May 31, 2000
▇▇. ▇▇▇▇▇ ▇▇▇▇▇
Senior Vice President and
Executive Financial Officer
Genaissance Pharmaceuticals, Inc.
Five Science Park
New Haven, CT 06511 REVISED JUNE 7, 2000
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Dear ▇▇. ▇▇▇▇▇:
FINOVA Capital Corporation ("we" or "Lessor") is pleased to enter into the
following leasing arrangement with Genaissance Pharmaceuticals, Inc. ("you" or
"Lessee") on the terms and conditions hereinafter set forth.
The outline of this Commitment is as follows:
LESSEE: Genaissance Pharmaceuticals, Inc.
LESSOR: FINOVA Capital Corporation.
EQUIPMENT: ▇▇▇▇▇▇ ▇▇▇▇▇ ABI Prism 3700 DNA Analyzers
CREDIT LINE: $10,000,000 line of credit for Equipment.
All Equipment is subject to review and
acceptance by Lessor.
EQUIPMENT LOCATION: Five Science Park, New Haven, CT 06511
ANTICIPATED DELIVERY: May 2000 through December 2000
CLOSING DATE: The date that the Lessor makes payment
for the Equipment covered under each
schedule to the Master Lease (each a
"Schedule" and collectively the "Schedules")
with an aggregate cost of not less than
$250,000, but no later than December 20,
2000.
TERM - A: For take downs funded (1.) prior to Lessee's
Initial Public Offering OR (2.) after
▇▇▇▇▇▇'s Initial Public Offering for less
than $65,000,000, from each Closing Date
until 38 months from the first day of the
month next following or coincident with that
Lease Term Commencement.
TERM - B: For take downs funded after ▇▇▇▇▇▇'s Initial
Public Offering for equal to or greater than
$65,000,000, from each Closing Date until 48
months from the first day of the month next
following or coincident with that Lease Term
Commencement.
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MONTHLY RENT - A: Monthly Rent equal to 2.925% of Equipment
Cost would be payable monthly in advance.
First and last months rent due in advance.
MONTHLY RENT - B: Monthly Rent equal to 2.448% of Equipment
Cost would be payable monthly in advance.
First and last months rent due in advance.
ADJUSTMENT TO MONTHLY
RENT PAYMENTS - A: If on the second business day preceding the
Closing Date for each Schedule, the highest
yield for three-year U.S. Treasury Notes as
published in THE WALL STREET JOURNAL is
greater or less than the yield on April 14,
2000, the Monthly Rent Payments shall be
increased or decreased to reflect such
change in the yield. The yield as of April
14, 2000 was 6.30%. As of the Closing Date,
the Monthly Rent Payments shall be fixed for
the entire term.
ADJUSTMENT TO
RENTAL PAYMENTS - B: If on the second business day preceding the
Closing Date for each Schedule, the highest
yield for four-year U.S. Treasury Notes as
published in THE WALL STREET JOURNAL is
greater or less than the yield on April 14,
2000, the Monthly Rent Payments shall be
increased or decreased to reflect such
change in the yield. The yield as of April
14, 2000 was 6.36%. As of the Closing Date,
the Monthly Rent Payments shall be fixed for
the entire term
INTERIM RENT: Interim Rent shall accrue from each Closing
Date until the 29th day of the month (27th
day of the month in the case of February)
unless the Closing Date is on the 30th or
31st day of a month. If the Closing Date is
the 31st day of a month, Interim Rent shall
accrue until the 29th day of the next
following month. If the Closing Date is the
30th day of a month, there shall be no
Interim Rent. Interim Rent shall be at the
daily equivalent of the currently adjusted
Monthly Rent Payment.
PURCHASE AGREEMENT - A: The Lessee shall purchase all (but not less
than all) the Equipment at the expiration of
the term of each Schedule for twelve and
one-half percent (12.5%), plus applicable
sales and other taxes.
PURCHASE AGREEMENT - B: The Lessee shall purchase all (but not less
than all) the Equipment at the expiration of
the term of each Schedule for ten percent
(10%), plus applicable sales and other
taxes.
NET LEASE: The Lease shall be a net-net-net lease
containing the usual provisions in the
Lessor's lease agreements and such other or
different provisions that are agreed to by
the parties. The
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Lessee shall be responsible for maintenance,
insurance, taxes, and all other costs and
expenses.
