-----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, AiTSbjtj6zU2JXYQ64LdMiVACAsuFfXhi8hmEm6S+2170WCU2TU6Fwyy4r/iJ55m t31EQ9+FXfrpLFJl+0PvUA== 0000912057-01-505202.txt : 20010329 0000912057-01-505202.hdr.sgml : 20010329 ACCESSION NUMBER: 0000912057-01-505202 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRUKER DALTONICS INC CENTRAL INDEX KEY: 0001109354 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 043110160 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-30833 FILM NUMBER: 1581894 BUSINESS ADDRESS: STREET 1: 44 MANNING RD CITY: BILLERICA STATE: MA ZIP: 01821 MAIL ADDRESS: STREET 1: 44 MANNING RD CITY: BILLERICA STATE: MA ZIP: 01821 10-K 1 a2040867z10-k.txt 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 COMMISSION FILE NUMBER 000-30833 ------------------------ BRUKER DALTONICS INC. (Exact name of Registrant as specified in its charter) DELAWARE 04-3110160 (State or other jurisdiction of incorporation (IRS Employer Identification Number) or organization)
15 FORTUNE DRIVE BILLERICA, MA 01821 (Address of principal executive offices, including zip code) (978) 663-3660 (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock $.01 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / / The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 23, 2001 was $102,661,520 (based on the last reported sale price on the Nasdaq National Market on that date). The number of shares outstanding of the registrant's Common Stock as of March 23, 2001 was 54,786,713. DOCUMENTS INCORPORATED BY REFERENCE The following documents (or parts thereof) are incorporated by reference into the following parts of this Form 10-K: (i) Proxy Statement for the 2001 Annual Meeting of Stockholders-Items 10, 11, 12 and 13. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- BRUKER DALTONICS INC. ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTS
PAGE -------- PART I Item 1. Business.................................................... 1 Item 2. Properties.................................................. 14 Item 3. Legal Proceedings........................................... 14 Item 4. Submission of Matters to a Vote of Security Holders......... 17 Item 4A. Executive Officers of the Registrant........................ 17 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters....................................... 18 Item 6. Selected Financial Data..................................... 19 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation.................................. 20 Item 7A. Quantitative and Qualitative Disclosures about Market Risk...................................................... 37 Item 8. Financial Statements and Supplementary Data................. 37 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................................. 37 PART III Item 10. Executive Officers of the Registrant........................ 37 Item 11. Executive Compensation...................................... 37 Item 12. Security Ownership of Certain Beneficial Owners and Management................................................ 37 Item 13. Certain Relationships and Related Transactions.............. 37 PART IV Item 14. Exhibits, Financial Statements and Schedules and Reports on Form 8-K.................................................. 37 Signatures.......................................................................... S-1
This report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including without limitation those discussed in "Factors Affecting Our Business, Operating Results and Financial Condition" section herein. Such forward-looking statements speak only as of the date on which they are made, and we caution readers not to place undue reliance on such statements. References to "we," "us," "our," the "Company" or "Bruker Daltonics" refer to Bruker Daltonics Inc. and, in some cases, its subsidiaries, as well as all predecessor entities. Our principal executive offices are located at 15 Fortune Drive, Billerica, Massachusetts 01821, and our telephone number is (978) 663-3660. Information about Bruker Daltonics is available at www.daltonics.bruker.com. The information on our website is not incorporated by reference into and does not form a part of this report. Daltonics and the Daltonics logo are trademarks of Bruker Daltonics. All other trademarks, tradenames or copyrights referred to in this report are the property of their respective owners. PART I ITEM 1. BUSINESS OVERVIEW Bruker Daltonics is a leading developer and provider of innovative life science tools based on mass spectrometry. Our substantial investment in research and development allows us to design, manufacture and market a broad array of products intended to meet the rapidly growing needs of our diverse customer base. Our customers include pharmaceutical companies, biotechnology companies, agricultural biotechnology companies, proteomics companies, molecular diagnostics companies, academic institutions and government agencies. Mass spectrometers are sophisticated devices that provide highly accurate molecular information. Our mass spectrometry-based systems often combine automated sample preparation robots; advanced mass spectrometry instrumentation; reagent kits and other disposable products used in conducting assays, or consumables, and bioinformatics software. Our systems offer integrated solutions for applications in multiple existing and emerging markets including genomics and proteomics, metabolic and biomarker profiling, drug discovery and development, molecular assays and diagnostics, molecular and systems biology and basic medical research. We market our life science systems both through our direct sales force and through strategic distribution arrangements with Agilent Technologies, PerkinElmer, Sequenom, MWG-Biotech and others. We are also a worldwide leader in supplying mass spectrometry-based systems for substance detection and pathogen identification in security and defense applications. Bruker Daltonics was incorporated in Massachusetts, as Bruker Federal Systems Corporation. In February 2000, we reincorporated in Delaware as Bruker Daltonics Inc. INDUSTRY BACKGROUND We design our products to address the rapidly evolving needs of the life science industry. Public and private efforts to sequence the entire human genome have led to advances that are fueling further investment in the discovery and identification of single nucleotide polymorphisms, or SNPs, and other forms of genetic variation. These developments, combined with advances in combinatorial chemistry, which is the creation of libraries of chemical compounds, and in basic molecular biology and medical research, are spurring growth in the following rapidly developing and emerging areas: - PHARMACOGENOMICS, which compares the genetic information of an individual to the average human genome to predict the response of individual patients and patient populations to drugs; - PERSONALIZED MEDICINE, which seeks to apply inexpensive, rapid molecular diagnostic tests, or assays, to profile a patient's genetic composition and enable the prescription of individualized drug therapy; - PROTEOMICS, which involves the large-scale separation, identification and characterization of proteins in order to understand how proteins are created based on the information contained in genes; - NEW METHODS OF DRUG DISCOVERY, which are based on the rapid measurement, or high-throughput screening, of large numbers of small organic compounds synthesized through combinatorial chemistry against large numbers of disease pathways, or targets, identified by genomics and proteomics; - BIOMARKER DETECTION, OR BIO-BARCODING, which develops rapid and sensitive assays for a broad range of cell and tissue types for applications including infectious disease detection, human tissue assessment, the identification of specific agricultural characteristics and pathogen identification, 1 even when the molecular mechanisms are not understood or the genomic sequence is not available; and - METABOLIC PROFILING, OR METABOLOMICS, which analyzes the levels of substances produced by the metabolism, or metabolites, present in a cell or in biological fluids to draw correlations between disease states, genetic modifications and variations in metabolite levels. In addition, increased levels of funding for basic medical research have fueled demand by universities, medical schools and government agencies for sophisticated bioanalytical systems, such as mass spectrometers. Funding has also increased for substance detection and pathogen identification systems for security and defense applications. LIMITATIONS OF ALTERNATIVE LIFE SCIENCE TOOLS Many of the bioanalytical tools available today based on technologies other than mass spectrometry, including those described in the next paragraph, have significant limitations when used for applications including the detection of genetic variation, pharmacogenomics, proteomics, drug discovery and biomarker detection. These limitations include lack of throughput to accommodate the volume of analysis required, lack of automation, time-consuming sample preparation and insufficient accuracy of the resulting data. For example, the two leading methods traditionally used for DNA sequencing and expression profiling are electrophoresis and hybridization. The error rate of these techniques can increase the cost, complexity and time involved in completing more demanding analyses. Traditional protein science tools including Edman sequencing and two-dimensional gel separations are time consuming, relatively inaccurate and labor intensive. Additionally, many alternative life sciences tools can only be utilized by expert scientists. Other, newer bioanalytical tools, like biological chips that can be read by fluorescence readers, may be highly automated. However, these instruments are often less flexible or less accurate than mass spectrometers. For other emerging applications including metabolic profiling and rapid biomarker detection, we believe there presently are no automated, sensitive and accurate alternative tools available other than mass spectrometry-based systems. Increasingly, life science companies are looking to solutions that address the limitations inherent in these alternative tools. MASS SPECTROMETRY Mass spectrometers are devices for measuring the mass, or weight, of a molecule. Mass spectrometry systems employ an ionization source which creates charged molecules and a mass separation/detection component which separates these charged molecules on the basis of mass to detect their presence and quantity. Mass spectrometry has been used in physics and chemistry for over fifty years. Over the past fifteen years, mass spectrometry has emerged as a powerful research tool in the life sciences. For example, mass spectrometers can determine the identity, amount, structure, sequence and other biological properties of small molecules, like drug candidates and metabolites, as well as large biomolecules, like proteins or DNA. While highly accurate, mass spectrometers historically have been limited by the time and skill required to prepare samples, conduct each measurement and analyze the data. OUR SOLUTIONS Our product lines integrate sophisticated mass spectrometers with automated sample preparation and measurement, and, where appropriate, bioinformatics software to address many of the bioanalytical 2 and bioinformatics needs of the life sciences industry across a broad range of applications. Our products have particular application to: - genetic variation analysis, including such evolving areas as pharmacogenomics and personalized medicine; - proteomics; - metabolomics; - drug discovery based on high-throughput screening and combinatorial chemistry; and - drug development. Automated high-throughput mass spectrometry systems offer significant advantages over other bioanalytical tools, including Edman sequencing and two-dimensional gel separations, in these emerging and rapidly changing markets. Our automated systems allow our customers to generate and evaluate large volumes of accurate, high-quality data on a cost-effective basis. We believe that this enhanced throughput and high-quality data improves our customers' ability to apply bioinformatics to validate lead disease pathways, or targets, understand disease pathways and analyze lead compounds. Our customers also use our products in molecular biology and other basic medical research. In addition, our automated, integrated mass spectrometry technology forms the basis of our substance detection and pathogen identification products used in security and defense markets. Our life science systems are based on four core mass spectrometry technologies. Building on these core technologies, we offer a wide range of systems that address key analytical needs in multiple applications across the life sciences industry. We believe that our products offer the following advantages to our customers: HIGH DEGREE OF AUTOMATION. Our automated sample preparation and measurement technology and sophisticated bioanalytic software allow our customers to process high sample volumes with reduced reliance on highly-trained scientific personnel. INTEGRATED SOLUTIONS. We provide our customers with complete bioanalytical solutions by integrating our mass spectrometry products with front-end sample preparation, a sample preparation technology that conditions samples before they are analyzed, with purification and separation methods that clean and separate components of sample mixtures, chemicals and other disposable materials used in conducting assays and with bioinformatics software that interprets and analyzes data after it has been generated. ACCURATE RESULTS. Our automated mass spectrometry systems generate large volumes of highly accurate data with the selectivity and sensitivity our customers demand. The high sensitivity of our products enables our customers to pursue miniaturization and analysis of smaller samples. The accuracy of the results reduces the need for repeat analysis to eliminate errors. INCREASED PRODUCTIVITY. Our high-throughput products are designed to allow our life science customers to increase productivity by generating more results in a shorter time period. COST EFFICIENCY. We have achieved performance advances with our products that are designed to result in increased information per analysis at a significantly lower cost per analysis for our customers. 3 OUR STRATEGY Our strategy is to continue to be a leading provider of mass spectrometry and related systems for use in life sciences, as well as in substance detection and pathogen identification. Key elements of our strategy include: PROVIDE A BROAD ARRAY OF TOOLS FOR A WIDE RANGE OF APPLICATIONS. In life sciences, our strategy is to offer a broad range of products that provide integrated solutions including sample preparation, sample analysis and data interpretation for applications in existing and emerging life science markets. Our longer term strategy is to expand our enabling life science tools beyond our current mass spectrometry-based product lines, and to extend our position as a leading provider of biological mass spectrometers to related bioinformation business opportunities. We plan to selectively evaluate new life science markets to which we may apply our core technologies and to continue to develop and market our mass spectrometry systems for substance detection and pathogen identification. DEVELOP NEW PLATFORMS, ENHANCED PRODUCTS AND NEW APPLICATIONS. We plan to continue our substantial investment in internal research and development. As a result of this investment, in early 2000 we introduced an entirely new technology platform, four next generation mass spectrometers, two new consumable product lines and two bioinformatics software packages. We expect our collaborations with key industrial and academic customers to continue to play a strategic role in our research and development efforts and to assist us in identifying and anticipating opportunities for enhanced products and emerging applications. BUILD ALLIANCES AND PURSUE ACQUISITIONS. We plan to continue to co-develop selected products with strategic partners, especially when these alliances expand our product lines and extend our marketing reach. As an example, our collaboration with Agilent resulted, in early 2000, in the introduction of two ion trap instruments designed to be installed on top of a laboratory bench. We also intend to pursue strategic acquisitions to extend our technology base. For example, at the end of 1999, we acquired ProteiGene and Viking to expand our biomarker and substance detection technologies, respectively. Similarly, in 2000, we entered into a strategic alliance with Geneva Proteomics whereby it will purchase 51 of our systems as well as consummables and support over time for use in industrial-scale proteomics research. GENERATE RECURRING REVENUE. Our consumables and product service and support provide an opportunity to generate recurring revenue. We seek to develop additional consumables which enhance the ease of use and productivity of our tools. For example, our reagents and assay kits make sample preparation easier for our customers. We seek to increase recurring revenue from post-warranty service to our growing industrial customer base as well as from training and applications support. DEVELOP AND EXPAND OUR BIOINFORMATION BUSINESS. We intend to expand our presence in the bioinformation field. We expect to create proprietary databases which our customers can access by paying subscription fees, to collaborate in drug discovery with customers in return for milestone and product royalty payments, and to offer paid-for technology access partnerships to life science companies. We intend to deploy our automated high-throughput mass spectrometry-based discovery tools in an industrial-biology information production operation. LEVERAGE OUR INTELLECTUAL PROPERTY. We expect to continue to pursue an intellectual property strategy of obtaining extensive patent protection. We have a substantial patent portfolio, and it is our strategy to build and protect our patent portfolio. We believe that maintaining extensive intellectual property rights allows us to maintain a competitive advantage through protecting access to key technologies. Where appropriate, we may pursue an active licensing program to generate recurring revenue. 4 OUR PRODUCTS MASS SPECTROMETRY We base our life science solutions on four core mass spectrometry technology platforms which include: - matrix-assisted laser desorption ionization, or MALDI, time-of-flight mass spectrometry; - electrospray ionization, or ESI, time-of-flight mass spectrometry; - Fourier transform mass spectrometry; and - ion trap mass spectrometry. Time-of-flight mass spectrometers measure mass based on the time it takes for charged molecules to travel from the ionization source to the detection component. With the ability to analyze as many as 30,000 samples per day, these mass spectrometers currently have the highest sample throughput and can analyze the broadest range of masses of any mass spectrometer for use in the fields of genomics and proteomics. Our time-of-flight mass spectrometry solutions make full use of this potential for increased speed by automating various steps of the analysis. Our time-of-flight solutions combine high sensitivity, accuracy and throughput to generate large volumes of accurate raw data for SNP detection and proteomics. Our life science tools include both MALDI and ESI time-of-flight instruments. MALDI TIME-OF-FLIGHT MASS SPECTROMETERS utilize an ionization process to analyze solid samples using a laser that combines large volume sample throughput with high mass range and significant sensitivity. Our MALDI time-of-flight mass spectrometers are useful for (a) SNP analysis; (b) genotyping; (c) personalized medicine; (d) forensics; (e) proteomics and protein function analysis; (f) drug discovery and development; and (g) fast cell and tissue biomarker detection. We offer four MALDI time-of-flight instruments: REFLEX III-TM-. Our top-of-the-line MALDI time-of-flight instrument offers modular flexibility that allows various configurations in the research laboratory and automated sampling combined with high sensitivity, resolution and accuracy. BIFLEX III-TM-. The BIFLEX III provides high-end performance with high-throughput for industrial biology and drug discovery applications. Sequenom uses this system in its industrial genomics MassArray system, and MWG-Biotech is integrating it into a medium-throughput SNP detection system. OMNIFLEX-TM-. Our first MALDI time-of-flight instrument which can be installed on a laboratory bench can be used in general-purpose mass spectrometry laboratories. We introduced this product in March 2000. The OmniFLEX combines sensitivity, resolution and accuracy, for a wide variety of routine and higher-end applications, with a lower price than our other two products described above. We co-market this product with PerkinElmer. AUTOFLEX-TM-. Our first MALDI time-of-flight instrument specifically designed for industrial biology. We introduced this product in August 2000. The autoflex can be used in SNP analysis and proteomics. These products utilize our proprietary AnchorChip microarrays which prepare samples for analysis. These microarrays employ patented microfluidics technology that improves sensitivity and reduces analysis time per sample by concentrating the sample in a defined location. ESI TIME-OF-FLIGHT MASS SPECTROMETERS utilize an ionization process to analyze liquid samples. This process, which does not destroy the sample, allows for rapid data acquisition and analysis of large biological molecules. ESI time-of-flight mass spectrometers are useful for (a) identification, protein 5 analysis and functional complex analysis in proteomics and protein function; (b) molecular identification in metabolomics and drug metabolite analysis; (c) combinatorial chemistry high-throughput screening, or HTS; and (d) fast liquid chromatography mass spectrometry, or LC/MS, in drug discovery and development. BIOTOF II-TM-. We introduced our BioTOF II in March 2000. Our system offers higher mass resolution and improved mass accuracy than we believe is currently achievable with other commercial ESI time-of-flight systems. FOURIER TRANSFORM MASS SPECTROMETERS utilize high-field superconducting magnets to offer the highest resolution, selectivity and accuracy currently achievable in mass spectrometry. Our systems based on this technology often eliminate the need for time-consuming separation techniques in complex mixture analyses. In addition, our systems can fragment molecular ions to perform exact mass analysis on all fragments to determine molecular structure. Fourier transform mass spectrometers are useful for (a) the study of the structure and function of biomolecules including proteins, DNA and natural products; (b) complex mixture analysis including combinatorial libraries; (c) high-throughput proteomics and metabolomics; and (d) high-throughput drug screening. APEX III-TM-. Our APEX III product line offers a choice of four magnetic field strengths. An increase in field strength improves resolution, selectivity and accuracy. In the third quarter of fiscal 2000, we introduced a new product in our APEX III line which is our first compact commercial fourier transform mass spectrometer. These products allow a wide range of research capabilities while maintaining simplicity of operation. Our software and automation developments allow us to offer high-throughput, easy-to-use systems. ION TRAP MASS SPECTROMETERS measure all ions simultaneously which improves sensitivity relative to older quadrupole mass spectrometers. Ion trap mass spectrometers are useful for (a) sequencing and identification based on structural analysis; (b) quantitative liquid chromatography mass spectrometry; (c) identification of combinatorial libraries; and (d) generally enhancing the speed and efficiency of the drug discovery and development process. ESQUIRE3000-TM-. Our esquire3000 ion trap mass spectrometer combines our patented ion trap technology with ion source and liquid chromatography technology from Agilent. It offers performance benefits over other ion trap systems, including software integration with Agilent separation systems, faster scan rates, higher sensitivity, a wider mass range and a simple Windows NT user interface. We also manufacture a related product, the LC/MSD-trap, which is distributed by Agilent. CONSUMABLES We sell consumables for processing, purifying and preparing samples prior to mass spectrometric analyses. Additionally, our systems for substance detection and pathogen identification use consumables for sample collection. Consumables will provide an increasing recurring revenue stream as our installed systems base grows. Our consumables include:
PRODUCT DESCRIPTION - ------- ----------- AnchorChips Microarrays that prepare samples and increase the sensitivity of MALDI analysis, improve automation and minimize reagent consumption GenoPureDS kit Purifies DNA prior to mass spectrometric analysis GenoPureOligo kit Purifies oligonucleotides, or DNA fragments, prior to analysis Silicon wheels Sample collection device for substance detection Quartz tubes Sample processing device for pathogen identification Dryers and filters Air dryers and filters for our ion mobility spectrometers
6 AUTOMATION AND SEPARATION PRODUCTS, TRAINING AND SERVICES We sell a broad array of related products and services with our initial system sales and during a product's lifetime. For substance detection and pathogen identification systems, we have developed training products, including complete system simulator installations. We offer post-warranty service on either a pre-paid or per-call basis and sell repair and replacement parts for our growing installed systems base. Our related products include:
PRODUCT DESCRIPTION - ------- ----------- Reconnaissance Training system that instructs users how to identify areas Simulator contaminated with toxic substances MM-1 Trainer Training product for the operation of our mass spectrometer HP1100 and 3D-CE Products that condition samples for mass spectrometric analysis that are produced by Agilent Technologies, Inc. and sold by us MAP II and II/8 Robots based on technology owned by Gilson Inc. that prepare samples for analysis by our MALDI instruments AutoXecute Automation software that allows our time-of-flight systems to analyze samples automatically
BIOINFORMATICS AND SOFTWARE We have introduced automated control software to integrate separation devices and robotics into our solutions. In addition, we provide bioinformatics software to generate useable information from large volumes of raw data. Finally, we offer intuitive data acquisition and analysis software on a Windows NT platform to make our systems accessible to non-experts. Our related products include:
PRODUCT DESCRIPTION - ------- ----------- HyStar NT Liquid chromatography mass spectrometry software to control Agilent and Waters liquid chromatography systems, Gilson robots and the operation of an integrated liquid chromatography/nuclear magnetic resonance/mass spectrometry system BioTools For biomolecule identification and sequencing Mascot Fast, automated web-enabled protein identification from protein databases--purchased from Matrix Science Genotools Interpretation software for DNA mass spectra for SNPs or other genetic variation PolymerTools Interpretation software for mass spectra for synthetic polymer parameters QuantAnalysis Software for quantification of metabolites and substances
SUBSTANCE DETECTION AND PATHOGEN IDENTIFICATION We sell a wide range of portable analytical and bioanalytical detection systems and related products. Our customers use these devices for nuclear, biological pathogen and chemical defense applications, anti-terrorism, law enforcement and process and facilities monitoring. Our substance detection and pathogen identification products use many of the same technology platforms as our life sciences products. For example, we developed our esquire products using the same ion trap technology used in our chemical and biological mass spectrometers. We also provide integrated, comprehensive 7 detection suites which include our multiple detection systems, consumables, training and simulators. Our related products include:
PRODUCT DESCRIPTION - ------- ----------- MM-1 Mobile mass spectrometer for automatic detection of chemical substances CBMS Mobile ion trap mass spectrometers for automated classification of biological pathogens and identification of chemical agents RAID-16 and RAID-S Portable and stationary automated ion mobility detectors for chemical agents detection SPME-RAID Trace detector for explosives EM640 Series Transportable mass spectrometers for emergency response Viking 573 Portable gas chromatography mass spectrometer for law enforcement RAPID II Long-range infrared detector for chemical substance clouds SVG-2 Solid-state radiation detector NIGAS Non-intrusive neutron activation detector for chemical component analysis in closed containers
RESEARCH AND DEVELOPMENT PRODUCT AND APPLICATIONS DEVELOPMENT. We commit substantial capital and resources to internal and collaborative research and development in order to provide innovative life science solutions to our customers. In 1998, 1999 and 2000, we spent $13.0 million, $15.1 million and $20.0 million, respectively, for research and development purposes. The following are a few examples of our recent research and development accomplishments: - After a four-year development effort, we created a new technology platform for orthogonal time-of-flight mass spectrometry. In January 1998, we introduced our first commercial system using this technology platform, the BioTOF. In March 2000, we offered our second generation product derived from this ESI time-of-flight platform, the BioTOF II; - In March 2000, we introduced various next-generation systems based on our existing mass spectrometry technology platforms including the Apex III Series Fourier transform mass spectrometer, the esquire3000 ion trap mass spectrometer, the OmniFLEX MALDI time-of-flight mass spectrometer and the MAP II/8 sample preparation robot. These new systems typically had two-year development and engineering cycles. - In the second quarter of 2000, we commercialized our AnchorChip microarrays. These products incorporate our patented microfluidics technology which achieves greater sensitivity in MALDI analyses; and - We developed our ion source, known as ZeroAdjust Nanospray-TM-, to solve ease of use and throughput constraints associated with traditional ESI sources at low flow rates. This development increases throughput for proteomic applications. - In the second half of 2000, we introduced the autoflex, the first MALDI time-of-flight system designed to analyze over 30,000 samples without operator intervention. The autoflex is the first MALDI time-of-flight system designed for high sample through put including fast, automatic analysis and maximum reliability for millions of sample analysis without service. - In the second half of 2000, we introduced our genopure DNA purification system developed in collaboration with the Max-Planck Institute for Molecular Genetics. In addition, we introduced Version 1.0 of our genotools software for MALDI time-of-flight SNP genotyping. GRANTS. Historically, we have been the recipient of various government grants. In early 2000, we completed a five-year Advanced Technology Program grant from the National Institute of Standards 8 and Technology for the development of a Mass Tag DNA Diagnostic Mass Spectrometer. We also currently have six ongoing, multi-year research grants from the German Federal Government for the development of new spectrometers and new applications for analysis. We have generally retained at least non-exclusive rights to any items or improvements we develop under these grants. The U.S. government generally retains the right to use technology developed under grants. The German government requires that we use and market technology developed under grants in order to retain our rights to the technology. In 1998, 1999 and 2000, we received research and development grants in the aggregate amounts of $2.1 million, $4.1 million and $1.8 million, respectively. We expect grant revenue to represent a decreasing portion of our revenue. CUSTOMERS We have a broad and diversified global life science customer base that includes over 1,700 customers with our installed products. Our life science system sales accounted for approximately 66% of our net product revenue for the year ended December 31, 2000. Our life science customer base is composed primarily of end-users and includes pharmaceutical, biotechnology, proteomics, agricultural biotechnology, molecular diagnostics and fine chemical companies, as well as commercial laboratories, university laboratories, medical schools and other not-for-profit research institutes and government laboratories. Our customers generally do not have a need to buy numerous systems at one time, and historically we have not depended on any single customer in the sale of our life science systems. In 2000, no single customer accounted for more than 10% of our revenue. We sell our substance detection and pathogen identification products and services to defense departments and law enforcement and emergency response professionals. For the year ended December 31, 2000, our substance detection and pathogen identification system sales represented approximately 22% of our net product revenue. Our substance detection and pathogen identification customers are primarily military and government end-users. Our after-market products, including consumables, software and services, accounted for the remaining 12% of our net product revenue for the year ended December 31, 2000. During 1998 and 1999, the U.S. Department of Defense Edgewood Chemical Biological Center accounted for 12% and 13%, respectively, of our net revenue, and the South Korean government (through its prime contractor Daewoo Heavy Industries) accounted for 18% and 15%, respectively, of our net revenue. Our production contract with the U.S. Department of Defense Edgewood Chemical Biological Center ended on March 31, 2000, and our contract with Daewoo Heavy Industries will continue until July 2001. Our net revenue attributable to Daewoo accounted for approximately 10% of our net revenue in 2000. No other customer accounted for 10% or more of our net revenue in 2000. Financial Information about our geographic areas required by Item 1 of Form 10-K may be found in Footnote 9 to our Financial Statements included in this report. Financial information about our revenues from external customers, measure of profit and total assets required by Item 1 of Form 10-K is included in our Financial Statements included in this report. STRATEGIC COLLABORATIONS We have several key technical collaborations and alliances for the development and distribution of new or existing products. These collaborations include: AGILENT TECHNOLOGIES, INC. In 1996, we commenced a collaboration with Agilent Technologies (formerly an operating unit of Hewlett Packard) to develop and distribute ion trap liquid chromatography mass spectrometry instrumentation. We jointly manufacture two different models of ion trap mass spectrometers. One model is branded and distributed by Agilent, and the other model, the esquire3000, is branded and distributed by us. As a part of our agreement with Agilent, we have agreed to assume the complete defense of the existing Finnigan lawsuit and any new lawsuits brought 9 by Finnigan against Agilent with respect to our jointly produced ion trap mass spectrometers. We will also pay any settlement and any final adverse judgment. Under our agreement with Agilent, neither party can conduct joint ion trap development with any other party, and each party has agreed not to develop products that would compete with the products of the other party that are the subject of this agreement. PERKINELMER, INC. In March 2000, we began our alliance with PerkinElmer to leverage PerkinElmer's global distribution capability to co-market our OmniFLEX time-of-flight products. Pursuant to this agreement, PerkinElmer distributes OmniFLEX products through its international distribution system and has committed to purchase a minimum number of our products. We believe this alliance will advance expansion into new markets, including pharmaceutical drug development, protein, peptide and oligonucleotide product quality control, synthetic polymer manufacturing, and quality testing in the food and beverage industries. PerkinElmer has agreed not to develop or sell any other benchtop MALDI time-of-flight mass spectrometers for the term of our agreement and for one year thereafter. SEQUENOM INSTRUMENTS GMBH. In 1997, we began an alliance with Sequenom Instruments GmbH, a subsidiary of Sequenom Inc., to develop industrial genomics tools for high-throughput SNP analysis. Under this agreement, Sequenom purchases MALDI time-of-flight mass spectrometers from us, and they include these spectrometers in their products. Our BIFLEX III is the basis for a co-labeled system called SpectroScan-TM- which is an important component of the Sequenom MassARRAY system. MWG-BIOTECH AG. In 1999, we began our alliance with MWG-Biotech to co-develop an integrated system for SNP analysis, including reagent kits, high-volume sample preparation systems and our BIFLEX III, MALDI time-of-flight system. The National Institute of Standards has selected this system to help establish a standard SNP database laboratory. Each party owns any developments it makes under this collaboration, and neither party participates in the sales proceeds of the other party. GENEVA PROTEOMICS, INC. In September 2000, we entered into a strategic alliance with Geneva Proteomics pursuant to which we will collaborate with Geneva Proteomics and share technologies for industrial-scale proteomics. As a part of this alliance, Geneva Proteomics will purchase, over the course of time, 51 of our mass spectrometry systems. Additionally, in November 2000, we made a strategic equity investment, in both cash and stock, in Geneva Proteomics. We financed this equity investment with cash and newly issued shares of our common stock. Each party owns any development it makes as a part of this agreement, and any developments made jointly shall be owned jointly by the parties. We have a number of other collaborations, including collaborations with Matrix Sciences and Variagenics for technology enhancements. In early 2000, we expanded our collaboration with Variagenics to combine our technologies into an integrated system used by Variagenics and its pharmaceutical partners to identify genetic variances. We own all developments we make under these collaborations. SALES AND MARKETING MARKETING ACTIVITIES. Our primary marketing theme is "Enabling Life Science Tools Based on Mass Spectrometry." We emphasize our solutions and technology platforms rather than simply the provision of instruments. We pursue an active marketing program through a large number of activities throughout the year. Our key marketing vehicles include trade shows, advertising, our websites, newsletters and related activities. DIRECT SALES CHANNELS. During the last three years, we have committed significant resources to upgrade and expand our direct sales force and our distribution channels worldwide. We have direct sales coverage throughout most of the European Union, North America and much of the Pacific Rim. 10 During the three years ending December 31, 2000, we more than doubled our sales and marketing staff. We have well-equipped application and demonstration facilities and qualified application personnel who assist customers and provide product demonstrations in specific application areas. We maintain our primary demonstration facilities in the United States (Massachusetts and California), Germany (Bremen and Leipzig), the United Kingdom (Coventry) and Japan (Tsukuba). Demonstration systems and applications scientists are also available in Australia, France, Italy and Switzerland. INDIRECT SALES CHANNELS. We have various international distributors and independent sales representatives, including affiliated companies and various representatives in the countries of South Korea, Portugal and Israel and in the regions of Latin America and Eastern Europe. We have adopted a distribution business model where we engage in strategic distribution alliances with other companies to address certain market segments. Our primary distribution alliances are: - We manufacture for Agilent an ion trap mass spectrometer, which they incorporate into their liquid chromatography mass spectrometry systems for distribution into various industrial markets; - We sell high-throughput MALDI time-of-flight mass spectrometers through Sequenom into emerging industrial genomics markets for high-throughput SNP analysis; - We sell BIFLEX MALDI time-of-flight mass spectrometry systems through MWG-Biotech for DNA/RNA applications, including SNP detection; and - In early 2000, we began co-marketing our OmniFLEX MALDI time-of-flight mass spectrometers with PerkinElmer in a variety of industrial market segments. SALES CYCLE AND BACKLOG The typical time between our first customer contact and our receipt of a customer's order for our life science systems is three to six months for most product lines. However, this sales cycle can be in excess of a year when a customer must budget the product into an upcoming fiscal year. Substance detection and pathogen identification products can have multi-year sales cycles for large production contracts. We typically ship ordered products within twelve months after receipt of the order. At December 31, 1999 and 2000, we had approximately $30.1 million and $38.0 million, respectively, in orders which had not yet been shipped to and accepted by the customer. MANUFACTURING We manufacture and test the majority of our products in our three principal ISO 9001 registered manufacturing facilities located in the United States and Germany. We have considerable manufacturing flexibility at our various facilities, and each facility can manufacture multiple products at the same time. We maintain in-house key manufacturing know-how, technologies and resources. Our facilities incorporate environmental chambers, CE mark compliance test centers, clean room manufacturing for vacuum components, licensed facilities for handling closed radioactive sources, computer-aided laser cutting and vacuum welding. We maintain multiple suppliers for key components that are not manufactured in-house. INTELLECTUAL PROPERTY Our intellectual property consists of patents, copyrights, trade secrets, know-how and trademarks. Protection of our intellectual property is a strategic priority for our business. We have a substantial patent portfolio, and it is our strategy to build and protect our patents. We believe our owned and licensed patent portfolio provides us with a competitive advantage. This portfolio permits us to 11 maintain access to a number of key technologies. We license our owned patent rights where appropriate. We will enforce our patent rights against infringers if necessary. The patent positions of life science tool companies involve complex legal and factual questions. As a result, we cannot predict the enforceability of our patents with certainty. In addition, we are aware of the existence from time to time of patents in certain countries which, if valid, could impair our ability to manufacture and sell our products in these countries. We are party to an agreement dated as of August 10, 1998 with Indiana University's Advanced Research and Technology Institute pursuant to which we have been granted an exclusive license to specified patent rights and products including three patents that relate to time-of-flight mass spectrometry. We pay the Institute royalties under this agreement and have agreed to allow the Institute to utilize any improvements that we make to the licensed products for research and educational purposes on a non-exclusive, royalty-free basis. The Institute may terminate the agreement if we default on our obligations or become bankrupt. We may terminate the agreement with six months notice. The license granted by the agreement expires at the later of August 10, 2008 or expiration of the licensed patent rights. Additionally, we have entered into a collaboration agreement with the Institute that extends until 2002 under which the Institute will continue to perform experiments that are useful to us in exchange for a flat fee and a percentage fee of any sales of products developed for us by the Institute. We also rely upon trade secrets, know-how, trademarks, copyright protection and licensing to develop and maintain our competitive position. We generally require the execution of confidentiality agreements by our employees, consultants and other scientific advisors. These agreements provide that all confidential information made known during the course of a relationship with us will be held in confidence and used only for our benefit. In addition, these agreements provide that we own all inventions generated during the course of the relationship. Our management considers Daltonics and the Bruker Daltonics logo to be our material trademarks, both of which are registered in the United States. We are a party to various government contracts. Under some of these government contracts, the government may receive license or similar rights to intellectual property developed under the contract. However, under government contracts we enter we receive no less than non-exclusive rights to any items or technologies we develop. SCIENTIFIC ADVISORY BOARD We have established an international Scientific Advisory Board to advise us on strategic research and development and strategic marketing issues. The members of the Board include: - Jean Futrell, Ph.D., Director of the Department of Energy's Environmental Molecular Sciences Laboratory in Richmond, Washington; former Chairman of Chemistry and Biochemistry at the University of Delaware; - Steven A. Hofstadtler, Ph.D., Director of Drug Discovery Technology, ISIS Pharmaceuticals, Inc., Carlsbad, California; - Joachim R. Wesener, Ph.D., Head of Mass Spectrometry at Bayer Central Research, Leverkusen, Germany; Board Member of German Society for Mass Spectrometry; - Professor Helmut Meyer, University of Bochum, Germany; President of Protagen AG, Bochum, Germany; 12 - Professor Peter Derrick, University of Warwick, United Kingdom; Director of University of Warwick's Institute for Mass Spectrometry; Professor and Chairman of the Department of Chemistry; and - Gunther Heinrich, Ph.D., CEO and President of EPIDAUROS AG, Bernried, Germany. We provide members of our Scientific Advisory Board a fee of $6,000 per year and options at fair market value for 1,500 shares of our common stock. These options vest in equal annual increments over the course of their three-year tenure. We also reimburse Scientific Advisory Board members for expenses reasonably incurred related to the services they provide us. COMPETITION Our markets are highly competitive, and we expect the competition to increase. Currently, we compete with a variety of companies that offer mass spectrometry-based systems along each of our product lines. Our competitors in the life sciences include Applied Biosystems, Amersham Pharmacia Biotech, Inc., Waters Corporation, ThermoElectron Corporation (which includes Finnigan) and Hitachi, Ltd. Our substance detection and pathogen identification markets are highly fragmented, and we compete with a number of companies in this area. Each of these competitors produces products based on several of the technology platforms that we utilize; however, none of them produces products utilizing all of our major technology platforms. Some of them have a greater market share than we have in particular technology platform areas. We also compete with other companies that provide analytical tools based on other technologies. These technologies may prove to be more successful in meeting demands in the markets that our products serve. In addition, other companies may choose to enter our field in the future. We believe that the principal competitive factors in our markets are technological applications expertise, product functionality, marketing expertise, distribution capability, proprietary patent portfolios, cost and cost effectiveness. Our existing products and any products that we develop may compete in multiple, highly competitive markets. Many of our potential competitors in these markets have substantially greater financial, technical and marketing resources than we do. They may offer or succeed in developing products that would render our products or those of our strategic partners obsolete or noncompetitive. In addition, many of these competitors have significantly greater experience in the life sciences market. Our ability to compete successfully will depend on our ability to develop proprietary products that reach the market in a timely manner and are technologically superior to and/or are less expensive, or more cost effective, than other currently marketed products. Current competitors or other companies may possess or develop technologies and products that are more effective than ours. Our technologies and products may be rendered obsolete or uneconomical by technological advances or entirely different approaches developed by one or more of our competitors. EMPLOYEES As of March 23, 2001, we employed over 500 full-time employees, with approximately 90 employees in the United States and more than 400 employees located primarily in Europe. Over 100 of these employees hold doctorates in biology, chemistry or physics. GOVERNMENT REGULATION We possess low-level radiation licenses for our facilities in Billerica, Massachusetts and Leipzig, Germany. Some of our products, particularly in the detection area, are subject to enhanced levels of export controls from the United States and Germany. Apart from these two areas, we are not subject to direct governmental regulation other than the laws and regulations generally applicable to businesses in the jurisdictions in which we operate. 