to comply with the provisions of, the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the Registration Period. -2- (c) Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, and each amendment or supplement thereto, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. (d) Use its best efforts to register and qualify the securities covered by such Registration Statement under such other securities or Blue Sky laws of such jurisdictions as shall be necessary to permit the sale of the Registrable Securities. (e) Notify promptly the Holders of Registrable Securities to be sold (and in any event within two (2) business days after) and (if requested by any such Person) confirm such notice in writing, (i)(A) when a prospectus or any prospectus supplement or post-effective amendment is proposed to be filed, and, (B) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any other federal, Canadian, state or provincial governmental authority for amendments or supplements to a Registration Statement or related prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, and (v) of the happening of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in such Registration Statement, prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading, and that in the case of the prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (f) Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of, any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment. (g) If requested by the holders of a majority of the Registrable Securities being sold in connection with such offering, (i) promptly incorporate in a prospectus supplement or post-effective amendment such information as the holders reasonably request should be included therein regarding such holders or the plan of distribution of the Registrable Securities, and (ii) make all required filings of the prospectus supplement or such post-effective amendment as soon as practicable after the Company has received notification of such matters to be incorporated in such prospectus supplement or post-effective amendment; provided, however, that the Company shall not be required to take any action pursuant to this Section 2.1(g) that would, in the opinion of outside counsel for the Company, violate applicable law. -3- (h) Upon the occurrence of any event contemplated by Section 2.1(e)(v), as promptly as practicable, prepare a supplement or amendment, including a post-effective amendment, to each Registration Statement or a supplement to the related prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (i) Use its reasonable best efforts to cause all Registrable Securities relating to such Registration Statement to be listed on each securities exchange or automated quotation system, if any, on which similar securities issued by the Company are then listed. 2.2 Seller Information. The Company may require each selling Holder of Registrable Securities as to which any registration is being effected to furnish to the Company such information regarding such Holder, such Holder's Registrable Securities and such Holder's intended method of disposition as the Company may from time to time reasonably request; provided that such information shall be used only in connection with such registration. If the Registration Statement refers to any Holder by name or otherwise as the Holder of any securities of the Company, then such Holder shall promptly (i) notify the Company and its counsel of the existence of any fact of which such Holder becomes aware and the happening of any event which relates to Holder or the distribution of the securities owned by such Holder which results in the Registration Statement containing an untrue statement of material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein not misleading, or the Prospectus included in such Registration Statement containing an untrue statement of material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein, in light of the circumstances under which they were made, not misleading, and (ii) provide to the Company such information which relates to Holder or the distribution of the securities owned by such Holder as shall be necessary to enable the Company to prepare a supplement or post-effective amendment to such Registration Statement or related Prospectus or any document incorporated therein by reference or file any other documents required so that such Registration Statement will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 2.3 Notice to Discontinue. Each holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.1(e)(ii) through (v), such Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.1(h) and, if so directed by the Company, such Holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in -4- such Holder's possession of the Prospectus covering such Registrable Securities which is current at the time of receipt of such notice. If the Company shall give any such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Registration Rights Agreement by the number of days in excess of ten (10) business days during the period from and including the date of the giving of such notice pursuant to Section 2.1(e) to and including the date when the Holder shall have received the copies of the supplemented or amended prospectus. 2.4 Expenses of Registration. Except only as specifically provided herein, all expenses incident to the performance of compliance with this Registration Rights Agreement by the Company shall be borne by the Company, regardless of whether the Registration Statement becomes effective, including, without limitation, (i) all registration and filing fees and expenses (including filings made with the National Association of Securities Dealers ("NASD"), if applicable); (ii) fees and expenses (including fees and expenses of counsel) of compliance with federal securities and state Blue Sky and other Canadian, provincial or other securities laws; (iii) expenses of printing, messenger and delivery services, duplication, word processing and telephone incurred by the Company (but not by the holders of Registrable Securities); (iv) fees and disbursements of counsel for the Company; (v) all application and filing fees in connection with listing Common Shares on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and "cold comfort" letters required by or incident to such performance). The Company will, in any event, bear its own internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any person, including special experts, retained by the Company. The Investors will bear their own expenses not described above in connection with or arising out of the registration of their Shares except that, as provided in the Purchase Agreement, the Company will pay the costs of one legal counsel for all Investors in connection with this Agreement and the Purchase Agreement of up to a maximum of $25,000. 