TAXES: Sales or use taxes shall be added to the
Equipment Cost or collected on the gross
rentals, as appropriate. In the event that
▇▇▇▇▇▇ claims a tax exempt status, the
Lessee shall provide to Lessor a tax
exemption certificate acceptable to Lessor.
INSURANCE: Prior to any delivery of Equipment, the
Lessee shall furnish confirmation of
insurance acceptable to the Lessor covering
the Equipment including primary, all risk,
physical damage, property damage and bodily
injury with appropriate loss payee
endorsement in favor of the Lessor.
WARRANT COVERAGE: In consideration for this Commitment by the
Lessor, Lessee shall grant to the Lessor
upon ▇▇▇▇▇▇'s acceptance of this Commitment
Letter, warrants to purchase 41,666 shares
of the common stock of the Lessee at an
exercise price of $12.00 per share (the
"Pre-IPO Warrants"). These warrants shall be
exercisable from their date of grant until
the close of business five years from the
date of grant. These warrants shall contain
(a) piggyback registration rights, including
underwriter cutbacks or eliminations
substantially similar to these contained in
the warrant from Lessee to Lessor issued as
of March 31, 2000, (b) antidilution
protection and nondiscriminatory liquidation
rights, substantially similar to these
contained in the warrant from Lessee to
Lessor issued as of March 31, 2000, and (c)
cashless exercise (conversion) provisions.
The Pre-IPO Warrants however will be subject
to conversion at a later date (at Lessee's
option) into warrants for common shares in
whole or in part if Lessee consummates an
initial public offering of equity securities
of Lessee with proceeds of a least
$65,000,000, a "Qualified IPO", on or before
December 20, 2000 (expiration of line
commitment). For each Closing following a
Qualified IPO and for only that portion of
the line still available, a calculated
number of Pre-IPO Warrants shall be
convertible to common stock warrants having
an exercise price equal to 125% of the IPO
price (herein referred to as the
"Post-Qualified IPO
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Warrants"). The calculation, where "AF" is
the amount funded at all post-Qualifed IPO
closings is:
($10,000,000 - AF)/ ($10,000,000) x 41,666 =
Pre-IPO Warrants
(AF x .03)/(1.25 x IPO Price) =
Post-Qualified IPO Warrants
ADDITIONAL COVENANTS: There shall be no actual or threatened
material conflict with, or material
violation of, any regulatory statute,
standard or rule relating to the Lessee, its
present or future operations, or the
Equipment.
All statements made by the Lessee shall be
correct and shall not omit any statement
necessary to make the information supplied
not be misleading. There shall be no breach
of the representations and warranties of the
Lessee in the Lease. The representations
shall include that the Equipment Cost of
each item of the Equipment does not exceed
the fair and usual price for like quantity
purchases of such item and reflects all
discounts, rebates and allowances for the
Equipment given to Lessee or any affiliate
of Lessee by the manufacturer, supplier or
anyone else including, without limitation,
discounts for advertising, prompt payment,
testing or other services.
The Lessor shall not be responsible for any
failure of suppliers or manufacturers of the
Equipment or their distributors to perform
their obligations to the Lessor or the
Lessee.
FINANCIAL REPORTING. During the period of
the Commitment and the Term of the Lease,
Lessee shall deliver to Lessor or cause to
be delivered to Lessor the Lessee's
quarterly financial statements within 45
days following the end of each respective
fiscal quarter and annual financial
statements within 90 days following the end
of each respective fiscal year. All annual
financial statements shall be prepared in
accordance with generally accepted
accounting principles ("GAAP") and be
audited by a reputable firm of certified
public accountants acceptable to Lessor, and
shall be accompanied by a certificate
executed by such certified public
accountants to the effect that the Lessee
has complied with all covenants contained in
the Lease Documents and there are no events
of default thereunder ("Compliance
Certificate"). All quarterly
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financial statements may be internally
prepared in accordance with GAAP, and
accompanied by a Compliance Certificate
executed by the Lessee's Chief Financial
Officer.
FEES AND EXPENSES: The Lessee shall be responsible for the
Lessor's fees and expenses in connection
with the transaction, including the expenses
of counsel to prepare and review the
documentation.