13 ITEM 2. PROPERTIES Our three principal facilities located in Billerica, Massachusetts; Bremen, Germany; and Leipzig, Germany incorporate manufacturing, research and development, application and demonstration, marketing and sales and administration functions. - We lease a 25,000 square foot facility in Billerica, Massachusetts from a related entity. The initial term of this lease expired October 31, 1999, and it now renews annually for one year periods. The lease can be terminated by either party on 90 days written notice. - On December 1, 2000, we purchased a 202,888 square foot parcel of property in Billerica, Massachusetts adjacent to our existing leased property for a purchase price of $742,000 from a related party. - We own a 50,000 square foot facility in Bremen, Germany. - We own a 50,000 square foot facility in Leipzig, Germany. We lease additional centers for sales, applications and service support in Fremont, California; Coventry, United Kingdom (Bruker Daltonics Ltd.); Wissembourg, France (Bruker Daltonique S.A.); Stockholm, Sweden (Bruker Daltonics Scandinavia A.B.); Faellanden, Switzerland (Bruker Daltonics AG); Tsukuba, Japan (Nihon Bruker Daltonics K.K.); Beijing, People's Republic of China, Taipei, Taiwan; Ontario, Canada (Bruker Canada, Ltd.); Milan, Italy (Bruker Italiana SRL); Bangkok, Thailand (Bruker South East Asia) and Alexandria, Australia (Bruker Australia Party Ltd.). ITEM 3. LEGAL PROCEEDINGS FINNIGAN LITIGATION Since December 31, 1996, we have been involved in patent litigation with a competitor, Finnigan, a subsidiary of Thermo Electron Corporation. INTERNATIONAL TRADE COMMISSION INVESTIGATION AND APPEAL. In January 1997, Finnigan filed a complaint with the United States International Trade Commission alleging that our esquire mass spectrometer products which are based on our ion trap technology and a related product sold by our strategic partner, Agilent (formerly a division of Hewlett Packard), infringe Finnigan's U.S. Patent No. 4,540,884, or the '884 patent, and U.S. Patent Reissue No. 34,000, or the '000 patent. In February 1998, an administrative law judge initially found that some claims of the '884 patent were not infringed, some claims of the '884 patent were invalid, and that the '000 patent was invalid. In April 1998, the Commission issued a final determination confirming, in most respects, the initial determination. Finnigan appealed the determination for the '884 patent only to the Court of Appeals for the Federal Circuit. In June 1999, this appeals court reversed the finding of invalidity of some claims of the '884 patent, but affirmed that our products did not infringe the '884 patent. The impact of this decision was to leave in effect the order of the Commission denying Finnigan the relief it sought. PATENT INFRINGEMENT ACTION BY FINNIGAN IN UNITED STATES DISTRICT COURT. In December 1996, Finnigan brought suit in the United States District Court for the District of Massachusetts alleging that our esquire series of mass spectrometer products and a related product marketed by Agilent infringe the '000 and the '884 patents. At present, Finnigan is only asserting two claims of the '000 patent and one claim of the '884 patent. The '000 patent expires in April 2005, and the '884 patent expires in September 2002. We have filed two motions for summary judgment. One motion seeks a ruling that the claim of the '884 patent is not infringed. The other seeks a ruling that the '000 patent is invalid. Finnigan has opposed these motions for summary judgment and cross-moved for summary judgment that the claim of the '884 patent covers the method of operation of our esquire mass spectrometers and the related Agilent product. A hearing on our summary judgment motion concerning the '884 patent was held on November 9, 2000, but the Court has not ruled on this motion as of March 14, 2001. No hearing on the motion concerning the '000 patent has been scheduled as of March 14, 2001. 14 OUR ANTITRUST ACTION AGAINST FINNIGAN AND OTHERS IN UNITED STATES DISTRICT COURT. In May 1997, we filed a complaint in the United States District Court for the District of Massachusetts alleging antitrust violations against Finnigan, ThermoQuest and Thermo Instruments, another subsidiary of ThermoElectron, based on Finnigan's actions in connection with several of its patents. In January 2000, Finnigan filed a motion to dismiss. In November 2000, the District Court denied Finnigan's motion to dismiss with respect to all counts of our complaint except one which the District Court dismissed. Finnigan subsequently filed a motion for reconsideration which was denied by the court in December 2000. In January 2001, Finnigan filed a motion to stay all discovery in this matter pending the outcome of their infringement suit against us in the United States District Court for the District of Massachusetts. In February 2001, the motion was denied, and the District Court allowed written discovery to commence immediately. Depositions may be scheduled after the rulings on the summary judgement motions pending in the patent infringement action. PATENT INFRINGEMENT ACTION BY FINNIGAN IN THE DISTRICT COURT IN DUSSELDORF, GERMANY. In March 1999, Finnigan brought suit in a District Court in Dusseldorf, Germany alleging that our esquire series of mass spectrometer products and the related Agilent product infringe three Finnigan European patents. The court retained the claims alleging infringement in Germany but, on jurisdictional grounds, transferred the claims alleging infringement in the United Kingdom, France, Sweden and Switzerland to the District Court in Hamburg. In March 2000, the court issued rulings that distribution and delivery of our esquire series of products and of the related Agilent product for use in Germany infringe two Finnigan patents, and we were enjoined from offering or delivering our ion trap devices to customers domiciled in Germany. The court ordered us and Agilent to pay damages in an amount to be determined and stayed its consideration of the third patent pending the court's opportunity to hear witness testimony with respect to our claim regarding this patent. The hearing on this third patent and witness testimony is scheduled for November 2001 in Dusseldorf. On December 22, 2000, Finnigan filed a request for damages from lost sales in the amount of DM 6,374,366 with the District Court; however, we estimate that the damages for our past sales of ion trap products in Germany to be determined by the Dusseldorf court will be approximately $240,000, and that the attorneys' fees and costs that we may be required to pay will be approximately $105,000. The damages and costs that the Dusseldorf Court actually assesses may be more or less than the amounts estimated here. We have filed an appeal of the decision of the Dusseldorf court at the Higher District Court in Duesseldorf (Oberlandesgericht) for which a hearing is scheduled preliminarily for August 2001. In late October 2000, the Dusseldorf court found that our subsidiary had delivered three instruments in summer 2000 in violation of its order and imposed a fine of DM 130,000 on us. We have appealed this decision as we believe that no instruments were delivered in violation of the order. In connection with our nullity action in the German Patent Court in Munich which is described below, the German Patent Court in Munich limited the scope of one of Finnigan's patents which the Dusseldorf court found we had infringed; and, therefore, we believe that this patent is no longer the subject of this action. PATENT INFRINGEMENT ACTION BY FINNIGAN IN THE DISTRICT COURT IN HAMBURG, GERMANY. As noted above, the Dusseldorf Court transferred to the District Court in Hamburg the claims alleging infringement in the United Kingdom, France, Sweden and Switzerland. In these proceedings the substantive patent law of each country will apply to the determination of the claims and defenses relating to infringement in each country, respectively. A hearing was held on September 13, 2000 regarding the identity of the plaintiff and its basis for claims. The decision from this hearing, issued in December 2000, confirmed Finnigan-Delaware as the plaintiff. We do not expect a ruling on the infringement case in 2001. PATENT INFRINGEMENT ACTION BY THERMOFINNIGAN IN THE DISTRICT COURT IN PARIS, FRANCE. On December 22, 2000, ThermoFinnigan Corporation sued Bruker Daltonique, Bruker SA, France and Bruker Daltonics, as well as Agilent Technologies Holding SA and Agilent Technologies SA, France, alleging that our esquire mass spectrometers and the corresponding Agilent products infringe the French portions of ThermoFinnigan's European Patents 0 113 207 and 0 202 943. As of March 14, 15 2001, ThermoFinnigan had not yet filed the necessary documents to support their law suit. If they make these filings, then we will be required to file a response which will primarily address formal questions. A first instance decision on this matter is not expected during 2001. OUR NULLITY ACTIONS AGAINST THE FINNIGAN PATENTS IN GERMANY. In July 1999, we filed nullity actions in the German Patent Court in Munich regarding the same three Finnigan patents involved in the Dusseldorf actions. In these nullity actions the Munich Court is being asked to determine the validity of the three Finnigan patents as they apply in Germany. The Munich Court will not determine the validity of the patents as the patents apply in France, the United Kingdom, Switzerland or Sweden. Hearings in the Munich nullity actions occurred in July 2000. The court limited the scope of one of the patents and deferred a ruling on the other two patents pending a further hearing. If we prevail in the nullity actions finally and absolutely, the rulings of the Dusseldorf Court will be withdrawn. A hearing on both remaining patents with witness testimony on prior public use is scheduled for May 2001. OUR PATENT INFRINGEMENT ACTION AGAINST FINNIGAN (THERMOQUEST) IN THE DISTRICT COURT IN DUSSELDORF, GERMANY. In late 1999, we filed a complaint in the Federal Court in Dusseldorf alleging that Finnigan's ion trap products infringe two of our European patents, EP 0 321 819 and EP 0 236 990. In a final hearing on May 9, 2000, the European Patent Office limited the scope of our European Patent EP 0 321 819. Therefore, we have withdrawn our complaint with respect to this patent. The court rendered a decision in our favor on March 22, 2001; however, because the written decision will not be released for several weeks, we are unable to assess the impact of this decision on our situation. NULLITY ACTIONS AGAINST OUR PATENTS IN MUNICH, GERMANY. Finnigan has filed a nullity action in the German Patent Court in Munich against one of our patents. In a ruling issued in January 2001, the German Patent Court in Munich upheld the validity of our patent but slightly narrowed its scope. This decision has been appealed by Finnigan and by us at the German Federal Court (Bundesgerichtshof) in Karlsruhe, Germany. We maintain our Dusseldorf complaint against Finnigan with respect to this patent. OUR DECLARATORY JUDGEMENT SUIT AGAINST THE FINNIGAN PATENTS IN ITALY. In August 2000, Bruker Daltonik GmbH filed a declaratory judgement suit in Milan Italy requesting that the Italian Court declare that Finnigan's European Patent 0113207 is invalid throughout Europe and is not infringed by our products. While we believe that our ion trap mass spectrometry products, including our Esquire series and the product sold by Agilent, should ultimately be held not to infringe any claim of any valid Finnigan patent, we cannot predict the outcome of the Finnigan litigation. As of December 31, 2000 and 1999, the Company accrued $4.1 million and $5.8 million, respectively, for future estimated legal defense fees and anticipated assessments associated with this litigation. In 1998, 1999 and 2000, our sales of ion trap mass spectrometry products in Germany totaled $810,767, $2.0 million and $2.4 million, respectively. In 1998, 1999 and 2000, our sales of these products in other European countries totaled $1.8 million, $2.6 million and $6.3 million, respectively. In 1998, 1999 and 2000, our sales of ion trap mass spectrometry products in the U.S. totaled $2.1 million, $3.6 million and $3.9 million, respectively. In 1998, 1999 and 2000, total worldwide sales of our ion trap mass spectrometry products totaled $5.0 million, $8.2 million and $12.6 million, respectively. Also, under our agreement with Agilent, we may be required to indemnify Agilent from any damages and expenses resulting from the Finnigan litigation. See "Risk Factors--Our success depends on our ability to operate without infringing or misappropriating the proprietary rights of others; and we are currently involved in several legal actions concerning technology for ion trap spectrometry with a competitor and various affiliates of the competitor, and a German court has decided that we have infringed two European patents of the competitor." 16 INTERFERENCE PROCEEDINGS. We are involved in interference proceedings in the United States Patent and Trademark Office regarding our MALDI time-of-flight mass spectrometry patents/applications and patents/applications owned by Applied Biosystems. An interference is a proceeding to determine priority among two or more applications or between a patent and an application that claim the same or similar inventions and were filed within one year of each other. The interference proceedings are ongoing and have a number of potential outcomes. Should the United States Patent and Trademark Office award priority to either of the parties, that party could then file a patent infringement action in a district court. GENERAL We may, from time to time, be involved in other legal proceedings in the ordinary course of business. We are not currently involved in any other pending legal proceedings that, either individually or taken as a whole, could materially harm our business, prospects, results of operations or financial condition. With the exception of the litigation described above, in the last two fiscal years, neither we nor our subsidiaries have been involved in any lawsuits or arbitrations that could have or have had a material adverse effect on our financial position, operating results and cash flows. No such arbitrations or lawsuits have been threatened. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the last quarter of the fiscal year ended December 31, 2000. ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT Information required by Item 10 of Form 10-K with respect to our executive officers is set forth below. Our executive officers are elected by the Board of Directors on an annual basis and serve until their successors have been duly elected and qualified. There are no family relationships among any of our executive officers or directors. Our executive officers of as of March 23, 2001 are:
NAME AGE POSITION - ---- -------- -------- Frank H. Laukien, Ph.D. (1)............ 41 Chairman, President and Chief Executive Officer John J. Hulburt, C.P.A................. 34 Corporate Controller and Treasurer Dieter Koch, Ph.D. (1)................. 60 Managing Director of Bruker Daltonik GmbH*; Managing Director of Bruker Saxonia Analytik GmbH* and Director of Bruker Daltonics Inc. Jochen Franzen, Ph.D................... 70 Managing Director, Bruker Daltonik GmbH* Hans-Jakob Baum........................ 48 Vice General Manager of Bruker Daltonik GmbH*; Managing Director of Bruker Saxonia Analytik GmbH* John Wronka, Ph.D...................... 45 Vice President Gary Kruppa, Ph.D...................... 39 Vice President
- ------------------------ (1) Member of our Board of Directors. * Bruker Daltonik GmbH is a subsidiary of Bruker Daltonics Inc. and Bruker Saxonia Analytik GmbH is a subsidiary of Bruker Daltonik GmbH. FRANK H. LAUKIEN, PH.D. Dr. Laukien has been the Chairman, President and Chief Executive Officer of Bruker Daltonics since the inception of our predecessor company in February 1991. He has been a Managing Director of Bruker Daltonik GmbH, a wholly-owned subsidiary of Bruker Daltonics, 17 since August 1997. He has also served as Chairman of Bruker AXS Inc., an affiliate of Bruker Daltonics, since October 1997 and as President of Bruker Instruments, Inc., an affiliate of Bruker Daltonics, since June 1997. He is a Professor of Mass Spectrometry at the University of Amsterdam. Dr. Laukien holds a B.S. degree from the Massachusetts Institute of Technology, as well as a M.A. and a Ph.D. in chemical physics from Harvard University. JOHN J. HULBURT, C.P.A. Mr. Hulburt has been our Corporate Controller since April 2000 and our Treasurer since June 2000. From December 1996 until April 2000, he was a manager at Ernst & Young LLP. Prior to that time, Mr. Hulburt was a senior accountant at Arthur Andersen LLP. Mr. Hulburt is a Certified Public Accountant. He holds a B.S. in accounting from Merrimack College. DIETER KOCH, PH.D. Dr. Koch has been a Director of Bruker Daltonics since August 1997. He is a Managing Director of Bruker Daltonik GmbH, now a wholly-owned subsidiary of Bruker Daltonics, since June 1980. Dr. Koch has also been the Managing Director of Bruker Saxonia Analytik GmbH, now a subsidiary of Bruker Daltonik GmbH, since founding it in 1990. He is responsible for our substance detection and pathogen identification product lines. He holds M.S. and Ph.D. degrees in chemistry from the University of Cologne. JOCHEN FRANZEN, PH.D. Dr. Franzen is a Managing Director of Bruker Daltonik GmbH and has held this position since June 1980. He is responsible for intellectual property and research activities at Bruker Daltonik GmbH. Prior to 1980 he served as Managing Director of Franzen Analysentechnik GmbH, a mass spectrometry manufacturing company. Dr. Franzen served as President of the German Society for Mass Spectrometry during 1997 and 1998. He holds an M.S. degree from the University of Mainz and a Ph.D. in physics from the Max-Planck Institute. HANS-JAKOB BAUM. Mr. Baum has been a Vice General Manager of Bruker Daltonik GmbH since August 1999. He is responsible for sales and product applications. Mr. Baum joined Bruker Daltonik GmbH in June 1988 as a Product Manager. From January 1991 until August 1997, he was Sales Director of Bruker Daltonik. Before joining us, Mr. Baum was a Chemical Defense Officer in the German Army. JOHN WRONKA, PH.D. Dr. Wronka has been our Vice President since June 1996. He is responsible for the general management of operations in the U.S. Dr. Wronka joined Bruker Instruments, an affiliate of Bruker Daltonics, in May 1989 as Mass Spectrometry Product Manager. He joined Bruker Daltonics as the Mass Spectrometry Division Manager in July 1995 and served as a Division Manager until June 1996. Prior to joining Bruker Instruments, Dr. Wronka was a Professor and Instrumentation Manager for Northeastern University. He holds a B.S. from St. Joseph's College and a Ph.D. in chemistry from the University of Delaware. GARY KRUPPA, PH.D. Dr. Kruppa has served as our Vice President of the Fourier Transform Mass Spectrometry Division since October 1998. He joined Bruker Instruments, an affiliate of Bruker Daltonics, in November 1990 as an applications scientist. He joined Bruker Daltonics in December 1994, and from December 1994 until September 1998, he was a Product Manager. Before joining Bruker Instruments, he was a research scientist at Ciba-Geigy, now Novartis, a pharmaceutical and drug discovery company. Dr. Kruppa holds a B.S. degree from the University of Delaware and a Ph.D. in chemical physics from the California Institute of Technology. PART II ITEM 5.MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS' MATTERS Our common stock has been quoted on the Nasdaq National Market since August 4, 2000. Prior to that time, there was no public market for the common stock. The following table sets forth, for the 18 period indicated, the high and low sale prices for the common stock as reported on the Nasdaq National Market.
HIGH LOW -------- -------- Third Quarter 2000 (from August 4, 2000).................... $51.375 $19.188 Fourth Quarter 2000......................................... $47.313 $15.063 First Quarter 2001 (through March 23, 2001)................. $27.250 $ 8.313
On March 23, 2001, the last sale price of the common stock on the Nasdaq National Market was $11.063. As of March 23, 2001, we had approximately 713 holders of security positions. We have never declared or paid cash dividends on our capital stock. We currently anticipate that we will retain all available funds for use in our business and do not anticipate paying any cash dividends in the foreseeable future. On November 22, 2000, we issued 79,218 shares of our common stock, par value $.01 per share, to Geneva Proteomics, Inc. in exchange for shares of Geneva Proteomics, Inc. valued at a total of approximately $2.2 million. The shares of our common stock were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, afforded by Section 4(2) of this act. ITEM 6. SELECTED FINANCIAL DATA The consolidated/combined statements of operations data for each of the years ended December 31, 1998, 1999 and 2000 and the consolidated balance sheet data as of December 31, 1999 and 2000 have been derived from our audited financial statements included elsewhere in this report. The consolidated and combined statement of operations data for the year ended December 31, 1997 and the consolidated and combined balance sheet data as at December 31, 1997 and 1998 have been derived from our audited financial statements not included in this report. The combined statements of operations data for the year ended December 31, 1996 and the combined balance sheet data as of December 31, 1996 have been derived from unaudited financial statements not included in this report. The financial statements for 1996 through 1998 are presented on a combined basis due to the common ownership of the Company and its affiliated company in Germany, which was formally acquired in December 1998. Historical results are not necessarily indicative of future results. The data presented below have been derived from financial statements that have been prepared in accordance with accounting principles generally accepted in the United States and should be read with the consolidated 19 and combined financial statements, including the notes, and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this report.
YEAR ENDED DECEMBER 31, ---------------------------------------------------- 1996 1997 1998 1999 2000 -------- -------- -------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) CONSOLIDATED/COMBINED STATEMENTS OF OPERATIONS DATA: Product revenue...................................... $ 43,942 $49,247 $40,157 $60,620 $ 74,772 Other revenue........................................ 2,130 1,878 2,050 4,070 1,830 -------- ------- ------- ------- -------- Net revenue...................................... 46,072 51,125 42,207 64,690 76,602 Total costs and operating expenses................... 38,882 48,527 42,368 62,050 75,868 Operating income (loss) from continuing operations... 7,190 2,598 (161) 2,640 734 Income (loss) from continuing operations............. 3,895 355 (888) 876 2,066 Income (loss) per share from continuing operations... $0.08 $0.01 $(0.02) $0.02 $0.04
AS OF DECEMBER 31, ---------------------------------------------------- 1996 1997 1998 1999 2000 -------- -------- -------- -------- -------- CONSOLIDATED/COMBINED BALANCE SHEET DATA: Cash, cash equivalents and short-term investments.... $ 3,766 $ 2,021 $ 1,135 $ 2,443 $ 94,629 Working capital (deficit)............................ (14,759) (8,845) 6,338 12,080 111,054 Total assets......................................... 62,105 52,249 63,841 67,309 184,554 Total debt........................................... 19,033 8,496 17,924 15,340 12,037 Total stockholders' equity........................... 9,996 9,870 10,340 10,058 124,172
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS TOGETHER WITH "SELECTED FINANCIAL DATA" AND OUR FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS REPORT. THIS DISCUSSION AND ANALYSIS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF MANY FACTORS, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH UNDER "FACTORS AFFECTING OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION" AND ELSEWHERE IN THIS REPORT. OVERVIEW We are a leading developer and provider of innovative life science tools based on mass spectrometry. We are also a worldwide leader in supplying mass spectrometry-based systems for substance detection and pathogen identification in security and defense applications. We maintain technical centers in Europe, North America and Japan, as well as customer support facilities in many industrialized and developing countries. We allocate substantial capital and resources to research and development and are party to various collaborations and strategic alliances. Our diverse customer base includes pharmaceutical companies, biotechnology companies, proteomic companies, academic institutions and government agencies. Effective December 21, 1998, Bruker Daltonics Inc. acquired all of the shares of Bruker Daltonik GmbH for $5.4 million. The transaction represented an exchange between entities under common control and, accordingly, the assets acquired and liabilities assumed have been accounted for at historical cost in a manner similar to that of pooling-of-interests accounting. In addition, all periods presented have been restated to reflect the businesses on a combined basis. 20 ACQUISITIONS In December 1999, we acquired a 49% interest in ProteiGene, Inc., a Delaware corporation, from a related party. ProteiGene is a biomarker research and development company specializing in the application of mass spectrometry and bioinformatics for medical and microbiology cell and tissue analysis. The acquisition cost was $50,000 in cash, the estimated fair market value, and was accounted for as a purchase. In March 2000, we acquired the remaining 51% interest in ProteiGene for $26,000 from an unrelated party. In June 1999, we purchased the assets of Viking Instruments Corporation, a developer and manufacturer of transportable gas chromatrograph mass spectrometers. These instruments are used for laboratory and field analysis of soil, air and water for the identification and quantification of a wide variety of organic compounds and pollutants. The acquisition cost was $150,000, and the results of operations are included in the accompanying consolidated financial statements from the date of acquisition. In connection with the acquisition, $100,000 was expensed as purchased in-process research and development, $25,000 was allocated to core technology and classified as an intangible, $20,000 was allocated to inventory and $5,000 was allocated to fixed assets. The amortization period is five years for the intangibles and three to five years for the fixed assets. The $100,000 in-process research and development was attributed to the Viking 573, a transportable gas chromatrograph mass spectrometer, and supported by a discounted probable cash flow analysis on a project-by-project basis modified to reflect the stage of completion of the in-process research and development expenditures. As of June 22, 1999, the feasibility of the acquired technology had not been established, and the acquired technology had no future alternative uses. In connection with the Viking 573 project, we invested an additional $313,000 out of operational cash flows through December 31, 1999. We shipped our first unit in December 1999 which was accepted by the customer in January 2000. DISCONTINUED OPERATIONS In 1999, we decided to dispose of our analytical infrared sales group. In March 2000, we completed the divestiture to a related party, Bruker Optik GmbH, without a gain or loss. Our former analytical infrared sales group sold and serviced instruments, not manufactured by us, in Germany only. The infrared sales group generated revenues of $2.7 million in fiscal 1999. Amounts previously reported have been reclassified as discontinued operations and are not included in this discussion. SIGNIFICANT ACCOUNTING POLICIES CUSTOMER DEPOSITS. Under the terms and conditions of contracts with many of our customers, we require a portion of the purchase price in the form of an advance deposit. We record these deposit amounts as a liability until the associated revenue is recognized at the time of acceptance of the system. REVENUE RECOGNITION. We recognize revenue from system sales, including hardware with embedded software, when a product is accepted by the customer, except when sold through an independent distributor, a strategic distribution partner or an unconsolidated Bruker affiliated distributor which assumes responsibility for installation, in which case the system sale is recognized when the products are shipped to the distributor and title has transferred to the distributor. Our distributors do not have price protection rights or rights to return; however our products are warranted to be free from defect for a period of, typically, one year. Revenue from accessories and parts is recognized upon shipment, and revenue from services when performed. COST OF PRODUCT REVENUE. Cost of product revenue includes all direct materials, direct labor, benefits and indirect costs related to generating revenue. These indirect costs include indirect labor, 21 materials and supplies, equipment rental and depreciation of production equipment, test equipment and facilities as related to production space revenue. SALES AND MARKETING. Sales and marketing expenses include salaries, sales commissions, benefits, travel, occupancy costs and related expenses for our direct sales force, sales support and marketing functions. We have expanded our sales and marketing organization substantially since 1997, adding subsidiaries and sales representatives in China, France, Japan, Scandinavia, Switzerland, the United Kingdom, Canada, Italy and Taiwan. Sales and marketing expenses also include costs associated with supporting our distribution channel partners for our time-of-flight and ion trap mass spectrometry products. We expect that sales and marketing expenses will continue to increase in the future as we further expand our global distribution capabilities and introduce new products. GENERAL AND ADMINISTRATIVE. General and administrative expenses include salaries, benefits and expenses for our executive, finance, legal, human resources and internal systems support personnel. In addition, general and administrative expenses include occupancy costs, fees for professional services and depreciation of office equipment. We expect general and administrative expenses to increase as we continue to expand our administrative infrastructure to support the anticipated growth of our business, including the costs associated with being a public company. RESEARCH AND DEVELOPMENT. Research and development expenses include costs for the development of new technologies and products. These expenses include materials, salaries, benefits, occupancy costs and related expenses for development personnel. We expense research and development costs as incurred. We expect to increase spending on research and development in order to develop new products and applications. PATENT LITIGATION COSTS. Patent litigation costs include actual and estimated legal fees and anticipated assessments associated with litigation in connection with our intellectual property, particularly the Finnigan litigation. These costs may increase depending upon the outcome of the current legal proceedings. 22 RESULTS OF OPERATIONS The following table sets forth certain items included in our results of operations for the three years ended December 31, 1998, 1999 and 2000, expressed as a percentage of our net revenue for these periods.
YEAR ENDED DECEMBER 31, -------------------------------- 1998 1999 2000 -------- -------- -------- Revenue: Product revenue........................................... 95.1% 93.7% 97.6% Other revenue............................................. 4.9 6.3 2.4 ----- ----- ----- Net revenue........................................... 100.0 100.0 100.0 Costs and operating expenses: Cost of product revenue................................... 46.6 48.9 46.4 Provision for loss on contract............................ -- -- 1.4 Sales and marketing....................................... 17.6 17.5 18.0 General and administrative................................ 5.3 5.3 6.6 Research and development.................................. 30.9 23.4 26.2 Patent litigation costs................................... 0.0 0.8 0.4 ----- ----- ----- Total costs and operating expenses.................... 100.4 95.9 99.0 ----- ----- ----- Operating income (loss) from continuing operations.......... (0.4) 4.1 1.0 Other income (expense)...................................... 0.4 0.2 (0.3) Interest income (expense), net.............................. (2.1) (1.4) 2.3 ----- ----- ----- Income (loss) from continuing operations, before income taxes..................................................... (2.1) 2.9 3.0 Provision for income taxes.................................. 0.0 1.5 0.3 ----- ----- ----- Income (loss) from continuing operations.................... (2.1) 1.4 2.7 Income from discontinued operations, net of income taxes.... 0.9 0.5 0.2 ----- ----- ----- Net income (loss)........................................... (1.2)% 1.9% 2.9% ===== ===== =====
YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999 Product Revenue. Total product revenue increased $14.2 million, or 23.3%, to $74.8 million in 2000 compared to $60.6 million in 1999. Our top-line product revenue growth rate for the year was approximately 39% before unfavorable currency effects due to the particular weakness of the European currencies throughout the year. Life science product revenue and substance detection and pathogen identification product revenue as a percentage of product revenue was approximately 66% and 22%, respectively, in 2000 compared to 54% and 46%, respectively, in 1999. The increase in product revenue in 2000 was fueled by a continuing strong demand for our life science products in all various product lines by new and existing customers. Other Revenue. Other revenue decreased $2.2 million, or 55.1%, to $1.8 million in 2000 compared to $4.1 million in 1999. This decrease was due to the completion of certain projects for early-stage research and development which were funded by grants from the German government and the Advanced Technology Program of the National Institute of Standards and Technologies in the United States. While we historically have obtained significant funding under grant awards for early-stage research and development activity, we anticipate this funding will be significantly reduced in the future. Cost of Product Revenue (including provision for loss on contract). Cost of product revenue increased $4.0 million, or 12.6%, to $35.6 million in 2000 compared to $31.6 million in 1999. The cost of product revenue as a percentage of product revenue was 47.6% in 2000 compared to 52.2% in 1999. 23 This decrease is due to a combination of greater revenues from new life science products which have a lower cost, increased efficiencies in the manufacturing operations and lower material costs driven by an increase in volume discounts. During fourth quarter 2000, we took a $1.1 million special charge against an unprofitable contract within our substance detection and pathogen identification business. We made considerable design changes to the systems to be delivered under this contract which increased the cost. The contract is expected to be completed near the end of 2001. Sales and Marketing. Sales and marketing expenses increased $2.5, or 21.7%, to $13.8 million in 2000 compared to $11.3 million in 1999. The dollar increase was due to higher sales commissions earned by our direct sales force as a result of an increase in the number of units sold and the addition of new distribution subsidiaries not in operation during 1999. Sales and marketing expenses as a percentage of product revenues were 18.5% in 2000 and 18.7% in 1999. General and Administrative. General and administrative expenses increased $1.6 million, or 48.3%, to $5.1 million in 2000 compared to $3.4 million in 1999. As a percentage of product revenues, general and administrative expenses were 6.8% in 2000 and 5.6% in 1999. The increase relates to certain non-cash charges to compensation expense related to our stock option grants as well as other various costs related to being a public company. Research and Development. Research and development expenses increased $4.9 million, or 32.3%, to $20.0 million in 2000 compared to $15.1 million in 1999. As a percentage of product revenues, research and development expenses increased to 26.8% in 2000 from 25.0% in 1999. The dollar increase in 2000 was due to increased staffing and the related personnel costs as well as late stage testing costs incurred for our new products scheduled for introduction in early 2001. We are investing heavily in proteomics and life-science systems integration in general and expect to introduce several new products in early March 2001, as well as in the second half of the year. Patent Litigation Costs. Patent litigation costs were $303,000 in 2000. This increase reflects a revised estimate of our legal costs associated with our intellectual property litigation and reflects estimated assessments related to the ongoing litigation. Interest and Other Income (Expenses), Net. Interest and other income, net was $1.6 million in 2000 compared to an interest and other expense, net of $(777,000) in 1999. The difference is due to interest income earned on the additional funding raised in our equity offering during third quarter 2000 and the payoff of our outstanding short-term lines of credit both in the United States and Germany. Income From Discontinued Operations, Net of Income Taxes. Income from discontinued operations net of income taxes decreased $189,000, or 50.8%, to $184,000 in 2000 compared to $373,000 in 1999. Income from discontinued operations is related to the disposal of our infrared sales group in early 2000. Provision for Income Taxes. Provision for income taxes was $254,000 in 2000 compared to $987,000 in 1999. The effective tax rate in 2000 was 10.9% which reflected a blended tax rate from the various countries in which we operate, a reduction in the valuation allowance in the United States as a result of future anticipated earnings, and a benefit on the revaluation of net deferred tax liabilities as a result of a reduction in enacted tax rates in Germany. The effective tax rate in 1999 was 52.9% which reflected a blended tax rate from the various countries in which we operate, benefits from the utilization of tax loss carryforwards in Germany, and an increase in the valuation allowance in the United States associated with tax loss carryforwards. YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998 Product Revenue. Total product revenue increased $20.5 million, or 51.0%, to $60.6 million in 1999 compared to $40.2 million in 1998. Product revenue via affiliated distributors increased $503,000, 24 or 5.1%, to $10.3 million in 1999 compared to $9.8 million in 1998. Life science product revenue and substance detection and pathogen identification product revenue as a percentage of net revenue was 50.6% and 43.1%, respectively, in 1999 compared to 42.1% and 53.0%, respectively, in 1998. The increase in product revenue in 1999 was fueled by strong demand for our life science products by new and existing customers, led by our Fourier transform mass spectrometry, MALDI time-of-flight and esquire product lines. Additionally, $8.1 million of our 1999 substance detection and pathogen identification product revenue was due to the completion of a large non-recurring contract. Other Revenue. Other revenue increased $2.0 million, or 98.6%, to $4.1 million in 1999 compared to $2.0 million in 1998. This increase was due to additional grant funding for early stage research and development from the German government and from the Advanced Technology Program of the National Institute of Standards and Technologies in the United States. Cost of Product Revenue. Cost of product revenue increased $11.9 million, or 60.7%, to $31.6 million in 1999 compared to $19.7 million in 1998. The cost of product revenue as a percentage of product revenue was 52.2% in 1999 compared to 49.0% in 1998. The increase as a percentage of product revenue was due to lower revenue from our substance detection and pathogen identification product, which historically has a lower cost of product revenue than our life science products. Additionally, we have increased manufacturing capacity to meet future projected product sales growth. This increased capacity had an adverse effect on cost of product. We anticipate improved leverage of our fixed manufacturing costs, and declines in cost of product revenue as a percentage of sales, as our product revenue increases. We are also seeking to improve our gross margin by developing new, more integrated systems and higher margin consumables for the life science market. Sales and Marketing. Sales and marketing expenses increased $3.9 million, or 52.6%, to $11.3 million in 1999 compared to $7.4 million in 1998. As a percentage of net revenues, sales and marketing expenses remained relatively consistent. The dollar increase was due to sales commissions and bonuses earned by our direct sales force as a result of an increase in the number of units sold and the expansion of our global distribution capabilities. The dollar increase was also due to an increase in sales personnel and the associated recruiting, training, travel, commissions and office space costs necessary to support a larger sales organization. General and Administrative. General and administrative expenses increased $1.2 million, or 54.2%, to $3.4 million in 1999 compared to $2.2 million in 1998. The dollar increases were due to increased staffing and personnel related costs incurred to manage and support our growth and the costs associated with the incorporation of our foreign subsidiary offices. As a percentage of net revenues, general and administrative expenses remained relatively consistent. Research and Development. Research and development expenses increased $2.1 million, or 16.0%, to $15.1 million in 1999 compared to $13.0 million in 1998. As a percentage of net revenues, research and development decreased to 23.4% compared to 30.9%. The dollar increase in 1999 was due to increased staffing and the related personnel costs incurred for late stage testing of our new product introductions, including APEX III, BioTOF II, esquire3000, MAP II/8 and OmniFLEX, in March 2000. These increased expenses represented a lower percentage of revenue due to the significant increase in revenues during fiscal 1999. Patent Litigation Costs. Patent litigation costs were $538,000 in 1999. This increase reflects a revised estimate of our legal costs associated with our intellectual property litigation. Interest Expense, Net. Interest expense increased $6,000, or 0.7%, to $907,000 in 1999 compared to $901,000 in 1998. The interest expense is the result of our long and short-term borrowings from banks in the United States and Germany. 25 Income from Discontinued Operations, Net of Income Taxes. Income from discontinued operations net of income taxes decreased $10,000, or 2.6%, to $373,000 in 1999 compared to $383,000 in 1998. Income from discontinued operations is related to the disposal of our infrared sales group in March 2000. For information concerning the provision for income taxes as well as information regarding differences between effective tax rates and statutory rates, see Note 6, of the Notes to Consolidated Financial Statements. LIQUIDITY AND CAPITAL RESOURCES Presently, we anticipate that our existing capital resources, including the approximately $110 million net proceeds received from our equity offering, during third quarter 2000, will meet our operating and investing needs through at least the end of 2001. Historically, we have financed our growth through a combination of cash provided from operations, debt financing and issuance of common stock. We utilized the proceeds of our initial public offering to repay short-term debt in the amount of approximately $5 million and for general working capital. During 2000, net cash used in operating activities was $202,000. Net cash provided by operating activities in 1999 was $5.8 million and net cash used was $6.4 million in 1998. We used $5.3 million of cash during the year for capital expenditures, $4.4 in 1999 and $2.9 in 1998. Such capital expenditures were made to improve productivity and expand manufacturing capacity. We expect to continue to make capital investments focused on enhancing the efficiency of our operations and supporting our growth. Also during 2001, we are planning on expanding our research and development and manufacturing facilities and infrastructure both in Massachusetts and Bremen, Germany. As of December 31, 2000, we have available up to $2.5 million under a revolving line of credit with a bank in the United States. As of December 31, 2000, there were no amounts outstanding. This line, which is secured by portions of our inventory, receivables and equipment in the United States, was used to provide working capital and expires July 31, 2001. We also maintain revolving lines of credit of approximately $7.7 million with German banks. As of December 31, 2000, there were no amounts outstanding. Our German lines of credit are unsecured. Our future capital uses and requirements depend on numerous factors, including our success in selling our existing products, our progress in research and development, our ability to introduce and sell new products, our sales and marketing expenses, our need to expand production capacity, costs associated with possible acquisitions, expenses associated with unforeseen litigation, regulatory changes and competition and technological developments in the market. INFLATION We do not believe inflation has had a material impact on our business or operating results during the periods presented. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS"). SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments, embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. In July 1999, the FASB issued Statement of Financial Accounting Standards No. 137 Accounting for Derivative Instruments and Hedging 26 Activities--Deferral of the Effective Date of FASB Statement No. 133 ("SFAS 137"). SFAS 137 deferred the effective date of SFAS 133 until the first fiscal year beginning after June 15, 2000. We will adopt the standard during January 2001. Management believes that SFAS 133 will not have a material effect on the financial position or results of operations of the Company. IMPACT OF FOREIGN CURRENCIES We sell our products in many countries and a substantial portion of our sales and a portion of our costs and expenses are denominated in foreign currencies, especially in Euro. Historically, our realized foreign exchange gains and losses have not been material. Accordingly, we have not hedged our foreign currency position in the past. However, as we expand our sales internationally, we plan to evaluate our currency risks, and we may enter into foreign exchange contracts from time to time to mitigate foreign currency exposure. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK Part of the information called for by this item is provided under the caption "Liquidity and Capital Resources" and "Impact of Foreign Currencies" under Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations. The Company does not use derivative financial instruments for trading or speculative purposes. However, the Company regularly invests excess cash in overnight repurchase agreements, interest-bearing investment-grade securities and short-term partnership funds all of which are subject to changes in short-term interest rates. The Company believes that the market risk arising from holding these financial instruments is minimal. The Company's exposure to market risks associated with changes in interest rates relates primarily to the increase or decrease in the amount of interest income earned on its investment portfolio since the Company's long-term debt has a fixed rate. The Company ensures the safety and preservation of invested funds by limiting default risks, market risk and reinvestment risk. The Company mitigates default risk by investing in investment grade securities. A hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would not materially affect the fair value of the Company's interest sensitive financial instruments at December 31, 2000. Declines in interest rates over time will, however, reduce the Company's interest income. FACTORS AFFECTING OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED IN CONJUNCTION WITH THE OTHER INFORMATION INCLUDED IN THIS REPORT. THIS REPORT MAY INCLUDE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. IN ADDITION TO THOSE RISK FACTORS DISCUSSED ELSEWHERE IN THIS REPORT, WE IDENTIFY THE FOLLOWING RISK FACTORS WHICH COULD AFFECT OUR ACTUAL RESULTS AND CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS. 27 IF OUR PRODUCTS FAIL TO ACHIEVE AND SUSTAIN SUFFICIENT MARKET ACCEPTANCE ACROSS THEIR BROAD INTENDED RANGE OF APPLICATIONS IN THE LIFE SCIENCES, WE WILL NOT GENERATE EXPECTED REVENUE. Our business strategy depends on our ability to successfully commercialize a broad range of products based on mass spectrometry for use in a variety of life science applications. We have only recently commercially launched many of our current products for sale to these markets, and many of our products have achieved only limited sales. The commercial success of our life science products depends on our obtaining continued and expanding market acceptance of our mass spectrometry tools by pharmaceutical and biotechnology companies and academic and government research laboratories across the wide range of applications covered by our product offerings. We may fail to achieve or sustain substantial market acceptance for our products across the full range of our intended life science applications or in one or more of our principal intended life science applications. Any such failure could decrease our sales and revenue. To succeed, we must convince substantial numbers of pharmaceutical and biotechnology companies and other laboratories to replace their existing techniques with mass spectrometry techniques employing our systems. Limited funding available for capital acquisitions by our customers, as well as our customers' own internal purchasing approval policies, could hinder market acceptance of our products. Our intended life science customers may be reluctant to make the substantial capital investment generally needed to acquire our products or to incur the training and other costs involved with replacing their existing systems with our products. We also may not be able to convince our intended life science customers that our systems are an attractive and cost-effective alternative to other technologies and systems for the acquisition, analysis and management of molecular information. Because of these and other factors, our products may fail to gain or sustain market acceptance. OUR PRODUCTS COMPETE IN MARKETS THAT ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE, AND MOST OF OUR PRODUCTS ARE BASED ON A RANGE OF MASS SPECTROMETRY TECHNOLOGIES ONE OR MORE OF WHICH COULD BE MADE OBSOLETE BY NEW TECHNOLOGY. The market for life science discovery tools is characterized by rapid technological change and frequent new product introductions. Rapidly changing technology could make some or all of our life science product lines obsolete unless we are able to continually improve our existing products and develop new products. Because substantially all of our life science products are based on mass spectrometry, we are particularly vulnerable to any technological advances that would make mass spectrometry obsolete as the basis for bioanalytical systems in any of our life science markets. To meet the evolving needs of our customers, we must rapidly and continually enhance our current and planned products and services and develop and introduce new products and services. Our business model calls for us to derive a significant portion of our revenues each year from products that did not exist in the previous year. However, we may experience difficulties which may delay or prevent the successful development, introduction and marketing of new products or product enhancements. In addition, our product lines are based on complex technologies which are subject to rapid change as new technologies are developed and introduced in the marketplace. We may have difficulty in keeping abreast of the rapid changes affecting each of the different markets we serve or intend to serve. If we fail to develop and introduce products in a timely manner in response to changing technology, market demands or the requirements of our customers, our product sales may decline, and we could experience significant losses. We offer and plan to offer a broad product line and have incurred and expect to continue to incur substantial expenses for development of new products and enhanced versions of our existing products. The speed of technological change in our life science markets may prevent us from being able to successfully market some or all of our products for the length of time required to recover their often significant development costs. Failure to recover the development costs of one or more products or product lines could decrease our profitability or cause us to experience significant losses. Furthermore, failure to develop successful products and capitalize on our research and development investment would negatively influence our profits and financial position. 28 WE FACE SUBSTANTIAL COMPETITION. In each market, for each of our life science products, we face substantial competition from major competitors, including competitors who offer mass spectrometry-based systems along each of our product lines and competitors who offer technology alternatives to mass spectrometry. We expect that competition in our life science markets will increase significantly as more biotechnology and pharmaceutical companies adopt automated high-throughput bioanalytical instruments as tools for drug discovery, drug development, proteomics, genomics and metabolomics. Currently, our principal competition comes from established companies providing products using existing technologies, including mass spectrometry and other technologies, which perform many of the same functions for which we market our products. In addition, other companies may choose to enter our field in the future. Our competitors may develop or market products that are more effective or commercially attractive than our current or future products or that may render our products obsolete. Many of our competitors have more experience in the life sciences market and substantially greater financial, operational, marketing and technical resources than we do which could give them a competitive edge in areas such as research and development, production, marketing and distribution. Our ability to compete successfully will depend, in part, on our ability to develop proprietary products that reach the market in a timely manner and are technologically superior to, less expensive than, or more cost-effective than, other currently marketed products. OUR SUCCESS DEPENDS ON OUR ABILITY TO OPERATE WITHOUT INFRINGING OR MISAPPROPRIATING THE PROPRIETARY RIGHTS OF OTHERS. Our commercial success depends on avoiding the infringement of other parties' valid patents and proprietary rights as well as the breach of any licenses relating to our technologies and products. There are various third-party patents which may relate to our technology. We may be found in the future to infringe these or other patents or proprietary rights of third parties, either with products we are currently marketing or developing or with new products which we may develop in the future. As described below, a German court has found that sales of our ion trap mass spectrometers in Germany infringe the European patents held by a competitor. If a third party holding rights under a patent successfully asserts an infringement claim with respect to any of our current or future products, we may be prevented from manufacturing or marketing our infringing product in the country or countries covered by the patent we infringe, unless we can obtain a license from the patent holder. We may not be able to obtain such a license on commercially reasonable terms, if at all, especially if the patent holder is a competitor. In addition, even if we can obtain such a license, it may be non-exclusive, which will permit others to practice the same technology licensed to us. We may also be required to pay substantial damages to the patent holder. Under certain circumstances in the United States, these damages may include damages equal to triple the actual damages experienced by the patent holder. If we have supplied infringing products to third parties for marketing by them or licensed third parties to manufacture, use or market infringing products, we may be obligated to indemnify these third parties for any damages they are required to pay to the patent holder and for any losses the third parties may sustain themselves as the result of lost sales or license payments they are required to make to the patent holder. Any successful infringement action brought against us may also adversely affect marketing of the infringing product in other markets not covered by the infringement action, as well as our marketing of other products based on similar technology. Furthermore, we will suffer adverse consequences of a successful infringement action against us even if the action is subsequently reversed on appeal, nullified through another action, or resolved by settlement with the patent holder. The damages or other remedies awarded, if any, may be significant. As a result, any successful infringement action against us could prevent us from selling some or all of our products or cause us to experience significant losses or both. 29 WE ARE CURRENTLY INVOLVED IN SEVERAL LEGAL ACTIONS CONCERNING TECHNOLOGY FOR ION TRAP MASS SPECTROMETRY WITH A COMPETITOR AND VARIOUS AFFILIATES OF THE COMPETITOR, AND A GERMAN COURT HAS DECIDED THAT WE HAVE INFRINGED TWO EUROPEAN PATENTS OF THE COMPETITOR. We have been involved for several years in various litigation proceedings with a competitor, Finnigan Corporation, and some of its affiliates regarding the possible infringement by us of some patents of Finnigan concerning technology for our ion trap mass spectrometry systems. Finnigan is a subsidiary of ThermoQuest Corporation which in turn is a subsidiary of Thermo Electron Corporation. The various claims have been, will be or currently are being heard in the United States International Trade Commission, the Court of Appeals for the Federal Circuit, and are pending in the United States District Court for the District of Massachusetts and in various German courts. In addition, we have filed various infringement and antitrust actions against Finnigan and its affiliates. In 1998, 1999 and 2000, total worldwide sales of our ion trap mass spectrometry products constituted $5.0 million, $8.2 million and $12.6 million, respectively. In March 2000, a German court decided that we have infringed two Finnigan patents by selling our ion trap mass spectrometer products in Germany. As a result, we have been enjoined from selling our ion trap mass spectrometer products in Germany. We will also be required to pay damages and expenses to Finnigan in amounts to be determined by the German court in these proceedings. In 2000, our German sales of ion trap mass spectrometry products were approximately $2.4 million. Finnigan is seeking to enforce the same European patents against us and Agilent Technologies, a company with which we jointly produce and develop ion trap mass spectrometers, in proceedings in Germany that could prevent us from distributing and delivering our ion trap mass spectrometry products in the United Kingdom, France, Sweden and Switzerland. Similar patents are at issue in the separate litigation cases brought by Finnigan in Massachusetts. Finnigan may also seek to show we have committed infringement elsewhere. Should we be found to infringe any patents of Finnigan or its affiliates in these proceedings, we may be liable for monetary damages and could be required to obtain licenses to commercialize our products or to redesign our products so that they do not infringe any of these patents. If we are unable to prove the invalidity of the Finnigan patents, obtain a license or adopt a non-infringing product design, we could be prevented from selling some of our ion trap mass spectrometry products. We may also have an indemnification obligation to Agilent pursuant to our collaboration agreement. In these circumstances, our ion trap business would not develop as contemplated, and our results would materially suffer. For more information on our litigation with Finnigan and its affiliates, please see "Business--Legal Proceedings." WE MAY BE INVOLVED IN OTHER LAWSUITS TO PROTECT OR ENFORCE OUR PATENTS THAT ARE BROUGHT BY US WHICH WOULD BE EXPENSIVE AND TIME-CONSUMING. In order to protect or enforce our patent rights, we may initiate patent litigation against third parties. We may also become subject to interference proceedings conducted in the patent and trademark offices of various countries to determine the priority of inventions. The defense and prosecution, if necessary, of intellectual property suits, interference proceedings and related legal and administrative proceedings is costly and diverts our technical and management personnel from their normal responsibilities. We may not prevail in any of these suits. An adverse determination of any litigation or defense proceedings could put our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. For example, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments in the litigation. If securities analysts or investors perceive these results to be negative, it could have a substantial negative effect on the trading price of our stock. 30 IF WE ARE UNABLE TO EFFECTIVELY PROTECT OUR INTELLECTUAL PROPERTY, THIRD PARTIES MAY USE OUR TECHNOLOGY, WHICH WOULD IMPAIR OUR ABILITY TO COMPETE IN OUR MARKETS. Our continued success will depend in significant part on our ability to obtain and maintain meaningful patent protection for our products throughout the world. We rely on patents to protect a significant part of our intellectual property and to enhance our competitive position. However, our presently pending or future patent applications may not issue as patents, and any patent previously issued to us may be challenged, invalidated, held unenforceable or circumvented. Furthermore, the claims in patents which have been issued or which may be issued to us in the future may not be sufficiently broad to prevent third parties from producing competing products similar to our products. In addition, the laws of various foreign countries in which we compete may not protect our intellectual property to the same extent as do the laws of the United States. Failure to obtain adequate patent protection for our proprietary technology could materially impair our ability to be commercially competitive. In addition to patent protection, we also rely on protection of trade secrets, know-how and confidential and proprietary information. To maintain the confidentiality of trade secrets and proprietary information, we generally seek to enter into confidentiality agreements with our employees, consultants and strategic partners upon the commencement of a relationship with us. However, we may not obtain these agreements in all circumstances. In the event of unauthorized use or disclosure of this information, these agreements, even if obtained, may not provide meaningful protection for our trade secrets or other confidential information. In addition, adequate remedies may not exist in the event of unauthorized use or disclosure of this information. The loss or exposure of our trade secrets and other proprietary information would impair our competitive advantages and could have a material adverse affect on our operating results, financial condition and future growth prospects. Furthermore, others may have, or may in the future independently develop, substantially similar or superior know-how and technology. WE HAVE AGREED TO SHARE OUR NAME, PORTIONS OF OUR INTELLECTUAL PROPERTY RIGHTS AND DISTRIBUTION CHANNELS WITH OTHER ENTITIES UNDER COMMON CONTROL WHICH COULD RESULT IN THE LOSS OF OUR NAME AND TO LOCK IN THE PRICE OF PRODUCTS WE MAY SELL TO THESE ENTITIES WHICH MAY NOT BE THE BEST PRICE AVAILABLE FOR THESE PRODUCTS. We maintain a sharing agreement with 13 affiliated entities that requires us to share portions of our intellectual property as it existed on February 28, 2000 and our distribution channels with these affiliated companies and their affiliates. We also share the Bruker name with many of these affiliates. We could lose the right to use the Bruker name if (a) we declare bankruptcy, (b) we interfere with another party's use of the name, (c) we take a material action which materially detracts from the goodwill associated with the name, or (d) we suffer a major loss of our reputation in our industry or marketplace. The loss of the Bruker name could result in a loss of goodwill, brand loyalty and sales of our products. In addition, we have agreed to maintain the price of some products purchased from and sold to these affiliates for a period of up to twelve years, subject to yearly adjustments equal to the increase in the Consumer Price Index. OUR MANUFACTURE AND SALE OF PRODUCTS COULD LEAD TO PRODUCT LIABILITY CLAIMS FOR WHICH WE COULD HAVE SUBSTANTIAL LIABILITY. The manufacture and sale of our products exposes us to product liability claims if any of our products cause injury or are found otherwise unsuitable during manufacturing, marketing, sale or customer use. A successful product liability claim brought against us in excess of, or outside the coverage of, our insurance coverage could have a material adverse effect on our business, financial situation and results of operations. We may not be able to maintain product liability insurance on acceptable terms, if at all, and insurance may not provide adequate coverage against potential liabilities. 31 OUR BUSINESS COULD BE HARMED IF OUR COLLABORATIONS FAIL TO ADVANCE OUR PRODUCT DEVELOPMENT. Demand for our products will depend in part upon the extent to which our collaborations with pharmaceutical and biotechnology companies are successful in developing, or helping us to develop, new products and new applications for our existing products. In addition, we collaborate with academic institutions on product development. We have limited or no control over the resources that any collaborator may devote to our products. Any of our present or future collaborators may not perform their obligations as expected. If we fail to enter into or maintain appropriate collaboration agreements or if any of these events occur, we may not be able to develop some of our new products, which could materially impede our ability to generate revenue. IF WE LOSE OUR STRATEGIC PARTNERS, IT COULD IMPAIR OUR MARKETING EFFORTS. A substantial portion of our sales of selected products consists of sales to third parties who incorporate our products in their systems. These third parties are responsible for the marketing and sales of their systems. We have little or no control over their marketing and sales activities or how they use their resources. Our present or future strategic partners may or may not purchase sufficient quantities of products from us or perform appropriate marketing and sales activities. These failures by our present or future strategic partners, or our inability to maintain or enter into new arrangements with strategic partners for product distribution, could materially impede the growth of our business and our ability to generate sufficient revenue. ANY REDUCTION IN THE CAPITAL RESOURCES OR GOVERNMENT FUNDING OF OUR CUSTOMERS COULD REDUCE OUR SALES AND IMPEDE OUR ABILITY TO GENERATE REVENUE. A significant portion of our sales are capital purchases by our customers. The spending policies of our customers could have a significant effect on the demand for our products. These policies are based on a wide variety of factors, including the resources available to make purchases, the spending priorities among various types of equipment, policies regarding spending during recessionary periods and changes in the political climate. Any changes in capital spending or changes in the capital budgets of our customers could significantly reduce demand for our products. The capital resources of our biotechnology and other corporate customers may be limited by the availability of equity or debt financing. Any significant decline in research and development expenditures by our life science customers could significantly decrease our sales. In addition, we make a substantial portion of our sales to non-profit and government entities which are dependent on government support for scientific research. Any decline in this support could decrease the ability of these customers to purchase our products. IF GENERAL HEALTH CARE SPENDING PATTERNS DECLINE, OUR ABILITY TO GENERATE REVENUE MAY SUFFER. We are dependent, both directly and indirectly, upon general health care spending patterns, particularly in the research and development budgets of the pharmaceutical and biotechnology industries, as well as upon the financial condition of various governments and government agencies. Since our inception, both we and our academic collaborators have benefited from various governmental contracts and research grants. Whether we or our academic collaborators will continue to be able to attract these grants depends not only on the quality of our products, but also on general spending patterns of public institutions. There exists the risk of a potential decrease in the level of governmental spending allocated to scientific and medical research which could substantially reduce or even eliminate our grants. Our status as a public company is likely to eliminate our ability to obtain research grants from the German government in the future because the German government focuses on funding small or private companies with limited access to capital. 32 WE MAY NOT BE ABLE TO EXPAND OUR SALES AND SERVICE STAFF TO MEET DEMAND FOR OUR PRODUCTS AND SERVICES. We need to expand our direct marketing and sales force as well as our service and support staff. Our future revenue and profitability will depend on our ability to expand our team of marketing and service personnel. Because our products are technical in nature, we believe that our marketing, sales and support staff must have scientific or technical expertise and experience. Competition for employees with these skills is intense. We may not be able to continue to attract and retain sufficient qualified sales and service people, and we may not be able to grow and maintain an efficient and effective sales, marketing and support department. If we fail to continue to attract or retain qualified people, then our business could suffer. WE PLAN SIGNIFICANT GROWTH, AND THERE IS A RISK THAT WE WILL NOT BE ABLE TO MANAGE THIS GROWTH. Our success will depend on the expansion of our operations. Effective growth management will place increased demands on our management, operational and financial resources. To manage our growth, we must expand our facilities, augment our operational, financial and management systems, and hire and train additional qualified personnel. Our failure to manage this growth effectively could impair our ability to generate revenue or could cause our expenses to increase more rapidly than revenue, resulting in operating losses. IN ADDITION TO THE RISKS APPLICABLE TO OUR LIFE SCIENCE PRODUCTS, OUR SUBSTANCE DETECTION AND PATHOGEN IDENTIFICATION PRODUCTS ARE SUBJECT TO A NUMBER OF ADDITIONAL RISKS, INCLUDING LENGTHY PRODUCT DEVELOPMENT AND CONTRACT NEGOTIATION PERIODS AND CERTAIN RISKS INHERENT IN LONG-TERM GOVERNMENT CONTRACTS. Our substance detection and pathogen identification products are subject to many of the same risks associated with our life science products, including vulnerability to rapid technological change, dependence on mass spectrometry technology and substantial competition. In addition, our substance detection and pathogen identification products are generally sold to government agencies under long-term contracts. These contracts generally involve lengthy pre-contract negotiations and product development. We may be required to devote substantial working capital and other resources prior to obtaining product orders. As a result, we may incur substantial costs before we recognize revenue from these products. Moreover, in return for larger, longer-term contracts, our customers for these products often demand more stringent acceptance criteria. Their criteria may also cause delay in our ability to recognize revenue from sales of these products. Furthermore, we may not be able to accurately predict in advance our costs to fulfill our obligations under these long-term contracts. If we fail to accurately predict our costs, due to inflation or other factors, we could incur significant losses. Any single long-term contract for our substance detection and pathogen identification products may represent a material portion of our total business volume, and the loss of any such contract could have a material adverse effect on our results of operations. In March 2000, we completed a production contract with the United States government that accounted for 12% and 13% of our net revenue in 1998 and 1999, respectively. Failure to increase other business or to obtain another government contract such as this one would cause our revenue to decline. Also, the presence or absence of such contracts may cause substantial variation in our results of operations between fiscal periods and, as a result, our results of operations for any given fiscal period may not be predictive of our results for subsequent fiscal periods. The resulting uncertainty may have an adverse impact on our stock price. WE ARE SUBJECT TO EXISTING AND POTENTIAL ADDITIONAL REGULATION, WHICH CAN IMPOSE BURDENS ON OUR OPERATIONS AND NARROW THE MARKETS FOR OUR PRODUCTS. We are subject, both directly and indirectly, to the adverse impact of existing and potential future government regulation of our operations and markets. For example, exportation of our products, 33 particularly our substance detection and pathogen identification products, is subject to strict regulatory control in a number of jurisdictions. The failure to satisfy export control criteria or obtain necessary clearances could delay or prevent shipment of products, which could adversely affect our revenues and profitability. Moreover, the life sciences industry, which is the market for our principal products, has historically been heavily regulated. There are, for example, laws in several jurisdictions restricting research in genetic engineering, which can operate to narrow our markets. Given the evolving nature of this industry, legislative bodies or regulatory authorities may adopt additional regulation that adversely affects our market opportunities. Additionally, if ethical and other concerns surrounding the use of genetic information, gene therapy or genetically modified organisms become widespread, we may have less demand for our products. Our business is also directly affected by a wide variety of government regulations applicable to business enterprises generally and to companies operating in the life sciences industry in particular. Failure to comply with these regulations or obtain or maintain necessary permits and licenses could result in a variety of fines or other censures or an interruption in our business operations which may have a negative impact on our ability to generate revenues. WE ARE DEPENDENT UPON VARIOUS KEY PERSONNEL AND MUST RECRUIT ADDITIONAL QUALIFIED PERSONNEL FOR A NUMBER OF MANAGEMENT POSITIONS. Our success is highly dependent on the continued services of key management, technical and scientific personnel. Our management and other employees may voluntarily terminate their employment with us at any time upon short notice. The loss of the services of any member of our senior management, technical or scientific staff may significantly delay or prevent the achievement of product development and other business objectives. Our chief executive officer also is and has been chairman of the board of directors of an affiliated company and a management officer of another affiliate, which may reduce the time and attention he can devote to our management. We are in the process of recruiting a chief financial officer. Our future success will also depend on our ability to identify, recruit and retain additional qualified scientific, technical and managerial personnel. Competition for qualified personnel is intense, particularly in the areas of information technology, engineering and science, and the process of hiring suitably qualified personnel is often lengthy. If we are unable to hire and retain a sufficient number of qualified employees, our ability to conduct and expand our business could be seriously reduced. WE ARE DEPENDENT IN OUR OPERATIONS UPON A LIMITED NUMBER OF SUPPLIERS AND CONTRACT MANUFACTURERS. We currently purchase components used in our mass spectrometry systems from a limited number of outside sources. The reliance on a limited number of suppliers could result in time delays associated with redesigning a product due to an inability to obtain an adequate supply of required components and reduced control over pricing, quality and timely delivery. Any interruption in the supply of components could have an adverse effect on our business, results of operations and financial condition. Because of the scarcity of some components, we may be unable to obtain an adequate supply of components, or we may be required to pay higher prices or to purchase components of lesser quality. The market is experiencing a shortage of electrical components, critical components in many of our products. Any delay or interruption in the supply of these or other components could impair our ability to manufacture and deliver our products, harm our reputation and cause a reduction in our revenues. In addition, any increase in the cost of the components that we use in our products could make our products less competitive and lower our margins. We may not be able to obtain sufficient quantities of required components on the same or substantially the same terms. Additionally, consolidations among our suppliers could result in other sole source suppliers for us in the future. 34 WE MUST INTEGRATE OUR GLOBAL OPERATIONS. Our U.S. headquarters is located in Billerica, Massachusetts. Our European headquarters is located in Bremen, Germany. Our principal manufacturing facilities are located in Billerica, Massachusetts, Bremen, Germany and Leipzig, Germany. Operating in diverse geographic locations imposes a number of risks and burdens on us, including the need to manage employees and contractors from diverse cultural backgrounds and who speak different languages, and difficulties associated with operating in a number of time zones. We may encounter unforeseen difficulties or logistical problems in operating in diverse locations. THE SUCCESS OF OUR INTERNATIONAL OPERATIONS IS DEPENDENT ON MANY FACTORS WHICH COULD ADVERSELY AFFECT OUR ABILITY TO SELL OUR PRODUCTS INTERNATIONALLY AND COULD AFFECT OUR PROFITABILITY. International sales account and are expected to continue to account for a significant portion of our total revenues. For the fiscal year ended December 31, 2000, international sales totaled $51.9 million, or 69.4% of our net revenue. We intend to substantially increase our international operations. Our international operations are, and will continue to be, subject to a variety of risks associated with conducting business internationally, many of which are beyond our control. These risks, which may adversely affect our ability to achieve and maintain profitability and our ability to sell our products internationally, include: - changes in regulatory requirements; - legislation and regulation, including tariffs, relating to the import or export of high technology products; - the imposition of government controls; - political and economic instability or conflicts; - costs and risks of deploying systems in foreign countries; - limited intellectual property rights; and - the burden of complying with a wide variety of complex foreign laws and treaties. Additionally, international expansion will require that we hire additional personnel. If we fail to hire additional personnel or develop and maintain relationships with foreign customers and partners, we may not be able to expand our international sales and would suffer decreased profits. WE MAY LOSE MONEY WHEN WE EXCHANGE FOREIGN CURRENCY RECEIVED FROM INTERNATIONAL SALES INTO U.S. DOLLARS. A significant portion of our business is conducted in currencies other than the U.S. dollar, which is our reporting currency. As a result, currency fluctuations among the U.S. dollar and the currencies in which we do business have caused and will continue to cause foreign currency transaction gains and losses. We recognize foreign currency gains or losses arising from our operations in the period incurred. We cannot predict the effects of exchange rate fluctuations upon our future operating results because of the number of currencies involved, the variability of currency exposures and the potential volatility of currency exchange rates. VARIOUS INTERNATIONAL TAX RISKS COULD ADVERSELY AFFECT OUR EARNINGS. We are subject to international tax risks. Distributions of earnings and other payments received from our subsidiaries may be subject to withholding taxes imposed by the countries where they are operating or are formed. If these foreign countries do not have income tax treaties with the United States or the countries where our subsidiaries are incorporated, we could be subject to high rates of 35 withholding taxes on these distributions and payments. We could also be subject to being taxed twice on income related to operations in these non-treaty countries. Because we are unable to reduce the taxable income of one operating company with losses incurred by another operating company located in another country, we may have a higher foreign effective income tax rate than that of other companies in our industry. The amount of the credit that we may claim against our U.S. federal income tax for foreign income taxes is subject to many limitations which may significantly restrict our ability to claim a credit for all of the foreign taxes we pay. RESPONDING TO CLAIMS RELATING TO IMPROPER HANDLING, STORAGE OR DISPOSAL OF HAZARDOUS CHEMICALS AND RADIOACTIVE AND BIOLOGICAL MATERIALS WHICH WE USE COULD BE TIME CONSUMING AND COSTLY. We use controlled hazardous and radioactive materials in our business and generate wastes that are regulated as hazardous wastes under United States federal and Massachusetts state environmental and atomic energy regulatory laws and under equivalent provisions of law in those jurisdictions in which our research and manufacturing facilities are located. Our use of these substances and materials is subject to stringent, and periodically changing, regulation that can impose costly compliance obligations on us and have the potential to adversely affect our manufacturing activities. The risk of accidental contamination or injury from these materials cannot be completely eliminated. If an accident with these substances occurs, we could be held liable for any damages that result, in addition to incurring clean-up costs and liabilities, which can be substantial. Additionally, an accident could damage our research and manufacturing facilities resulting in delays and increased costs. THE UNPREDICTABILITY AND FLUCTUATION OF OUR QUARTERLY RESULTS MAY ADVERSELY AFFECT THE TRADING PRICE OF OUR COMMON STOCK. Our revenues and results of operations have in the past and may in the future vary from quarter to quarter due to a number of factors, many of which are outside of our control and any of which may cause our stock price to fluctuate. The primary factors that may affect us include the following: - the timing of sales of our products and services; - the timing of recognizing revenue and deferred revenue under U.S. GAAP; - changes in our pricing policies or the pricing policies of our competitors; - increases in sales and marketing, product development or administration expenses; - the mix of services provided by us and third-party contractors; - our ability to attain and maintain quality levels for our products; and - costs related to acquisitions of technology or businesses. Historically, we have experienced a decrease in revenue in the first quarter of each fiscal year relative to the prior fourth quarter, which we believe is due to our customers' budgeting cycles. You should not rely on quarter-to-quarter comparisons of our results of operations as an indication of our future performance. It is likely that in some future quarters, our results of operations may be below the expectations of public market analysts and investors. In this event, the price of our common stock may fall. IF WE ARE UNABLE TO MAKE SUCCESSFUL ACQUISITIONS AS CONTEMPLATED BY OUR GROWTH STRATEGY OR INTEGRATE ANY SUCH ACQUISITIONS, OUR BUSINESS DEVELOPMENT MAY SUFFER. Our Company strategy involves expanding our technology base through strategic acquisitions. If we fail to effect acquisitions, our technology base may not expand as quickly and efficiently as we have anticipated. Without such expansion, our ability to keep up with the evolving needs of the market and 36 to meet our future performance goals will be adversely affected. Additionally, if we fail to effectively integrate any acquired businesses or technologies into our existing business, such failure could adversely affect our business. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is incorporated by reference from the section labeled "Quantitative and Qualitative Disclosures of Market Risk" in Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operation. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements required in response to this item are submitted as part of Item 14(a) of this report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III In accordance with General Instruction G(3) to Form 10-K, except as indicated in the following sentence, the information called for by Items 10, 11, 12 and 13 is incorporated by reference from the registrant's definitive proxy statement pursuant to Regulation 14A for the 2000 Annual Meeting of Stockholders. As permitted by General Instruction G(3) to Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K, the information on executive officers called for by Item 10 is included in Part I of this Annual Report on Form 10-K. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES AND REPORTS ON FORM 8-K (a) Financial Statements and Schedules
PAGE (1) FINANCIAL STATEMENTS -------- Report of Independent Auditors.............................. 38 Consolidated Balance Sheets as of December 31, 1999 and 2000...................................................... 39 Combined / Consolidated Statements of Operations for the years ended December 31, 1998, 1999 and 2000.............. 40 Combined / Consolidated Statements of Stockholders' Equity for the years ended December 31, 1998, 1999 and 2000...... 41 Combined / Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1999 and 2000.............. 42 Notes to Financial Statements............................... 43
37 REPORT OF INDEPENDENT AUDITORS The Board of Directors Bruker Daltonics Inc. We have audited the accompanying consolidated balance sheets of Bruker Daltonics Inc. (the Company) as of December 31, 1999 and 2000, and the related combined/consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Bruker Daltonics Inc. at December 31, 1999 and 2000, and the combined/consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. /s/ ERNST & YOUNG LLP Boston, Massachusetts March 1, 2001 38 BRUKER DALTONICS INC. CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE DATA)
DECEMBER 31, ------------------- 1999 2000 -------- -------- ASSETS Current assets: Cash and cash equivalents................................. $ 2,443 $ 21,735 Short-term investments.................................... -- 72,894 Accounts receivable, less allowances for doubtful accounts of $114 in 1999 and $369 in 2000........................ 12,204 11,626 Due from affiliated companies............................. -- 706 Inventories............................................... 25,442 36,780 Deferred income taxes..................................... 899 2,378 Other assets.............................................. 532 1,302 ------- -------- Total current assets.................................. 41,520 147,421 ------- -------- Property, plant and equipment, net.......................... 25,351 25,528 Intangible and other assets................................. 386 2,335 Investments in other companies.............................. 52 9,270 ------- -------- Total assets.......................................... $67,309 $184,554 ======= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term bank borrowings................................ $ 2,496 $ -- Accounts payable.......................................... 6,661 7,601 Due to affiliated companies............................... 1,496 -- Accrued expenses.......................................... 3,806 3,976 Accrued payroll........................................... 1,742 1,561 Customer deposits......................................... 8,323 15,766 Warranty reserves......................................... 4,739 3,346 Provision for loss on contract............................ -- 1,172 Income taxes payable...................................... 177 2,945 ------- -------- Total current liabilities............................. 29,440 36,367 ------- -------- Deferred revenue............................................ 393 371 Long-term debt.............................................. 12,844 12,037 Deferred income tax liabilities............................. 8,786 7,475 Contingent liabilities...................................... 5,788 4,132 Stockholders' equity: Common stock, $0.01 par value, authorized 100,000,000 shares, issued and outstanding 45,500,000 shares in 1999 and 54,779,218 shares in 2000........................... 455 548 Additional paid-in capital................................ 6,045 118,014 Retained earnings......................................... 6,412 8,662 Accumulated other comprehensive loss...................... (2,854) (3,052) ------- -------- Total stockholders' equity............................ 10,058 124,172 ------- -------- Total liabilities and stockholders' equity........ $67,309 $184,554 ======= ========
The accompanying notes are an integral part of these statements. 39 BRUKER DALTONICS INC. COMBINED / CONSOLIDATED STATEMENTS OF OPERATIONS (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
YEAR ENDED DECEMBER 31, ----------------------------------------- 1998 1999 2000 ----------- ------------ ------------ COMBINED CONSOLIDATED CONSOLIDATED Product revenue............................................ $40,157 $60,620 $74,772 Other revenue.............................................. 2,050 4,070 1,830 ----------- ----------- ----------- Net revenue.......................................... 42,207 64,690 76,602 ----------- ----------- ----------- Costs and operating expenses: Cost of product revenue.................................. 19,672 31,618 35,587 Provision for loss on contract........................... -- -- 1,082 Sales and marketing...................................... 7,435 11,345 13,806 General and administrative............................... 2,212 3,411 5,057 Research and development................................. 13,049 15,138 20,033 Patent litigation costs.................................. -- 538 303 ----------- ----------- ----------- Total costs and operating expenses................... 42,368 62,050 75,868 ----------- ----------- ----------- Operating (loss) income from continuing operations......... (161) 2,640 734 Other income (expense), net................................ 174 130 (208) Interest (expense) income, net............................. (901) (907) 1,794 ----------- ----------- ----------- (Loss) income from continuing operations before provision for income taxes......................................... (888) 1,863 2,320 Provision for income taxes................................. -- 987 254 ----------- ----------- ----------- (Loss) income from continuing operations................... (888) 876 2,066 Income from discontinued operations, net of income taxes... 383 373 184 ----------- ----------- ----------- Net (loss) income.......................................... $ (505) $ 1,249 $ 2,250 =========== =========== =========== Net (loss) income per share--basic and diluted: (Loss) income from continuing operations................. $(0.02) $0.02 $0.04 Income from discontinued operations, net of income taxes.................................................. 0.01 0.01 0.00 ----------- ----------- ----------- Net (loss) income per share................................ $(0.01) $0.03 $0.04 =========== =========== =========== Shares used in computing net (loss) income per share--basic............................................. 45,500,000 45,500,000 49,269,313 Shares used in computing net (loss) income per share--diluted........................................... 45,500,000 45,500,000 49,921,979
The accompanying notes are an integral part of these statements. 40 BRUKER DALTONICS INC. COMBINED / CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (AMOUNTS IN THOUSANDS)