2.5 Indemnification. (a) Indemnification by Company. To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, officers and directors of each Holder and each person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal, Canadian, provincial or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation") by the Company: (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendments or supplements thereto, or the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the Prospectus (including any preliminary, final or summary prospectus, amendment or -5- supplement thereto) included in such Registration Statement or any omission or alleged omission to state a material fact required to be stated therein or necessary to make any statement therein, in light of the circumstances under which they were made, not misleading, or (iii) any violation or alleged violation of the Securities Act, the Exchange Act, any Canadian, provincial or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any Canadian, provincial or state securities law in connection with the offering covered by the Registration Statement; provided, however, that the Company will not be liable for indemnification in any such case to the extent that any losses, claims, damages or liabilities arise out of or are based upon any untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact so made in reliance upon and in conformity with written information furnished to the Company by such Holder. Subject to Section 2.5(c), the Company will pay to each such Holder, partner, officer, director or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a violation. (b) Indemnification by Holder of Registrable Securities. To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify and hold harmless the Company, each of its directors, its officers, agents and each person, if any, who controls the Company within the meaning of the Securities Act against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, agent or controlling person may become subject under the Securities Act, the Exchange Act or other federal, Canadian, provincial or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs as a result of reliance by the Company upon and in conformity with written information furnished by such Holder under an instrument duly executed by such Holder and stated to be specifically for use in connection with such registration; and each such Holder will pay any legal or other expenses reasonably incurred by the Company or any such director, officer, agent, controlling person or other person in connection with investigating or defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a Violation; provided, however, that in no event shall any indemnity under this Section 2.5(b) exceed the dollar amount of proceeds from the offering received by such Holder. (c) Conduct of Indemnification Proceedings. Promptly after receipt by an indemnified party under this Section 2.5 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.5, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if, in the reasonable judgment of any such indemnified party, based upon advice of counsel, a conflict of -6- interest may exist between such indemnified party and the indemnifying party with respect to such claims (in which case, if the indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such indemnified party; provided, however, that the indemnified party shall be entitled to elect only one counsel at the expense of the indemnifying party and such counsel shall be reasonably acceptable to the indemnifying party). The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if it is finally determined in a court of competent jurisdiction (which determination is not subject to appeal) that such failure is materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.5, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.5. No indemnifying party shall be liable for any settlement of any claim or action effected without its written consent, which consent shall not be unreasonably withheld. (d) Contribution. If the indemnification provided for in this Section 2.5 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, that in no event shall any contribution by a Holder hereunder exceed the dollar amount of proceeds from the offering received by such Holder. (e) Survival; Settlement. The obligations of the Company and Holders under this Section 2.5 shall survive completion of any offering of Registrable Securities in a registration statement, the termination of this Registration Rights Agreement and any sale by the Holders of Registrable Securities. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. 2.6 Termination of Registration Rights. Notwithstanding anything herein to the contrary, a Holder shall not be entitled to any registration rights, rights to liquidated damages or other rights hereunder (a) if all Registrable Securities held by such Holder have been sold or (b) beginning sixty (60) days after the first date on which all Registrable Securities held by such -7- Holder may immediately be sold during any 90-day period without registration under the Securities Act pursuant to the exemptions provided by Rule 144 under the Securities Act ("Termination Event"); provided, however, that any right to liquidated damages, indemnification or any other right that had accrued to the benefit of such Holder prior to the Termination Event but had not been satisfied as of the Termination Event, shall remain in effect after the Termination Event until satisfied. 