COMMITMENT FEE: With the acceptance of this Commitment
by the Lessee, a Commitment Fee of $50,000
shall be then due the Lessor. The
Application Fee of $50,000 previously paid
by the Lessee shall be considered as the
Commitment Fee. The Commitment Fee (at our
discretion shall be first applied to our
Fees and Expenses in connection with this
transaction) and any remainder shall be
applied on a pro rata basis to the second
Monthly Rent Payment of each Schedule.
SURVIVAL: This Commitment Letter shall survive
closing. However, if there is any conflict
between the terms and conditions of the
Master Lease Agreement and Schedules and
those of this Commitment Letter, the Master
Lease Agreement and Schedules shall control.
This Commitment and the Closing of each Schedule contemplated herein are
subject, amongst other things, to receipt by us, in form and substance
satisfactory to us and our counsel, at or prior to Closing, of:
(i) all documentation and other requirements set forth herein
including but not limited to the Lease Documents and other
requirements set forth herein and as may be required by our
counsel; and
(ii) our receipt, in form and substance satisfactory to us, of all
financial and credit information requested by us, which
reflects no material adverse change in your condition,
business, financial or otherwise; and
(iii) evidence that the Equipment is free and clear of all liens and
encumbrances; and
(iv) evidence of such insurance required by us, written by insurers
and in amounts satisfactory to us; and
(v) such opinions of your outside counsel, certificates, waivers,
releases, Uniform Commercial Code Financing Statements, due
diligence searches, and further documents as may be required
by us or our counsel; and
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(vi) evidence that no payment is past due to the Lessor from the
Lessee, whether as a borrower, a lessee, a guarantor or in
some other capacity and that there be no default under any
agreement, instrument or document between the Lessor and the
Lessee (including, without limitation, the Lease Documents);
and
(vii) evidence that the Lessee is in compliance with the provisions
of this Commitment; and
(viii) our receipt of evidence satisfactory to us, in our sole
discretion that the subject transaction is environmentally
acceptable. We shall have the right to require you to retain
the services of a firm acceptable to us and knowledgeable in
environmental matters to perform environmental investigations
of the Equipment and real property owned, operated or occupied
by you (including, without limitation, the Equipment Location)
and the surrounding areas.
Such investigation may include, but not be limited to, soil
and ground water testing to fully identify the scope of any
environmental issues impacting the transaction (including
Phase I and/or Phase II environmental reports). The scope and
results of such investigations must be satisfactory to us, in
our sole discretion.
In addition to all other conditions and requirements set forth herein, this
Commitment and the closing of each Schedule contemplated hereunder shall be
subject, in our sole judgment, that there be no material adverse change in your
financial, business or other condition. This Commitment is not assignable
without our prior written consent. We reserve the right to cancel this
Commitment in the event you or any of your officers, employees, agents or
representatives has made any misrepresentation to us or has withheld any
information from us with regard to the transaction contemplated hereby.
As used in this Commitment, the terms "satisfactory to us" or "acceptable to us"
or "satisfactory to our counsel" or "acceptable to our counsel" or terms of
similar import mean satisfactory or acceptable to us or our counsel in our or
its sole judgment and discretion.
This Commitment and the Lease Documents shall be governed by the laws of the
State of Delaware. Any dispute arising under this Commitment shall be litigated
by you only in any federal or state court located in the State of Arizona, or
any state court located in Maricopa County, Arizona; and you hereby irrevocably
submit to the personal jurisdiction of such courts and waive any objection that
may exist as to venue or convenience of such forums. Nothing contained herein
shall preclude us from commencing any action in any court having jurisdiction
thereof.
In the event that the Schedules do not close prior to January 1, 2001 because of
your failure to satisfy the conditions for the closing, or because of a material
adverse change in your financial, business or other condition, this Commitment
shall terminate and we shall have no liability to you and we shall retain, as
earned, the Commitment Fee.
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In the event we fail to complete this transaction and such failure is not
because of your inability to satisfy all the conditions for closing or a
material adverse change in your financial, business or other condition, our
liability shall be limited to a return of the Commitment Fee, less Fees and
Expenses due hereunder.
Please execute the copy of this letter acknowledging your acceptance of the
terms hereof and return it to us. If a copy of this Commitment is not executed
and returned by you on or before June 13, 2000, this Commitment shall be deemed
withdrawn.
Sincerely,
FINOVA CAPITAL CORPORATION.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President - Credit
Accepted this ____ day of June, 2000
GENAISSANCE PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇
Executive Vice President and Chief Financial Officer
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