COMMON STOCK ACCUMULATED BRUKER BRUKER ADDITIONAL OTHER TOTAL DALTONICS DALTONIK PAID-IN RETAINED COMPREHENSIVE STOCKHOLDERS' INC. GMBH CAPITAL EARNINGS INCOME (LOSS) EQUITY --------- -------- ---------- -------- ------------- ------------- Combined balance as of December 31, 1997............................... $ 52 $3,489 $ 698 $ 7,600 $(1,969) $ 9,870 Issuance of common stock............. 403 -- 5,347 -- -- 5,750 Payments to stockholders in connection with reorganization of business........................... -- (3,489) -- (1,932) -- (5,421) Comprehensive income: Foreign currency translation adjustment....................... -- -- -- -- 646 646 Net loss........................... -- -- -- (505) -- (505) -------- Net comprehensive income........... -- -- -- -- -- 141 ---- ------ -------- ------- ------- -------- Consolidated balance as of December 31, 1998........................... 455 -- 6,045 5,163 (1,323) 10,340 Comprehensive loss: Foreign currency translation adjustment....................... -- -- -- -- (1,531) (1,531) Net income......................... -- -- -- 1,249 -- 1,249 -------- Net comprehensive loss............. -- -- -- -- -- (282) ---- ------ -------- ------- ------- -------- Consolidated balance as of December 31, 1999........................... 455 -- 6,045 6,412 (2,854) 10,058 Initial public offering proceeds, net of issuance costs............ 92 -- 109,596 -- -- 109,688 Issuance of common stock on acquisition of investment in other companies.................. 1 -- 2,192 -- -- 2,193 Compensation expense related to stock options issued to non-employees.................... -- -- 181 -- -- 181 Comprehensive income: Foreign currency translation adjustment....................... -- -- -- -- (198) (198) Net income......................... -- -- -- 2,250 -- 2,250 -------- Net comprehensive income........... -- -- -- -- -- 2,052 ---- ------ -------- ------- ------- -------- Consolidated balance as of December 31, 2000........................... $548 $ -- $118,014 $ 8,662 $(3,052) $124,172 ==== ====== ======== ======= ======= ========
The accompanying notes are an integral part of these statements. 41 BRUKER DALTONICS INC. COMBINED / CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLAR AMOUNTS ARE IN THOUSANDS)
YEAR ENDED DECEMBER 31, ----------------------------- 1998 1999 2000 --------- ------------- ------------- COMBINED CONSOLIDATED CONSOLIDATED OPERATING ACTIVITIES: (Loss) income from continuing operations.................... $ (888) $ 876 $ 2,066 Adjustments to reconcile (loss) income from continuing operations to net cash (used in) provided by continuing operations: Depreciation and amortization........................... 2,605 3,487 4,145 Deferred income taxes................................... 526 875 (3,340) Provision for loss on contract.......................... -- -- 1,082 Stock option compensation............................... -- -- 181 Charge for purchase of in-process research and development........................................... -- 100 -- Changes in operating assets and liabilities, net of acquisitions: Accounts receivable................................... (6,273) (3,605) 499 Inventories........................................... (1,802) (10,265) (13,028) Other assets.......................................... (773) 419 (1,148) Accounts payable and accrued expenses................. (480) 6,374 1,739 Warranty reserve...................................... 1,759 2,034 (1,095) Contingent liabilities................................ (367) -- (1,219) Income taxes payable.................................. (526) -- 2,632 Deferred revenue...................................... (282) 295 (22) Customer deposits..................................... 66 4,680 7,237 ------- -------- -------- Net cash (used in) provided by continuing operations........ (6,435) 5,270 (271) Net cash (used in) provided by discontinued operations...... (9) 495 69 ------- -------- -------- Net cash (used in) provided by operating activities..... (6,444) 5,765 (202) INVESTING ACTIVITIES: Purchases of property and equipment and other long lived assets.................................................... (2,978) (4,563) (5,581) Purchase of short-term investments.......................... -- -- (92,394) Redemption of short-term investments........................ -- -- 19,500 Acquisition of business, net of cash acquired............... -- (200) 22 Investments in other companies.............................. -- -- (7,075) ------- -------- -------- Net cash used in investing activities................... (2,978) (4,763) (85,528) FINANCING ACTIVITIES: Proceeds from long-term debt................................ 14,213 -- -- Proceeds from short-term borrowings......................... 2,604 1,000 2,510 Payments on short-term borrowings........................... (50) (1,087) (4,833) Advances from (payments to) affiliated companies............ (8,617) 444 (2,523) Issuance of common stock net of issuance cost............... 5,750 -- 109,688 Payments to stockholders.................................... (5,435) -- -- ------- -------- -------- Net cash provided by financing activities............... 8,465 357 104,842 Effect of exchange rate changes............................. 71 (51) 180 ------- -------- -------- Net change in cash and cash equivalents..................... (886) 1,308 19,292 Cash and cash equivalents at beginning of period............ 2,021 1,135 2,443 ------- -------- -------- Cash and cash equivalents at end of period.................. $ 1,135 $ 2,443 $ 21,735 ======= ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest.................................... $ 1,019 $ 1,232 $ 610 Cash paid for taxes....................................... 153 464 202 NON-CASH FINANCING ACTIVITIES: Issuance of common stock for investment in other company................................................. -- -- 2,193
The accompanying notes are an integral part of these statements. 42 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS Bruker Daltonics Inc. and its wholly-owned subsidiaries (the "Company") design, manufacture and market proprietary life science systems based on their mass spectrometry core technology platforms. The Company also sells a broad range of field analytical systems for substance detection and pathogen identification. The Company maintains major technical centers in Europe, North America and Japan. Bruker Daltonics allocates substantial capital and resources to research and development and is party to various collaborations and strategic alliances. The Company's diverse customer base includes pharmaceutical companies, biotechnology companies, proteomic companies, academic institutions and government agencies. These financial statements represent the consolidated accounts of Bruker Daltonics Inc., and its wholly-owned subsidiaries as of December 31, 1999 and 2000 and for the years then ended, and the combined accounts of Bruker Daltonics Inc., and its affiliated companies for the year ended December 31, 1998 (see Note 3). All significant intercompany accounts and transactions have been eliminated in consolidation and combination, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with original maturities of 90 days or less at date of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair market value at year end. SHORT-TERM INVESTMENTS The Company accounts for its short-term investments in accordance with Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The Company's investments, which are carried at fair value, consist of funds comprised of short-term money market and bond instruments and have been classified as available-for-sale at December 31, 2000. CONCENTRATION OF CREDIT RISK Financial instruments which subject the Company to credit risk consist of cash and cash equivalents, short-term investments and accounts receivables. The risk with respect to cash and cash equivalents and short-term investments is minimized by the Company's policy of investing in short-term financial instruments issued by highly-rated financial institutions. The risk with respect to accounts receivable is minimized by the credit worthiness of the Company's customers. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require 43 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) collateral. Credit losses have been within management's expectations. For the years ended December 31, 1998, 1999 and 2000, two customers accounted for an aggregate of 32%, 30% and 11%, respectively, of the Company's product revenue. Accounts receivables for these two customers accounted for an aggregate of 3% of total receivables as of December 31, 1999 and 2000. INVENTORIES Inventories are stated at the lower of cost or market with cost determined by the first-in, first-out, ("FIFO") method. Inventories include demonstration equipment which the Company offers to current and potential customers. The Company amortizes its demonstration equipment over a three year period. Amortization expense for demonstration equipment was approximately $259,000, $307,000 and $952,000 for the years ended December 31, 1998, 1999 and 2000, respectively. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment which includes land, buildings, machinery and equipment, furniture and fixtures and leasehold improvements are stated at cost. Depreciable assets are being depreciated on a straight-line basis over the estimated useful lives of the assets as follows: Buildings........................ 25 years Machinery and equipment.......... 5-10 years Furniture and fixtures........... 3-5 years Leasehold improvements........... Shorter of 15 years or the life of the lease
SOFTWARE COSTS Purchased software is capitalized at cost and is amortized over the estimated useful life, generally three years. Software developed for use in the Company's products is expensed as incurred and is classified as research and development expense. OTHER ASSETS Other assets consist principally of patents and licenses. Patents, patent applications and rights are stated at acquisition cost. Amortization of patents is recorded using the straight-line method over the legal lives of the patents, generally for periods ranging up to ten years. Accumulated amortization of these assets was approximately $1,121,000 and $1,177,000 as of December 31, 1999 and 2000, respectively. INVESTMENTS IN OTHER COMPANIES Investment in other companies consists of equity securities of privately-held companies and is accounted for under the cost method. The Company's ownership interest in each of these individual companies is less than 20%. 44 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) LONG-LIVED ASSETS The Company reviews long-lived assets for impairment, in accordance with Statement of Financial Accounting Standard (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets to Be Disposed Of," whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Assets are written-down to fair value when the carrying costs exceed this amount. Any impairment losses are determined based upon estimated future cash flows and fair values. To date, no such indicators of impairment have been identified. WARRANTY COSTS The Company provides a one year parts and labor warranty with the purchase of equipment. The anticipated cost for this one year warranty is accrued upon recognition of the sale and is included as a current liability on the accompanying balance sheets. CUSTOMER DEPOSITS Under the terms and conditions of contracts with certain customers, the Company may require an advance deposit. These deposit amounts are recorded as a liability until revenue is recognized against the specific contract at time of acceptance of the system. PATENT LITIGATION COSTS The Company records charges for the costs it anticipates incurring in connection with litigation and claims against the Company when management can reasonably estimate these costs. EARNINGS PER SHARE Basic earnings per share is calculated by dividing net earnings by the weighted-average number of common shares outstanding during the period. Diluted earnings per share computation includes the effect of shares which would be issuable upon the exercise of outstanding stock options, reduced by the number of shares which are assumed to be purchased by the Company from the resulting proceeds at the average market price during the period. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments consist primarily of cash and cash equivalents, short-term investments, accounts receivable, accounts payable, amounts due from/to affiliated companies and long-term debt. The carrying amounts of the Company's cash and cash equivalents, short-term investments, accounts receivable, accounts payable and amounts due from/to affiliated companies approximate fair value due to their short-term nature. The fair value of long-term debt is estimated based on current interest rates offered to the Company for financing arrangements with similar maturities. The recorded value of these financial instruments approximate their fair value at December 31, 1999 and 2000. FOREIGN CURRENCY TRANSLATION In accordance with Statement of Financial Accounting Standards (SFAS) No. 52, "Foreign Currency Translation," all balance sheet accounts of foreign subsidiaries are translated into United 45 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) States dollars at the current exchange rate, and income statement items are translated at the average exchange rate for the period; resulting translation adjustments are made directly to accumulated other comprehensive income (loss) in stockholders' equity. Realized exchange gains and losses on foreign currency transactions are included in other income (expenses) and were immaterial in 1998 and 1999 and gains of approximately $332,000 in 2000. REVENUE RECOGNITION Revenue is recognized from system sales, including hardware with embedded software, when a product is accepted by the customer, except when sold through an independent distributor, a strategic distribution partner or an unconsolidated Bruker affiliated distributor which assumes responsibility for installation, in which case the system sale is recognized when the products are shipped to the distributor and title has transferred to the distributor. Our distributors do not have price protection rights or rights to return; however, our products are warranted to be free from defect for a period of, typically, one year. Revenue from accessories and parts is recognized upon shipment, and revenue from services when performed. The Company also offers to its customers warranty and service agreements extending beyond the initial year of warranty for a fee. These fees are recorded as deferred revenue and amortized into revenue over the life of the agreements. Other revenues, which are principally comprised of research and development grants, are recognized as grant work is performed. The Company believes that its revenue recognition policies comply with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" and with the American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) 97-2, "Software Revenue Recognition." ADVERTISING COSTS Advertising costs are expensed as incurred. Advertising expenses included in sales and marketing were approximately $452,000, $364,000 and $793,000 for the years ended December 31, 1998, 1999 and 2000, respectively. INCOME TAXES The Company provides for income taxes under the liability method prescribed by SFAS No. 109, "Accounting for Income Taxes." Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the difference is expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. ACCOUNTING DEVELOPMENTS In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The provisions of the statement require the recognition of all derivatives as either assets or liabilities in the statement of financial 46 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) position and the measurement of those instruments at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. The Company is required to implement the statement in the first quarter of fiscal 2001. The Company does not believe that this new accounting standard will have a material impact on the financial statements. RECLASSIFICATIONS Certain amounts in the accompanying combined / consolidated financial statements have been reclassified to conform with the 2000 presentation. 3. ACQUISITIONS BRUKER DALTONIK GMBH Effective December 21, 1998, Bruker Daltonics Inc. acquired all the equity interests of Bruker Daltonik GmbH, formerly known as Bruker Franzen Analytik GmbH (a manufacturer of mass spectrometers), for $5,435,012 funded through the issuance of 5,750,000 shares of common stock for $1.00 per share to existing stockholders. The operations of Bruker Daltonik GmbH and its subsidiary, Bruker Saxonia Analytik GmbH, based in Germany, are included in the 1998 combined statements of operations for comparative purposes. The transaction represented an exchange between entities under common control, and, accordingly, the assets acquired and liabilities assumed have been accounted for at historical cost in a manner similar to a pooling-of-interests. PROTEIGENE, INC. In December 1999, the Company acquired a 49% interest in ProteiGene, Inc. from an officer of the Company for $50,000, the estimated fair market value. In March 2000, the Company acquired the remaining 51% interest in ProteiGene, Inc. from an unrelated party for $26,000, the estimated fair market value. ProteiGene is a bioanalytical research and development company specializing in applications of mass spectrometry and bioinformatics in medical and microbiologic diagnostics. ProteiGene is developing products to be used in the care of patients suffering from routine and exotic infections, organ transplant rejection, and genetic and environmental diseases including cancers and auto-immune conditions where standard microbiologic and histopathologic diagnostics have proven ineffective. VIKING INSTRUMENTS CORPORATION On June 22, 1999, the Company purchased the assets of Viking Instruments Corporation, a developer and manufacturer of transportable gas chromatrograph mass spectrometers (GC/MS). These transportable GC/MS instruments are used for laboratory and field analysis of soil, air and water for the identification and quantification of a wide variety of organic compounds and pollutants. The acquisition cost was $150,000, and the results of operations are included in the accompanying consolidated financial statements from the date of acquisition. In connection with the acquisition, $100,000 was expensed as purchased in-process research and development, $25,000 was allocated to core technology and classified as an intangible, $20,000 was allocated to inventory and $5,000 was allocated to fixed assets. The amortization period is five years for the intangibles and three to five years for the fixed assets. 47 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. ACQUISITIONS (CONTINUED) The $100,000 in-process research and development was attributed to the Viking 573, a transportable gas chromatrograph mass spectrometer, and supported by a discounted probable cash flow analysis on a project-by-project basis modified to reflect the stage of completion of the in-process research and development expenditures. As of June 22, 1999, the feasibility of the acquired technology had not been established, and the acquired technology had no future alternative uses. GENEVA PROTEOMICS, INC. In November 2000, the Company acquired 909,091 shares of Series B Preferred Stock of Geneva Proteomics, Inc. in exchange for $7 million in cash and 79,218 shares of the Company's common stock. The acquired securities are included in investments in other companies and are accounted for under the cost method. 4. INVENTORIES The components of inventories were as follows:
DECEMBER 31, ------------------- 1999 2000 -------- -------- (IN THOUSANDS) Raw materials............................................... $ 5,849 $14,391 Work-in-process............................................. 10,777 13,690 Finished goods.............................................. 8,816 8,699 ------- ------- $25,442 $36,780 ======= =======
5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following:
DECEMBER 31, ------------------- 1999 2000 -------- -------- (IN THOUSANDS) Land........................................................ $ 1,480 $ 2,430 Buildings................................................... 24,165 22,403 Office furniture, machinery and equipment................... 18,328 20,408 Leasehold improvements...................................... 11 16 ------- ------- 43,984 45,257 Less accumulated depreciation and amortization.............. (18,633) (19,729) ------- ------- $25,351 $25,528 ======= =======
Depreciation expense for the years ended December 31, 1998, 1999 and 2000 was approximately $2,465,000 $3,317,000 and $3,176,000, respectively. Amortization of leasehold improvements is included with depreciation in the accompanying financial statements. 48 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 6. INCOME TAXES The components of income (loss) from continuing operations before provision for income taxes consisted of the following for the years ended December 31, 1998, 1999 and 2000:
YEAR ENDED DECEMBER 31, ------------------------------ 1998 1999 2000 -------- -------- -------- (IN THOUSANDS) United States..................................... $ 230 $(1,527) $ (24) Foreign........................................... (1,118) 3,390 2,344 ------- ------- ------ $ (888) $ 1,863 $2,320 ======= ======= ======
Significant components of the provision (benefit) for income taxes for the years ended December 31, 1998, 1999 and 2000 were as follows:
YEAR ENDED DECEMBER 31, ------------------------------ 1998 1999 2000 -------- -------- -------- (IN THOUSANDS) Current: Federal........................................... $ 97 $ -- $ -- State............................................. 11 -- 3 Foreign........................................... -- 72 3,591 ----- ------- ------ 108 72 3,594 ----- ------- ------ Deferred: Federal........................................... (26) -- (792) State............................................. (82) -- (146) Foreign........................................... -- 915 (2,402) ----- ------- ------ (108) 915 (3,340) ----- ------- ------ Total income taxes on continuing operations................................ $ -- $ 987 $ 254 ===== ======= ======
The reconciliation of income tax computed at the United States federal statutory tax rate to income tax expense for the years ended December 31, 1998, 1999 and 2000 were as follows:
YEAR ENDED DECEMBER 31, ------------------------------ 1998 1999 2000 -------- -------- -------- Income tax (benefit) at statutory rate................ 34.0% 34.0% 34.0% Add (deduct): Change in valuation allowance....................... (30.5) 35.6 (32.9) Change in enacted rates............................. -- -- (42.3) Foreign income tax at differing rates............... -- (8.9) 58.2 Other............................................... (3.5) (7.8) (6.1) ----- ----- ----- -- 52.9% 10.9% ===== ===== =====
49 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 6. INCOME TAXES (CONTINUED) The components of the Company's deferred income taxes were as follows:
DECEMBER 31, ------------------- 1999 2000 -------- -------- (IN THOUSANDS) Deferred tax assets: Inventory................................................. $ 880 $ 1,353 Warranty accrual.......................................... 257 128 Allowance for doubtful accounts........................... 11 11 R & D and other tax credit carryforwards.................. 225 1,234 Net operating loss carryforward........................... 171 940 Other..................................................... 456 67 ------- ------- 2,000 3,733 Valuation allowance......................................... (763) -- ------- ------- Net deferred tax assets..................................... 1,237 3,733 Deferred tax liabilities: Patent litigation costs................................... (4,023) (3,513) Excess tax over book depreciation......................... (4,939) (3,487) Other..................................................... (162) (540) ------- ------- Total deferred tax liabilities.............................. (9,124) (7,540) ------- ------- Net deferred tax liability.................................. $(7,887) $(3,807) ======= =======
For financial reporting purposes, a valuation allowance at December 31, 1999 was recognized to offset deferred tax assets since uncertainty existed with respect to future realization of deferred tax assets. No valuation allowance was necessary at December 31, 2000. As of December 31, 2000, research and development tax credits and net operating loss carryforwards were available to reduce future federal, state and foreign tax liabilities. These credits expire at various dates through the year 2020. Undistributed earnings of foreign subsidiaries aggregated approximately $9.7 million at December 31, 2000, which, under existing law, will not be subject to United States tax until distributed as dividends. Because the earnings have been or are intended to be indefinitely reinvested in foreign operations, no provision has been made for United States income taxes that may be applicable thereto. 50 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 7. FINANCING ARRANGEMENTS In August 1999, the Company entered into a revolving line of credit with Citizens Bank in the amount of $2,500,000. This line, which is secured by certain inventory, receivables and equipment in the United States, is used to provide working capital and expires July 31, 2001. Interest on this line of credit is at the lower of LIBOR plus 175 basis points (8.15% at December 31, 2000) or the Prime Rate (9.50% at December 31, 2000). There is no commitment fee on the unused portion of the line. As of December 31, 1999 and 2000, the Company had $1,000,000 and $0, respectively, outstanding on this line of credit. The Company also maintained revolving lines of credit in 1999 and 2000, respectively, of approximately $6,200,000 and $7,700,000, among German banks at interest rates ranging between 6.45% and 6.75%. At December 31, 1999 and 2000, $1,496,350 and $0, respectively, were outstanding against these revolving lines of credit. The lines are secured by certain inventory and accounts receivable in Germany and are renewable in June 2001. The Company has three notes payable with outstanding balances aggregating $12,843,582 and $12,036,591 as of December 31, 1999 and 2000, respectively. One note ($5,137,434 and $4,814,636 at December 31, 1999 and 2000, respectively), with an interest rate of 5.10%, is payable in full in 2003. The other two notes ($7,706,148 and $7,221,955 in the aggregate at December 31, 1999 and 2000, respectively), have an interest rate of 4.65% and are due in 2008. Interest is due monthly, and all obligations are collateralized by the land and buildings of Bruker Daltonik GmbH. 8. STOCKHOLDER'S EQUITY INITIAL PUBLIC OFFERING On August 3, 2000, the Company issued 9,200,000 shares of its common stock for $119,600,000 (or $13 per share). The Company incurred $9,912,000 in offering costs as a result of this transaction. PREFERRED STOCK At December 31, 2000, 5,000,000 shares of Blank Check Preferred Stock with a stated par value of $0.01 per share were authorized, none of which have been issued. STOCK SPLIT On February 14, 2000, the Board of Directors of Bruker Daltonics Inc. authorized a seven-for-one stock split in the form of a stock dividend. Stockholders of record received six additional shares of common stock for every share they owned. All common shares and per share data in the accompanying financial statements have been restated to reflect the stock split. STOCK OPTIONS In February 2000, the Board of Directors adopted and the Stockholders approved the 2000 Stock Option Plan ("the Plan"). The Plan provides for the issuance of up to 2,188,000 shares of common stock in connection with awards under the Plan. The Plan allows a committee of the Board of Directors (the "Committee") to grant incentive stock options, non-qualified stock options, stock appreciation rights and stock awards (including the use of restricted stock and phantom shares). The Committee has the authority to determine which employees will receive the rewards, the amount of the awards and other terms and conditions of the award. During the year ended December 31, 2000, the 51 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 8. STOCKHOLDER'S EQUITY (CONTINUED) Committee granted stock options for 871,385 shares of common stock, which vest over three-to-five year periods. Stock option activity for the year ended December 31, 2000 is as follows:
WEIGHTED AVERAGE OPTIONS EXERCISE PRICE -------- -------------- Outstanding at December 31, 1999......................... -- -- Granted.................................................. 871,385 $6.41 Exercised................................................ -- -- Forfeited................................................ 39,785 5.27 ------- Outstanding at December 31, 2000......................... 831,600 $6.46 ======= Exercisable at December 31, 2000......................... -- ======= The weighted average fair value of options granted during the year............................................... $1.76
The following table summarizes information about stock options outstanding at December 31, 2000:
WEIGHTED- NUMBER OF AVERAGE OPTIONS REMAINING OUTSTANDING AT CONTRACTUAL DECEMBER 31, LIFE IN RANGE OF EXERCISE PRICES 2000 YEARS - ------------------------ -------------- ----------- $5.27--$8.00........................................ 755,350 9.16 $17.875............................................. 76,250 9.91 ------- 831,600 9.23 =======
The Company accounts for stock-based compensation using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and has adopted the disclosure-only alternative of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). Under APB 25, because the exercise price of the Company's stock options equaled the fair market value of the underlying stock on the date of grant, no compensation expense was recognized. Stock options granted to non-employees, including Scientific Advisory Board Members, are accounted for in accordance with Emerging Issues Task Force Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services," which requires the value of such options to be remeasured as they vest over a performance period. The fair value of such options is determined using the Black-Scholes model and the resulting charge is recognized as the related services are performed. The Company has incurred approximately $181,000 of net compensation expense relating to non-employee grants during the year ended December 31, 2000. Pro forma information regarding net income and earnings per share is required by SFAS No. 123, which also requires that the information be determined as if Bruker Daltonics has accounted for its 52 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 8. STOCKHOLDER'S EQUITY (CONTINUED) employee stock options under the fair value method of the Statement. The fair value of these options was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for 2000: risk-free interest rates ranging from 5.45% to 6.65%; expected dividend yield of 0%; volatility factor of 0.151 to 0.386; and a weighted-average expected life of the options of three-to-five years. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of pro forma disclosures, the estimated fair value of stock options is amortized to expense over the options' respective vesting periods, and the estimated fair value of shares issued under the Company's stock option plan has been determined based on the fair value at date of grant as defined by SFAS 123. The Company's pro forma results for the year ended December 31, 2000 would have been as follows: Pro forma net income (in thousands)......................... $2,089 Pro forma earnings per common share: Basic..................................................... $ 0.04 Diluted................................................... $ 0.04
9. SEGMENT AND GEOGRAPHIC INFORMATION The Company operates in one business segment and engages in the design, manufacturing and marketing of proprietary life science systems, process analysis systems and analytical instruments based primarily on mass spectrometry technology. GEOGRAPHIC AREAS Information concerning principal geographic areas is as follows:
YEAR ENDED DECEMBER 31, ------------------------------ 1998 1999 2000 -------- -------- -------- (IN THOUSANDS) Net product revenues from external customers(1) Germany............................................ $26,621 $31,695 $38,862 United States...................................... 13,536 22,166 22,913 Other.............................................. -- 6,759 12,997 ------- ------- ------- $40,157 $60,620 $74,772 ======= ======= =======
- ------------------------ (1) Net product revenues are attributable to geographic areas based on the region of sale. 53 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 9. SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)
DECEMBER 31, -------------------------------- 1998 1999 2000 -------- -------- ---------- (IN THOUSANDS) Long-lived assets (excluding intangible assets) Germany......................................... $28,037 $24,284 $ 23,761 United States................................... 328 484 1,653 Other........................................... -- 673 567 ------- ------- -------- $28,365 $25,441 $ 25,981 ======= ======= ======== Net assets Germany......................................... $ 9,307 $11,320 $ 15,357 United States................................... 6,822 5,294 117,539 Other........................................... -- 357 (1,397) ------- ------- -------- 16,129 16,971 131,499 Elimination entries............................. (5,789) (6,913) (7,327) ------- ------- -------- $10,340 $10,058 $124,172 ======= ======= ========
10. DISCONTINUED OPERATIONS In 1999, the Company decided to discontinue its Fourier Transform-Infrared (FT-IR) business. The FT-IR business unit sells and services FT-IR instruments to a variety of markets outside the Company's core technology platform of mass spectrometry. The Company completed the sale of its FT-IR business to Bruker Optik GmbH, an affiliated entity, in the first half of 2000 for a price which approximates the net book value of the assets and liabilities of the business. Summary results for the discontinued operations for the years ended December 31, 1998, 1999 and 2000 are as follows:
YEAR ENDED DECEMBER 31, ------------------------------ 1998 1999 2000 -------- -------- -------- (IN THOUSANDS) Net product revenues.................................... $2,853 $2,742 $1,223 Total costs and expenses................................ (2,214) (2,120) (880) Provision for income taxes.............................. (256) (249) (159) ------ ------ ------ Income from discontinued operations..................... $ 383 $ 373 $ 184 ====== ====== ======
The assets and liabilities of the discontinued operations as of December 31, 1999 consisted of inventories of $32,000 and accounts payable of $147,000. 11. RELATED-PARTY TRANSACTIONS The Company is affiliated, through common stockholders, with several other entities which use the Bruker name. The Company and its affiliates have entered into a sharing agreement which provides for the sharing of specified intellectual property rights, services, facilities and other related items. 54 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 11. RELATED-PARTY TRANSACTIONS (CONTINUED) The Company recognized sales to affiliated entities of approximately $9,805,000 in 1998, $10,307,000 in 1999 and $9,378,000 in 2000 and purchases from affiliated entities of approximately $3,914,000 in 1998, $3,209,000 in 1999 and $5,627,000 in 2000. In 1998, 1999 and 2000, various Bruker affiliates provided administrative and other services (including office space) to the Company at a cost of approximately $227,000, $437,000 and $443,000, respectively, based on its assessment of the estimated fair market value of such services. In 2000, the Company purchased land from a principal shareholder for $742,000, the estimated fair market value. 12. EMPLOYEE BENEFIT PLANS The Company maintains or sponsors various defined contribution retirement plans that cover domestic and international employees. The Company may make contributions to these plans at its discretion. Retirement benefits earned are generally based on years of service and compensation during active employment. Eligibility is generally determined in accordance with local statutory requirements. However, the level of benefits and terms of vesting may vary among plans. The Company contributed approximately $66,000, $123,000 and $199,000 in 1998, 1999 and 2000, respectively. 13. COMMITMENTS AND CONTINGENCIES LICENSE AGREEMENTS The Company has entered into license agreements allowing the Company to utilize certain patents. If these patents are used in connection with a commercial product sale, the Company pays royalties ranging from 0.15% to 5.00% on the related product revenues. Licensing fees for the years ended December 31, 1998, 1999 and 2000 were approximately $146,000, $178,000 and $238,000, respectively. GRANTS The Company had a grant from the National Institute of Standards and Technology (NIST) Advanced Technology Program, which commenced on March 1, 1995 and ran through February 28, 2000. This grant was for the development of a DNA sequencing time-of-flight mass spectrometer with a total project cost of $7 million, of which $3.5 million will be reimbursed from NIST. The Company's expenditures were $1.3 million, $2.1 million and $703,000 in 1998, 1999 and 2000, respectively. Amounts reimbursed from NIST were approximately $594,000, $1 million and $226,000 in 1998, 1999 and 2000, respectively, and are classified in other revenues. The Company's wholly-owned subsidiary, Bruker Daltonik GmbH and its subsidiary Bruker Saxonia Analytik GmbH, are the recipients of six grants from German government authorities. The grants were made in connection with the Company's development of specific spectrometers and components of spectrometers. Total grants awarded amount to $4.5 million and expire through December 31, 2001. Amounts received under these grants during 1998, 1999 and 2000 totaled $1.5 million, $3 million and $1.2 million, respectively, and are classified in other revenues. Total expenditures related to these grants were $3 million, $3.2 million and $2.7 million in 1998, 1999 and 2000, respectively. 55 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 13. COMMITMENTS AND CONTINGENCIES (CONTINUED) LEGAL The Company's wholly-owned subsidiary, Bruker Daltonik GmbH, had a $5.8 million and $4.1 million accrued liability at December 31, 1999 and 2000, respectively, related to certain patent infringement litigation filed by a competitor. In 1997, the competitor initiated an action in the United States District Court of Massachusetts alleging patent infringement against the Company and Agilent (formerly a division of Hewlett-Packard). The competitor has also filed a request for an investigation of its patent infringement claims with the United States International Trade Commission (ITC) and has filed suit against the Company in Germany, France and the United Kingdom. In 1998, the ITC found in favor of the Company, and in 1999, the Court of Appeals for the Federal Circuit confirmed, in part, the ITC decision in favor of the Company. The Company has filed counterclaims in relation to these patent claims and in 1999 filed an anti-trust suit against the competitor in Massachusetts Federal Court. The Company believes that it has a meritorious defense to the competitor's claims and intends to vigorously defend itself. Based on a review of the current facts and circumstances, management of the Company and its subsidiary believe that the amount of the accrued liability is a reasonable estimate of the exposure to loss associated with these matters, representing, principally, anticipated legal fees. While acknowledging the uncertainties of litigation, the Company believes that these matters will be resolved without a material effect on the Company's financial position or results of operations. However, an unfavorable outcome of these matters could result in a material adverse impact on the Company's financial statements, although an estimate of such impact cannot be made. Other lawsuits, claims and proceedings of a nature considered normal to its businesses are pending against the Company and its subsidiary. The Company believes the outcome of these proceedings will not have a material impact on the Company's financial position or results of operations. 56 BRUKER DALTONICS INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 14. QUARTERLY INFORMATION (UNAUDITED) A summary of operating results for the quarterly periods in the two years ended December 31, 2000 is set forth below:
QUARTER ENDED ------------------------------------------------ MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL -------- -------- ------------ ----------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) YEAR ENDED DECEMBER 31, 2000 Net revenues..................................... $14,599 $17,523 $22,690 $21,790 $76,602 Operating income (loss) from continuing operations..................................... 450 448 577 (741) 734 Income from continuing operations................ 137 118 581 1,230 2,066 Income from discontinued operations, net of income tax.............................. 37 95 52 -- 184 Net income....................................... 174 213 633 1,230 2,250 Net income per share--basic and diluted Income from continuing operations.............. $0.00 $0.01 $0.01 $0.02 $0.04 Income from discontinued operations, net of income tax............................ 0.00 0.00 0.00 0.00 0.00 ------- ------- ------- ------- ------- Net income....................................... $0.00 $0.01 $0.01 $0.02 $0.04
During the quarter ended December 31, 2000, the Company recorded a provision for loss on contract of $1.1 million.
QUARTER ENDED ------------------------------------------------ MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL -------- -------- ------------ ----------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) YEAR ENDED DECEMBER 31, 1999 Net revenues..................................... $11,898 $15,687 $18,007 $19,098 $64,690 Operating income (loss) from continuing operations..................................... (99) 465 1,064 1,210 2,640 Income (loss) from continuing operations......... (106) 137 394 451 876 Income from discontinued operations, net of income tax.............................. 90 101 75 107 373 Net income (loss)................................ (16) 238 469 558 1,249 Net income per share--basic and diluted Income from continuing operations.............. $0.00 $0.01 $0.01 $0.01 $0.02 Income from discontinued operations, net of income tax............................ 0.00 0.00 0.00 0.00 0.01 ------- ------- ------- ------- ------- Net income....................................... $0.00 $0.01 $0.01 $0.01 $0.03
57 (2) FINANCIAL STATEMENTS SCHEDULES All schedules have been omitted since they are either not applicable, not required or the information is included elsewhere herein. (3) EXHIBITS See (c) below (b) Reports on Form 8-K None. (c) List of Exhibits
EXHIBIT NO. TITLE - --------------------- ----- **2.1 Asset Purchase Agreement dated July 1, 1996 between the Registrant and Spectrospin AG **2.2 Share Purchase Agreement dated December 9, 1998 among the Registrant, Bruker Physik AG and the estate of Dr. Guenther R. Laukien **2.3 Asset Purchase Agreement dated May 28, 1999 between the Registrant and Viking Instruments Corp **2.4 ProteiGene Share Purchase Agreement dated December 6, 1999 between the Registrant and Frank H. Laukien **2.5 ProteiGene Share Purchase Agreement dated March 1, 2000 between the Registrant and Sidney R. Kaufman **3.1 Amended and Restated Certificate of Incorporation of the Registrant **3.2 Amended and Restated Bylaws of the Registrant **4.1 Specimen stock certificate representing shares of common stock of the Registrant **10.1 2000 Stock Option Plan **10.2 Sharing Agreement dated as of February 28, 2000 among the Registrant and 13 affiliates of the Registrant **+10.3 Collaboration and OEM Agreement dated March 6, 2000 between PerkinElmer Instruments LLC and its Affiliates and the Registrant and its Affiliates **+10.4 Cooperation Agreement dated November 15, 1999 between Bruker Daltonik GmbH and MWG-Biotech AG **+10.5 License Agreement dated August 10, 1998 between the Registrant and Indiana University's Advanced Research & Technology Institute **10.6 Lease dated June 27, 1996 between the Registrant and Bruker Instruments, Inc., as amended **+10.7 ITMS Collaboration Agreement by and between Hewlett-Packard, the Registrant and Bruker Daltonik GmbH, dated April 28, 1999 **+10.8 Collaboration Agreement dated December 4, 1997 between Bruker-Franzen Analytik GmbH and Sequenom Instruments GmbH **+10.9 Agreement by and between the Bruker Daltonik GmbH, Bruker Saxonia Analytik GmbH and Bruker Optik GmbH dated March 31, 2000
58
EXHIBIT NO. TITLE - --------------------- ----- +10.10 Strategic Alliance Agreement between the Registrant and Geneva Proteomics, Inc. dated September 12, 2000 10.11 Standard Form Purchase and Sale Agreement by and between Bruker Daltonics Inc. and Isolde Laukien dated as of December 1, 2000 21.1 Subsidiaries of the Registrant 23.1 Consent of Independent Auditors 24.1 Power of attorney (included on page S-1)
- ------------------------ ** Incorporated by reference from our registration statement on Form S-1, registration number 333-34820, declared effective by the Securities and Exchange Commission on August 3, 2000. + Confidential treatment requested as to certain portions, which portions have been omitted and filed separately with the Commission. All other schedules for which provisions are made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. 59 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BRUKER DALTONICS INC. By: /s/ FRANK H. LAUKIEN ----------------------------------------- Name: Frank H. Laukien, Ph.D. Title: President, Chief Executive Officer and Chairman Date: March 28, 2001
We, the undersigned officers and directors of Bruker Daltonics Inc., hereby severally constitute and appoint Frank H. Laukien, Ph.D to sign for us and in our names in the capacities indicated below, the report on Form 10-K filed herewith and any and all amendments to such report, and to file the same, with all exhibits thereto and other documents in connection therewith, in each case, with the Securities and Exchange Commission, and generally to do all such things in our names and on our behalf in our capacities consistent with the provisions of the Securities Act of 1934, as amended, and all requirements of the Securities and Exchange Commission. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
NAME TITLE DATE ---- ----- ---- President and Chief Executive /s/ FRANK H. LAUKIEN Officer and Chairman of the ------------------------------------------- Board (Principal Executive March 28, 2001 Frank H. Laukien, Ph.D. Officer) Corporate Controller and /s/ JOHN J. HULBURT Treasurer (Principal ------------------------------------------- Financial and Accounting March 28, 2001 John J. Hulburt Officer) /s/ DIETER KOCH ------------------------------------------- Director March 28, 2001 Dieter Koch, Ph.D. /s/ BERNHARD WANGLER ------------------------------------------- Director March 28, 2001 Bernhard Wangler /s/ WILLIAM A. LINTON ------------------------------------------- Director March 28, 2001 William A. Linton
S-1
NAME TITLE DATE ---- ----- ---- /s/ COLLIN D'SILVA ------------------------------------------- Director March 28, 2001 Collin D'Silva /s/ RICHARD M. STEIN ------------------------------------------- Director March 28, 2001 Richard M. Stein /s/ M. CHRISTOPHER CANAVAN, JR. ------------------------------------------- Director March 28, 2001 M. Christopher Canavan, Jr.