3. RULE 144 During the Registration Period, the Company covenants that it will file the reports required to be filed by it (if so required) under the Securities Act and the Exchange Act and the Rules and Regulations adopted by the SEC thereunder in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Registrable Securities, make publicly available other information so long as necessary to permit sales pursuant to Rule 144 under the Securities Act. The Company further covenants that it will take such further action as any Holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act pursuant to the exemptions provided by Rule 144 under the Securities Act. Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such information requirements. 4. LIQUIDATED DAMAGES (a) The Company acknowledges and agrees that the Holders of Registrable Securities will suffer damages, and that it would not be feasible to ascertain the extent of such damages with precision, if the Company fails to fulfill certain of its obligations hereunder. Accordingly, if (i) the Registration Statement has not been declared effective by the Commission within 120 days after the Closing, or (ii) the Registration Statement is declared effective but shall thereafter cease to be effective without being succeeded within 30 days by any additional Registration Statement filed and declared effective (each such event referred to in clauses (i) and (ii), a "Registration Default"), the Company agrees to pay liquidated damages (for loss of benefit of a bargain and not as a penalty) to each Holder of Registrable Securities an amount equal to .75% of the dollar amount of such Holder's investment in the Registrable Securities for each full month commencing on the 121st day in the case of clause (i) and on the 31st day in the case of clause (ii) until the Registration Statement is declared effective, or the successor Registration Statement is filed and declared effective or until 180 days after the Closing, whichever occurs first. Commencing on the 181st day of the Closing, if the Registration Default persists, the foregoing required percentage payment by the Company for each full month shall increase to 1.5% until the Registration Statement is declared effective. (b) All accrued liquidated damages ("Default Payment") shall be paid to Holders by the Company on the sooner of the day the Registration Statement or successor Registration Statement is declared effective or every 30 days by wire transfer of immediately available funds or by federal funds check by the Company. Following the cure of all Registration Defaults, the accrual of liquidated damages will cease to accrue. In the event of a Registration -8- Default, if the Default Payment is not paid as set forth above, such Default Payment shall be deemed indebtedness of the Company due upon demand and bearing interest at an annual rate equal to 18% (or such lesser amount that is the maximum permitted by applicable law) until paid in full (the "Indebtedness"). Any Indebtedness shall be deemed senior to all "Subordinated Indebtedness"; provided; however, that if the characterization or treatment of the Default Payment as senior or prior to any Subordinated Indebtedness would result in a default (or upon giving of notice or passage of time or both would result in a default) under any Senior Indebtedness (a "Senior Indebtedness Default") then the priority of the Indebtedness shall automatically be adjusted to the most senior position possible which will not result in or cause a Senior Indebtedness Default. "Subordinated Indebtedness" means all indebtedness for borrowed money of the Company other than Senior Indebtedness and any Default Payment. "Senior Indebtedness" means: (i) any obligations of the Company to the Royal Bank of Canada arising under the Credit Facility extended by it to the Company, as the same may be amended from time to time; (ii) any obligations of the Company to any other commercial bank, financial institution or institutional lender or other person which is or is intended to be senior indebtedness or senior subordinated indebtedness, as the same may be amended from time to time; and (iii) any extension, renewals, amendments or restatements of any of the foregoing. (c) All of the obligations of the Company set forth in this Section 4 that are outstanding with respect to any Registrable Security at the time such security ceases to be a Registrable Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full. 5. MISCELLANEOUS 5.1 Governing Law; Exclusive Jurisdiction. This Registration Rights Agreement shall be governed by and construed under the laws of the State of New York as applied to agreements among New York residents entered into and to be performed entirely within New York. The parties hereto (a) agree that any suit, action or other proceeding arising out of this Agreement shall be brought only in the courts of the State of New York or the courts of the United States located within the State of New York, in each case in the County of New York, (b) consent and submit to the exclusive jurisdiction of each such court in any such suit, action or proceeding and (c) waive any objection which they, or any of them, may have to personal jurisdiction or the laying of venue of any such suit, action or proceeding in any of such courts, and agree not to seek to change venue. 5.2 Survival. The representations, warranties, covenants, and agreements made herein shall survive any investigation made by any Holder and the closing of the transactions contemplated hereby. 5.3 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each Permitted Assignee of Registrable Securities from time to time. A "Permitted Assignee" shall mean (i) with respect to any Investor, any other person directly or indirectly controlling or controlled by or under direct or indirect, common control with such Investor, -9- (ii) the spouse, sibling, child, step-child, grandchild, niece, nephew or parent of the Investor, or the spouse thereof, and (iii) any transferee or assignee of not less than 75,000 shares of Registrable Securities (as presently constituted and subject to subsequent adjustment for stock splits, stock dividends, reverse stock splits, and the like). The Company may not assign the rights or obligations hereunder without the prior written consent of each Holder of Registrable Securities. 