S-2 EX-10.10 2 a2040867zex-10_10.txt EXHIBIT 10.10 Exhibit 10.10 STRATEGIC ALLIANCE AGREEMENT This Strategic Alliance Agreement (hereinafter "Agreement"), by and between Geneva Proteomics, Inc., a corporation organized under the laws of Delaware ("GeneProt"), Bruker Daltonics Inc., a corporation organized under the laws of Delaware ("BDAL") and Bruker Daltonik GmbH, a company organized under the laws of Germany ("BDAL Germany") is made as of September 12, 2000 ("Effective Date"). I. RECITALS AND OVERVIEW A. GeneProt is in the business of large-scale industrial proteomics and BDAL is a developer and provider of innovative life science tools based on mass spectrometry; B. BDAL Germany desires to sell to GeneProt, and GeneProt desires to purchase from BDAL Germany, certain Products (defined below) in the quantities and on the terms as set forth in this Agreement; C. GeneProt wishes to receive engineering support relating to the Products from BDAL and BDAL Germany; D. GeneProt and BDAL desire to enter into a related transaction relating to ownership of equity in each other; and E. GeneProt and BDAL desire to formalize the ownership of certain technologies that the parties, either individually or jointly, may develop and other aspects of a long-term relationship. II. AGREEMENT NOW, THEREFORE, the parties agree as follows: 1. DEFINITIONS. Defined terms used in this Agreement shall have the following meanings: 1.1 "Consumables" means the items listed under the heading "Consumables" on Exhibit A hereto. 1.2 "DOCUMENTATION" means user manuals for the Products and all other written materials provided by BDAL with respect to the use and maintenance of the Products. 1.3 "PRICE LIST" means BDAL Germany's standard commercial fee schedule or other price notification releases furnished by BDAL Germany generally to its customers, a current copy of which is attached hereto as EXHIBIT D. 1.4 "PRODUCTS" means, collectively, the Systems acquired by GeneProt under this Agreement, the Consumables and the other items listed on Exhibit A as more particularly described on Exhibit D, which GeneProt has the option to purchase under this Agreement. The term "Product" also includes any enhancement or improvement of a Product that is made generally available by BDAL, that is substantially similar to such Product, and is marketed under the same product number and nomenclature as such Product. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS EXHIBIT, WHICH PORTIONS HAVE BEEN OMITTED AND REPLACED WITH [**] AND FILED SEPARATELY WITH THE COMMISSION. 1.5 "SERVICES" means the software/applications research and development support described in EXHIBIT C. 1.6 "SYSTEMS" means BDAL Germany's Reflex III MALDI-TOF and esquire3000 ion trap mass spectrometry systems acquired under this Agreement as more particularly described on the Price List attached as EXHIBIT D HERETO. 2. TERMS AND CONDITIONS OF PRODUCT SALE. 2.1 SALE AND PURCHASE OF PRODUCTS. Pursuant to the terms and conditions of this Agreement, BDAL Germany shall sell to GeneProt, and GeneProt shall purchase from BDAL Germany, the Systems in the quantities and at the prices set forth on Exhibit A hereto and in the manner described in the General Terms and Conditions set forth on Exhibit B hereto (the "General Terms and Conditions"). In addition, pursuant to the terms and conditions of this Agreement, BDAL Germany shall make the Consumables available for purchase in the manner and with the discounts from the then current Price List as described in the General Terms and Conditions. The parties acknowledge and agree that BDAL Germany shall appoint an operational point of contact for purposes of this Agreement. 2.2 PROVISION OF SERVICES. In connection with the sale of the Products pursuant to Section 2.1, BDAL Germany will provide the Services in the manner described in the General Terms and Conditions. 2.3 PRICING AND PAYMENT. Unless otherwise agreed upon by the parties, BDAL Germany will invoice GeneProt for payment upon the date of BDAL Germany's delivery of the applicable Products to the shipping carrier. All payments shall be made in European denominations in accordance with the General Terms and Conditions. All amounts shown in the Exhibits hereto are in the Euro. 2.4 TAXES AND OTHER CHARGES. Purchase prices, and any other payments made hereunder with respect to the Products, do not include and are net of any foreign or domestic governmental taxes or charges of any kind that may be applicable to the use or sale of the Products. 2.5 TRADE-IN OPTION. Subject to the terms and conditions of this Agreement, BDAL and BDAL Germany hereby grant to GeneProt the Trade-In Option more particularly described on the General Terms and Conditions. 2.6 DESTRUCTION OF PRODUCTS. In the event that all or substantially all of the Products are destroyed due to fire to other calamity while the Products are in the possession of GeneProt, upon the placement of a new order for such Products by GeneProt with BDAL Germany, BDAL Germany shall make it a top priority of BDAL Germany's production line to manufacture replacement Products for GeneProt. 3. TERMS AND CONDITIONS OF STOCK PURCHASE 3.1 PURCHASE AND SALE OF GENEPROT STOCK. Subject to the terms and conditions of this Section 3, BDAL agrees to purchase and GeneProt agrees to sell Nine Hundred Nine Thousand and Ninety One (909,091) shares of GeneProt's Series B Preferred Stock (the "GeneProt Stock") at a per share purchase price not to exceed [**] per share. BDAL shall pay such purchase price by delivering Seven Million Dollars ($7,000,000) in cash to GeneProt and 79,218 shares of fully paid and nonassessable shares of BDAL's common stock. 2 [**] Indicates that information has been omitted and filed separately with the Commission pursuant to a request for confidential treatment. 3.2 TIMING AND TERMS OF PURCHASE. The parties agree that BDAL shall purchase the GeneProt Stock as part of the Series B Preferred Stock round currently being undertaken by GeneProt (the "Series B Round"). Such investment shall be pursuant to the stock purchase, investor rights and other agreements, documents and instruments used by GeneProt for the other investors in the Series B Round. Such agreements, documents and instruments shall be no less favorable to BDAL than the agreements, documents and instruments which are most favorable to any investor in the Series B Round. GeneProt agrees that it shall not sell, transfer or otherwise dispose of any BDAL stock received hereunder for a period of twenty four (24) months after receipt of such stock. The timing of BDAL's investment shall occur simultaneously with the closing of the first $50,000,000 (including BDAL's investment). However, if such investment has not closed on or before November 30, 2000 through no fault of BDAL, BDAL shall have the right not to close on such investment thereafter. 4. DELIVERY; TITLE; ACCEPTANCE. 4.1 SHIPPING DATES. BDAL Germany shall deliver the Products on their respective delivery dates as set forth in the General Terms and Conditions. In the event GeneProt determines that it requires a change in the actual scheduled delivery date, GeneProt will notify BDAL Germany as soon as is reasonably practicable following such determination and BDAL Germany shall use its commercially reasonable efforts to comply with the requested schedule change. 4.2 TITLE. Title to the Products shall pass to GeneProt upon Acceptance (defined below) of the Products by GeneProt. Risk of loss or damage to the Products, other than due to an act or omission of BDAL or BDAL Germany, shall pass to GeneProt upon delivery. 4.3 ACCEPTANCE. (a) For purposes of this Agreement, "Acceptance" of a Product by GeneProt shall be deemed to have occurred upon completion of the installation of such Product by BDAL Germany and the execution of an Acceptance Certificate by GeneProt, a form of which is attached hereto as EXHIBIT E (THE "ACCEPTANCE CERTIFICATE"). (b) GeneProt may reject any Product which is not conforming with the warranties set forth in Section 5. In order to reject a Product, GeneProt must (i) give notice to BDAL Germany of GeneProt's intent to reject the shipment within thirty (30) days of receipt together with a written indication of the reasons for such rejections, and (ii) as promptly as reasonably practicable thereafter, provide BDAL Germany with notice of final rejection and the full basis therefor. After notice of intent to reject is given, GeneProt shall cooperate with BDAL Germany in determining whether rejection is necessary or justified. If no such notice of intent to reject is timely received, GeneProt shall be deemed to have accepted such delivery of Products; provided, however, that such acceptance shall in no way limit any remedies GeneProt may have with respect to the warranties set forth in Section 4. 5. WARRANTIES. 5.1 PRODUCTS. BDAL Germany and BDAL warrant to GeneProt that the Products delivered to GeneProt will be free from defects in material and workmanship for [**] months from the date of Acceptance of such Products, (the "Warranty Period") and shall perform substantially in accordance with BDAL Germany's published technical specifications, which are set forth in the Acceptance Certificate, and that such Products shall perform without defect when installed in GeneProt's proteomics factory. 3 [**] Indicates that information has been omitted and filed separately with the Commission pursuant to a request for confidential treatment. 5.2 SERVICES. BDAL Germany and BDAL warrant to GeneProt that during the Warranty Period, (a) In performing the Services, BDAL Germany shall comply with all applicable laws of local, state and federal governments and agencies. (b) All Services shall be performed by qualified personnel at a level of professional performance standard within the industry in which the Services are provided. 5.3 INFRINGEMENT. BDAL and BDAL Germany warrant to GeneProt that they are not aware of any patent, copyright, trade secret or trademark of a third party which has been used without permission to manufacture or complete any Product or which has been incorporated therein without permission. 5.4 COMPLIANCE WITH LAW. BDAL Germany and BDAL warrant to GeneProt that, at the time of shipment, all Products sold to GeneProt hereunder shall, when required, be in compliance with applicable laws and regulations. 5.5 LIMITATIONS. EXCEPT AS SET FORTH IN THIS AGREEEMNT, BDAL AND BDAL GERMANY MAKE NO OTHER WARRANTIES WITH RESPECT TO THE PRODUCTS OR ANY SERVICES AND DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 5.6 WARRANTY SERVICES. With respect to each Product, during the applicable Warranty Period, BDAL Germany will provide to GeneProt the maintenance, repair and return services described in Exhibit F. If considered by BDAL Germany staff to be advisable to improve the reliability of the Products, components will be replaced or modified without additional cost, and replaced components will become the property of BDAL Germany, all during the Warranty Period. In addition, software bug fixes will be provided during the Warranty Period free of charge. 5.7 SITE GUIDE. The Site Guides for the Products are included in Exhibit E. 6. GENEPROT COVENANTS. GeneProt agrees: 6.1 REVERSE ENGINEERING. Not to (and not to allow any third parties to) (a) disassemble, decompile or otherwise reverse engineer the Products. 6.2 NO REMOVAL OF MARKS. To include, and not alter, obscure or remove, any logo, trademark, copyright notice or other mark used or claimed by BDAL or BDAL Germany, or any markings, colors or other insignia which are contained in or affixed to the Product at the time of shipment. 6.3 ACCESS. To provide BDAL Germany, or its designee, with all physical and electronic access to the Products reasonably necessary in GeneProt's opinion to permit BDAL Germany to perform the Services and the warranty services. 4 7. PROVISION OF PERSONNEL. 7.1 SERVICES PERSONNEL. During the Warranty Period, BDAL Germany shall provide four (4) man years of its full-time employees to perform the Services (the "BDAL Employees"). Each man year shall be approximately 1800 hours of direct labor. The BDAL Employees shall provide the Services at such times and locations as shall be reasonably requested by GeneProt. The BDAL Employees shall be available at all times during the normal business hours of GeneProt to provide the Services and Improvements by telephone or in person. The Services shall be performed in collaboration with GeneProt. 7.2 SITE MANAGER. During the Warranty Period, BDAL Germany shall provide a site manager as described in the General Terms and Conditions. 7.3 STATUS OF PERSONNEL. The parties acknowledge and agree that the BDAL Employees and any site manager shall not be deemed to be employees of GeneProt and shall remain employees of BDAL Germany. GeneProt shall have no obligation to provide any employee related benefits, including, without limitation, health, pension plan, social security, life or disability insurance, sick leave, vacation leave, work permits, personal liability or separate payment to such personnel. BDAL Germany agrees to inform such personnel of the foregoing. 8. OWNERSHIP AND LICENSE. 8.1 As between the parties, GeneProt exclusively shall have all right, title and interest (including all patent rights, copyrights, trade secret rights and all other intellectual property rights throughout the world) (the "Intellectual Property Rights") in any inventions, methods, instruments, consumables, software, works-of-authorship, ideas or information made or conceived or reduced to practice ("Inventions") by GeneProt through its use of the Products or Systems under this Agreement. 8.2 Except for the licenses granted by BDAL and BDAL Germany to GeneProt hereunder, as between the parties, BDAL and BDAL Germany exclusively shall have all Intellectual Property Rights in any Inventions by BDAL or BDAL Germany through its use of the Products or Systems under this Agreement. 8.3 With respect to Inventions for which employees or consultants of both parties are joint inventors or authors, each party will equally and jointly own the Intellectual Property Rights with respect to the joint Inventions with the right to unilaterally fully exploit or nonexclusively license such rights without accounting or further consent. BDAL and BDAL Germany hereby grant to GeneProt a worldwide, nonexclusive, nontransferable, perpetual, irrevocable license to use, modify and otherwise exploit any BDAL Inventions related to the large-scale analysis of expressed proteins according to the business model of GeneProt as described in the business plan of GeneProt dated May 2000. 9. TERMINATION OF AGREEMENT. 9.1 TERMINATION BY EITHER PARTY. This Agreement may be terminated by a party for cause immediately upon the occurrence of any of the following events: (a) If the other party ceases to do business, or otherwise terminates its business operations without a successor; or 5 (b) If the other party shall seek protection under any bankruptcy, receivership, trust deed, creditors arrangement, composition or comparable proceeding, or if any such proceeding is instituted against the other (and not dismissed within 60 days); or (c) If the other party breaches any material provision of this Agreement and, for any breach other than a payment breach, fails to cure such breach within thirty (30) days of written notice describing the breach. 9.2 NOT SOLE REMEDY. Termination is not the sole remedy under the Agreement and, whether or not termination is effected, all other remedies remain available and shall be cumulative. Upon a default hereunder, each party reserves to itself all remedies available to it in equity, under the Uniform Commercial Code, or under any other applicable law, notice of the non-defaulting party's exercise thereof being expressly waived by the defaulting party. 9.3 EFFECT OF TERMINATION. Any accrued rights to payment, remedies for breach and those rights and obligations set forth in Sections 2,3,8, 10, 11, 12 and 15 shall survive any termination or expiration of this Agreement. 10. CONFIDENTIAL INFORMATION. As used in this Agreement, "Confidential Information" will mean the terms of this Agreement and any confidential or proprietary information that is marked or otherwise designated as "Confidential" or is clearly by its nature confidential and disclosed in any medium by one party to the other. Except as required by law or regulation or expressly and unambiguously allowed herein, the receiving party will hold in confidence and not use or disclose any Confidential Information of the disclosing party and shall similarly bind its employees in writing. Without limiting the foregoing, each party agrees to employ with regard to the Confidential Information of the other party procedures no less restrictive than the strictest procedures used by it to protect its own confidential and proprietary information. These nondisclosure obligations will not apply to information which the receiving party can document has entered the public domain without any action or inaction by it. Each party will promptly report to the other party any actual or suspected violation of the terms of this Section 9, and will take all reasonable further steps requested by the other party to prevent, control or remedy any such violation. Each party will, upon the termination or expiration of the Agreement or the request of the other party at any time, return to the disclosing party all tangible manifestations of Confidential Information received by it pursuant to the Agreement (and all copies and reproductions thereof). Notwithstanding this Section 9, any confidentiality or non-disclosure agreement(s) previously entered into between GeneProt and BDAL shall continue in full force and effect in accordance with their terms. 11. INFRINGEMENT. BDAL and BDAL Germany agree to indemnify, defend and hold harmless GeneProt and its officers, directors, shareholders, affiliates, employees and agents against any and damages, including reasonable expenses, arising from a third party claim that GeneProt's use of a Product in accordance with the terms of this Agreement infringes or misappropriates any patent, copyright, trade secret or other proprietary or intellectual property right of any such third party; provided that GeneProt provides prompt notice to BDAL and BDAL Germany of such claim and the opportunity to assume sole control of the defense or settlement of such claim. In the event that any Product is held to constitute such an infringement and the use of such Product is enjoined, BDAL and BDAL Germany by their own election and at its own expense, shall either: (1) procure for GeneProt the right to continue using such Product; (2) shall modify the Product so that it becomes non-infringing; or (3) remove the Product and refund to GeneProt the entire amount paid for such Product and any related Services. BDAL and BDAL Germany shall have no obligation or liability under this Section 10 if any infringement claim is based upon portions or components of the Products (a) that are not supplied by BDAL and BDAL 6 Germany, (b) that are combined with other products, processes or materials where the alleged infringement relates to such combination, (c) to the extent GeneProt continues allegedly infringing activity after being notified thereof or of modifications that would have avoided the alleged infringement or (d) where GeneProt's use of the Product is incident to an infringement not resulting primarily from the Product or is not strictly in accordance with the licenses or restrictions provided in this Agreement. THE FOREGOING AND SECTION 5.3 HEREOF ARE IN LIEU OF ANY WARRANTIES OF NON-INFRINGEMENT, WHICH ARE HEREBY DISCLAIMED, AND STATE THE EXCLUSIVE OBLIGATION AND SOLE LIABILITY OF BDAL AND BDAL GERMANY FOR INFRINGEMENT OR CLAIMS OF INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS. 12. LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE, GENEPROT WILL NOT BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR AMOUNTS IN EXCESS IN THE AGGREGATE OF THE AMOUNTS PAID TO BDAL GERMANY HEREUNDER . 13. FORCE MAJEURE. If the performance of any obligation under this Agreement is interfered with by reason of any circumstances beyond the reasonable control of the party affected, including, without limitation, fire, explosion, power failure, acts of God, war, revolution, civil commotion, delays of the other party in the performance of any of its obligations hereunder, industry-wide parts shortages, acts of the public enemy, or any law, order, regulation, ordinance or requirement of any government or legal body, and labor difficulties, including without limitation, strikes, slowdowns, picketing or boycotts; then the party affected shall be excused from such performance for a period equal to the delay resulting from any such causes and such additional period as may be reasonably necessary to allow the party to resume its obligations (and the other party shall likewise be excused from performance of its obligations to the extent such party's obligations relate to the performance which was interfered with). The party so affected shall make reasonable efforts to remove such causes of nonperformance. 14. PRINCETON OPTION. Since GeneProt intends to give preferential treatment to BDAL and BDAL Germany as suppliers for GeneProt's proposed Princeton, New Jersey facility, for a period of [**] after the date hereof GeneProt shall have the option to purchase the same number of Systems and Products for such facility as described in the General Terms and Conditions at the discounts contained therein from BDAL and BDAL Germany then current list prices and without the four man years of Services. 15. GENERAL. 15.1 COMPLETE AGREEMENT. This Agreement, together with the Exhibits attached hereto, and the documents contemplated hereby, contains the entire agreement of the parties and supersedes all existing agreements and all previous oral, written, or other communications between them concerning its subject matter. 15.2 MODIFICATION. No addition or modification of any portion of this Agreement shall be binding upon GeneProt or BDAL unless such is made in writing and signed by a duly authorized representative of each party. 15.3 INDEPENDENT CONTRACTOR. The relationship established by this Agreement between GeneProt and BDAL is that of independent contractors. BDAL and BDAL Germany have no express or 7 [**] Indicates that information has been omitted and filed separately with the Commission pursuant to a request for confidential treatment. implied authorization to incur any obligation or commitment on behalf of GeneProt, unless specifically approved in writing by an authorized GeneProt official. BDAL and BDAL Germany shall employ and contract their own personnel and agents and shall be responsible for them and their acts. 15.4 PARAGRAPH AND SECTION HEADINGS. The paragraph and Section headings contained herein are intended for convenience of reference only and shall not affect the interpretation of any such provisions. 15.5 VALIDITY. If any provision of this Agreement shall be held to be invalid, illegal, or unenforceable, the validity, legality or enforceability of the remaining provisions of this Agreement shall in no way be affected or impaired. In such event, the parties shall negotiate, in good faith, a substitute provision which most clearly reflects their original intent for entering into this Agreement. 15.6 GOVERNING LAW. This Agreement shall be governed by and construed under the laws of Delaware without reference to conflicts of law principles and without reference to the United Nations Convention on Contracts for the International Sale of Goods. The sole jurisdiction and venue for any action related to the subject matter hereof shall be the local and federal courts having within their jurisdiction at the location of the defendant's principal place of business. Both parties consent to the jurisdiction of such courts and agree that process may be served in the manner provided herein for giving notices or otherwise as allowed by such local or federal law. In any action to enforce this Agreement, the prevailing party shall be entitled to costs and attorneys' fees. 15.7 ENGLISH LANGUAGE. This Agreement is written in the English language, which shall be controlling for all purposes. No translation of this Agreement into any other language shall be of any force or effect in the interpretation of this Agreement or in a determination of the intent of the parties hereto. 15.8 WAIVER. The waiver by either party hereto of a breach of any provision of this Agreement shall not be construed as a waiver of any subsequent breach of the same, or any different, provision. 15.9 NOTICES. All notices remitted under this Agreement shall be in writing and in the English language. Any and all notices shall be sent by registered or certified mail, postage prepaid, receipt requested or by confirmed fax or hand delivery to the other party to the attention and address listed below, or to such other person(s) or addresses as the parties shall specify by written notice. Notices will be deemed effective three (3) days after delivery to a recognized overnight courier service, if so delivered; one (1) business day after sending if given by facsimile transmission and upon delivery if given by hand. All notices hereunder shall be remitted to the attention of the: If to GeneProt, to: Rue du Rhone 14 1204 Geneva Switzerland Attn: Chief Executive Officer 8 If to BDAL, to: Bruker Daltonics Inc. 44 Manning Road Billerica, MA 01821 Attn: Frank H. Laukien, Ph.D. President and Chief Executive Officer If to BDAL Germany, to: Bruker Daltonik GmbH Fahrenheitstrasse 4, D-28359 Bremen, Germany Attn: Hans J. Baum 15.10 LIMITATION. No action, regardless of form, arising out of or related to this Agreement, may be brought by either party more than one (1) year after the cause of action has accrued, except that an action for non-payment may be brought within one (1) year after the date of last payment. 15.11 NON-SOLICITATION. During the term of this Agreement and for six (6) months thereafter, without the prior written consent of the other party, each party agrees not to solicit or initiate contact or communications with the other party's personnel or contractors for the purpose of hiring or engaging such personnel as employees or contractors of the contacting party. 15.12 ASSIGNMENT. Neither party may assign or transfer this Agreement or any rights hereunder (and any attempted assignment will be void) without the prior written consent of the other party; except for rights to payment and except to a person or entity who acquires all or substantially all the assets or business of a party, whether by sale, merger or otherwise. 15.13 ORDER OF PRECEDENCE. Should the terms and conditions of any Exhibit to this Agreement or the terms of any purchase order delivered by either party conflict with the terms and conditions of this Agreement, the terms and conditions of the principal portion of this Agreement shall govern. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 9 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. GENEVA PROTEOMICS, INC. By: ----------------------------------- Name: ----------------------------------- Title: ----------------------------------- BRUKER DALTONICS INC. By: ----------------------------------- Name: ----------------------------------- Title: ----------------------------------- BRUKER DALTONIK GMBH By: ----------------------------------- Name: ----------------------------------- Title: ----------------------------------- [SIGNATURE PAGE TO STRATEGIC ALLIANCE AGREEMENT] EXHIBIT A PRICING
- --------------------------------------------------------------------------------------------------- INSTRUMENTS LIST [**] - --------------------------------------------------------------------------------------------------- ESQUIRE 9,604,375.00 [**] REFLEX 2,396,712.00 [**] SOFTWARE/APPLICATIONS SUPPORT 1,200,000.00 [**] - --------------------------------------------------------------------------------------------------- SUM 13,201,087.00 [**] - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- ESTIMATE FOR 1YR. OF CONSUMABLES LIST [**] - --------------------------------------------------------------------------------------------------- ESQUIRE 456,395.00 [**] REFLEX 512,030.00 [**] - --------------------------------------------------------------------------------------------------- SUM 968,425.00 [**] - ---------------------------------------------------------------------------------------------------
Note: The 1 Year Consumables are ONLY an estimate and are not included in the order. The consumables cost estimate do not include HPLC consumables, solvents, helium gas, microtitre plates, ZIP Tips, data storage, etc. that are not directly used by the mass spectrometers. For example, 1536 Zip Tips will be required for each 1536 target prepared. GeneProt is negotiating a solvent contract separately and is setting up the permanent facilities for purified water. Each esquire3000 will require approximately 7 atm L/day of pure Helium gas. The estimate for consumables is a very preliminary draft for discussion purposes. Until the methods are finalized and tested in the pilot phase, firm estimates of consumable will be difficult. [**] Indicates that information has been omitted and filed separately with the Commission pursuant to a request for confidential treatment.
- ---------------------------------------------------------------------------------------------------------------------------- SUM: LIST [**] [**] [**] - ---------------------------------------------------------------------------------------------------------------------------- TOF 2,239,512.00 [**] [**] [**] COMPUTER / SW 89,700.00 [**] [**] [**] TARGETS / MATRIX 67,500.00 [**] [**] [**] CONSUMABLES ESTIMATE 512,030.00 [**] [**] [**] - ---------------------------------------------------------------------------------------------------------------------------- ALL 2,908,742.00 [**] [**] [**] - ---------------------------------------------------------------------------------------------------------------------------- ALL (WITHOUT CONSUMABLES EST.) 2,396,712.00 [**] [**] [**] - ----------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------- TOF [**] TYPE IN % - --------------------------------------------- TOF INSTRUMENTATION [**] BRUKER MANUFACTURED ACC [**] EXTERNAL PARTS [**] - ---------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------- TOF PRICE IN EURO # SUM LIST [**] IN% [**] PRICE - ---------------------------------------------------------------------------------------------------------------------------- LINEAR + REFLECTOR 100 278,200.00 [**] [**] [**] [**] (REFLECTOR, LISTPRICE 52,200) MAP II 171 45,950.00 [**] [**] [**] [**] HOOD FOR MAP 175 4,590.00 [**] [**] [**] [**] 2ND YEAR WARRANTY 22,256.00 [**] [**] [**] [**] 3RD YEAR WARRANTY 22,256.00 [**] [**] [**] [**] - ---------------------------------------------------------------------------------------------------------------------------- [**] [**] - ----------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------- COMPUTER / SW - ---------------------------------------------------------------------------------------------------------------------------- PC FOR OFF-LINE DATA PROCESSING 3,500.00 [**] [**] [**] [**] COMPUTER FOR MAP INC. WINDOWS NT AND 4,000.00 [**] [**] [**] [**] MS OFFICE SUBSTITUTE 21" MONITOR FOR 19" (SUN) 401 1,400.00 [**] [**] [**] [**] XMASS NT 445 3,100.00 [**] [**] [**] [**] BIOTOOLS 450 2,950.00 [**] [**] [**] [**] - ---------------------------------------------------------------------------------------------------------------------------- [**] [**] - ----------------------------------------------------------------------------------------------------------------------------
[**] Indicates that information has been omitted and filed separately with the Commission pursuant to a request for confidential treatment.
- ---------------------------------------------------------------------------------------------------------------------------- TARGETS / MATRIX - ---------------------------------------------------------------------------------------------------------------------------- #26755 384 TARGET,WITH ANTI-CORROSIVE 253.00 [**] [**] [**] [**] COATING, GROUND #72226 ANCHORCHIPTM 200/384 (384 ANCHORS, 414.00 [**] [**] [**] [**] 200[MU]M DIAMETER) #72227 ANCHORCHIPTM 400/384 (384 ANCHORS, 414.00 [**] [**] [**] [**] 400[MU]M DIAMETER) #72228 ANCHORCHIPTM 600/384 (384 ANCHORS, 414.00 [**] [**] [**] [**] 600[MU]M DIAMETER) #72229 ANCHORCHIPTM 800/384 (384 ANCHORS, 414.00 [**] [**] [**] [**] 800[MU]M DIAMETER) #29414 ANCHORCHIPTM VAR/384 414.00 [**] [**] [**] [**] 384 ANCHORS, 4 DIFF ANCHOR DIAMETER: 96X200[MU]M, 96X400[MU]M, 96X600[MU]M, 96X800[MU]M #72448 ANCHORCHIPTM 200/1536 (1536 470.00 [**] [**] [**] [**] ANCHORS, 200[MU]M DIAMETER) #72449 ANCHORCHIPTM 400/1536 (1536 470.00 [**] [**] [**] [**] ANCHORS, 400[MU]M DIAMETER) SANDWICH TARGETS AND ACCESSORIES #25183 384 TARGET PLATE, STAINLESS 103.00 [**] [**] [**] [**] STEEL, GROUND #25184 384 TARGET PLATE, STAINLESS 157.00 [**] [**] [**] [**] STEEL, POLISHED # 24983 SCOUT MTP TARGET FRAME 377.00 [**] [**] [**] [**] # 26475 KEY 62.00 [**] [**] [**] [**] FOR SANDWICH TARGET ASSEMBLY PREPURIFIED MATRIX (500MG) 2,500.00 [**] [**] [**] [**] - ---------------------------------------------------------------------------------------------------------------------------- [**] [**] - ----------------------------------------------------------------------------------------------------------------------------
[**] Indicates that information has been omitted and filed separately with the Commission pursuant to a request for confidential treatment.
- ---------------------------------------------------------------------------------------------------------------------------- ESTIMATE OF REFLEX CONSUMABLES PER YEAR - ---------------------------------------------------------------------------------------------------------------------------- ANCHORCHIP TARGETS (SPOT TBD) 470.00 [**] [**] [**] [**] DETECTOR MCP CARTRIDGE 2,250.00 [**] [**] [**] [**] PREPURIFIED MATRIX (500MG) 2,500.00 [**] [**] [**] [**] MECHANICAL PUMP OIL 37.00 [**] [**] [**] [**] - ---------------------------------------------------------------------------------------------------------------------------- [**] [**] - ----------------------------------------------------------------------------------------------------------------------------
[**] Indicates that information has been omitted and filed separately with the Commission pursuant to a request for confidential treatment.
- ---------------------------------------------------------------------------------------------------------------------------- SUM: LIST [**] PRICE [**] IN% (CALC.) - ---------------------------------------------------------------------------------------------------------------------------- ESQUIRE 8,953,980.00 [**] [**] COMPUTER 194,000.00 [**] [**] CONSUMABLES ESTIMATE 456,395.00 [**] [**] - ---------------------------------------------------------------------------------------------------------------------------- ALL 9,604,375.00 [**] [**] - ----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------- ESQUIRE [**] TYPE IN % - -------------------------------------------- ESQUIRE INSTRUMENTATION [**] BRUKER MANUFACTURED ACC [**] EXTERNAL PARTS [**] - --------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------- ESQUIRE PRICE IN EURO # SUM LIST [**] IN% [**] PRICE - ---------------------------------------------------------------------------------------------------------------------------- ESQUIRE3000 166,000.00 [**] [**] [**] [**] 2ND YEAR WARRANTY 13,280.00 [**] [**] [**] [**] 3RD YEAR WARRANTY 13,280.00 [**] [**] [**] [**] ON-LINE NANOSPRAY 7,020.00 [**] [**] [**] [**] 21" MONITOR 1,330.00 [**] [**] [**] [**] - ---------------------------------------------------------------------------------------------------------------------------- [**] [**] - ----------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------- COMPUTER - ---------------------------------------------------------------------------------------------------------------------------- DECONVOLUTION 400.00 [**] [**] [**] [**] BIOTOOLS 2,950.00 [**] [**] [**] [**] OFFLINE DATAANALYSIS 3,700.00 [**] [**] [**] [**] MASCOT WORKSTATION 7,500.00 [**] [**] [**] [**] MASCOT LICENCE 2,750.00 [**] [**] [**] [**] - ---------------------------------------------------------------------------------------------------------------------------- [**] [**] - ----------------------------------------------------------------------------------------------------------------------------
SUMMARY OF INDIVIDUAL SYSTEM PRICING [**] DUE ON DELIVERY [**] DUE ON ACCEPTANCE NUMBER OF SYSTEMS ESQUIRE WITH ESI END PRICE [**] [**] [**] [**] ESQUIRE WITH ON-LINE NANOSPRAY END PRICE [**] [**] [**] [**] ESQUIRE WITH ESI + 21" MONITOR END PRICE [**] [**] [**] [**] ESQUIRE WITH ON-LINE NANOSPRAY + 21" MONITOR END PRICE [**] [**] [**] [**]
[**] Indicates that information has been omitted and filed separately with the Commission pursuant to a request for confidential treatment.
- ------------------------------------------------------------------------------------------------- ESTIMATE OF ESQUIRE3000 CONSUMABLES PER YEAR - ------------------------------------------------------------------------------------------------- GLASS CAPILLARY 2,150.00 [**] [**] [**] [**] ESI NEEDLES (SET OF 2 , #27921) 350.00 [**] [**] [**] [**] PACKAGE OF 15 NANOSPRAY NEEDLES 300.00 [**] [**] [**] [**] CHANNEL MULTIPLIER 1,300.00 [**] [**] [**] [**] CALIBRATION MIXTURE 171.00 [**] [**] [**] [**] MECHANICAL PUMP OIL 37.00 [**] [**] [**] [**] - ------------------------------------------------------------------------------------------------- [**] [**] - -------------------------------------------------------------------------------------------------
[**] Indicates that information has been omitted and filed separately with the Commission pursuant to a request for confidential treatment. EXHIBIT B GENERAL TERMS AND CONDITIONS GENERAL TERMS The following General Terms and Conditions are valid AND CONDITIONS only in connection with the Strategic Alliance Agreement between GeneProt and BDAL dated as of September 8, 2000. All terms capitalized, but not otherwise defined herein shall have the meanings set forth in the Agreement. PRICING TERMS AND Prices for all Products are F.O.B., Bremen Germany, CONDITIONS and do not include import duty, state, local, or any other taxes but include packing and insurance. GeneProt will supply with each purchase order a certificate indicating that the sale is either exempt from these taxes, or that the buyer will directly remit any applicable sales/use taxes. This offer includes equipment purchased under Quotation #08-11-2000-GPI-3, and the terms and conditions of this offer supersede Quotation #08-11-2000-GPI-3. Offer valid until 15 Sept. 2000 QUOTATION This offer number 0/317 includes equipment purchased #08-11-2000-GPI-3 under Quotation #08-11-2000-GPI-3 and the terms and conditions of this offer supersed those of Quotation #08-11-2000-GPI-2. PAYMENT TERMS Payment for Consumables are invoiced 100% on delivery. Payment for each System order must be made as follows: [**]% of the purchase price of such System shall be paid with GeneProt's initial order, [**]% thereof shall be paid within 30 days following delivery of a System and [**]% shall be made upon Acceptance of a System. (All payments made as of the date of this Agreement under Quotation #08-11-2000-GPI-3 shall be applied toward the purchase of future Systems.) Payments not made within the time period set forth above shall be assessed interest at a rate equal to the lesser of one and one-half percent (1.5%) per month or the maximum rate permitted by applicable law. [**] LEVEL GeneProt shall receive discounts off the price of a Product as listed on the Price List in effect in the country of delivery as of the date of any order placed under the Agreement. [**] shall be as follows: [**] for each Reflex MALDI-TOF system, [**] for each esquire3000 system, [**] for Consumables, and [**] for all service not covered by the warranty provisions of the Agreement or any other provision of the Agreement. All Systems purchased under this Agreement include 2 years of extended warranty for which GeneProt is paying at [**] the original price for each year of such extensions. [**] Indicates that information has been omitted and filed separately with the Commission pursuant to a request for confidential treatment. TRADE IN OPTION If GeneProt elects to purchase next generation products similar to the Systems from BDAL within the first three years after Acceptance of a System, GeneProt may trade-in such System and receive a credit against the purchase of a next generation product as follows: - Within [**] after Acceptance of a System, GeneProt would receive a credit equal to [**] of the System's original purchase price. - Within [**] after Acceptance of a System, GeneProt would receive a credit equal to [**] of the System's original purchase price. - Within [**] after Acceptance of a System, GeneProt would receive a credit equal to [**] of the System's original purchase price. CONFIGURATION OF [**] esquire3000 Systems with on-line NanoSpray PURCHASED ESQUIRE3000 [**] esquire3000 Systems with electrospray SYSTEMS (21"monitors for [**] esquire3000 Systems) 50 copies of BioTools 5 copies each of off-line DA and Deconvolution (printers for [**] esquire3000 Systems) CONFIGURATION OF [**] Reflex with linear & reflectron operation, MAP PURCHASED REFLEX II/8 with hood, MAPII/8 computer, off-line copies of MALDI-TOF SYSTEMS XMASS and BioTools, and assorted targets. Printers are to be included with [**] out of [**] of such Systems. WARRANTY The warranty described in the Agreement includes both parts and labor and covers the repair or replacement of all defective Products, subject to the provisions of this paragraph. BDAL shall be responsible for all expenses incurred in performing all warranty services, including costs related to shipping and hereby agrees that it shall provide replacement Products for use by GeneProt such that GeneProt shall not be without the use of a System for more than 30 days at any one time. For items supplied by not manufactured by BDAL, the warranty terms of the manufacturere will be transferred to GeneProt. The warranty does not cover consumables, pump oil, routine pump maintenance (e.g. cleaning, oil change, etc.), MALDI targets, digital media and solvents. BDAL shall provide one of its employees to GeneProt for the purpose of acting as a Site Manager upon completion of the installation and integration services to be performed by BDAL. The Site Manager shall be responsible for coordinating and completing all warranty service on the Products and shall generally [**] Indicates that information has been omitted and filed separately with the Commission pursuant to a request for confidential treatment. INSTALLATION BDAL shall perform all installation and integration services necessary to enable the Products to safely and effectively function in accordance with the direction of GeneProt. GeneProt shall be obligated to perform site preparation tasks as described in BDAL's Site Preparation guide attached to the Agreement as Exhibit ____. SERVICE Warranty service of the complete GeneProt proteomics factory shall be performed under the direction of a site manager hired and paid by BDAL who shall remain an employee of BDAL. Such site manager shall perform such service and shall remain on-site at GeneProt's proteomics factory during the Warranty Period. All back-up services will be provided by BDAL Switzerland. Non-warranty services will be charged as specified in BDAL's then current Price List minus the discount set forth herein. SOFTWARE/ APPLICATIONS BDAL shall provide the equivalent of four man years R&D AND SUPPORT of expert software, applications and research and development support from its subsidiary in Bremen, Germany (BDAL Germany) for the purpose of: 1. Automating and adapting GeneProt's proteomics factory to meet GeneProt's specifications. In this process, if GeneProt purchases either a Waters or Flux HPLC equipment instead of BDAL's standard Agilent 1100, BDAL shall incorporate control of such equipment into the integrated Proteomics factory within 90 days after receipt of notice of such purchase and delivery of the selected pump to BDAL's Bremen, Germany location. DELIVERY SCHEDULE BDAL shall deliver the Products purchased under the Agreement in accordance with the following schedule: 1. On or before [**] BDAL shall deliver [**] Reflex MALDI-TOF Systems, [**] esquire3000 Systems with 21" monitors and on-line Nanospray and [**] esquire3000 Systems with 21" monitors and electrospray. Installation at the customer's site will commence no later than the [**]. 2. On or before [**], BDAL shall deliver [**] Reflex MALDI-TOF System and [**] esquire3000 Systems with on-line NanoSpray. Installation of these machines at the customer's site will commence no later than the [**]. 3. On or before [**], BDAL shall deliver [**] Reflex MALDI-TOF Systems, [**] esquire3000 Systems with on-line Nanospray and [**] esquire3000 System with electrospray. Installation of these machines at the customer's site will commence no later than the [**]. 4. On or before [**], BDAL shall deliver [**] Reflex MALDI-TOF System, [**] esquire3000 Systems with on-line Nanospray and [**] esquire3000 System with electrospray. Installation of these machines at the customer's site will commence no later than the [**]. PRINCETON OPTION GeneProt shall have the option, exercisable within [**] after Acceptance of all System purchased under the Agreement for GeneProt's Geneva, Switzerland factory, to purchase Products in the same quantities and with the same terms and conditions (including, without limitation, discounts from the purchase price of such Products), as set forth in the Agreement. GeneProt may exercise this option by delivering written notice to BDAL of its intention at any time prior to the expiration of the option as described above. Upon receipt of such notice and a corresponding order of Products, BDAL covenants that it will use its best efforts to meet GeneProt's desired schedule for delivery and installation of such Products, but in any event BDAL shall deliver such Systems within [**] after receipt of such notice and order. LIABILITY 1. BDAL and BDAL Germany experssly disclaim responsibility for loss or damage caused by use of its goods other than in accordance with proper operating procedures. 2. To the extent that such exclusions are in compliance with the law, BDAL and BDAL Germany shall in no event be liable for incidential, consequential or resulting loss or damage of any kind, however caused. To the extent that such exclusion is in compliance with the law, BDAL and BDAL Germany's liability for damages shall not exceed the payment, if any received by BDAL and BDAL Germany for the product or service furnished or to be furnished as the case may be which is the subject to claim or dispute. The same applies to any claims of GeneProt for damages arising from delay or non performance from positive violation of claims, violation of duties during contract negotiations or tortious acts. [**] Indicates that information has been omitted and filed separately with the Commission pursuant to a request for confidential treatment. EXHIBIT C SOFTWARE/APPLICATION RESEARCH AND DEVELOPMENT SUPPORT 1. IMPLEMENTATION AND INTEGRATION. BDAL shall provide expert software, application and research and development support to GeneProt for its proteomics factory automation and adaptation to: integrate [**] into GeneProt's proteomics factory environment located in Geneva Switzerland as directed by GeneProt; optimize BDAL's [**] for optimized sensitivity and robust automation utilizing GeneProt's preferred protocols for first [**] and [**]; integrate the [**] and [**] data output, appropriately analyzed to GeneProt's preferred analysis protocols by [**], and use either [**] or GeneProt's preferred [**] search tool (at GeneProt's discretion) to create high-throughput protein identification from [**]; integrate either [**], if GeneProt selects either of these systems instead of the [**]. This integration will be performed within 90 days after receipt of notice of selection given by GeneProt and delivery of the selected [**] to BDAL's software center in Bremen, Germany. GeneProt shall obtain the necessary technical assistance from the pump manufacturer; and integrate [**] data analysis and interpretation operations as an [**] for geneprot's selected search engines and sequence databases. such a [**] and will play an important role in the protein data management. [**] Indicates information which has been omitted and filed separately with the Commission pursuant to a request for confidential treatment. EXHIBIT D PRICE LIST / DESCRIPTION OF PRODUCTS ESQUIRE 3000 ---------- HIGH-PERFORMANCE BENCHTOP HPLC/MS(n) SYSTEM [PHOTO-DESCRIPTION TO COME] EXHIBIT D-1 DESCRIPTION AND EUROPEAN PRICE LIST EXHIBIT D-2 TABLE OF CONTENTS 1. Introduction 4 2. esquire3000 Standard Pricing 6 3. esquire3000 Options 8 3.1. HARDWARE OPTIONS...................................... 8 3.2. SOFTWARE OPTIONS...................................... 10 4. Miscalleneous 11 5. General Terms and Conditions 12 5.1. WARRANTY.............................................. 12 5.2. TERMS AND CONDITIONS.................................. 12 5.3. PAYMENT TERMS......................................... 12 5.4. DELIVERY.............................................. 12 5.5. INSTALLATION.......................................... 12 5.6. SITE PREPARATION...................................... 12 6. Consumables Price List 13 EXHIBIT D-3 INTRODUCTION Bruker Daltonik's new esquire3000 provides a new analytical flexibility for the structural characterization and quantitation of complex mixtures in drug discovery, metabolic profiles, proteomics, combinatorial chemistry and other applications. This system offers the perfect combination of highest performance with intuitive software to simplify the setup and interpretation of HPLC/MS(n) and CE/MS(n) analyses. The esquire3000 is equipped with the successful Agilent electrospray ion source, which has proven to be robust and sensitive due to its orthogonal sprayer design. Technological innovation led to a new level of performance of Bruker Daltonik's ion trap MS and MSn analyzer. It now provides an unrivaled mass range of m/z 3000 with monoisotopic resolution and an equally unrivaled sensitivity in the low pg range. The intuitive software guarantees for optimized workflow. It features the unique SmartSuite(TM) for automated system optimization and integrates applications-oriented tools, e.g. for quantitation and protein analysis. Most prominent features are: - - Highest sensitivity of all LC-MS/MS instruments (sensitivity 20:1 S/N at 10 pg Reserpin Full Scan MS/MS) - - High mass resolution: 0.3 u FWHM in the m/z range of 50-3000, resulting in the isotopic resolution for up to (M+3H)(3+) and (M+4H)(4+) ion signals, at a scan speed of 1650 Da/s. - - Extended Mode with SpeedScan 27.000 Da/s at a mass range of m/z 200 - 6000 with 4u FWHM EXHIBIT D-4 - - Ion Charge Control (ICC) for automated regulation of the ion accumulation time to provide a wide dynamic range without overloading the trap. - - New SmartSuite -TM- Features: - SPS -TM- (Smart Parameter Setting) providing optimized parameter settings for user defined masses. - SmartCal -TM- Autocalibration/Autotune - SmartFrag -TM- Ramping during Fragmentation (for easy AutoMS/MS setup and Library Search) - EasyTune Page showing only the important parameters - STS -TM- (Smart Time Segment) Editor setup based on MS data - SmartRamp -TM- Parameter Ramping for Method development - - Fast scan speed: up to 13,000 Da/s at better than unit resolution for capturing more than 100 scans across a typical LC peak. - - Subsequent, multiple fragmentation (MS/MS) of analyte molecules up to MS(11) for structural elucidation. - - New On-Line Nanoelectrospray for capillary LC applications providing searchable results down to the femtomol range. - - Fast switching between positive and negative ionization - - Divert Valve Exhibit D-5 ESQUIRE3000 STANDARD PRICING
QTY DESCRIPTION PRICE - --- ---------------------------------------------------------------------- --------------- ESQUIRE3000 -TM- EURO 166,000.00 NEW ION TRAP LC/MS(N) DESIGNED TO ACCESS A NEW DIMENSION OF ANALYTICAL FLEXIBILITY AND VERSATILITY FOR STRUCTURAL CHARACTERIZATION AND QUANTITATION OF COMPLEX MIXTURES IN PROTEOMICS, DRUG DISCOVERY, METABOLIC PROFILES, COMBINATORIAL CHEMISTRY AND OTHER LIFE SCIENCE APPLICATIONS. THE BASIC SYSTEM CONSISTS OF: 1 COMPACT, BENCHTOP ENCLOSURE FOR MASS ANALYZER, ESI SOURCE, ELECTRONICS AND TURBOPUMPS WITH - 2 SOFTWARE SELECTABLE MASS RANGES - STANDARD mass range 50 -3000 u with three scan rates - NORMAL: 13,000 u/sec, 0.6 u resolution - ENHANCED: 5550 u/sec, 0.4 u FWHM for isotopic resolution of up to triply charged ions - MAXIMUM: 1650 u/sec, 0.3 u FWHM for charge state determination up to four charges - HIGH mass range: 200-6000 u at 27,000 Da/s scan rate with 4 u_FWHM - Same resolution across the full mass range in MS mode and MS(n) mode(n # 11) for each scan rate - Highest sensitivity of all ion traps (sensitivity 10 pg MS/MS 20:1 S/N) - Robust and sensitive Agilent orthogonal ESI source with fast switching power supply for positive/negative mode 1 ROUGH PUMP (please specify required voltage) INCL. 1 SET OF MANUALS AND REFERENCE CD-ROMS INCL. 1 SYRINGE PUMP (please specify required voltage) INCL. Exhibit D-6 1 ESQUIRE3000 DATA SYSTEM, CONSISTING OF: INCL. - HP KAYAK XA 7/500 SI1 with 500 MHz, 10 GB HD, 128 MB RAM, CD-ROM and CD-Writer - HP LASERJET 2100 (please specify required voltage) - HP 17" COLOR MONITOR HP 75 1 SOFTWARE PACKAGE ESQUIRE NT 4.0 INCL. - Unique SmartSuite TM software features for optimized workflow - Advanced data processing with automation capability - New QuantAnalysisTM quantitation package - LibrarySearch of MS/MS spectra with advanced matching algorithms CONSISTING OF: - BRUKER DALTONICS ESQUIRE NT 4.0 control software package including BRUKER DALTONICS POST PROCESSING SOFTWARE DA 2.0 WITH: - QuantAnalysisTM Module - LibrarySearchTM Module - Charge Deconvolution Module - AGILENT HPLC 2D CHEMSTATION VER A.07.0X - AGILENT HPLC CHEMSTATION SPECTRAL S/W 1 INSTALLATION INCL. 1 FAMILIARIZATION COURSE (UPON INSTALLATION) INCL.
Exhibit D-7
QTY DESCRIPTION PRICE - ------------------------------------------------------------------------------ BRUKER OFF-LINE NANOELECTROSPRAY (PART-# 26871) E 7,320.00 Accessory for off-line electrospray at nanoliter/min flow rates. Includes 100 coated needles, mount, positioning controls and video monitoring. BRUKER ON-LINE NANOELECTROSPRAY (PART-# 29079) E 7,020.00 Accessory for on-line nanoelectrospray for capillary LC applications (100-500 nl/min). Includes 20 needles (15mum inner diameter, for 200-500 nl/min) and microscope ---------------------------------------------------- NanoSPRAY was developed in collaboration with M. Mann and M. Wilm at the EMBL, and is exclusively licensed to Bruker for ion traps. Its ultra-narrow spray tip is loaded with 1 - 10 mul of sample. Just 2 muul of sample permit measurement times greater than 30 minutes to study the sample with MS, MS/MS and MS(n). ---------------------------------------------------- ADDITIONAL NANOELECTROSPRAY NEEDLES 15 MUUM (PACK OF 20) (PART-# 27364) E 240,00.00 AGILENT APCI SOURCE OPTION (PART-# 72685) E 9,500.00 Atmospheric pressure chemical ionization source includes APCI nebulizer and vaporizer, spray chamber, corona discharge needle and calibration sample. Easy switch-over between ESI and APCI without breaking vacuum. AGILENT 3D CAPILLARY ELECTROPHORESIS SYSTEM (PART-# G1602A) as per Consists of the Agilent 3D CE instrument, Agilent Agilent 3D-CE Chem-Station Software, HP Computer, HP country Laserprinter and OS for Computer price list AGILENT CE-ESI-MS SPRAYER KIT (PART-# G1607A) as per Agilent 3D CE-ESI-MS "Triple Layer Needle" Agilent sprayer kit for coupling of a CE-System to the country API/ESI Source of the esquire3000 price list AGILENT 3D CE CE-MS ADAPTER KIT as per Adapter Kit to connect the Agilent 3D CE System Agilent to a Mass Spectrometer. Necessary for use of the country CE with the esquire3000 price list Exhibit D-8 QTY DESCRIPTION PRICE - ------------------------------------------------------------------------------ AGILENT TECHNOLOGIES 1100 HPLC All as per Agilent country The Agilent 1100 HPLC system can be combined to price list customer's needs from the following set of subcomponents o 1100 binary pump G1312A (Bruker-Part-# 22086) o 1100 Diode-Array Detector (Bruker-Part-# 24106) o (w/o Flow Cell) G1314A with deuterium lamp o Standard Flow Cell for AGILENT 1100 DAD OPT021 (Bruker-Part-# 27520) o 1100 Vacuum Degasser G1322A (Bruker-Part-# 22088) o 1100 Automatic Sampler G1313A (Bruker-Part-# 16839) o 1100 Thermostatic Column Holder G1316A (Bruker-Part-# 23471) o OPTIONS: o 1100 Quaternary Pump G1354 A o 1100 Option for G 1312A with sealing rinse for use with high concentration salt solutions OPT 030 o 1100 Manual Sample Injector G1328A o 1100 Option for G1316A 4-way column switching OPT 055 o 1100 DAD with deuterium and tungsten lamp (w/o Flow cell) G1315A o 1100 Option 055 for G1315A Flow Cell o 1100 Control Module G 1323 A o ChemStation Additional License G2175AA BRUKER DALTONICS N(2) GENERATOR LC-MS-NGM-11 (PART-#26875) E 6,620.00 The nitrogen generator LC-MS-NGM 11 produces nitrogen continuously up to a max. purity of 99,5%. o prefiltration system to remove particles. o membrane based separation o no moving parts o LC-MS-NGM 11 does not need any electrical power Exhibit D-9 QTY DESCRIPTION PRICE - ------------------------------------------------------------------------------ BRUKER DALTONICS N(2) GENERATOR LC-MS-NGM-11 K (PART-#72461) E 10,000.00 Upon request, the Bruker LC-MS-NGM 11K model with a built-in low noise and oil-less air compressor for permanent use (less than 50 dbA) is available (indicate required voltage) HP P1100 21" MONITOR (PART-# 30313) E 1,330.00 Trinitron Tube, supports Ultra VGA (1024 X 768)60/75/85Hz, Ultra VGA 1600 (1600 x 1200)60/75/85Hz, Ultra VGA 2 (1280 x 1024)60/75/85 Hz SOFTWARE OPTIONS BIOTOOLS (PART-#28693) E 2,950.00 BioTools NT Based Analysis and Interpretation Package. Supports processed spectra and/or peak picking results from the esquire3000 ion trap system, FLEX(TM) III series of MALDI-TOF mass spectrometers, BioTOF(TM) orthogonal ESI-TOF system, and APEX(TM) II series of FTMS systems. o Internet library searches are fully integrated in the software using EMBL PeptideSearch and MASCOT (peptide fingerprint and MS/MS) Requires Windows NT (4.0 with Service pack 4, Microsoft Internet Explorer 4.0 or greater) PC with Pentium II CPU, minimum 300 MHz, graphic resolution 1024 * 768 pixel with 256 colors or better, 128 MBytes of RAM or better, 4 GBytes or larger hard disk (SCSI recommended), 3.5" Floppy Drive with 1.44 MB capacity, CD-ROM Drive (4x or greater), and Ethernet interface (Computer not included) GPMAW (32 BIT)(PART-# 21521) E 218.00 The standard Windows NT based protein mass analysis program by Peter Hojrup, Odense University. Designed for protein digest MS/MS analysis. Includes local sequence database searches for low throughput work. Import filters for esquire3000 peak lists and FLEX. Free Software upgrade via GPMAW Internet homepage
Exhibit D-10
QTY DESCRIPTION PRICE - --------------------------------------------------------------------------------------------- MASCOT (PART-#28795) E 5,625.00 Intranet version of the Internet search software from Matrix Science. The software enables OWL, NCBInr and dbEST protein sequence database searches using MS and MS/MS (PSD) data. - No interpretation - even partial - needed for MS/MS searches! - BATCH SEARCHES FROM COMPLETE (ESQUIRE 3000) LC-MS/MS RUNS ARE ALSO SUPPORTED. AND ARE AN INTEGRAL PART OF THE MS BIOTOOLS SOFTWARE. REQUIRES AN NT-WORKSTATION WITH SERVER SOFTWARE BRUKER DALTONICS DATAANALYSIS POST PROCESSING SOFTWARE PACKAGE DA 2.0 E 3,700.00 (PART-#72669) - Intuitive treeview-TM- for data-handling - Unified handling of profile spectra and mass spectra - full 32-bit support - easy-to-learn - easy-to-use BRUKER DALTONICS QUANTANALYSIS-TM- MODULE FOR DA 2.0 E 750.00 BRUKER DALTONICS LIBRARYSEARCH-TM- MODULE FOR DA 2.0 E 700.00 BRUKER DALTONICS CHARGE DECONVOLUTION MODULE FOR DA 2.0 E 400.00 AGILENT DECONVOLUTION/BIOANALYSIS (PEPTIDE TOOLS)(PART-#22190) E 7,250.00 Software package consisting of the Bruker DA deconvolution option and AGILENT Peptide Tools (G1981AA): AGILENT PEPTIDE TOOLS SOFTWARE PACKAGE W/0 DECONVOLUTION OPTION E 3,050.00 (PART-#20419) MISCELLANEOUS TRAINING COURSE E 1,950.00 Three day extended training course at the factory in Bremen (Price is per person and excludes travel and lodging, 8 hours training per day))
Exhibit D-11 GENERAL TERMS AND CONDITIONS WARRANTY One (1) year after acceptance, but not longer than 15 months after delivery. Warranty covers both parts and labor. For items supplied but not manufactured by Bruker, the warranty terms of the manufacturer will be transferred to the buyer. The warranty does not cover consumables, columns, capillaries, needles, routine pump maintenance (e.g. cleaning, oil change, etc.), digital media, solvents, etc. TERMS AND CONDITIONS All prices are quoted F.O.B. Bremen and do not include import duty, and do not include state, local or any other taxes. Buyer will supply with the purchase order a certificate that purchase is exempt from sales tax or that buyer will directly remit sales/use tax, if any. PAYMENT TERMS Irrevocable Letter of Credit with: 40% upon order 40% upon delivery* 20% upon demonstration of specification * If delivery of the system is delayed by request of the purchaser, then the amount due upon delivery will be considered payable on the quoted delivery date. DELIVERY Approximately 60 days ARO INSTALLATION Installation includes familiarization on-site by the installation engineer. Additional factory training is available as an option. Please contact Bruker for further details. SITE PREPARATION Please see the Site Preparation Document for details Exhibit D-12 CONSUMABLES PRICE LIST Please contact Bruker Daltonik GmbH, Bremen, Germany at +49-421-2205-0 for information on spare parts.
LIST-PRICE E CONSUMABLES MISCELLANEOUS Filter Nitrogen 21755 225,00 Vials pre-backed sample 1ml (100 pcs) 21756 12,00 Caps snap-on, teflon only (100 pcs) 21757 12,00 Microliter Syringe, 250ul 21232 45,00 Fill Port Assembly, 1/16" 18218 14,00 Tee Union, SS, 1/16", 0,020mm 21737 73,00 Septa Thermogreen LB-2, D=10mm (50 pcs) 47445 79,00 Fitting (10 pcs) 21150 24,00 Union 21151 38,00 Tubing, PEEK-; 1/16", 1,5m 80172 18,00 Rough Pump Oil, Inland 45 20221 - Rough Pump Oil, Ultragrade 19 (Can with 4liters) 49777 37,00 Pipette, 0.5ul - 5ul (200 pieces in a pack) 47008 43,00 CHEMICALS AND CLEANING TOOLS
Exhibit D-13 Reserpine 5ng/ul (AGILENT Part-#G2423A) 21792 136,00 Calibration Tune Mix standard mass range 18219(100ml) 171,00 (AGILENT Part-#G2431A) Calibration Tune Mix extended mass range 18220(100ml) 171,00 AGILENT Part-#G2421A) Calibration Tune Mix APCI (AGILENT Part-#G2422A) 27227 - Acetonitril Chromasolv (1000 ml) 44108 30,00 Water for Chromatography (1000 ml) 42111 9,00
Exhibit D-14
DESCRIPTION LIST-PRICE E CHEMICALS AND CLEANING TOOLS 2-Propanol Chromasolv (1000 ml) 21816 19,00 Cloths, clean, lint free, Kimwipes (1 box) 68343 3,00 Gloves, clean, lint free, Size 9 1/2 (1 box) 01213 6,00
Exhibit D-15 FLEX SERIES FULLY AUTOMATED MALDI-TOF MASS SPECTROMETERS FOR ROUTINE HIGH-PERFORMANCE HIGH-THROUGHPUT APPLICATIONS [PHOTO DESCRIPTION TO COME] IN PROTEOMICS, GENOMICS, PHARMACOGENOMICS, PROTEIN ANALYSIS, PEPTIDE & OLIGONUCLEOTIDE SEQUENCING, AND SYNTHETIC POLYMERS Exhibit D-16 DESCRIPTION AND EUROPEAN PRICE LIST Exhibit D-17 TABLE OF CONTENTS 3 INTRODUCTION 8 COMPLETE MALDI-TOF SYSTEMS, OPTIONS, AND PRICING 17 COMPUTER & SOFTWARE OPTIONS 20 SCOUT-TM- MTP AND SCOUT-TM- 100 MALDI TARGETS 23 TRAINING, SERVICE, AND MAINTENANCE 25 GENERAL TERMS & CONDITIONS
Exhibit D-18 FLEX SERIES INTRODUCTION Exhibit D-19 THE FLEX MALDI-TOF MASS SPECTROMETER PRODUCT LINE The FLEX-TM- series of MALDI-TOF mass spectrometers offers a full range of performance from the REFLEX-TM- III with the ultimate performance and flexibility, to the research grade high-throughput BIFLEX III and finishing with high performance and easy to use walk up bench-top OmniFLEX. Common to the entire line is intelligent automation with "fuzzy logic" based AutoXecute-TM- for problem solving in the analytical and bio-analytical lab-oratories with a wide variety of applications. Examples in Proteomics, Genomics, Pharmacogenomics, protein analysis, peptide and oligonucleotide sequencing, and synthetic polymer analysis are well documented in product notes, application notes and reprints of scientific literature available from Bruker Daltonics. All FLEX MALDI-TOF mass spectrometers offer the highest performance available in their price class. GRIDLESS ION SOURCES AND REFLECTRONS Bruker Daltonics pioneered the first commercial gridless two stage reflectron based TOF mass spectrometer almost two decades ago and was the first to apply MS/MS to MALDI-TOF MS for peptides with FAST (Fragmentation Analysis and Structural TOF) for PSD (Post Source Decay) measurements of metastable ions. With the introduction of PIE (pulsed ion extraction) Bruker added ISD (In-Source Decay) for sequencing even on "linear only" instruments. The gridless design of both the ion sources and reflectrons of the FLEX series of MALDI-TOF mass spectrometers eliminates the ion loss and scattering that occurs Exhibit D-20 with lower performance gridded systems to give both high mass accuracy and the highest sensitivity possible especially at higher molecular weights. SCOUT-TM- MTP AND SCOUT-TM- 100 SAMPLE INLETS BRUKER DALTONICS' REFLEX-TM- III AND BIFLEX-TM- III MALDI-TOF MS SYSTEMS OFFER THE INNOVATIVE SCOUT-TM- MTP AUTOMATED SAMPLE TARGET IN MICROTITRE FORMAT AS THE STANDARD INLET SYSTEM. WITH X150 MAGNIFICATION OPTICS, THE SCOUT MTP ALLOWS FOR DETAILED EXAMINATION OF THE SAMPLE SPOT. FOR HIGH THROUGHPUT, AUTOMATED MALDI-TOF WITH UNATTENDED ACQUISITION, THE COMBINATION OF THE SCOUT MTP MICROTITRE FORMAT WITH THE POWERFUL AUTOXECUTE-TM- SOFTWARE AND PRECISE X-Y POSITIONING WITH 4 MICRONS STEP-SIZE OFFERS UNRIVALLED REPRODUCIBILITY BETWEEN SAMPLE SPOTS. "FUZZY LOGIC" ALGORITHIMS OPTIMIZE FOR HIGHEST QUALITY DATA FOR UP TO 1,536 SAMPLES ON 1 TARGET. THE SCOUT MTP OFFERS BOTH THE LARGEST PHYSICAL TARGET AND THE LARGEST CAPAC-ITY IN THE INDUSTRY WHILE LEVERAGING EXISTING AUTOSAMPLER/ROBOT TECHNOLOGY BY USING AN IDENTICAL PATTERN FORMAT AND PHYSICAL DIMENSIONS AS A MICROTITRE PLATE. THE SCOUT MTP WITH THE MAP II OR MAPII/8 SAMPLE ROBOT (SEE BELOW) ARE IDEAL FOR HIGH VOLUME BATCH ANALYSIS IN LARGE INDUSTRIAL PRODUCT DEVELOPMENT PROGRAMS. In multi-user environments where several groups with different sample classes need a cost-effective easy to use bench-top system, the OmniFLEX-TM- with the SCOUT-TM- 100 inlet system is ideal as a walk up instrument. Based on the rugged and proven SCOUT 26 sample inlet, the SCOUT 100 offers different targets with up to 100 positions. When combined with AutoXecute (see below) the OmniFLEX with the SCOUT 100 is the first bench-top MALDI-TOF MS system worth buying to achieve high quality data from an economical instrument. Exhibit D-21 AUTOMATION The demand for high throughput automated sample preparation and analysis for a wide range of sample classes is rapidly increasing. This is addressed by Bruker with the SCOUT MTP, AutoXecute, and with the Bruker Daltonics MAP II and MAPII/8 (MALDI Auto Preparation) sample robots based on the popular Gilson 215 and Gilson Multiprobe robot, resp.. The robots of the MAP II series MAP II have racks that can each hold up to ten microtitre plates, as well as a variety of other sample formats including a wide variety of standard glass and plastic sample vials. This allows the Bruker user to prepare automatically a large number of samples easily and reproducibly in a batch mode directly on the MALDI target. For automated data acquisition, the AutoXecute acquisition interface includes "fuzzy logic" algorithms for fast automated optimization of the instrument for almost any sample class without operator intervention. This includes automatic optimization of proteins, peptides, oligonucleotides, carbohydrates and synthetic polymers samples with automatic processing, plotting and report generation. Using these automation features, it is not even necessary for the instrument operator to view the spectrum for many routine samples. SOFTWARE AND COMPUTER OPTIONS The Bruker Daltonics FLEX product line comes standard with the XACQ data acquisition including AutoXecute and the XMASS-TM- data processing package, running on industry standard workstations. For off-line processing and data inspection, XMASS is available in a processing-only Exhibit D-22 version (no spectrometer control or data acquisition capabilities) for Windows NT computer platforms. As the first Bruker Daltonics MALDI-TOF MS the OmniFLEX is fully operated on a Windows NT computer platform. The Bruker NT-based software package, MS BioTools-TM-, supports data analysis and interpretation of data generated from all Bruker Daltonics mass spectrometers used in life science systems or as analytical instruments. MS BioTools provides communication and file import/export for XMASS single spectra, FAST-TM- (post-source decay) spectra, LC/MS ion trap profile spectra, deconvoluted single charged profile spectra, GPMAW sequence files (unmodified amino acids only) and clipboard support for spectra and data. Processing functions include annotation of spectra using a given amino acid sequence, matching of experimental spectra with potential amino acid sequence candidate lists. In addition, MS BioTools interprets spectra and automatically generates sequence tags for Internet database searches using EMBL PeptideSearch. Other search engines include the MASCOT package which allows to search using not interpreted MS/MS spectra. Exhibit D-23 FLEX SERIES COMPLETE MALDI-TOF SYSTEMS, OPTIONS, AND PRICING EXHIBIT D-24 REFLEX-TM- III - THE ULTIMATE-PERFORMANCE MALDI TOF MS SYSTEM 1. TOF-100: REFLEX-TM- III MALDI TOF MS SYSTEM TIME-OF-FLIGHT MASS ANALYZER - 150 cm linear TOF analyzer for both positive and negative ions - Fast, high-sensitivity and high dynamic range gated MCP ion detector system - Ion flight path housing and vacuum system stand - Ultrastable power supplies for TOF analyzer, detector and ion source - Includes +25/-20 kV HV power supplies for ion acceleration GRIDLESS MALDI SOURCE WITH PULSED ION EXTRACTION (PIE-TM-) - Modular ion source housing - Valve between ion source and TOF analyzer - Ion lens system with matrix ion elimination system - Automatic vacuum lock for sample introduction with inlet vacuum pump - N2-LASER including variable power attenuator and UV optics - SCOUT-TM- MTP Microtitre Plate Source / Target with Observation Optics - Large area target with exact dimensions of microtitre plate - Precise X-Y positioning (4 micron step increments) - 2 exchangeable targets (384-position standard) - 1 adapter target for up to 12 inserts provided with 25 assorted inserts (10 position) - High resolution magnifying observation optics with display on 14" color monitor - Intuitive GUI for simple mouse controlled X-Y positioning PUMPING SYSTEM INCLUDING VACUUM MEASUREMENT AND CONTROL UNIT - 260 I/sec turbomolecular pump including fore-pump for the mass analyzer - 260 I/sec turbomolecular pump including fore-pump for the ion source DATA SYSTEM AND SOFTWARE - 2 GHz Digitizer standard - Sun SPARCUltra 5, 19" color monitor, 128 MB RAM, 4.3 GByte IDE disk, 1.44 MB floppy drive, CD-ROM drive, Ethernet connection for external networks - Mass spectrometry software for acquisition (XACQ-TM-), processing (XMASS-TM-), plotting, and analysis in a networked multi-user environment - AutoXecute-TM- with fuzzy-logic optimization for automated acquisition - Postscript printer - DAT tape drive for backup Exhibit D-25 SYSTEM LIST PRICE EURO 226,000.00
Exhibit D-26 REFLEX-TM- III OPTIONS MASS ANALYZER OPTIONS 2. TOF-105 ADDITION OF GRIDLESS ELECTROSTATIC ION REFLECTOR EURO 52,200.00 - Patented gridless two-stage ion reflectron for increased mass resolution and accuracy with PIE-TM- operation - Includes ion reflectron electronics - Includes special second high sensitivity fast 5 micron MCP detector and power supplies 3. TOF-110 FAST (FRAGMENTATION ANALYSIS AND STRUCTURAL TOF-MS) EURO 17,400.00 - Accessory for PSD (Post-Source Decay) Experiments - Independent reflector power supply with high-precision DACs - FAST software for calibration, pasting of segments, etc. - FAST-FILTER-TM- high-resolution parent ion preselector for true MS/MS - Reflector and 2nd detector (TOF-105) required 4. TOF-115 CID (COLLISION-INDUCED DISSOCIATION) ACCESSORY EURO 8,700.00 - Includes gas inlet valve/CID interface in source - Includes control software (operates with and requires FAST Accessory (TOF-110) 5. TOF-130 SUBSTITUTE HIMAS-TM- DETECTOR IN LIEU OF LINEAR EURO 10,440.00 MCP DETECTOR - ULTIMATE GAIN DETECTOR FOR HIGH M/Z SYNTHETIC POLYMER APPLICATIONS - Reduced time resolution at very low m/z - Very wide dynamic range for maximum ion handling capacity LASER OPTIONS 6. TOF-150 ND:YAG LASER (IN ADDITION TO N2-LASER) EURO 33,000.00 - Includes crystals for both 355 nm and 266 nm operation 7. TOF-155 IR LASER (IN ADDITION TO N2-LASER) EURO 65,250.00 - Includes set up for IR MALDI or UV MALDI - Includes all appropriate IR optics - IR Laser is an Erbium-YAG with 2.94 micron wavelength
Exhibit D-27 AUTOMATED SAMPLE PREPARATION OPTIONS 8. TOF-170 MAP II (MALDI Auto Preparation) Sample and EURO 20,800.00 Liquid Handler - Based on Gilson 215 autosampler with liquid handler and injector, customized for MALDI application with disposable tips - Racks available for a wide variety of sample vials, and 96 and 384 well plates - Fully computer controlled from Windows NT data station under MS Excel (not included), includes all control software and all user-interface software with Bruker MALDI applications software 9. TOF-171 MAP II/8 Sample and Liquid Handler EURO 45,950.00 - Based on Gilson Multiple Probe 215 autosampler, 8-channel liquid handler and injector, customized for MALDI application with disposable tips - Racks available for a wide variety of sample vials, and 96 and 384 well plates - Fully computer controlled from Windows NT data station under MS Excel (not included), includes all control software and all user-interface software with Bruker MALDI applications software - Higher performance than MAP II due to 8 channel operation 10. TOF-175 HOOD FOR MAP II ROBOT EURO 4,590.00
SOFTWARE AND COMPUTER OPTIONS (PLEASE REFER TO PAGE 17) Exhibit D-28 BIFLEX (TM) III RESEARCH-GRADE MALDI-TOF MS SYSTEM 11. TOF-200: BIFLEX (TM) III MALDI-TOF MS SYSTEM TIME-OF-FLIGHT MASS ANALYZER - 125 cm linear TOF analyzer for both positive and negative ions - High sensitivity fast MCP detector system with detector housing - Ion flight path housing - Integrated vacuum system, electronics and computer desk - Ultra-Stable power supplies for TOF analyzer, detector and ion source GRIDLESS MALDI SOURCE WITH PULSED ION EXTRACTION (PIE (TM)) - Ion source and ion lens system - Automatic vacuum lock for sample introduction with inlet vacuum pump - N2-LASER including variable power attenuator and UV optics - SCOUT (TM) MTP Microtitre Plate Source/Target with Observation Optics - Large area target (12cm x 8cm) with exact dimensions of microtitre plate - Precise X-Y positioning (4 micron step increments) - 2 exchangeable targets (384-position standard) - 1 adapter target for up to 12 inserts provided with 25 assorted inserts (10 position) - High resolution magnifying observation optics with display on 14" color monitor - Intuitive GUI for simple mouse controlled X-Y positioning PUMPING SYSTEM INCLUDING VACUUM MEASUREMENT AND CONTROL UNIT - 260 I/sec turbomolecular pump including fore-pump - Vacuum measurement system and control unit DATA SYSTEM AND SOFTWARE - 2 GHz Digitizer - Sun SPARCUltra 5, 19" color monitor, 128MB RAM, 4.3 GByte IDE disk, 1.44 MB floppy drive, CD-ROM drive, Ethernet connection for external networks - Mass spectrometry software for acquisition (XACQ (TM)), processing (XMASS (TM)), plotting, and analysis in a networked multi-user environment - AutoXecute with fuzzy-logic optimization for automated acquisition - Postscript printer - DAT tape drive for backup System List Price E 172,250.00 Exhibit D-29 BIFLEX (TM) III OPTIONS MASS ANALYZER OPTIONS 12. TOF-205 ADDITION OF GRIDLESS ELECTROSTATIC ION REFLECTOR FOR E 43,500.00 BIFLEX (TM) III - Gridless ion reflectron for increased mass resolution and accuracy with PIE (TM) operation - Includes ion reflectron electronics - Includes second high sensitivity fast MCP detector and power supplies 13. TOF-210 FAST (FRAGMENTATION ANALYSIS AND STRUCTURAL TOF-MS) E 17,400.00 - Accessory for PSD (Post-Source Decay) Experiments - Independent reflector power supply with high-precision DACs - FAST software for calibration, pasting of segments, etc. - FAST-FILTER (TM) high-resolution parent ion preselector for true MS/MS - Reflector and 2nd detector (TOF-205) required 14. TOF-215 CID (COLLISION-INDUCED DISSOCIATION) ACCESSORY E 8,700.00 - Includes gas inlet valve/CID interface in source - Includes control software (operates with and requires FAST Accessory (TOF-210) 15. TOF-230 SUBSTITUTE HIMAS (TM) DETECTOR IN LIEU OF LINEAR E 10,440.00 MCP DETECTOR - Ultimate gain detector for high m/z synthetic polymer applications - Reduced time resolution at very low m/z - Very wide dynamic range for maximum ion handling capacity Exhibit D-30 AUTOMATED SAMPLE PREPARATION OPTIONS 16. TOF-170 MAP II (MALDI Auto Preparation) Sample and Liquid E 20,800.00 Handler - Based on Gilson 215 autosampler with liquid handler and injector, customized for MALDI application with disposable tips - Racks available for a wide variety of sample vials, and 96 and 384 well plates - Fully computer controlled from Windows NT data station under MS Excel (not included), includes all control software and all user-interface software with Bruker MALDI applications software 17. TOF-171 MAP II/8 Sample and Liquid Handler E 45,950.00 - Based on Gilson Multiple Probe 215 autosampler, 8-channel liquid handler and injector, customized for MALDI application with disposable tips - Racks available for a wide variety of sample vials, and 96 and 384 well plates - Fully computer controlled from Windows NT data station under MS Excel (not included), includes all control software and all user-interface software with Bruker MALDI applications software - Higher performance than MAP II due to 8 channel operation 18. TOF-175 HOOD FOR MAP II ROBOT E 4,590.00 SOFTWARE AND COMPUTER OPTIONS (PLEASE REFER TO PAGE 17) Exhibit D-31 OmniFLEX(TM) BENCH-TOP MALDI TOF MS 19. TOF - 500 OmniFLEX(TM) BENCH-TOP MALDI TOF MS LINEAR TIME-OF-FLIGHT MASS ANALYZER - 120 cm linear TOF analyzer - Positive and negative ion detection - High sensitivity fast MCP detector system with detector housing - Integrated vacuum system and electronics with compact Bench-Top footprint GRIDLESS MALDI SOURCE WITH PULSED ION EXTRACTION (PIE(TM)) - SCOUT(TM) 100 X-Y stage ion source with 100-position target and magnifying observation optics - Gridless design for maximum sensitivity - Precise X-Y positioning of sample allowing access to all target area - Easy to use GUI for simple mouse control of system - Automatic vacuum lock for sample target introduction - Computer-controlled UV LASER (N(2) @ 337nm) - 4 exchangeable targets (2 x 100 position, 2 x 49 position) PUMPING SYSTEM INCLUDING VACUUM MEASUREMENT AND CONTROL UNIT - 70 I/sec turbomolecular pump including fore-pump - Vacuum measurement system and control unit DATA SYSTEM AND SOFTWARE - 1 GHz 8-bit Digitizer - Windows-NT workstation: 19" color monitor, 256MB RAM, >8 GByte hard disk, 1.44 MByte floppy drive, CDR drive for data archival, Ethernet connection for external networks - Video camera capture card for on-screen display of target spot - Mass spectrometry software for data acquisition (NT-Acquisition), processing (XMASS-NT(TM)), plotting, and analysis in a networked multi-user environment - Laser printer for data output SYSTEM LIST PRICE E 130,000.00
Exhibit D-32 OmniFLEX(TM) OPTIONS 20. TOF - 505 HIGH RESOLUTION /PSD OPTION FOR OmniFLEX(TM) E 50,000.00 - Addition of Gridless Electrostatic Ion Reflectron and control electronics - Includes second detector with high speed dual MCP technology - FAST(TM) Post Source Decay accessory with pre-cursor ion selection device for structural analysis. Automatic PSD pasting/calibration capability - Includes all relevant control software, hardware and power supplies SOFTWARE AND COMPUTER OPTIONS (PLEASE REFER TO PAGE 17)
Exhibit D-33 FLEX SERIES COMPUTER & SOFTWARE OPTIONS Exhibit D-34 COMPUTER & SOFTWARE OPTIONS COMPUTER OPTIONS 21. TOF-400 SUBSTITUTE 19" COLOR MONITOR FOR 17" COLOR MONITOR E 1,700.00 22. TOF-410 SUBSTITUTE MO DRIVE IN LIEU OF DAT TAPE FOR BACKUP E 1,000.00 - For very fast data access 23. TOF-415 HEWLETT PACKARD COLOR LASER PRINTER E 5,250.00 - HP Laser Jet 4200 DN Color Postscript laser printer SOFTWARE OPTIONS 24. TOF-440 ADDITIONAL LICENSE FOR XMASS, UNIX VERSION E 3,100.00 - License to run XMASS on one additional SGI or SUN UNIX workstation, for offline data processing, does not include installation. 25. TOF-445 ADDITIONAL LICENSE FOR XMASS, NT VERSION E 3,100.00 - License to run XMASS on one additional NT workstation, for offline data processing, does not include installation. 26. TOF-450 MS BIOTOOLS NT BASED ANALYSIS AND INTERPRETATION PACKAGE E 2,950.00 - Supports processed spectra and/or peak picking results from FLEX(TM)III series of MALDI-TOF mass spectrometers, BioTOF(TM) orthogonal ESI-TOF system, ESQUIRE(TM)-LC ESI ion trap system, and APEX(TM)II series of FTMS systems. - Communication and File Import/Export of XMASS spectra, FAST(TM) (post source decay) spectra, LC ion trap profile spectra from Bruker/HP ESQUIRE-LC systems, deconvoluted single charged profile spectra, GPMAW Sequence Files (unmodified amino acids only), and clipboard support for spectra and data - Annotation of spectra and sequence data to visualize and score the match between MS/MS spectra and the sequence. - Automatic generation of sequence tags for database searches - Internet library searches are fully integrated in the software using EMBL PeptideSearch and MASCOT (peptide fingerprint and MS/MS) - Requires Windows NT (4.0 with Service pack 3, Microsoft Internet Explorer 4.0 or greater) PC with Pentium II CPU, minimum 300 MHz, graphic resolution 1024 * 768 pixel with 256 colors or better, 128 MBytes of RAM or better, 4 GBytes or larger hard disk (SCSI recommended), 3.5" Floppy Drive with 1.44 MB capacity, CD-ROM Drive (4x or greater), and Ethernet interface (Computer not included)
Exhibit D-35 SOFTWARE OPTIONS (CONT.) 27. TOF-455 GPMAW E 216.00 The Standard in Protein MS, NT based Version Protein mass analysis program from Peter Hojrup, Odense University. Designed for protein digest MS/MS analysis. Includes local sequence database searches for low throughput work. Import filters for FLEX and ESQUIRE(TM) LC peak lists. Software upgrade free via GPMAW Internet homepage. 28. TOF-460 MASCOT E 5,625.00 Intranet version of the Internet search software. From Matrix Science. The software enables OWL, NCBlnr and dbEST protein sequence database searches using MS and MS/MS searches! Also batch searches from complete LC-MS/MS runs (ESQUIRE) are supported. Searches are supported under AutoXecute and XMASS and are an integral part of the MS BioTools software. (e.g., Personal Web Server from Microsoft, free). Single Processor License. 29. TOF-461 MASCOT E 11,250.00 Double Processor License. 30. TOF-462 MASCOT E 22,500.00 Quadruple Processor License.