5.4 Entire Agreement. This Registration Rights Agreement, including any exhibits hereto, the Purchase Agreement and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 5.5 Severability. In case any provision of the Agreement shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 5.6 Amendment and Waiver. The provisions of this Registration Rights Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of at least a majority of the then outstanding Registrable Securities; provided, however, that Sections 2.1 and 2.5 shall not be amended, modified or supplemented, and waivers or consents to departures from this proviso may not be given, unless the Company has obtained the written consent of each Holder of the then outstanding Registrable Securities. 5.7 Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any Holder, upon any breach, default or noncompliance of the Company under this Registration Rights Agreement shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on any Holder's part of any breach, default or noncompliance under the Agreement or any waiver on such Holder's part of any provisions or conditions of this Registration Rights Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Registration Rights Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not alternative. 5.8 Notices. All notices, requests, consents and other communications 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) upon receipt when sent by first-class registered or certified mail, return receipt requested, postage prepaid, or (d) upon receipt after deposit with a nationally recognized overnight express courier, postage prepaid, specifying next day delivery with written verification of receipt. All communications shall be sent to the party to be notified at -10- the address as set forth below or at such other address as such party may designate by ten (10) days advance written notice to the Company. All communications shall be addressed as follows: (a) if to the Company, to: VISIBLE GENETICS INC. 700 Bay Street, Suite 1000 Toronto, Ontario M5G 1Z6 Telephone: (416) 813-3242 Facsimile: (416) 813-3250 Attention: Chief Executive Officer with a copy so mailed to: BAER MARKS & UPHAM LLP 805 Third Avenue New York, New York 10022 Telephone: (212) 702-5700 Facsimile: (212) 702-5941 Attention: Steven S. Pretsfelder and to: GOLDMAN, SPRING, SCHWARTZ & KICHLER Suite 700 40 Sheppard Avenue West North York, Ontario M2N 6K9 Attention: Samuel Schwartz (b) if to the Investors, at the address as set forth on the Counterpart Execution Page of this Registration Rights Agreement. 5.9 Attorneys' Fees. In the event that any dispute among the parties to this Registration Rights Agreement should result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Registration Rights Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 5.10 Securities Held by the Company or its Affiliates. Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or its affiliates (as such term is defined in Rule 405 under the Securities Act) (other than the Holders or subsequent Holders of Registrable Securities if such Holders or subsequent Holders are deemed to be such affiliates solely by reason of their -11- holdings of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 5.11 Titles and Subtitles. The titles of the sections and subsections of this Registration Rights Agreement are for convenience of reference only and are not to be considered in construing this Registration Rights Agreement. 5.12 Counterparts. This Registration Rights Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. If this Registration Rights Agreement is satisfactory to you, please so indicate by signing a counterpart execution page to this Registration Rights Agreement and a Registration Statement Questionnaire and return such counterpart and questionnaire to the Company whereupon subject to the Company's acceptance of your subscription, this Registration Rights Agreement will become binding between us in accordance with its terms. Visible Genetics Inc. an Ontario corporation By:___________________________________________ Name: Richard T. Daly Title: President and Chief Executive Officer -12- REGISTRATION RIGHTS AGREEMENT COUNTERPART EXECUTION PAGE By signing below, the undersigned agrees to the terms of the Visible Genetics Inc. Registration Rights Agreement. INVESTOR: By:___________________________________________ Name: Title: Address:___________________________________ ___________________________________ ___________________________________ Facsimile:____________________________________ Appendix I VISIBLE GENETICS INC. REGISTRATION STATEMENT QUESTIONNAIRE In connection with the preparation of the Registration Statement, please provide us with the following information: 1. Please state your or your organization's name exactly as it should appear in the Registration Statement:_________________________________________________ 2. Please provide the following information, as of December 13, 1999: a) Number of Shares that you are purchasing: b) Number of Shares that you seek to include in the Registration Statement: c) Number of Common Shares that you already beneficially own: d) Number of Shares of Series A Preferred Shares that you already beneficially own: e) Number of Warrants that you already beneficially own: f) Total Number of Securities that you already beneficially own: Have you or your organization had any position, office or other material relationship within the past three years with the Company or its affiliates other than as disclosed in the Company's 1998 Annual Report on Form 20-F? Yes_____ No_____ 1. Have your or your organization had any position, office or other material relationship within the past three years with the Company or its affiliates other than as disclosed in the Company's 1998 Annual Report on Form 20-F? Yes_____ No_____ If yes, please indicate the nature of any such relationships:___________________ 4. Please describe your Plan of Distribution for the shares you wish to sell:___________________________________________________________________________ INVESTOR: ______________________________________ By:___________________________________ Print Name:___________________________ Title:________________________________ The foregoing constitutes the only information furnished to the Company for inclusion in the Registration Statement for purposes of Section 2.5(b) of the Registration Rights Agreement. -----END PRIVACY-ENHANCED MESSAGE-----