Exhibit D-36 FLEX SERIES SCOUT-TM- MTP AND SCOUT-TM- 100 MALDI TARGETS Exhibit D-37 SCOUT-TM- MTP MALDI TARGETS ONE-PIECE ALUMINUM TARGETS 31. #26755 384 TARGET E 254.00 - With anti-corrosive coating, ground 32. #26993 384 TARGET E 283.00 - With Gold coating, ground ANCHORCHIP-TM- TARGET PLATES To be mounted on Frame (#24983) with Key (#26475) 33. #72226 ANCHORCHIP-TM- 200/384 (384 ANCHORS, 200-mu-m DIAMETER) E 414.00 34. #72227 ANCHORCHIP-TM- 400/384 (384 ANCHORS, 400-mu-m DIAMETER) E 414.00 35. #72228 ANCHORCHIP-TM- 600/384 (384 ANCHORS, 600-mu-m DIAMETER) 36. #72229 ANCHORCHIP-TM- 800/384 (384 ANCHORS, 800-mu-m DIAMETER) 37. #29414 ANCHORCHIP-TM- VAR/384 E 414.00 - 384 Anchors, four different Anchor Diameter: 96x200-mu-m, 96x400-mu-m, 96x600-mu-m, 96x800-mu-m 38. #72448 ANCHORCHIP-TM- 200/1536 (1536 ANCHORS, 200-mu-m DIAMETER) E 470.00 39. #72449 ANCHORCHIP-TM- 400/1536 (1536 ANCHORS, 400-mu-m DIAMETER) E 470.00 SANDWICH TARGETS AND ACCESSORIES 40. #25183 384 TARGET PLATE, STAINLESS STEEL, GROUND E 103.00 41. #25185 864 TARGET PLATE, STAINLESS STEEL, GROUND E 157.00 42. #25184 384 TARGET PLATE, STAINLESS STEEL, POLISHED E 157.00 43. #26983 384 TARGET PLATE, GLASS, GROUND E 377.00 - With electrical conductivity coating, ultra flat
Exhibit D-38 Exhibit D-39 SCOUT-TM- MTP MALDI TARGETS (Cont.) 44. #24983 SCOUT MTP TARGET FRAME E 377.00 45. #26475 KEY E 62.00 - For sandwich target assembly SPECIAL TARGETS 46. #24996 MULTIPROBE ADAPTER TARGET E 560.00 47. #26762 PEBio ADAPTER TARGET E 412.00
SCOUT-TM- MALDI TARGETS 48. 100-POSITION TARGET (REF: A3315) E 200.00 49. 49-POSITION TARGET (REF: A3316) E 200.00
Exhibit D-40 FLEX SERIES TRAINING, SERVICE, AND MAINTENANCE Exhibit D-41 TRAINING, SERVICE, AND MAINTENANCE 50. FACTORY TRAINING COURSE E 1,950.00 - 3 day course at the factory - Includes instrument control, data acquisition and processing - Includes sample preparation and application-specific training - Price is per person and excludes all travel & lodging expenses 51. SERVICE & MAINTENANCE CONTRACTS E variable are available on request. Please ask at your local Bruker Daltonics office.
Exhibit D-42 FLEX SERIES GENERAL TERMS & CONDITIONS Exhibit D-43 GENERAL TERMS AND CONDITIONS WARRANTY TERMS One (1) year after acceptance, but not longer than 15 months after delivery. Warranty covers both parts and labor. For items supplied but not manufactured by Bruker, the warranty terms of the manufacturer will be transferred to the buyer. The warranty does not cover consumables, columns, capillaries, needles, routine pump maintenance (e.g. cleaning, oil change, etc.), digital media, solvents, etc. TERMS AND CONDITIONS All prices are quoted F.O.B. Bremen, Germany, and do not include import duty, and do not include state, local or any other taxes. Buyer will supply with the purchase order a certificate that purchase is exempt from sales tax or that buyer will directly remit sales/use tax, if any. PAYMENT TERMS Irrevocable Letter of Credit with: 40% upon order 40% upon delivery* 20% upon demonstration of specification Exhibit D-44 *If delivery of the system is delayed by request of the purchaser, then the amount due upon delivery will be considered payable on the quoted delivery date. Exhibit D-45 DELIVERY Approximately 60, max. 90 days ARO INSTALLATION Installation includes familiarization on-site by the installation engineer. Additional factory training is available as an option. Please contact Bruker for further details. SITE PREPARATION Site Preparation Document for details will be disseminated timely enough by your local Bruker Daltonics office. Exhibit D-46 [GRAPHIC DESCRIPTION TO COME] INTRODUCTION Dear Customer, as you will certainly understand, it is impossible for us to visit future installation sites in order to make sure that everything is perfectly prepared for the installation of your new instrument. So we have to put this task into our customer's hands. However, with this document in hand and some telephone numbers as a backup, the site preparation for your new esquire3000(TM) should not be a problem. Please follow the directions given in this manual and make sure, that the installation site complies with your local laws, regulations, codes and ordinances with regard to electrical and mechanical installations, building safety and use of hazardous materials/chemicals. In order to schedule the installation as flexible as possible, please use the enclosed form in the appendix of this document for your fax reply to the BRUKER Daltonics Service Team. This fax does also confirm the preparation of the installation site. Note, that it is not possible for us to schedule your installation prior to the receipt of your reply fax. If there are any questions related to the site preparation for your new esquire3000(TM), please do not hesitate to contact us by phone or e-mail. In appreciation of your cooperation, Your BRUKER Daltonics Service Team Page 1 of 8 [GRAPHIC] Read these instructions below before all continuos actions: PURPOSE OF PROCEDURE To ensure that the installation site is properly evaluated and prepared with the appropriate utilities, consumables and supplies for the successful installation of the esquire3000(TM) system. CUSTOMER RESPONSIBILITIES Customers should ensure those all-necessary operating supplies, consumables and usage dependent items such as columns, vials, syringes and solvents required for the successful installation of instruments and systems are available. Installation sites should be prepared in accordance with the following specifications. IMPORTANT INFORMATION If you have problems in providing any of the following, please contact your local BRUKER office for assistance. Assistance with user specific applications may be provided but should be contracted separately. Users of the instrument should be present throughout the installation and familiarization otherwise important operational, maintenance and safety information may be missed. RESPONSIBILITIES OF THE LOCAL BRUKER OFFICE The local BRUKER office will contact you to determine the required power cord and national plug appropriate for your country and site. Please look up the appendix for more details. PROCEDURE CHECKLIST RECEIVING THE INSTRUMENT /X/ Examine the shipping container for any obvious external damage after the receipt. In the case of an visible damage, make a note on the freight bill: Visible damage - Subject to inspection and test. Do not open the shipping container unless a BRUKER representative is present - - opening of the container without authorized persons will void the receiving warranty of the instrument: As part of the complete installation our service engineers will unpack the instrument and set it up in customers laboratory. Up to begin of the installation the shipping container should be stored in a closed area - do not leave them in the open air. Make yourself sure about the accessibility of the appropriate areas: All doors, staircases, floors and elevators must be suitable to the weight and seize of the shipping container. After installation of the instrument the shipping container pass into customer hands and should not be returned. [GRAPHIC] ESQUIRE3000(TM) MAINFRAME /X/ LOCATING THE INSTRUMENT Dimensions, Weight and Space WEIGHT: 84 kg/185 lb (without packing) 108 kg/238 lb (with packing) LENGTH: 754 mm 29.68 in WIDTH: 696 mm 27.4 in HEIGHT: 552 mm 21.7 in PACKAGING: 840 mm x 840 mm x 760 mm 33.1 in x 33.1 in x 29.9 in
The installation site for the esquire3000(TM) must provide sufficient bench space for the optional AGLILENT HPLC (1100 series) or other HPLC systems, Personal Computer, monitor, printer and other accessories. Benches must be sturdy enough to support the weight of all considered desk equipment. In addition, there must sufficient space around the system for ventilation and Page 2 of 8 maintenance access - at least 300 mm (12 in) to the left and front side and at least 50 mm (12 in) behind the esquire3000(TM) must kept clear. Data system size and weight depends on the components included in the data system. Reserve at least 1000 mm (39in) of bench space for the data system. Typical weights are 34 kg (75 lb) for the data system and 100 kg (220 lb) for the AGILENT LC. The rough pump as stand alone equipment can be located on the bench, better on the floor to have a vibration decoupling. The pump must be close enough to the esquire3000(TM), because they are connected by a stiff hose. THe available length of the tube is dependent on the orientation of the instrument - the maximally length is 1.5 m. The esquire3000(TM) must also be connected to the drain bottle, which must be attached underneath the mass spectrometer. [GRAPHIC] ENVIRONMENTAL CONDITION REQUIREMENTS /X/ Environmental conditioning considerations include temperature, humidity, airborne dust and exhaust venting. The esquire3000(TM) is specified for operation under following conditions: - Operating Temperature: 13 to 35DEG.C (55 to 95DEG.F) - Operating Humidity: 15% to 95% non-condensing @ 35DEG.C Note that the guaranteed analytical specifications will be met only within the temperature range of 21DEG. C +/- 3DEG.C (70DEG.F +/- 6DEG.F). Regardless the existing room temperature the temperature variations shall be < 3DEG.C/hr. [GRAPHIC] The esquire3000(TM) dissipates up to 2000 Watts (6800 BTU/hr). The data system and additional equipment also contribute significantly to the cooling load although the exact amount depend on the configuration. [GRAPHIC] ELECTRICAL AND POWER SPECIFICATION /X/ The customer is responsible for providing appropriate electrical power and power outlets for all system components. The esquire3000(TM) includes a wide-range input that can operate between 208 to 240 VAC +/- 10%, 50/60 Hz +/- 3% without any configuration. The terminal connection of the power socket is customers responsibility: The esquire3000(TM) can be powered either with dual phase voltage (208 VAC in North America e.g.) or single phase voltage (230 VAC in Europe e.g.). The current cut-out device should not have a protection less than 10 ampere. Note that the correct grounding of the electrical installation must be guaranteed by the customer: It is inadmissible to use the neutral wire as safety ground. The ground wire should be an isolated ground, carrying zero current except in the case of a fault. Interruption of the protective conductor can cause a shock hazard for the user and can damage the instrument. Page 3 of 8 The single rough pump draws its power from the esquire3000-TM-. However a different pump version is delivered depending on the mains voltage in your country, which affects on the efficiency of the pump. The other low power equipment like the data system also includes a full-range power supply, or a voltage selector in few cases. Please refer to the corresponding instruction manuals. ADDITIONAL CONSIDERATIONS o Plan extra power capacity for additional equipment. o Every equipment, like the esquire3000-TM- and the data system, should have an own separate circuit with a particular breaker. o If your mains voltage is unstable use an uninterruptable power supply (UPS). o Electromagnetic interferences, like NMRs, celluar phones and radio transmitters may have a bad effect on system performance. o It is recommended to install an emergency stop to interrupt the electric circuits and other systems in a emergency case or for maintenance. LABORATORY GAS SUPPLY REQUIREMENTS /X/ NITROGEN GAS REQUIREMENTS The specified performance of the esquire3000-TM- contingent on a constant, large supply of nitrogen for drying and nebulizing gas. The nitrogen consumption come to 5 to 15 sl/min in operation (typical 8 to 10 sl/min) and 3 to 4 sl/min in standby. Due to this large quantity of nitrogen required we recommend following easy ways out: o NITROGEN GENERATOR, which works as gas separator. The only requirement is a clean compressed air source with a operating range of 80 to 100 PSI (5 to 7 bar) and a flow rate of at least 10 l/min @ 6 bar. No additional mains voltage connections are necessary for this solution. o LIQUID NITROGEN DEWAR FLASK (LESS THAN 160 l), which generates a pressure of 80 to 100 PSI (5 to 7 bar). o Multiple high pressure NITROGEN CYLINDERS configuration, Quality 5.0 (99.999 % purity), with a minimum demand of 2 cylinders with coupled outputs. Single nitrogen cylinders are NOT recommended. NITROGEN PURITY The nitrogen gas must be free of contaminants in dependence on the source of the nitrogen. Reason for this are the different types of contaminants usual to the different nitrogen sources as listed above: Bottled nitrogen for example have a tendency to be contaminated with hydrocarbons, which can be the reason for a widely deviation to BRUKER's specified performance. Note, if the purity of the bottling is less than 99.999 % even an optional available gas purifier can be unable to remove all of the hydrocarbon contaminants. On the other hand is oxygen the main contaminant which appears with the Page 4 of 8 use of a nitrogen generator. Oxygen has less influence on the performance degree, in lower concentrations even a supportive role. Therefore the purity specification for nitrogen separated by generators can be less than the one for bottled nitrogen. HELIUM GAS REQUIREMENTS To ensure the best system's performance, please follow these characteristics: o Helium purity with an Ultra High Percentage (UHP) grade of 99.996 % minimum (Quality 4.6). o Regulator capable of delivering helium in a range of 50 PSI (3.5 bar) to 150 PSI (10.3 bar) maximum. We recommend a helium pressure of 65 PSI (4.5 bar) to 80 PSI (5.6 bar) for the instrument. o The helium consumption amounts to LESS THAN 5sccm/min. ADDITIONAL CONSIDERATIONS To satisfy the prior preparation of the site before installation date, the customer must ensure the following user connections of helium and nitrogen gas supply: o Helium: SWAGELOK male connection, 3 mm, metric thread, [3 m tube (10 ft) will be supplied with instrument]. o Nitrogen: SWAGELOK male connection for BRUKER's 6 mm Teflon tube, metric thread, [3 m tube (10 ft) will be supplied with instrument]. Ensure that an appropriate pressure control regulator is available - the regulator must be able to supply gas in the above specified pressure range: Nitrogen generators do not require an (external) regulator , because they have built-in regulators. A dewar of liquid nitrogen typically requires a single- stage regulator (see manufacturers technical description). If your are equipped with nitrogen from a house installation the regulator can usually be a single-stage one, if the supply pressure is higher than the above specified one. In comparison a high pressure nitrogen cylinder configuration requires a dual-stage regulator. EXHAUST VENTING REQUIREMENTS /X/ Exhaust venting is required for user safety. Health hazards include chemical toxicity of solvents, samples and buffers used, as well as pump fluid vapor and potential biohazards of aerosolized samples. Most of the solvent and sample are aerosolized and vented directly through the source exhaust. Due to this the source exhaust (via the drain bottle) and the rough pump exhaust must be vented externally to the building and not recirculated by the environmental control system. The exhaust (environmental) system must be designed and controlled as directed in conformance with all local laws (codes, ordinances and regulations). Page 5 of 8 Both exhaust sources must be vented separately to prevent traces of rough pump oil from entering the source when drying gas is not flowing. The sum of exhaust is up to 20 l/min and continuous as the instrument is on. The exhaust system must have no backpressure at 20 l/min - ideally both exhaust vents should be at or slightly below atmospheric pressure (subpressure). If a subpressure is not available, the length of the tubing from rough pump to the vent and from the drain bottle to the vent should each not exceed 4600 mm (15 ft). o DIVERT VALVE (to drain bottle) Location: Source side / left side of instrument, small tube Connection to drain bottle: 8 mm (5/16") O plastic tubing + prepared hose connection Capacity: 1 to 2 l/min o SPRAY CHAMBER EXHAUST (to drain bottle) Location: Source side / left side of instrument, big tube Connection to drain bottle: 26 mm (1") O plastic tubing Suggested tubing to exhaust: 13 mm (1/2") O plastic tubing (Tygon) Capacity: up to 15 l/min o ROUGH PUMP EXHAUST Location: Outlet mist filter of the rough pump Suggested tubing to exhaust: 13 mm (1/2") O plastic tubing (Tygon) Capacity: 1 to 2 l/min Connection to ventilation system shall be direct to building exterior or to clean fume hod to prevent possible bay flow of contaminants - loss of nitrogen gas may occur due to this. SOLVENTS AND SUPPLIES /X/ The quality of the solvents and consumables greatly effects the ultimate performance of LC/MS systems. Many solvents and supplies suitable for typical LC applications have been found to be unacceptable for LC/MS applications. This is particularly true for full scan MS applications. Contamination issues should not be underestimated. Good references are: o BUFFERS, ACIDS, BASES: High quality e.g. suprapur small packs / packages o SOLVENTS: HPLC grade o WATER: HPLC grade or from ultrapure water systems Please consult the BRUKER office for detailed informations. Page 6 of 8 TECHNICAL ASSISTANCE If you need any assistance please call or write to BRUKER Daltonik GmbH Fahrenheitstrasse 4 28359 Bremen Germany Phone : ++49-(0)421-2205-200 Sales Department ++49-(0)421-2205-420 Service Department Fax : ++49-(0)421-2205-103 Sales Department ++49-(0)421-2205-106 Service Department E-mail : sales@bdal.de eqservice@bdal.de Internet : www.bruker-daltonik.de Page 7 of 8 APPENDIX /X/ Dear customer, for the correct and fast installation of the new esquire3000-TM- at your site we need your confirmation of the realized site preparation in conformance with the handed over Site Preparation Specification document. Accompanying to the site preparation the local BRUKER office will contact you to determine the required power cord and national plug appropriate for your country and site. According to your order you will need 5 or more low power cables (computer, monitor, printer, syringe pump, hub etc.) with your national, power appropriated and grounded plug and 1 IEC 60320 C13 connector (Picture 1) and one power cable with a IEC 60320 C19 connector (Picture 2) on the instrument side. [PHOTO-DESCRIPTION TO COME] Picture 1 national connector to power supply Type C13 V EN 60320/C13 max.10A Picture 2 national connector to power supply Type C19 EN 60320/C19 max.16A FAX REPLY TO BRUKER SERVICE DEPARTMENT: Hereby I/we verify that all of the above site preparations criteria have been fulfilled. - ---------------------------------- Company/Institute - ---------------------------------- ----------------------------------- Address Postal Code, City - ---------------------------------- ----------------------------------- Name Job Position - ---------------------------------- ----------------------------------- Telephone Fax - ---------------------------------- E-mail - ----------------------------------- ----------------------------------- City, Date Signature/Stamp PLEASE SEND THE STATEMENT TO: ----------------------------------- Stamp Page 8 of 8 The REFLEX-TM- dissipates up to 1400 Watts (4777 BTU/hr). The data system and additional equipment also contribute significantly to the cooling load although the exact amount depend on the configuration. The heat produced in the spectrometer is blown out of the system through a 100 mm O hole - please look up the Exhaust Venting Requirements for more details. ELECTRICAL AND POWER SPECIFICATION /X/ The customer is responsible for providing appropriate electrical power and power outlets for all system components: The REFLEX-TM- instrument needs a three-phase high power connection at your site with a CEE socket (IEC 60309). Ensure at least one CEE socket for the REFLEX-TM- instrument (permanent connection with a cable-mounting connector, Picture 1, or better as panel-mounted socket, Picture 2). [PHOTO-DESCRIPTION TO COME] Picture 1 CEE cable-mounting Connector 16A/220-415 VAC [PHOTO-DESCRIPTION TO COME] Picture 2 CEE panel-mounted socket 16A/220-415 VAC The computer system includes a wide range input that can be operated between 110 to 240 VAC +/- 10%, 50/60 Hz +/- 3 %. The computer system can be connected through the main internal REFLEX-TM- power distribution system or separate power outlets. For a increased security of your stored software data we recommended separate outlets connected to a separate circuit or better a UPS. Page 4 of 10 Note that the correct grounding of the electrical installation must be guaranteed by the customer. It is inadmissible to use the neutral wire as safety ground. The ground wire should be an isolated ground, carrying zero current except in the case of a fault. Interruption of the protective conductor can cause a shock hazard for the user and can damage the instrument. ADDITIONAL CONSIDERATIONS * Plan extra power capacity for additional equipment. * Every equipment, like the REFLEX-TM- and the data system, should have an own separate circuit with a particular breaker. * If your mains voltage is unstable use an uninterruptable power supply (UPS). * Electromagnetic interferences, like NMRs, cellular phones and radio transmitters may have a bad effect on system performance. * It is recommended to install an emergency stop to interrupt the electric circuits and other systems in a emergency case or for maintenance. LABORATORY SUPPLY REQUIREMENTS /X/ COMPRESSED AIR / NITROGEN GAS REQUIREMENTS The specified performance of the REFLEX-TM- contingent on a constant supply of compressed air or nitrogen for operating the electropneumatic isolation gate valve between the ion source and main analyzer chambers. In the case of compressed air, it should be free of oil and dry with a pressure of 4 to 6 bar (58 to 87 PSI) and should be supplied in a tube with a 1/4"-connection (1/4" SWAGELOK connection e.g.). Compressed-air house supply or nitrogen supply are usable, or alternatively cylinder air can be used. Tubing should have an inner diameter of 4mm (FESTO type PU4 e.g.). The instrument kit includes a 5000 mm (16.4 ft) long tubing. Ensure that an appropriate pressure control regulator is available--the regulator must be able to supply gas in the above specified pressure range. If your are equipped with air/nitrogen from a house installation the regulator can usually be a single-stage one, if the supply pressure is higher than the above specified one. In comparison a high pressure nitrogen cylinder configuration requires a dual-stage regulator. COOLING WATER REQUIREMENTS Cooling water is required for the two turbomolecular pumps of the REFLEX-TM-. The flow volume rate amount to 30 l/hr at a maximum pressure of 1.5 bar. The recommended method of obtaining the necessary, economical refrigeration up to 15 to -20 degrees C (59 to -4 degrees F) outlet temperature is to use a small recirculating water chiller (e.g. PFEIFFER TZK400 or similar). The instrument kit includes two 5000 mm (16.4 ft) long tubings. Page 5 of 10 EXHAUST VENTING REQUIREMENTS /X/ WARM AIR OUTLET The heat produced in the spectrometer cabinet is blown out of the system through a 100 mm O hole. This warm air can either just blown into the room or directly to the outside of the building to ease the air conditioning (system). The instrument kit includes a appropriate 5000 mm (16.4 ft) long tubing. ROUGH PUMP OUTLET For the outlet of the rough pumps you either need an oil mist filter or you have to lead it to the outside or into your exhaust air system. Tubing: 9 mm inner O, 12 mm outer O, 5000 mm delivered with the instrument kit. Exhaust venting could be required for user safety. Health hazards include chemical toxicity of solvents, samples and buffers used, as well as pump fluid vapor and potential biohazards of aerosolized samples. Most of the solvent and sample are aerosolized and must be vented externally to the building and not recirculated by the environmental control system. The exhaust system should be at or slightly below atmospheric pressure (subpressure). If a subpressure is not available, the length of the tubing from rough pump to the vent should not exceed 5000 mm. Connection to ventilation system shall be direct to exterior building or to clean fume hod to prevent possible bay flow of contaminants. A existing exhaust (environmental) system must be designed and controlled as directed in conformance with all local laws (codes, ordinances and regulations). SAFETY PRECAUTIONS /X/ The standard Nitrogen laser emits high intensity radiation at 337 nm, 250-mu-J (Class IIIb laser classification). The laser radiation is invisible to the eye but still can cause damage to it. To safeguard the user the REFLEX-TM- is equipped with interlocks, which prevent operation of the laser when the instrument laser cover is open. During normal operation mode with all covers closed (i.e. Class I laser classification) no laser radiation can be transmitted outside the spectrometer. BRUKER does not recommend bypassing or disabling any of the safety features by anyone other than trained BRUKER service engineers or running the system without covers--BRUKER will not take over any responsibility in such cases. The spectrometer operation involves use of high voltages. The access of high voltage cables and high voltage feedthroughs is restricted behind the side walls of the instrument as far as possible. Accessible high voltage connections are marked with danger signs according to regulations. BRUKER will not take over any responsibility for any injury incurred as result of a misappropriate use of the instrument. Page 6 of 10 TECHNICAL ASSISTANCE If you need any assistance please call or write to BRUKER Saxonia GmbH Permoserstrasse 15 04318 Leipzig Germany Phone : ++49-(0)421-2205-200 Sales Department ++49-(0)341-2431-590 Service Department Fax : ++49-(0)421-2205-103 Sales Department ++49-(0)341-2431-343 Service Department E-mail : sales@bdal.de Internet : www.bruker-daltonik.de Page 7 of 10 APPENDIX /X/ FAX REPLY TO BRUKER DALTONICS SERVICE DEPARTMENT: Dear customer, for the correct and fast installation of the new REFLEX-TM- at your site we need your confirmation of the realized site preparation in conformance with the handed over Site Preparation Specification document. Moreover we need your informations to configure the computers for your network. Ensure that the fax reply will be returned at least 4 weeks before instrument installation - the BRUKER Service Team is NOT able to begin installation without customers confirmation! - ------------------------------------------------------------------------------ Hereby I/we verify that all of the below mentioned site preparations criteria have been fulfilled: / / Suitable space for the instrument / / Electrical installation according to Site Preparation Specification and common electrical rules / / Cooling water connection / / Compressed-air line / / Exhaust ventilating outlet / / Network Setup according to BRUKER MALDI - TOF Computer Configuration List - ----------------------------- Company/Institute - ----------------------------- ------------------------------ Address Postal Code, City - ----------------------------- ------------------------------ Name Job Position - ----------------------------- ------------------------------ Telephone Fax - ----------------------------- E-mail - ----------------------------- ------------------------------ City,Date Signature/Stamp PLEASE SEND THE STATEMENT TO: Stamp ------------------------------ Page 8 of 10 GEOMETRIC TYPES OF THE REFLEX-TM- SYSTEM (SPACE REQUIREMENTS) Choice N(0) 1 /X/ Besides the angular version of the REFLEX-TM- System as standard configuration you also have the choice of a linear version to accommodate the system to the layout of your site. Please note, that it is indispensable to determine the desired version of the REFLEX-TM- System, because the cable laying must be performed analogous to the desired version. [GRAPHIC - DESCRIPTION TO COME] Picture 3: Angular version of REFLEX System (Standard configuration) [GRAPHIC - DESCRIPTION TO COME] Picture 4: Linear version of REFLEX System (Optional configuration) Choice N(0) 2 /X/ Appropriate to the overall dimensions of the REFLEX-TM- System you should intend enough free space around the system for user conveniences and maintenance access especially. We recommend a floor space of 3500 mm x 3200 mm (LxW) 11.48 ft x 10.50 ft at least. Page 9 of 10 BRUKER MALDI - TOF COMPUTER CONFIGURATION LIST CUSTOMER DATA ADDRESS: ----------------------------------------- ----------------------------------------- ----------------------------------------- ----------------------------------------- CONTACT PERSON: SYSTEM ADMINISTRATOR: Mr./Mrs. Mr./Mrs. --------------------------- ------------------------ TELEPHONE: --------------------------- ------------------------ FAX: --------------------------- ------------------------ E-MAIL: --------------------------- ------------------------ PLEASE NOTE, THAT THE STANDARD LENGTH OF NETWORK CONNECTION CABLES DELIVERED BY BRUKER IS LIMITED TO 10 METERS. LONGER CABLES MUST BE ORDERED SEPARATELY! TECHNICAL DATA (use as often as the number of computers) / / SUN Workstation and/or / / PC Hostname (e.g. TOF-MS) (if left blank, chosen by Bruker) --------------- IP Address (e.g. 192.168.200.1) (if left blank, a non-internet- routeable address is chosen) --------------- Subnetmask (e.g. 255.255.255.224) (if left blank, no subnetting is assumed) --------------- Default Gateway (IP Address) (if left blank, No default router is assumed) --------------- DNS IP Address (IP Address) (if left blank, no domain server is assumed) --------------- DNS Domain Name (e.g. bruker.com) (if left blank, no domain name is assumed) --------------- IF YOU ARE RUNNING A LAN AND/OR IF YOU WANT TO CONNECT MORE THAN ONE PC TO THE SUN, PLEASE ANSWER THE NEXT TWO QUESTIONS: Is there a Hub for connecting your new computer to your LAN? / / YES or / / NO If BRUKER should provide a Hub, what is your LAN's bandwidth? / / 10 MBit or / / 100 MBit Is there something else you want to be considered for the network setup of your new computers? ---------------------------------------------------------- ---------------------------------------------------------- ---------------------------------------------------------- Page 10 of 10 EXHIBIT E ACCEPTANCE CERTIFICATE [GRAPHIC - DESCRIPTION TO COME] [GRAPHIC - DESCRIPTION TO COME] CUSTOMER: ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- -------------------------------------------------
MEAS. ----- TOF MASS DIFFERENTIAL PUMPING SYSTEM ANALYZER * 260 l/sec turbomolecular pump for ion source * 260 l/sec turbomolecular pump for analyzer * 3 forepumps ultimate analyzer pressure: LESS THAN OR EQUAL TO 8 x 10 TO THE POWER OF NEGATIVE 7 Torr ______ 2 min. after sample change: LESS THAN OR EQUAL TO 8 x 10 TO THE POWER OF NEGATIVE 6 Torr ______ SOURCE AND * MALDI or LDI with 337 nm Nitrogen laser OPTICS * variable, computer-controlled attenuator
REFLEX-TM- III SPECIFICATIONS & ACCEPTANCE REPORT, MARCH 1999, VERSION NO. 9.03., PAGE SPECIFICATIONS SUBJECT TO CHANGE WITHOUT NOTICE. I. LINEAR MALDI-TOF WITH PULSED ION EXTRACTION = PIE-TM-
MEASURED -------- * 150 cm flight path * positive or negative ion analysis * ion acceleration up to +25/-20 kV ________ * MALDI mass resolution linear (FWHM): 34,000 for m/z = 1,619.82 (Bombesin) ________ * linear MALDI mass accuracy measured on mixture of Angiotensin I, Angiotensin II, Substance P, and Bombesin: Internal calibration: average error LESS THAN OR EQUAL TO 50 ppm _________ External calibration: average error LESS THAN OR EQUAL TO 200 ppm _________ * linear MALDI sensitivity: S/N GREATER THAN OR EQUAL TO 10:1 for 10 fmole at m/z = 2,465.20 (ACTH 18-39) _________ * linear MALDI mass range: dimer of BSA-dimer detected at ~ 264 kDa _________
REFLEX-TM- III SPECIFICATIONS & ACCEPTANCE REPORT, MARCH 1999, VERSION NO. 9.03., PAGE 2 SPECIFICATIONS SUBJECT TO CHANGE WITHOUT NOTICE. II. OPTIONAL REFLECTRON MALDI-TOF WITH PULSED ION EXTRACTION = PIE-TM-
MEASURED -------- * ~ 300 cm effective flight path * patented two-stage gridless ion reflector * positive or negative ion analysis * ion acceleration up to +25/- 20 kV * reflectron MALDI mass resolution (FWHM): GREATER THAN 20,000 for m/z ~ 3,147 (Somatostatin 28) _________ * reflector MALDI mass accuracy measured on mixture of Angiotensin II, Angiotensin I, Substance P, Bombesin: Internal calibration: average error LESS THAN OR EQUAL TO 10 ppm _________ External calibration: average error LESS THAN OR EQUAL TO 50 ppm _________ * reflector MALDI sensitivity: S/N GREATER THAN OR EQUAL TO 10:1 for 10 fmole at m/z = 1,047 (Angiotensin II) _________
MALDI SOURCE: SCOUT-TM- * Multisample/Membrane Target and Observation Optics 384 * size and shape identical to microtitre plates, allows robotic handling; * Automatic vacuum interlock * Exchangeable targets available: smooth, 96 spots, or 384 spots; * Computer-controlled * High-resolution observation optics (magnification ~ 100) for color display with large observation area, depth perception;
REFLEX-TM- III SPECIFICATIONS & ACCEPTANCE REPORT, MARCH 1999, VERSION NO. 9.03., PAGE 3 SPECIFICATIONS SUBJECT TO CHANGE WITHOUT NOTICE. III. ADDITIONAL OPTIONS: - ------------------------ FAST(TM) / / Optional Fragmentation Analysis and Structural TOF-MS accessory (OR PSD) * High-precision DAC computer control of reflector voltage with ultra-stable 2nd power supply * Automatic FAST calibration software * Composite FAST spectrum pasting software * FAST-FILTER(TM) parent ion preselector with resolution 150 FAST SPECIFICATION: Using 2-3 [.?.]the FAST procedure with pulsed ion extraction using 14 voltage steps will yield at least [.?.] of the following 12 fragment ions with an avarage mass error of less than 0.4 [.?.] to column 2 from the pasted FAST spectrum peak print-out and calculate columns 4 and 5 (magnitude only).
1 Fragment 2 measured 3a exact 3b exact 4 mass 5 % error ion mass (Da) mass (Da) mass (Da) error in Da (4/3 x 1.00) average monoisotopic (2-3) b2 254.3 254.2 b3 353.4 353.2 b4 481.6 481.3 b5 580.7 580.4 b6 743.9 743.5 b7 841.0 840.5 b 955.1 954.6 b11 1212.4 1211.7 b12 1327.5 1326.7 b13 1456.6 1455.7 b16 1743.9 1742.8 b21 2301.5 2300.1
REFLEX-TM- III SPECIFICATIONS & ACCEPTANCE REPORT, MARCH 1999, VERSION NO. 9.03., PAGE 4 SPECIFICATIONS SUBJECT TO CHANGE WITHOUT NOTICE. FAST RESULT: NUMBER n OF FRAGMENT IONS MESURED n=_______ AVARAGE MASS ERROR (SUM .?.)=_______Da AVERAGE MASS ACCURACY (SUM .?.)=_______% REFLEX-TM- III SPECIFICATIONS & ACCEPTANCE REPORT, MARCH 1999, VERSION NO. 9.03., PAGE 5 SPECIFICATIONS SUBJECT TO CHANGE WITHOUT NOTICE. CID / / Optional Collision-Induced Dissociation Accessory (requires FAST(TM)) IV. COMPUTER SYSTEM AND SOFTWARE: COMPUTER SUN SPARC ULTRA 5: SYSTEM PUBLISHED SUN SPECIFICATIONS WILL NOT BE DEMONSTRATED. * 128 MB memory * 4.3 GB SCSI disk * 1.44 MByte 3.5" floppy drive * 19" color monitor * two serial ports, one parallel port * CD-ROM drive for software upgrades CHECK & fill in: * printer, type: -------------------------------- DIGITIZER 2GHz ADC (standard) SOFTWARE * Solaris UNIX operating system, true multiuser and multitasking * X-11 Windows and client-server computing * TCP/IP, NFS * Motif graphical user interface REFLEX(TM)III SPECIFICATIONS & ACCEPTANCE REPORT, MARCH 1999. VERSION NO. 9.03., PAGE 6 SPECIFICATIONS SUBJECT TO CHANGE WITHOUT NOTICE. * XMASS(TM) applications software with simultaneous data acquisition, processing, display, plotting * real-time acquisition optimization * WYSIWYG plotting * multiple views and spectral overlay * AUTOXECUTE(TM) software for automated acquisition and processing of MALDI-TOF data, now including unique FUZZY-LOGIC OPTIMIZATION for optimal data quality under automation. OTHER ACCESSORIES DELIVERED: - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ V. ACCEPTANCE COMMENTS: - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ REFLEX(TM)III SPECIFICATIONS & ACCEPTANCE REPORT, MARCH 1999. VERSION NO. 9.03., PAGE 7 SPECIFICATIONS SUBJECT TO CHANGE WITHOUT NOTICE. CHECK APPROPRIATE BOX: The / / installation(/ / final test) is satisfactorily completed and the / / warranty period (/ / customer shipment) will commence. Date: -------------------- - ----------------------------- ---------------------------------- Customer (Manager) Signature Bruker Service Engineer Signature REFLEX(TM)III SPECIFICATIONS & ACCEPTANCE REPORT, MARCH 1999. VERSION NO. 9.03., PAGE 8 SPECIFICATIONS SUBJECT TO CHANGE WITHOUT NOTICE. [GRAPHIC - DESCRIPTION TO COME] PURPOSE OF INSTALLATION: To ensure that instruments and systems are correctly installed and functioning as designed in the customer's facility. Correct installation is the first step in ensuring that instruments and systems operate reliably over an extended lifetime. CUSTOMER RESPONSIBILITIES: The customer should ensure that the installation site is prepared in accordance with the specifications contained in the relevant site preparation document and that the necessary operating supplies, consumable and usage dependent items such as gases, vials, syringes and solvents are available. A customer representative should be present at all times during the installation. INSTALLATION CHECKLIST: DAY 1 SHIPMENT VERIFICATION / / Unpack and verify condition, as well as completeness, of shipment. - If shipment is damaged or incomplete, please notify: 1. Gerd Huelso Bruker Product Support Tel. (49) 421/2205 299 Fax (49) 421/2205 106 Date: ---------------- name: ---------------- 2. Carrier notified: date: ---------------- name: ---------------- 3. Record damaged or missing material: ----------------------------------- ----------------------------------- ----------------------------------- PRE-INSTALLATION CHECK / / Verify that the site preparation kit has been correctly and fully installed. - Main power for mass spectrometer 1. Check power cord for specified power and proper connection. 2. Check for available outlet for syringe pump. Verify that the power and power outlet match that of the pump and included power cord. 3. Check for available outlets for the computer, monitor and printer. Verify that the power outlets match that of the included power cords. 4. Check for available outlets for the HPLC system if ordered from Bruker. Verify that the power outlets match that of those included with the HPLC. - Check that the gas supply lines for the instrument have been properly installed. 1. Verify that the 6mm od Teflon tubing is connected to an approved nitrogen source and the 5bar (75psi) pressure is available. 2. Verify that the 3mm (1/8") od stainless steel or copper tubing has been connected an approved helium regulator and that the helium is 99.99%+ purity. - Check that the ventilation lines for the instrument have been properly installed. 1. Check that one end of the reinforced tubing is connected to the ventilation. 2. Check that the 3/4" thick wall Tygon tubing is separately connected to the customers approved exhaust ventilation system. - Check that the customer has the required supplies, as in Site Preparation document recommended, for complete and successful installation and verification. 1. Solvents: water, isopropyl alcohol, acetonitrile, methanol 2. Buffers: acetic acid, etc. 3. Eppendorf pipets, 100mul and 1000mul and corresponding tips. page 1 of 8 ESQUIRE 3000 SYSTEM INSTALLATION / / Install ESQUIRE 3000. - Wheel the ESQUIRE 3000 box into the lab. - Heave the ESQUIRE 3000 onto the table. do this with the help of two, better four people. - Place the rough pump under the table and connect the power cord to the main power module of the ESQUIRE 3000. - Connect the fore vacuum tube to the inlet of the rough pump. - Install the oil mist filter and the oil return kit. - Connect one end of the reinforced tubing to the outlet of the oil mist filter, the other end should exit in the customers ventilation system or to outside air. - Check oil level of the rough pump. - Connect the end of the API source exhaust tubing to the source drain bottle. Connect the exit of the drain bottle with 3/4" (19mm) id thick wall Tygon tubing to a secondary ventilation system. Ideally, this connection should be directly to a clean ventilation hood or directly to outside air. Follow all environmental regulations. - Plug the remaining drain bottle connection with a 1/16" (1.5mm) pin. - Flush the nitrogen gas supply line. Install the nitrogen gas filter in the 6mm nitrogen supply line. The nitrogen flow must be straight down. Secure gas filter with tie wraps. Connect the outlet of the gas filter to gas inlet on the left side of the ESQUIRE 3000 using a remnant of the Teflon tubing. - Flush the helium gas supply line. Connect the helium gas supply to the esquire3000 helium gas inlet on the left side using 3mm (1/8") stainless steel or copper tubing installed during the site preparation. If the customer uses a helium cylinder, ensure that it is properly secured with approved stand or wall mounting hardware. Set the pressure on the helium regulator to 80 psi (5.6 bar). Loosen the Swagelok helium connection on the left side of the instrument. Open the helium cylinder and post regulator valve to allow the line to be purged with helium for several seconds. Close the post regulator valve and tighten the helium connection. - Verify that all instrument covers are in place. Install power cord to left side (main power supply) of instrument and connect to customers power. / / Set up computer, monitor, printer and hub. - After computer, monitor, printer and hub are set up install control software of the instrument, delivered with the instrument. Copy the content of directory EQ_xxx (xxx=serial number of the instrument) of the instrument CD-ROM to drive D:\DATA\ Copy the methods to drive D:\METHODS\ Connect the crossed twisted pair network cable (with green plugs or labeled "crossed") from the right LAN board in the PC (the LAN board close to the PC housing) to port S of the hub. Switch the MDI/MDI-X switch to MDI (for crossed cable at port 8. Use the uncrossed twisted pair network cable (with grey plugs and unlabled) to connect the hub with the instrument. Plug the cable to port 7 of the hub and to "10 Base T" port on the left side of the instrument. / / Powering up the instrument. - Turn on the main power switch on the main power supply of the esquire3000. Switch on the power switch on the front of the instrument. You should hear the rough pump starting and then the first turbo pump begins to spin, then the second turbo pump. - After powering on the instrument, the green LED of the processor system modul is on and the yellow LED is blinking after approx. 30 seconds. - Start the control software, open menu Options and select Vacuum Systems... . Observe the fore and high vacuum pressures. The fore vacuum pressure with the source open should be approximately 1-3 mbar and the high vacuum pressure should begin to fall into the 10(-3) mbar range. page 2 of 8 / / Establish the helium and drying gas pressures. - Press Flush Helium Line in the opened Vacuum System ... window two times to flush the helium line. - Open any customer valving supplying the nitrogen drying gas. Where possible set the supplying pressure from 5-7 bar (75 - 110 psi) - Ensure that the atmospheric end of the source sampling capillary is not capped. - Establish flows for the API gases. Set the NEBULIZER to 80 psi. Set the DRYING GAS flow to 12 liters/min. Verify that the gas pressures and flow are present. After two minutes note the read values for: Neb. Gas: ----------psi Dry Gas: ----------l/min These values show if the nitrogen gas supply is without restriction if the read values equal the set values. - Set the NEBULIZER to 10 psi. Set the DRYING GAS flow to 4 liters/min. Verify that the gas pressure and flow are present. - Set the temperature of DRYING GAS to 300 DEG. C. / / Connect the syringe pump. - Connect 1 1/2 ft (50 mm) of 0.005" jd (red) PEAK tubing from the nebulizer fitting on the top of the electrospray source to the syringe coupling. - Fill the syringe with HPLC grade isopropyl alcohol or acetonitrile and rinse through the tubing and nebulizer. - Verify that the syringe pump has the proper barrel diameter (3,26 mm) for the 500mul syringe in use. / / Installing the HP 1100 HPLC system if available. - This step should have been previously coordinated with your HP customer engineer (CE). He should be present for the first day of installation to concurrently install the HP 1100 HPLC system. / / Coupling the HPLC hardware to the joint Bruker - HP Chemstation. - Connect the second uncrossed twisted pair network cable between port 6 of the hub and the jet direct card of the HP 1100 HPLC. - Power up the HPLC modules - Launch the Chemstation control using the appropriate icon in: Start, Programs, HP ChemStations. The Chemstation control and the Bruker control software will be joiny started. / / Purging the LC. - It is important that the HPLC is purged overnight before attempting performance verification on the esquire3000. - In the bottles for BOTH channels A and B prepare a 50:50 mix of water/acetonitrile. - With the outlet of the HPLC in a waste bottle, prime each channel (%B set to 50%) through the vacuum degasser for at least 10 min. at 5 ml/min. - Reduce the total flow to 0.1 ml/min and allow the pump and system to purge overnight. Make sure that enough solvent is in each of bottles A and B. (0.1ml/min = 6ml/hr = 120ml/20hr). / / Setting up the esquire3000 to bakeout overnight. - Set drying gas flow to 7#L/min. Set the nebulizer gas to 20psi. - Set drying gas temperature to 365 DEG. C. / / Record system serial numbers and fill in installation documentation. page 3 of 8 DAY 2 / / End the purging and bakeout of the HPLC and esquire3000. / / Check and, if necessary, reset the helium pressure. - In menu Options, Vacuum Systems..., switch off the helium. Wait for 10 minutes to reach the base pressure of the instrument. - With the instrument in standby (high voltages and drying gas heater off and gases off) carefully remove the capillary shield and cap in the source. Temporarily cap the end of the glas capillary with a small silicone septum. Record the fore and high vacuum pressures: Fore Vacuum: ___________ mbar High Vacuum: ___________ *10(-5)mbar - Switch on the helium and if necessary adjust the helium regulator, located on the top of the electronic cover, to get a helium pressure 6x10(-6) mbar above the base pressure. Record the high vacuum pressure: High Vacuum: ___________ *10(-5)mbar - Uncap the end of the capillary and replace the metal cap and shield. Turn on the heat and gas flows (typically: 250-300 DEG. C, 7-20psi, 3-51/min). When the source has returned to temperature record the pressures: Fore Vacuum: ___________ mbar High Vacuum: ___________ *10(-5)mbar / / Setting up initial instrument parameter. - Place the instrument in Operate mode. - Load the method TUNE_ESI.MS in the ESQUIRE Control software. - Fill the syringe with diluted calibration tune mix. Tune mix / ACN: 1/10 - Connect the syringe to the nebulizer - Start the flow of calibration tune mix at 4mul/min (240 mul/h). - Watch for an endplate current of approximately 25-150nA indicating that solvent has reached the end of the needle and is spraying. - Observe the mass peaks. SYSTEM PERFORMANCE VERIFICATION / / Perform auto scan calibration for all resolutions in Standard mass range and extended mass range. Show the customer how to do this. / / Verify Mass Resolution in all Operational Modes and Mass Accuracy in Mode Standard Normal. - Produce spectra of the tuning mix including both mass spectrum and profile spectrum in all mass ranges and resolution modes. Use 10-20 averages and rolling 2 and save some profile spectrum. Create the directory INSTALL and use file names: STD_NOR0.D (std/normal, 50-1200), STD_NOR1.D (std/normal, 1200-3000), STD_ENH0.D (std/enhanced, 50-1200), STD_ENH1.D (std/enhanced, 1200-3000), STD_MAX0.D (std/maximum, 50-1000), STD_MAX1.D (std/maximum, 1000-2000), STD_MAX2.D (std/maximum, 2000-3000), EXTEND0.D (extended, 200-1600), EXTEND1.D (extended, 1600-2800). - Load the files into Bruker DA and produce a Mass List. displaying the mass, intensity and resolution for each file and mode. Print a Profile MS Report of each resolution mode. / / Verify Negative Ion Capability. - Show the negative ion masses of the tuning mix in mode Standard Normal. Save a profile spectrum as NEGATIV1.D (50-1500), NEGATIV2.D (1500-3000), - Load the files into Bruker DA and produce a Mass List. Print a Profile MS Report. / / Perform auto isolation/fragmentation calibration. Show the customer how to do this. (hint: this is done using standard mass range and normal resolution) / / Verify Monoisotopic Precursor Selection. - Switch ICC off and set Accu Time to a proper value. page 4 of 8 - While in enhanced resolution mode show mono-isotopic isolation of the 1522.97 peak. Do this by displaying the 1521.97 isotope cluster with the profile spectrum focused on mass 1522. Then isolate 1522.97. Save a profile spectrum of isolation off (MS1523.D) and on (MSMS1523.D). - Load the files into Bruker DA and show the capability of monoisotopic isolation. Produce a Peak List of both files and print a Profile MS Report. - Demonstrate and help the customer to produce MS/MS and MS(n) spectra. / / Demonstrate Auto MS/MS features. - In ESQUIRE Control load the method AUTOMSMS.MS. - Using the diluted tuning mix solution run the method. Use AUTOMSMS.D as data file. - Load the file into Bruker DA and show the capability of AutoMSMS. Produce a Peak List of every different Profile Spectrum and print a Profile MS Report. / / Demonstrate positive - negative switching (alternating). - In ESQUIRE Control load the method Tune-ESI.MS. - Using the diluted tuning mix solution focus on mass 622 m/z in positive mode. - In mode page, activate Alternating. / / Verify Mass Axis Stability. - Produce spectra of the Tuning Mix including both mass spectrum and profile spectrum in Standard Normal mode. Use 20 averages and rolling 2 and save a profile spectrum with scan range 50-3000. Use the file name MASSAXIS.D. - Load the files into Bruker DA and produce a Mass List. Print a Profile MS Report. Compare the masses with the file STD_NOR0.D and STD_NOR1.D measured this morning. / / Verify Nano ESI source if available. - Remove the syringe pump - Switch Control Software to Shutdown - Remove the ESI source - Install the Nano spray source - Change the source in Menu page to Nano - Switch to Operate mode - Use 20 averages and rolling 2 and save a profile spectrum. Use file names for positive mode: NANOPOS0.D (std/normal, 50-1200), NANOPOS1.D (std/normal, 1200-3000), Use file names for negative mode: NANONEG0.D (std/normal, 50-1200), NANONEG1.D (std/normal, 1200-3000), / / Setting up the esquire3000 to bakeout overnight. - Install the ESI source. - Connect the HPLC to the source. - On the HPLC, set the flow to 0.1 ml/min, 50/50 H2O/ACN. - On the esquire3000 set drying gas flow to 7 L/min. Set the nebulizer gas to 20psi. - Set drying gas temperature to 365 DEG. C. - Start the flow on the HPLC. page 5 of 8 DAY 3 SYSTEM SENSITIVITY VERIFICATION with ESI source / / Prepare performance evaluation samples for HP 1100 HPLC. - Prepare a dilution series of reserpine. Begin with the 5ng/mul standard (HP p/n O2423A). - Prepare 100ml of fresh 50/50 water/acetonitrile. Use only clean, supplied glassware and solvents. - Transfer the 5ng/mul reserpine standard to supplied glass vials and cap. Label the first concentration level 5ng/mul (level 1). - All dilutions should be done with corresponding eppendorf pipets and supplied glass vials and caps. - Begin the dilution with 900mul. of solvent and 100mul of the 5ng/mul standard. This second level is labeled 500pg/mul (level 2). Shake well before proceeding. - Make the next dilution with 900mul of solvent in a third vial and add 100mul of the level 2 standard (500pg/mul). Label this concentration level 50 pg/mul (level 3). Shake well before proceeding. - Make the fourth dilution with 950mul of solvent in a fourth vial and add 50mul of the level 2 standard (500pg/mul). Label this concentration level 25pg/mul (level 4). Shake well before proceeding. - Finish the dilution with 800mul of solvent in a fifth vial and add 200mul of the level 3 standard (50pg/mul). Label this concentration level 10pg/mul (level 5). Shake well before proceeding. - Fill two vials with 1ml of water/acetonitrile solvent for use as two wash vials. / / Verify API-Electrospray Sensitivity in MS Full Scan and MS/MS Full Scan. - Disconnect the syringe pump from the source. - Reinstall the ESI source if not already done. - Connect the HP 1100 HPLC to the source. - Place level 5 (10pg/mul) in vial position 1, followed level 4 (25pg/mul, position 2), then level 3 (50pg/mul, position 3) and then level 2 (500pg/mul, position 4). Place wash vials in position 10 and 20. - Load method RES_MS.M. - Run the Method RES_MS.M (MS only, full scan). Use the data file name RES_MS.D in directory INSTALL. - In Bruker DA load the data file and produce an extracted ion chromatogram of mass 609. With: +0,7, -0.3. Find peaks with auto integrate. Report the signal to noise ratio in a processed peak list. The 50 pg/mul peak must have a better signal to noise ratio of 10/1. - Run the Method RES_MSMS.M (MS/MS, full scan). Use the data file name RES_MSMS.D. - In Bruker DA load the data file and produce an extracted ion chromatogram of the most abundant product ion (448 m/z), Filter: All MS/MS With: +0,7,-0,3. Find peaks with auto integrate. Report the signal to noise ratio in a processed peak list. The 10 pg/mul peak must have a better signal to noise ration of 20/1. If any difficulty is observed in meeting any of the specifications (see specification sheet), then it is almost certain that the HPLC system should be conditioned for an additional evening. Repeat the conditioning that was done on the last night, except using the 50/50 water/acetonitrile that is currently being used for the analysis. / / Install APCI and check the function - Switch control software to Shutdown. page 6 of 8 O Change source to APCI. O Set up APCI source and bakeout for a while. O Couple the HPLC and the syringe pump with a "T" to the APCI source. O Fill the syringe with Tuning Mix for APCI. O Load the Method APCI_POS.MS in the ESQUIRE Control software. O Set the LC flow of 50/50 water/acetonitrile at 400ul/min and set the syringe flow of Tuning mix at 4 ul/min(240ul/h). O Start the syringe flow and the LC flow. O Set the corona current so to 6000nA. If necessary set the current different. O Use the file name APCI_POS.D and load them into the Bruker DA. Produce a Peak List. Produce a Peak List and print a Profile MS Report. O Switch to negative mode. O Set the corona current so to 20000nA. If necessary set the current different. O Use the file name APCI_NEG.D and load them into the Bruker DA. Produce a Peak List and print a Profile MS Report. O Set the corona current to 0nA. O Switch to positive mode. O Stop the flow and disconnect the syringe and the "T". // Explain Other SW features including: O Segment editor O LCMS-Sequence O Deconvolution, if available O Divert valve O Show Quantity Analysis Program (should be explained by application engineer) // Make sure that all previously printed data is properly labeled, sorted and in customer acceptance notebook. Make sure that copy is produced for product support records. // Copy calibration and parameter files to disk for product support. // Copy data from subdirectory INSTALL to customers CD-ROM and to a CD-ROM for product support. CONTINUED SYSTEM FAMILIARIZATION // Explain how to use the manuals (refer customer to the operational maintenance section). page 7 of 8 // PRODUCT SUPPORT INFORMATION: THIS SHOULD BE FILLED OUT BY THE SERVICE ENGINEER O Service support: Tel.: ____________________ (Service engineer) e-mail: ____________________ O Application support: Tel.: ____________________ (Name) e-mail: ____________________ O Where to order spare parts: Tel.: ____________________ (Name) e-mail ____________________ page 8 of 8 CUSTOMER ACCEPTANCE // The installation is satisfactorily completed and the warranty period will commence. All specifications due to the esquire3000 System Specifications has been met. - ----------------------------------- COMPANY NAME - ----------------------------------- SALES ORDER NUMBER - ---------------------------------- SERIAL NUMBER - ---------------------------------- CUSTOMER SIGNATURE/DATE - ---------------------------------- ENGINEER SIGNATURE/DATE // List all materials (if any) that are not accompanied with this instrument: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- page 1 of 7 EXHIBIT F WARRANTY SERVICES WARRANTY SERVICE [GRAPHIC - DESCRIPTION TO COME] WARRANTY SERVICE I. SUBJECT This Annex specifies the warranty service conditions for the following delivered intruments: REFLEX III MASS SPECTROMETER ESQUIRE 3000. II. WARRANTY TIME Begin of warranty period: --------------- End of warranty period: --------------- III. DEFINITIONS Contact time: This is the time when the customer or the user of the instrument can contact Bruker for a unforeseeable technical problem. Response time: This time is defined as the time between the first contact regarding a unforeseeable technical problem and the reaction of Bruker in which way the problem can be solved. Action time: This time is defined as the time to bring the instrument to operation again. Optimization adjustments and usual maintenance work is not included in this time. In case further extra problems during the service work appear the action time can be extended. The time frame starts with the written (FAX or e-mail) request for service of the customer or the user of the instrument. Waiting Time: The time the Service Engineer can not start or continue his work because of a problem he is not responsible for. The waiting time must be reported separate. Waiting time van not be taken into account of Action time or Maintenance time. IV. WARRANTY SERVICE - - In case of a unforeseeable technical problem the customer or the user of the instrument shall approach the service center mentioned in annex "Bruker Service Center". During the response time Bruker will try to locate and fix the problem via telephone, FAX or e-mail. - - In case the problem can only be solved by Bruker on site the customer or the user have to send a written (FAX, e-mail or letter) service request to the corresponding Bruker office with indication of the complete address and name of the contact personnel and the order number. - - In general the user has to fill out and sign a "Declaration of contamination" before Service or Maintenance work will be carried out. WARRANTY SERVICE ON REQUEST Contact times: Monday-Friday between 8.00 a.m. and 5.00 p.m. (excluding Swiss Holidays) Contact office: Bruker Daltonics (Switzerland). Details see Annex D. Response time: 2 Working days (for back-up Service) - ------------------------------------------------------------------------------- page 1 of 3 Action time: Max. 10 Working days or individual agreed with the user Waiting time: The customer is responsible to ensure that the Bruker Service Engineer can carry out the service work without impediments. Waiting times must be reported on a Bruker "Service Report" and can be charged separate. Reported waiting times can not be counted as action time. Place of service: Equipment installation site Action reporting: All service actions and the needed spare parts will be reported on the usual Bruker "Service Report". The "Service Report" has been signed by the Bruker Service Engineer and the user of the instrument when the instrument is in operation again. If this confirmation by the user cannot be obtained or not given in time, the accounting will be based on the notes of the Contractor staff member. One copy of the report stays with the instrument, one copy stays with Bruker and one copy will be send to the customer. The "Service Report" is the basic for the invoice of the used spare parts Service confirmation: With the singed "Service Report" Bruker confirms that the instrument is operational again. All work carried out is professional done. Bruker also confirms that the instrument is safe in normal operational use after service actions. The user confirms with the signed "Service Report" that he agrees the work carried out and the operational status of the instrument. V. RETURN OF DEFECTIVE OR USED PARTS - - Usually the contractor is responsible for the return of defective or exchanged parts to the Bruker Service Center. For parts which can not be handcarried the corresponding user should support the contractor to ship the parts back. Shipping costs will be covered by the contractor. - - The user is responsible for the correct and safe decontamination and disposal of all used incidentals and sundries (e.g. pump oil, adsorbing substance) and all other contaminated parts (e.g. P2-plate). - - All other replaced components will become the property of Bruker. VI. TECHNICAL IMPROVEMENTS - - If considered by the Bruker staff to be advisable to improve the reliability of the equipment related components will be replaced or modified without additional costs for the customer. Replaced components will become the property of Bruker. - - In case that the customer will not allow such modifications and improvements to be made, the contractor is entitled to terminate the service contract for the respective devices without notice. VII. DUTIES OF THE CUSTOMER - - The customer takes responsibility that the equipment installation site meets the respective statutory provisions and other applicable regulations. This in particular concerns the safety measures. He has to prepare the installation site as laid down in the SITE PREPARATION documentation and to maintain this state. - - If not otherwise agreed the customer has to regularly clean the device and replace the incidentals/sundries as laid down in the OPERATING and SERVICE MANUAL. - - The customer is in charge of protecting his confidential information and data as well as of storing his data against loss or damage. Bruker undertakes no warranty for the loss of data on data carriers - ------------------------------------------------------------------------------- page 2 of 3 which might be caused during maintenance and/or service work at the installation site or in the production facility. - - The customer provides access for the contractor staff at the stated time to all information and facilities (including their use) which are necessary to carry out service work on the equipment. - - The customer is responsible to ensure that service on the equipment to be maintained or parts of it can be carried out under safe conditions. Devices contaminated with microbiological and/or radioactive materials will only be serviced if proof of a proper decontamination can be submitted. (see Bruker's Safety Requirements for the return of devices and components) - - If not otherwise agreed the customer is responsible to carry out all preventive maintenance work which is defined by Bruker. VIII. WARRANTY AND LIABILITY - - No warranty is applicable for damages caused by carelessness, mishandling, operating errors, malicious damage of a third party or vandalism, unforeseen events, wars, civil disturbances etc. - - No warranty is applicable if preventive maintenance work is either not carried out or carried out wrong or not followed by the recommended maintenance cycles. - - If the service proves to be insufficient for reasons the Bruker is responsible for, he commits to clear the fault free of charge or to select the corresponding procedure for repeating maintenance free of charge. - - For the damages caused by faults of the Bruker staff during service work the Bruker is liable. IX. OTHER AGREEMENTS - - To become effective, reservations, collateral or other agreements need to be confirmed in writing by the two contracting parties. - - If individual regulations of this contract should be ineffective, the validity of all other provisions of this contract will not be affected. The contracting parties will replace the ineffective provisions in order to obtain the desired economic success in another manner which is in accordance with the law. All information, data and records will be handled according to the Data Surveillance Act, and if no longer required will be returned immediately or destroyed upon request. X. RELATED DOCUMENTS MAINTENANCE PLAN REFLEX Maintenance Plan Esquire 3000 BRUKER SERVICE CENTERS - ------------------------------------------------------------------------------- page 3 of 3 MAINTENANCE PLAN REFLEX MAINTENANCE PLAN FOR BRUKER REFLEX III MASS SPECTROMETER
INTERVAL (MONTH) ---------------- ACTION NEEDED MATERIAL 1 2 6 12 - ------------------------------------- ----------------------------- --- --- --- ---- 1. Cleaning P2-Plate X X 2. Cleaning and greasing of the X-Y- High vacuum grease NyeTorr X X probe movement units 5200 3. Check of laser power Lasercartridge Reflex X X 4. Check of operating fluid level Leybold N62, Pfeiffer P3 X X and quality (color) of the Rotary Vane Vacuum Pumps 5. Cleaning the laser optics X X 6. Replacing the operating fluids of Leybold N62, Pfeiffer P3 X the Rotary Vane Vacuum Pumps 7. Replacement of operating fluid Pfeiffer felt replacement X reservoir of the turbo pumps 8. Replacement of the filter of the Replacement-Filter X dirt trap 9. Sensitivity check with the X X prescribed standard 10. Cleaning of pressure gauges X 11. Check of cooling system, check X the water-level, function test of water cooling monitor
Note: The maintenance plan is currently under review! INCIDENTALS AND SUNDRIES BRUKER RELEX III MASS SPECTROMETER
DESCRIPTION PART BRUKER PART NO. - ---------------------------------- --------------------- -------------------- High Vacuum Grease NyeTorr 5200 29514 Lasercartridge Reflex 41155 Leybold Universal-Oil N62 Leybold Part Number 38357 17702 Pfeiffer Universal-Oil P3 Pfeiffer Part Number 17234 PK001-106-T Pfeiffer Operating fluid reservoir Pfeiffer Part Number 19565 PM 063265-T Replacement Filter IImvac Part Number 19037 700 154 Channel Plate 48134 Linear Detector Channel Plate Cartridge Reflector 21255 Detector Prevacuum sensor Pirani Gauge TPR 265 43258 Prevacuum sensor Pirani Gauge TPR 010 42663 Highvacuum sensor Cold Cathode Gauge 13321 IKR 050 Cooling Water Monitor TCW 002 8780
Note: The incidentals and sundries are currently under review! page 1 of 1 MAINTENANCE PLAN ESQUIRE MAINTENANCE PLAN FOR BRUKER ESQUIRE 3000 MASS SPECTROMETER
PREVENTIVE MAINTENANCE INTERVAL --------------------------------------------- POS DESCRIPTION 6 MONTH 12 MONTH 18 MONTH 24 MONTH - -- ---------------- ----------------------- --------- ---------- ---------- ---------- 1 Rough pump Oil Exchange 2 Oil mist filter Exchange 3 Air Exhausts Cleaning 4 Instrument Diagnostic SW Tool Run 5 Source (Endcap and Cleaning Capillary Cap) 6 Multiplier Check Exchange 7 Nebulizer Needle Check Exchange 8 Skimmer-1 Cleaning Exchange 9 Ion Gauges Cleaning 10 Air Exhausts Cleaning 11 APCI Source Nebulizer Corona Needle Check Exchange 12 Corona Needle Check Exchange 13 Off-Line Camera Adjustment Check Nanoelectrospray 14 On-Line Check Nanoelectrospray
Note: The maintenance plan is currently under review! INCIDENTALS BRUKER ESQUIRE 3000 MASS SPECTROMETER
DESCRIPTION PART BRUKER PART. NO - ------------------------------------- ---------------------- --------------- Rough Pump Oil, Inland 45 HP Nr.: 6040-0834 20221 Oil mist filter Typ EMF20 Art.Nr.A462- 13450 29-000 Multiplier, Ceramic Channel Electron- Typ 7596M 21712 Skimmer-1 HP Nr.: G1946-20089 27446 ES Shipping Kit HP Nr.: G1946-60136 27281 (incl. Nebulizer needle) APCI Shipping Kit HP Nr.: G1947-60025 (incl. Nebulizer corona needle Corona needle
Note: The Incidentals are currently under review! page 1 of 1 BRUKER SERVICE CENTERS In case Bruker service is required for the BRUKER BIFLEX III MASS SPECTROMETER OR BRUKER ESQUIRE 3000 please contact one of the following Bruker Service Center. Bruker On-side Service Representiv Tel: ?(On-side Service) Fax: ?(On-side Service) e-mail: ?@Bruker.ch Bruker Daltonics GmbH Industriestr. 26 CH-8117 Fallanden Tel: +41-(0)1-8259-??? (Service) Fax: +41-(0)1-8259-??? (Service) e-mail: HRE@Bruker.ch Bruker Saxonia Analytik GmbH Permoserstr. 15 04318 Leipzig Tel: +49-341-2431-395 (Service) Fax: +49-341-2431-343 (Service) e-mail: TOF-Service@bsax.de Bruker Daltonik GmbH Fahrenheitstr. 4 28359 Bremen Tel.: +49-421-2205-122 (Service) Fax: +49-421-2205-106 (Service) e-mail: EQService@bdal.de page 1 of 1 EX-10.11 3 a2040867zex-10_11.txt EXHIBIT 10.11 Exhibit 10.11 STANDARD FORM PURCHASE AND SALE AGREEMENT As of this 1st day of December 2000 1. PARTIES ISOLDE LAUKIEN AND MAILING 8 BRIGHAM ROAD ADDRESSES LEXINGTON, MA 02420 (hereinafter called the "SELLER") agrees to SELL and BRUKER DALTONICS INC. 15 FORTUNE DRIVE BILLERICA, MA 01821 (hereinafter called the "BUYER"), agrees to BUY, upon the terms hereinafter set forth, the following described premises: 2. DESCRIPTION The land consisting of 4.66 Acres (202,888 square feet) located on Manning Road, Billerica, as more fully described in Exhibit A, attached hereto and made a part hereof. Title Reference: See deed recorded with Middlesex North Registry of Deeds, Book 4755 Page 315. 3. FIXTURES Included in the sale as a part of the said premises are improvements now thereon, if any. 4. TITLE DEED Said premises are to be conveyed by a good and sufficient quitclaim deed running to the BUYER or to the nominee designated by the BUYER by written notice to the SELLER at least seven (7) days before the deed is to be delivered as herein provided, and said deed shall convey a good and clear record and marketable title thereto, free from encumbrances except: (a) Provisions of existing building and zoning laws; (b) Such taxes for the then current year as are not due and payable on the date of the delivery of such deed; (c) Any liens for municipal betterments assessed after the date of this agreement; and (d) Easements, restrictions and reservations of record, if any. 5. PLANS NOT APPLICABLE 6. REGISTERED TITLE NOT APPLICABLE 7. PURCHASE The agreed purchase price for said premises is SEVEN PRICE: HUNDRED FORTY THOUSAND ($740,000.00) DOLLARS, of which $ 37,000.00 have been paid as a deposit this day; and $ 703,000.00 are to be paid at the time of delivery of the deed in cash, or by certified, ____________ cashiers, treasurer's or bank check(s). $ 740,000.00 TOTAL 1 Exhibit 10.11 8. TIME FOR Such deed is to be delivered at 12 o'clock noon on PERFORMANCE December 15, 2000 at the Middlesex North Registry of Deeds or BUYER's attorney's office, unless otherwise agreed upon in writing. 9. POSSESSION Full possession of said premises is to be delivered at the time of the delivery of the deed, said premises to be then (a) in the same condition as they now are, and (b) in compliance with the provisions of any instrument referred to in clause 4 hereof. 10. EXTENSION If the SELLER shall be unable to give title or make TO PERFECT conveyance, or to deliver possession of the premises, TITLE OR all as herein stipulate, or if at the time of the MAKE delivery of the deed the premises do not conform PREMISES with the provisions hereof, the SELLER shall use CONFORM reasonable efforts to remove any defects in title, or to deliver possession as provided herein, or to make the premises conform to the provisions hereof, as the case may be, and the time for performance hereof shall be extended for a period of thirty (30) days. 11. FAILURE If at the expiration of the extended time the SELLER TO PERFECT shall have failed so to remove any defects in title, TITLE OR deliver possession, or make the premises conform, as MAKE the case may be, all as herein agreed, then any PREMISES payments made under this agreement shall be forthwith CONFORM refunded and all other obligations of the parties hereto shall cease and this agreement shall be void without recourse to the parties hereto. 12. BUYER'S The BUYER shall have the election, at either the ELECTION original or any extended time for performance, to TO ACCEPT accept such title as the SELLER can deliver to the said TITLE premises in their then condition and to pay therefore the purchase price without deduction, in which case the SELLER shall convey such title. 13. ACCEPT- The acceptance of a deed by the BUYER or his nominee, ANCE OF as the case may be, shall be deemed to be a full DEED performance and discharge of every agreement and obligation herein contained or expressed, except such as are, by the terms hereof, to be performed after the delivery of said deed. 14. USE OF To enable SELLER to make conveyance as herein provided, PURCHASE the SELLER may, at the time of delivery of the deed, MONEY TO use the purchase money or any portion thereof to clear CLEAR the title of any or all encumbrances or interests, TITLE provided that all instruments so procured are recorded simultaneously with the delivery of the deed or as soon thereafter as is practical and in conformance with local conveyancing practice. 2 Exhibit 10.11 15. INSURANCE Until the deliver of the deed, the SELLER shall maintain such insurance on said premises as the SELLER is currently carrying. 16. ADJUSTMENTS Taxes for the then current fiscal year shall be apportioned and adjusted as of the day of performance of this agreement and the net amount thereof shall be added to or deduction from, as the case may be, the purchase price payable by the BUYER at the time of delivery of the deed. 17. ADJUSTMENT If the amount of said taxes is not known at the time of OF TAXES the delivery of the deed, they shall be apportioned on the basis of the taxes assessed for the preceding fiscal year, with a reapportionment as soon as the new tax rate and valuation can be ascertained; and, if the taxes which are to be apportioned shall thereafter be reduced by abatement, the amount of such abatement, less the reasonable cost of obtaining the same, shall be apportioned between the parties, provided that neither party shall be obligated to institute or prosecute proceedings for an abatement unless herein otherwise agreed. 18. BROKER'S FEE NOT APPLICABLE 19. BROKER'S WARRANTY NOT APPLICABLE. 20. DEPOSIT All deposits made hereunder shall be held in escrow by George Woron, Esq., attorney for SELLER, as escrow agent, subject to the terms of this agreement and shall be duly accounted for at the time for performance of this agreement. The deposit shall be held in a non-interest bearing account. 21. BUYER'S If the BUYER shall fail to fulfill the BUYER's DEFAULT; agreements herein, all deposits made hereunder by the DAMAGES BUYER shall be retained by the SELLER as liquidated damages, which shall be SELLER's sole remedy hereunder both in law and in equity. 22. BROKER AS PARTY NOT APPLICABLE 23. LIABILITY OF TRUSTEE, ETC. NOT APPLICABLE 24. WARRANTIES The BUYER acknowledges that the BUYER has not been AND REPRE- influenced to enter into this transaction nor has he SENTATIONS relied upon any warranties or representation not set forth or incorporated in this agreement. 25. MORTGAGE CONTINGENCY NOT APPLICABLE 26. CON- This instrument, executed in multiple counterparts, is STRUCTION to be construed as a Massachusetts contract, is to take effect as a sealed instrument, sets forth the entire contract between the parties, is binding upon and enures to 3 Exhibit 10.11 the benefit of the parties hereto and their respective heirs, devisees, executors, administrators, successors and assigns, and may be canceled, modified or amended only by a written instrument executed by both the SELLER and BUYER. If two or more persons are named herein as BUYER their obligations hereunder shall be joint and several. The captions and marginal notes are used only as a matter of convenience and are not to be considered a part of this agreement or to be used in determining the intent of the parties to it. 27. LEAD PAINT LAW NOT APPLICABLE 28. SMOKE DETECTORS NOT APPLICABLE SEE ADDENDUM ATTACHED HERETO, INCORPORATED HEREIN AND MADE A PART HEREOF. SELLER: BUYER: BRUKER DALTONICS INC. _____________________________ BY:______________________________ ISOLDE LAUKIEN , duly authorized 4 Exhibit 10.11 ADDENDUM TO PURCHASE & SALE AGREEMENT DATED AS OF DECEMBER 1, 2000 BY ISOLDE LAUKIEN, AS SELLER, AND BRUKER DALTONICS INC. AS BUYER, FOR THE PREMISES LOCATED ON MANNING ROAD, BILLERICA, MASSACHUSETTS A. INSPECTIONS: The premises are sold "AS IS" and no representations have been made by SELLER in regard to its condition except those contained in this Agreement. B. TITLE STANDARD: Any title matter which is the subject of a title standard of the Massachusetts Conveyancers Association at the time for delivery of the deed shall be governed by said title standard to the extent applicable. C. CERTIFICATES: The BUYER's obligations hereunder are conditioned upon the SELLER signing and delivering at the closing such documents as may be customarily and reasonably requested by the BUYER's or BUYER's title insurance company, including, without limitation, affidavits and/or certificates with respect to: (i) mechanic's liens and parties in possession; and (ii) FIRPTA. D. WARRANTIES AND REPRESENTATIONS: The SELLER hereby warrants and represents, the same to be true as of the date hereof, that: (i) the SELLER has not received any notice that the premises are in violation of any federal, state or local environmental, sanitary, health or safety statute, ordinance, code, by-law, rule or regulation and that the SELLER has no actual knowledge of any such violations; and (iii) the SELLER has no knowledge of any pending betterment assessments, encumbrances, and/or liens affecting the premises E. SOCIAL SECURITY NUMBERS: The BUYER's Tax Identification number is _____ ___________. The SELLER's social security number is _________________. F. NOTICES: All notices required or permitted to be given hereunder shall be in writing and delivered by hand, sent by overnight carrier (such as Federal Express) or by facsimile (with acknowledgment of receipt), or mailed postage prepaid, by registered or certified mail, to the other party, in the case of the SELLER: George Woron, Esq. 75 State Street - Suite 1520 Boston, MA 02109 FAX: (617) 439-3939 5 in the case of the BUYER: Richard M. Stein, Esq. Hutchins, Wheeler & Dittmar 101 Federal Street Boston, MA 02110 FAX: (617) 951-1295 or, in the case of either party, to such other address as shall be designated by written notice given to the other party. Any such notice shall be deemed given when so delivered by hand, or if sent by overnight delivery service or facsimile, when received, or, if mailed, when deposited with the U.S. Postal Service. G. CONDITION OF PREMISES: At the time for performance the Premises shall be delivered to BUYER free of all personal property and debris. H. REASONABLE ACCESS: From and after the date of this Agreement, SELLER agrees to permit BUYER and its designees reasonable access to the premises for purposes of inspecting the Premises. I. TITLE/SURVEY/LEGAL COMPLIANCE: It is understood and agreed by the parties that the Premises shall not be in conformity with the provisions of Paragraphs 4 and 9 of the Agreement unless: 1. All improvements, if any, shall be located completely within the boundary lines of said Premises and shall not encroach upon or under the property of any other person or entity; 2. No building, structure or improvement of any kind belonging to any other person or entity shall encroach upon or under said Premises; 3. The Premises shall abut a public way or private way to which BUYER shall have both pedestrian and vehicular access, and, if a private way, that such private way in turn has legal access to a public way, which public way is duly laid out or accepted as such by the Town of Billerica; 4. Title to the Premises is insurable for the benefit of BUYER by a title insurance company at normal premium rates in the American Land Title Association form currently in use, subject only to those printed exceptions to title normally included in the "jacket" to such form and to the exceptions set forth in Paragraph 4 of this Agreement but not subject to any exception or exclusion for so-called "mechanic's liens" or for "creditors' rights". 5. Neither the Premises, nor any portion thereof, violates the subdivision ordinances, by laws or regulations of the Town of Billerica or the provisions of Massachusetts General Laws, Chapter 41 Sections 81K et seq. J. NO BROKER: BUYER and SELLER warrant and represent to each other that no broker or finder has been involved in this transaction and each party agrees to indemnify and save the other harmless from any loss, cost or damages which the other party may pay or incur, including reasonable attorney's fees and expenses, by reason of any claim for payment in the nature of a broker's commission or finder's 6 Exhibit 10.11 fee or other similar fee which may be made by reason of contact by the indemnifying party with any such broker or finder. The provisions of this paragraph shall survive delivery of the deed. K. SELLER'S REPRESENTATIONS AND WARRANTIES: SELLER represents and warrants to BUYER that to the best of her knowledge: 1. there is not presently nor during the period of SELLER's ownership has there been, nor has there been during any prior ownership, any underground storage tank for the storage of fuel oil, petroleum products or hazardous materials at the Premise. 2. No hazardous material or waste has been improperly disposed of at the Premises during the period of SELLER's ownership or during any prior ownership. 3. There is no mortgage indebtedness or other monetary encumbrances presently outstanding against the Premises. 4. SELLER has not caused or permitted any work to be done on or to the Premises in violation of the provisions of General Laws, chapter 131, Section 40, as amended, concerning wetlands, seacoasts and flood plains, and Seller knows of no such violation with respect to the Premises by any other person before or after Seller acquired the Premises. The provisions of this paragraph shall survive delivery of the deed. L. ENTIRE AGREEMENT: It is understood by and between the parties hereto that the Purchase and Sale Agreement, including this Addendum, constitutes the entire agreement between the parties (hereinafter, the "Agreement"), that this Agreement supersedes any and all other agreements made prior hereto, and that this Agreement may not be altered or amended except in writing signed by both parties. Executed as a sealed instrument as of the day and year first above written. SELLER: BUYER: BRUKER DALTONICS INC. /S/ ISOLDE LAUKIEN /S/ FRANK LAUKIEN - ---------------------------------- ------------------------------------ ISOLDE LAUKIEN Frank Laukien, duly authorized EX-21.1 4 a2040867zex-21_1.txt EXHIBIT 21.1 Exhibit 21.1 List of Subsidiaries of the Registrant Name Jurisdiction 1. Bruker Daltonics Ltd. England 2. Bruker Daltonique S.A. France 3. Nihon Bruker Daltonics K.K. Japan 4. Bruker Daltonics AG Switzerland 5. Bruker Daltonics Scandinavia AB Sweden 6. ProteiGene, Inc. Massachusetts, USA 7. Bruker Daltonik GmbH Germany 8. Bruker Saxonia Analytik GmbH Germany 9. Bruker Daltonics LTD Canada 10. Bruker Daltonics S.r.l. Italy * Bruker Saxonia Analytik GmbH ("Saxonia") is an indirect subsidiary of the Registrant. Saxonia is 98% owned by Bruker Daltonik GmbH ("Daltonik"). Daltonik, in turn, is a wholly-owned subsidiary of the Registrant EX-23.1 5 a2040867zex-23_1.txt EXHIBIT 23.1 Exhibit 23.1 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-47836) pertaining to the 2000 Stock Option Plan of Bruker Daltonics Inc. of our report dated March 1, 2001, with respect to the consolidated financial statements of Bruker Daltonics Inc. included in the Annual Report (Form 10-K) for the year ended December 31, 2000. /s/ Ernst & Young LLP ------------------------------------- March 23, 2001 -----END PRIVACY-ENHANCED MESSAGE-----